China’s “Migration Transition” Is Changing the Factory Floor

Sunday, January 13, 2013 19:33
Posted in category The Big Picture

While catching up on some reading, the following passages from Arrival City (A book about the migration of people to the city) reminded me of a trend that I have been observed in China:

Back-and-forth migration was indeed occurring, often for many generations.  But eventually there was something of a tipping point, a moment where the entire family, and sometimes the village, shifted it allegiances and investments to the city and ceased to rely on agriculture.  This he called the “migration transition”.  sometimes it took generations to occur, sometimes only years.

With 400 million migrants estimated to have already moved to the city, and a projected 300 million more to arrive over the course of the next 15 years, this tipping point is something that is very relevant for China.  Relevant as cities as cities like Shanghai and Beijing look to integrate large populations of “outsiders”, and relevant as cities like Chengdu and Zhengzhou look to attract “insiders” from the province into their cities.

It is a process that over the last 5-8 years has seen a marked difference in the hopes and dreams of migrants as their own their pattern has begun to shift. Migrants that were once willing to separate from family, were solely focused on working long hours so that they could save enough to one day return home (and be reunited), are now looking to move as a family until and find “good” jobs.   It is a transition that plays into regular conversations I have with nearly everyone.  From government officials who are seeing their district populations explode, to business leaders who are trying to understand why the pressure from labor is increasing at a time when they should be going the other direction.

by the end of 2007, Shenzhen had 700,000 unfilled jobs.  City officials raised minimum wage from 450 to 750 to 900 yuan ($132) per month, but it did little to attract workers back.  In 2010, when hundreds of thousands more failed to return, Shenzhen announced plans to raise it yet again, to 1,100 per month, after facing labor shortages of more than 20 percent.  Again, the promise had little noticeable effect.  Officials were left bewildered [.....]

On the factory floor, what this translates into is line workers want more money, more training, and are looking for firms that can offer more than a mindless job installing widgets for 12 hours a day.  They are looking for this because as a “new resident” of the city, their need to save and invest in their futures is vastly different. they are now looking to support a lifestyle that is not tied to farm income, small stores, and village life.  Migrants that were once willing to “eat bitterness” for two years so that they could save enough money to return home and open a small business, are now looking for more.  Looking for opportunities, within firms or within cities, that will provide a livelihood that aligns with their urban needs.  Stable incomes.  Healthcare.  Housing funds.  With the added need for career development and access to education (for themselves and their kids).

Which means that firms are going to have to do more than simply assume that the problems their labor are facing, or are striking over, can be solved by a raise in wages and a promise to cut down on the overtime.

Case in point Foxconn. Which is once again seeing a strike affect its supply chain

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