Labor in China: Moving on up
As manufacturing sector gets more sophisticated, companies will have to break down the barriers between low-wage and skilled labor in China.
“In this industry, it’s just one or two heroes directing a bunch of knuckleheads,” says Peng Wen, a technician at a Winto Ceramics subsidiary factory in Guangdong Province’s Foshan city. Peng’s words illustrate the barriers between skilled and unskilled workers at many factories in the manufacturing hub of Foshan, where the latter are rarely able to elevate their status.
As China seeks to move up the smile curve and upscale its manufacturing sector–as envisioned in its 12th Five Year Plan–companies will have to break down the barriers between low-wage and skilled laborers.
Some companies are already starting to educate their workers. Foshan-based kitchenware producer Canbo Electrical Appliance Co., Ltd, for example, outsources its employee vocational program to a local training firm, Bewise. The Bewise training center provides instructors to develop the skills of production-line workers in areas such as efficient warehouse management and enterprise resource planning models. Bewise also offers career-planning services.
“Four years ago when we started customized in-house company training, people were in their forties, but now it’s the so-called generation born after the 80s or 90s,” says Bewise founder Li Huijuan. “The young workers are more educated than their parents’ generation, and are often bored by the work. They need to do more than just feed themselves.”
This is a stark contrast to the Winto Ceramics factory, which employs 1,500 workers, including about 50 technicians who are all either friends or relatives of the factory owner. They receive twice the average salary of an unskilled worker, and rarely share their knowledge of ceramics firing techniques with outsiders. The baseline salaries of the majority of the laborers start from around 1,200 yuan ($188) per month, and are are capped at 3,000 yuan ($469) per month.
Every two or three years, an unskilled employee may be lucky enough to receive technical training in ceramics firing, but the vast majority of workers are consigned to the arduous tasks of mixing clay or moving semi-finished products from one production line to another, nine hours a day.
In Foshan, thousands of factories similar to Winto Ceramics dot the landscape. Most are private or family- owned small- and medium-sized enterprises (SMEs). Over the past thirty years of China’s reform and opening up, some of these companies, such as Midea and Galanz, have become national brands known for offering affordable products, made possible in part by cheap labor.
When markets declined sharply during the 2008 global financial crisis, the companies that drove Guangdong’s export manufacturing engine suffered. As the central government tightened housing policies and directed banks to restrict loans to SMEs, ceramics dealers and factories saw thinner profit margins. Shopfloor workers were forced to migrate from factory to factory.
After these economic shocks, Guangdong officials decided to upgrade their home industries to acquire a competitive edge. They chose to focus on SMEs, on the assumption that large private companies like Canbo had enough capital to institute internal training programs.
In 2009, thousands of workers began to access vocational training in Foshan, sponsored by both their employers and provincial and municipal subsidies, which ranged from 420 to 2,200 yuan ($66 to $344 USD) per person, depending on his or her skill. Beijiao, a small town in Foshan, trained 2,700 unemployed migrant workers in 2011 alone, in conjunction with local vocational training schools. Companies have also reported training more than 20,000 people internally, said one official with Beijiao’s Ministry of Human Resources and Social Security.
According to Li Shaokui, an independent scholar who frequently consults with Guangdong officials, the provincial government’s plans for unskilled workers go beyond job training.
“Migrant workers have no standing in our constitution,” Li says. The newest generation of workers should be able to attain skills and senior technician certification after five to seven years, Li says, which will open the door for registered residency–or hukou–in the city. There, he says, they can settle down by renting low-cost houses and become senior technicians after another 12 years of hard work.
Just as high trees need strong roots, Li says, China’s 200 million migrant workers “need to have a channel for promotion.”
Yet Yang Yongye, a 36-year-old mechanic working at a 100-person textile factory in Foshan’s Nanhai District, says he had never heard of the government subsidies, and is skeptical about the government’s efforts. Since his first factory job at the age of 13, Yang has been through more than ten factories, teaching himself various skills along the way. He said he plans to acquire enough experience and money to start his own business someday.