SHENZHEN, Nov 21 (Reuters) – Growing up in a Chinese village, Julian Zhu saw his father only a few times a year when he returned for holidays from his grueling job at a textile factory in the southern province of Guangdong.
For his father’s generation, factory work was a lifeline from rural poverty. For Zhu, and millions of other young Chinese, the low pay, long hours of toil, and risk of injury are no longer sacrifices worth making.
“After a while, that work numbs your mind,” said the 32-year-old, who left the production lines a few years ago and now makes a living selling powdered milk and delivering scooters for a supermarket in Shenzhen, the central technology of southern China. . “I couldn’t bear the repetition.”
The refusal to grind out factory work by Zhu and other Chinese in their 20s and 30s is contributing to a growing labor shortage that is frustrating manufacturers in China, which produces a third of globally consumed goods.
Factory bosses say they would produce more and faster, with younger blood to replace their aging workforce. But offering the higher wages and better working conditions that younger Chinese want would risk eroding their competitive advantage.
And smaller manufacturers say large investments in automation technology are unsustainable or imprudent when rising inflation and financing costs are holding back demand in China’s key export markets.
More than 80 percent of Chinese manufacturers have faced labor shortages ranging from hundreds to thousands of workers this year, accounting for 10-30 percent of their workforce, according to a survey by CIIC Consulting. China’s education ministry predicts a shortage of nearly 30 million manufacturing workers by 2025, more than Australia’s population.
On paper, there is no shortage of labor: about 18% of Chinese aged 16 to 24 are unemployed. This year alone, a cohort of 10.8 million college graduates entered a job market that, other than manufacturing, is very subdued. The Chinese economy, hit by COVID-19 restrictions, a downturn in the housing market, and regulatory crackdowns on technology and other private sectors, faces the slowest growth in decades.
Klaus Zenkel, who chairs the European Chamber of Commerce in southern China, moved to the region about two decades ago, when college graduates were less than a tenth this year’s number and the economy as a whole was about 15 times smaller in current US dollar terms. He runs a factory in Shenzhen with about 50 workers who make magnetically shielded rooms used by hospitals for MRI screening and other procedures.
Zenkel said China’s soaring economic growth in recent years has raised the aspirations of younger generations, who now see his line of work as increasingly unattractive.
“If you are young it is much easier to do this job, climb the ladder, do some work on the machinery, handle tools and so on, but most of our installers are between 50 and 60 years old,” he said . “Sooner or later we’ll need more young people, but it’s very difficult. Candidates will take a quick look and say ‘no thanks, it’s not for me'”.
The National Development and Reform Commission, China’s macroeconomic management agency, and ministries of education and human resources did not respond to requests for comment.
Manufacturers say they have three main options for addressing the labor market mismatch: sacrifice profit margins to raise wages; invest more in automation; or jump on the wave of decoupling triggered by the heightened rivalry between China and the West and move to cheaper pastures like Vietnam or India.
But all of these choices are difficult to implement.
Liu, who runs a factory in the electric battery supply chain, has invested in more advanced production equipment with better digital measurements. He said his he older workers struggle to keep up with the fastest gear or read the data on the screens.
Liu, who like other factory bosses declined to give his full name so he could speak freely about China’s economic slowdown, said he had tried to attract younger workers with 5% higher wages, but was treated coldly.
“It’s like with Charlie Chaplin,” said Liu, describing the performance of his workers, alluding to a scene from the 1936 film “Modern Times,” about the anxieties of US industrial workers during the Great Depression. The main character, Little Tramp, played by Chaplin, can’t keep up with tightening bolts on a conveyor belt.
Chinese policy makers have emphasized automation and industrial upgrade as a solution to an aging workforce.
The country of 1.4 billion people, on the verge of a demographic recession, accounted for half of robot installations in 2021, up 44% year-on-year, the International Federation of Robotics said.
But automation has its limits.
Dotty, general manager of a stainless steel processing factory in Foshan city, has automated product packaging and work surface cleaning, but says a similar solution for other functions would be too expensive. Yet young workers are vital to keeping production moving.
“Our products are really heavy and we need people to transfer them from one manufacturing procedure to another. It’s a laborious business at high temperatures and we have a hard time hiring for these procedures,” he said.
Brett, manager of a factory that makes game controllers and keyboards in Dongguan, said orders had halved in recent months and many of his colleagues were moving to Vietnam and Thailand.
He’s “just thinking about how to survive this moment,” he said, adding he expected to lay off 15% of his 200 workers even if he still wanted younger muscle on his assembly lines.
ASPIRATIONS IN CONFLICT
The competitiveness of China’s export-oriented manufacturing sector has been built over several decades on state-subsidized investment in production capacity and low labor costs.
Preserving that status quo is now colliding with the aspirations of a generation of better educated Chinese for a more comfortable life than the daily sleep-work-sleep-for-meal-tomorrow routine their parents endured.
Rather than settle for jobs below their level of education, a record 4.6 million Chinese have applied for postgraduate studies this year. There are 6,000 applications for every civil service job, state media reported this month.
Many young Chinese are also increasingly adopting a minimal lifestyle known as “laying flat,” doing just enough to get by and rejecting the rat race of China Inc.
Economists say market forces may force both Chinese youth and manufacturers to curb their aspirations.
“The unemployment situation for young people may need to be much worse before the discrepancy can be corrected,” said Zhiwu Chen, a finance professor at the University of Hong Kong.
By 2025, he said, there may not be much of a shortage of workers “as demand will certainly decrease.”
‘YOU FEEL FREE’
Zhu’s first job was screwing fake diamonds into wristwatches. Later he worked in another factory, modeling tin boxes for mooncakes, a traditional Chinese bakery product.
His colleagues shared gruesome stories about workplace injuries involving sharp sheet metal.
Realizing he could avoid reliving his father’s life, he quit.
Now in charge of sales and deliveries, he earns at least 10,000 yuan ($1,421.04) a month, depending on how many hours he works. That’s almost double what he would earn in a factory, although part of the difference goes to housing, as many factories have their own dormitories.
“It’s hard work. It’s dangerous on busy roads, in wind and rain, but for young people it’s much better than factories,” said Zhu. “You feel free.”
Xiaojing, 27, now earns 5,000 to 6,000 yuan a month as a masseuse in an upscale area of Shenzhen after a three-year stint at a printer factory where she earned 4,000 yuan a month.
“All my friends my age have left the factory,” she said, adding that it would be a tall order to get her to return.
“If they paid 8,000 before overtime, sure.”
($1 = 7.0371 Chinese Yuan Renminbi)
Editing by Marius Zaharia and David Crawshaw
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