A 'Shortage' of Factory Workers in the World's Most Populous Nation

Manufacturers increasingly are under pressure to increase pay and benefits to attract young Chinese.

Workers in a machine shop produce metal molds which will be used for other manufacturing processes.

Workers in a machine shop produce metal molds which will be used for other processes.

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DONGGUAN, CHINA—For decades, southern China's Pearl River Delta has been a magnet for manufacturers, who flocked here by the tens of thousands to take advantage of the huge pool of readily available, inexpensive workers.

But despite its booming population of 1.3 billion people, factories in the area are now being hit hard by an unexpected trend: Employers can't find enough workers in the world's most populous nation. It's partly about numbers, but also about deeper economic changes in China.

The trend is evident throughout the town of Dongguan, a manufacturing base just two hours north of Hong Kong. Some factory dorms are visibly less than full and the red sheets of paper bearing the words Zhaogong, or "workers wanted," are prominently slapped on factory walls, buildings, street corners, rooftops and fences—just about everywhere you look.

The labor shortage was highlighted in late April when the Southern Metropolis newspaper uncovered a child-slave-labor ring in the export-processing center of Dongguan, where police rescued more than 150 children and investigated 3,000 companies.

One reason for the labor squeeze is the decline in the population bulge of prime working-age Chinese. According to a report by the investment firm CLSA Asia-Pacific Markets titled "Retooling China: Moving Manufacturers Up the Value Chain," the size of the 15-34 age group—the age of young people who work in factories—fell from 442 million in 2000 to 384 million in 2006, a decrease of 13 percent in just a half dozen years. This age group accounted for 29 percent of the total population in 2006, falling from 36 percent in 2000.

Alexandra Harney, author of The China Price: the True Cost of Chinese Competitive Advantage, says that companies in the past would look for workers 25 and under, but now some job advertisements are targeting people up to 40 years old. "That shows the level of desperation," she says.

But the trend is not just about numbers, since China still has a vast workforce, but also about changing attitudes and expectations. For some young Chinese, the mind-numbing, low-wage factory jobs—which have provided an alluring escape from the backbreaking work and poverty of their villages—no longer seem quite so appealing. And the so-called worker shortage—the emerging competition for workers—is most acute for those factories that resist raising wages and offer few job benefits.

Not surprisingly, employers grumble about the rising expectations of workers. Some manufacturers complain about poor work attitudes and attribute the problem to China's generation of "Little Emperors," products of the country's one-child-per-couple policy who have been spoiled by doting parents.

Mou Weidong, general manager of BW Moulds, a small factory, points out that people born in the 1990s have not suffered as much as earlier generations who faced hardship such as famine and the tumultuous Cultural Revolution. "The kids born under the one-child policy are treated like they're something precious," he says. "They don't have to do any work at home. They have never tasted bitterness."

Take the case of Tian, a suntanned, 26-year-old factory worker looking at job ads in Houjie. He says he quit his last job because "the wages were too low and the food in the cafeteria was terrible." He notes that "prices are rising and everyone needs money" but adds that he is not willing to take a job that requires working overtime, as is often the case with factories here.

Complains a manager at the Flourish Shoe Factory in the Houjie area of Dongguan, "Young workers today don't want to work overtime. They have no kids back home to take care of. One thousand yuan [$146] is enough for them. They only want to buy a few pieces of clothes and fool around."

At Strategic Sports, a manufacturer of protective helmets, a quality control manager also notes there is a generation gap in outlook. "The people coming here to work today were born at the end of the 1980s, and their thinking is different than ours," she says.