The persistent labor shortage has nearly driven growth in China's export industries to a halt. More than half of the 477 respondents to a Global Sources survey said their overseas revenue did not increase during the past year, due mainly to the shortage. Forty-four percent even recorded a drop in exports, most by up to 10 percent.
Outsourcing and automating production are the key measures suppliers have taken to stem the negative effects of the labor shortage. Factories that were unable to find permanent or even part-time workers outsourced some processes to nearby plants. Many also invested in advanced machinery both to boost productivity and reduce the number of staff by as much as 50 percent.
As these measures have proven to be successful, makers intend to continue with the same strategies for the next few months. Survey results show automating and outsourcing production, and increasing export prices are the top three steps suppliers will take to counter the effects of the labor shortage, regardless of industry and geographic location.
At the same time, makers are also trying to fill job vacancies. Except for suppliers in inland provinces, offering incentives such as subsidies and bonuses, and improving working and living conditions are the top two steps taken to alleviate the labor shortage. Those based in the interior are giving better incentives and opportunity for additional training to entice workers.
Although the labor shortage is a challenge for makers across all industries, suppliers in the electronics sector seem to have the upper hand over those in the consumer products segment. The former accounts for 29 percent of survey respondents.
Twenty-five percent of consumer product makers said they are not experiencing any shortage in labor. In contrast, 31 percent of electronics suppliers said they have a full workforce. While nearly 70 percent of surveyed companies from the consumer products industry said the current monthly salaries of their production line workers are more than 1,500 yuan ($230), 55 percent of electronics makers cap theirs at 1,500 yuan.
Fifty-nine percent of suppliers from both segments intend to raise wages up to 10 percent in the next 12 months.
In terms of geographic location, 39 percent of suppliers based in Jiangsu province and 32 percent of those in Shanghai said they are not experiencing any shortage in labor. Seventy percent of companies in both locations also offer monthly salaries exceeding 1,500 yuan, with nearly two-thirds planning to boost wages up to 10 percent in the months ahead.
While 38 percent of respondents from Guangdong province said they lack less than 10 percent of their required workforce, 30 percent said there is no shortage of labor at their factories. But unlike Shanghai and Jiangsu makers that offer high monthly salaries, 53 percent of Guangdong suppliers dole out no more than 1,500 yuan in wages. Interestingly, more than half of respondents based in the province are engaged in electronics, including telecom and computer products.
Note: This survey was mostly conducted in the three China export centers of Guangdong, Zhejiang and Fujian, with additional companies from Jiangsu and other provinces. A total of 477 suppliers were interviewed from various industries, including security products, home products, gifts and premiums, garments and textiles, and fashion accessories.