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China manufacturers still face persistent labor shortage

Suppliers in China's main production centers are continuing to experience a shortage in labor. Sixty-four percent of the 239 respondents to a Global Sources survey said they remain in need of workers, despite higher wages and several concessions.

China manufacturers still face persistent labor shortage

The survey, which was conducted in July and August 2010, also indicates that workers across all export manufacturing centers are asking for higher wages and other privileges. There is a slight uptick in hubs outside the Pearl and Yangtze River Delta regions, however, because compensation in these areas is generally lower than in the coastal provinces. Seventy-five percent of surveyed suppliers said employees have sought higher salaries or made other demands. This comes even after the basic monthly pay was increased early this year.

For instance, the minimum wage in Guangdong province's capital city of Guangzhou was raised 22 percent to 1,100 yuan. In the neighboring city of Dongguan, the basic salary rose to 920 yuan. In fact, many factories there are paying workers higher than the minimum wage. Some companies even dole out as much as 1,500 yuan in basic pay alone for production line staff. Even so, many Guangdong manufacturers still have problems with compensation and benefits, with 73 percent of respondents there saying their workers continue to demand higher wages and other concessions.

The situation is no different in other hubs. Based in Fujian province, Quanzhou Haohan Sporting Goods Co. Ltd offers as much as 2,000 yuan in basic monthly wages, although the minimum wage in the city is only 800 yuan. The company has also increased overtime pay 20 to 30 percent over the past year, but it is still short of hands.

Increasing basic monthly salaries and overtime pay continue to be the main measures taken by suppliers to retain and attract workers. Makers are working on improving living conditions in the factory dormitories as well.

This last step is popular among foreign-invested enterprises, including Star Prototype China Ltd. The company's factory dormitory has individual beds, wardrobes, desks, computers with Internet connection, and chairs. Increasing the basic pay means having to spend more for each worker per month. But renovating dormitories to include better facilities incurs a one-time investment only.

Read the full survey results at Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research.

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