Photos showing tens of thousands of Chinese people lining up outside a train station in the southern metropolis of Guangzhou this week offered a snapshot of the world’s biggest annual migration in action.
What the images don’t tell you, though, is that many of those people won’t be returning after the Lunar New Year holiday period, also known as Spring Festival, which is the most important celebration in the Chinese calendar.
That’s because they may not have a job to go back to.
China’s manufacturing sector is shrinking, owing to the country’s much-talked-about economic slowdown and its falling overseas orders, as a stronger yuan — which makes Chinese exports more expensive — and global economic woes weigh on demand for made-in-China products.
Fresh data show factory activity contracted for the sixth straight month in January. Given the first three months of the year are typically slow for China’s manufacturing sector due to the holiday, the trend is likely to continue.
Official unemployment figures are notoriously unreliable, but surveys show factory bosses have been laying off workers in recent months. As economic conditions worsen that trend is expected to accelerate.
“Companies have been delaying wages and cutting the workweek. They have tried these different measures to keep people employed. But now we expect greater outright layoffs,” Andrew Polk, senior economist at the Conference Board’s China Center, told Bloomberg.
Demographics are also playing a role in China’s manufacturing downturn.
China’s previously vast pool of labor is drying up as a result of the country’s low fertility rate over the past 30 years and rapidly aging population. You can blame China’s strict family planning rules for that.
Official data released last month showed the working-age population, which the state-run China Daily said was defined as people aged 16 to 60, fell by a record 4.87 million in 2015, to to 911 million. And that’s going to continue.
That puts factory bosses in a difficult position. To attract employees, they have to offer higher wages and better conditions. And minimum wages are already going up as the government seeks to reduce income inequality and keep a lid on social unrest.
The Nikkei Asian Review reported this week that minimum wages in 10 provinces and municipalities rose between 8 percent and 28 percent in the four months through January. But some companies can’t afford the wage hikes and are shuttering their operations or relocating to countries where labor is cheaper.
Fewer people traveling back to coastal factories this year won’t be a one-off. Bloomberg’s Adam Minter wrote this week that “China is on the cusp of a long-term trend of reverse migration back to the countryside.” That might be hard to fathom when you consider China has more than 250 million migrant workers, or people working outside their hometowns.
But Minter points to new data from the National Bureau of Statistics that shows China’s migrant population fell by 5.68 million in 2015 — that’s more people than the entire population of Minnesota, and it marked the first decline in roughly 30 years.
Even if migrants can find factory jobs along China’s coasts, where the manufacturing sector is concentrated, a growing number don’t want to. Government efforts to develop inland provinces, including offering tax breaks and other incentives to companies to set up operations in poorer regions of the country, have created more opportunities in towns and cities closer to home.
The wages might be lower than what they earned before, but the cost of living is also cheaper and many migrants prefer being closer to their aging parents.
Times sure are changing in the world’s workshop.
By Allison Jackson, GlobalPost
This article is syndicated from GlobalPost.