Feb. 11 – Increasing militancy over labor conditions and terms by migrant workers in China is having a serious impact on South China-based businesses, as many migrant workers are refusing to return from the Chinese New Year vacation unless their demands are met. With workers becoming increasingly aware of their rights under the Labor Law, many are resorting to strong-arm tactics to “persuade” factory owners to give them more money. The situation is often exacerbated by grass roots labor union officials, who also stand to benefit via larger payments into the labor funds at their disposal if companies pay higher wages.
In one case related to the South China Morning Post, 30 migrant workers climbed onto the roof of one Shenzhen factory last month and threatened to collectively jump off if they were not allowed to go home five days early for the Chinese New Year vacation. In another case, workers demanded an additional 8 percent wage increase (on top of the 34 percent increase in wage levels in 2010) to return from Chinese New Year vacation, giving them a total salary increase of 42 per cent year-on-year.In many cases, factories are already paying significantly more than the minimum wage – often double the legal requirement – yet still meet worker demands. Shenzhen raised its minimum wage last summer and is expected to follow Guangdong’s third provincial raise in twelve months, an increase of 18.6 percent, effective March 1. Some workers are asking now for free gifts in addition to salary increases, including requests for air tickets, cash-only bonuses, dinners and entertainment.
Increasing China labor costs and worker demands are making once profitable businesses lose money and there is virtually no leeway for labor-intensive manufacturing to survive under such circumstances. As stipulated in the nation’s 12th five-year plan (covering 2011 to 2015), China Briefing has discussed how the future of such businesses hinges on whether they can either succeed in upgrading their value chain and technology levels or relocate to regions where costs are lower.
As the South China Morning Post reports, Shenzhen is no longer seen as the place where costs are lower and is placing its priorities elsewhere. Dr. Fang Zhou, assistant chief research officer at the One Country Two Systems Research Institute, said that Shenzhen’s attitude towards cross-border cooperation had changed significantly since 2003, along with the economic zone’s waning need for Hong Kong capital and know-how. “Shenzhen and other PRD cities in the past were very keen to attract Hong Kong business to set up factories there. Hong Kong-run factories were the pillar of the local economy, creating jobs and raising local living standards,” he said. “But now cities like Shenzhen are no longer interested in those types of factories, which are labor-intensive, polluting and low-tech.” Fang said that these cities were more interested in developing high-end, large-scale modern manufacturing, which “Hong Kong cannot provide”.
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