Liu Shinan

Rise of wages for migrant workers a must

By Liu Shinan (China Daily)
Updated: 2010-02-24 06:45

As a man who has many relatives in rural areas, I was delighted at the news about the recent shortage of laborers in China's most developed coastal regions - the Yangtze delta and Pearl River delta.

According to the rule of market and the law of value, anything in short supply in a market will gain in value. The labor shortage in the coastal regions will undoubtedly help raise wages of rural migrant workers. This scenario is exactly what is happening there.

The municipal government of Shenzhen, for instance, is planning to raise the minimum wage. Entrepreneurs also showed a willingness to raise pay for their employees who hail from less developed regions in central and western China. Some trade associations in Zhongshan, a city in Guangdong province, are mulling over the possibility of boosting remuneration by 30 percent. Enterprises in the eastern Yangtze delta were considering similar moves much earlier than Zhongshan.

This hasn't only been seen in coastal regions. Labor shortages have also been reported in less developed central and western regions. In my hometown, Wuhan, capital city of central China's Hubei province, local enterprises have been finding it difficult to find enough workers recently. In a labor fair held the day before yesterday, none of the 30 companies succeeded in employing a migrant worker, though they offered 1,500 vacancies at fairly decent wages.

Although one of the reasons for the shortage is that rural migrant workers tend to stay home for the lunar New Year holidays until the 15th day of the lunar first month, it is an indisputable fact that they are not as worried as they used to be about landing a job in urban areas. There are a number of reasons accounting for this comparatively favorable position.

First, the Chinese government's policy to give top priority to the development of agriculture and annul the agriculture tax has paid off. Rural residents are earning more from farming.

Second, the government's strategy of boosting development in central and western regions has achieved initial success.

The rural surplus labor has more employment opportunities in the manufacturing industries in towns near their home.

Third, China's earlier recovery from the economic recession has significantly increased orders for coastal manufacturing plants, which are eager to retrieve the workers they laid off when the economic crisis struck.

This situation is certainly a blessing for rural people. Their family income will rise considerably.

However, some economists have grumbled that the rising wage standards for rural migrant workers may increase China's labor costs in general and thus diminish the advantage of Chinese products globally. These worries are groundless and unfair.

China's advantage in labor costs will not diminish substantially in the foreseeable future. The average wage level is 10 times lower than that in the United States. It will take a long time for Chinese labor costs to catch up with developed countries. And China's labor resource will remain mammoth for a considerably long time, given the continual growth of the nation's population.

Second, even if labor costs rise to a considerably high level, it is a reasonable and welcome change. Why should the laborers' earnings be forever kept at low levels?

Why should capital owners always shift every bit of escalation of production costs onto the employees? Is the current divide of profit between the owner and the employees reasonable?

According to authoritative investigations, the money paid to laborers make up only 10 percent of the total operational cost of an enterprise in China; but it is 50 percent in developed nations.

If factory owners want to maintain their advantage globally, they should cut the size of their share in the profit rather than that of the workers. This is not only an obligation morally but it is also a must for the benefit of their own long-term interests, as Western developed capitalist countries have shown.

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(China Daily 02/24/2010 page9)