6 April 2006
Foreign businesses in China are being told to raise wages and improve conditions for rural workers flocking to the big cities or risk shutting down production, the latest issue of Monash Business Review reveals.
Mr Sijun Shao, a doctoral candidate in the Department of Management at Monash University, said rural migrant labourers were evolving into "homo economicus" - economically aware workers with a new-found self interest who responded to incentives. This new type of worker would lead to the reform of China’s labour market, he said.
"With its new-found confidence, understanding of workers’ rights and the appreciation of the values of their labour, homo economicus is causing difficulties for foreign investors and multinational organisations recruiting cheap labour," Mr Shao said.
"And with reports beginning to surface of a severe labour shortage in China, multinationals operating in China need to beware.
"One survey of migrant wages concluded that, on average, rural migrants earned one third that of urban workers. Other research has revealed businesses that have kept wages low have been forced to close production or have been unable to recruit,’’ he said.
"Businesses most affected were those that relied heavily on cheap labour and had reputations for exploitation and poor working conditions, many of which were foreign,’’ Mr Shao said.
Although many believe China to be a bottomless supply of industrial workers, a government investigation in 2004 concluded that Guangdong province was about one million workers short.
Despite the fact that 150 million rural Chinese have moved to cities in search of work since 1978, migration from the rural to the urban sector has been largely constrained by China’s hukou residential registration system, introduced in the 1950s.
"Foreign businesses in China have two choices - raise the level of wages and become attractive enough for migrant workers, or relocate to the central and western hinterland regions where labour is cheaper," Mr Shao said.
His research partner, Dr Ingrid Nielsen, said long-overdue reform of the hukou system had begun and the government planned to ease its restrictions on the classification system with a view to abolishing it within five years.
"However the reality is that the hukou system will not be completely eliminated in the short or medium term and three labour markets - urban, rural and migrant will continue to coexist," she said.
For further information contact Ms Natasha Whalley, Media Communications on +61 3 9905 9201 or 0437 458 457.
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