The problem of labor shortage is not only faced by Hu Yuandi. Since the financial crisis in 2008, the "labor shortage" issue faced by the coastal traditional manufacturing industry, represented by the Pearl River Delta, has not been well resolved. As the year-end approaches, the phenomenon of urgent labor demand becomes more prominent. To make matters worse, since this year, the European and American debt crisis has led to weak international market demand, domestic raw material prices and RMB exchange rate fluctuations, loss of labor advantage, transfer of mid-to-low-end orders, and a high proportion of short-term orders. The chilling export situation makes it difficult for many small and medium-sized enterprises to survive.
"This year, I feel that the real crisis has arrived," said Hu Yuandi to the reporter. He also clearly understands the crux of why enterprises cannot recruit enough workers: "One reason is the year-end period; every year at the end of the year, there are very few people entering factories as workers quit to return home for the New Year. In the long term, 'labor shortage' is related to the overall downturn of small and medium-sized enterprises. Workers fear that companies may incur losses and go bankrupt at any time, so they cannot get their wages back. Therefore, they prefer to sign short-term contracts and work as temporary workers to protect themselves."
"Now recruiting workers is really difficult, with wages changing almost daily. From the original 80 yuan per worker per day, it increased to 90 yuan, and now up to 120 yuan, and it is estimated that it will reach 150 yuan next," said Hu Yuandi, chairman of Guangzhou Tama Leather Co., Ltd., who recently felt quite troubled. Despite raising wages again and again, he still could not recruit enough skilled workers for his company. During its peak period, Tama Leather once employed more than 800 workers, but now only about 200 employees remain.
Regarding the causes of the "labor shortage," Ding Li, director of the Center for Regional and Corporate Competitiveness Research at the Guangdong Academy of Social Sciences, provided another perspective. He stated that according to the supply pattern of domestic labor force, the phenomenon of labor from the Yangtze River Delta and the Pearl River Delta being diverted to central and western regions in recent years should have basically adjusted by now. Therefore, apart from the factors mentioned earlier, it is not ruled out that some enterprises have proactively reduced production capacity and adjusted structures in response to the economic downturn both domestically and internationally. Additionally, industrial structure adjustments can lead to imbalances in labor demand structures. For instance, the textile and garment industries require relatively lower educational qualifications from workers, while machinery, biopharmaceuticals, and LED industries demand higher levels of education and technical skills.
Regarding the issue of transferring industries to inland areas, Chen Xiaofeng frankly admitted that for the audio industry, although the cheaper labor and various favorable conditions offered by local governments in inland areas are tempting, due to the lack of a complete industrial chain and inconvenient transportation, moving there would increase procurement costs, making the relocation of this industry not so easy.
In addition to the labor shortage, various data also indicate that the export orders of small and medium-sized enterprises (SMEs) are showing signs of fatigue. According to the import and export trade statistics of Guangdong Province released by the Guangdong Sub-bureau of Customs from January to November 2011, in the second half of this year, the growth rates of processing trade imports and exports have shown a monthly declining trend. The growth rate of processing trade exports dropped from 18.4% in June to negative growth in November. Since the second half of the year, the growth rates to major markets such as Hong Kong, the United States, and the European Union have also slowed down.
"In the second half of this year, the global economy has been on a downward trend. Orders from major customers in Africa, the Middle East, and Southeast Asia have decreased by half, and factory profits have also decreased by nearly fifty percent. After deducting the costs of wage increases and welfare improvements for employees, the net profit remains very little," said Chen Xiaofeng, foreign trade manager of Deweiqi Audio Factory in Baiyun District, Guangzhou. However, Chen Xiaofeng believes that after the Spring Festival next year, the situation will improve as inventories are gradually digested. A big purchasing wave is expected between March and April, and at that time, he will have the opportunity to take over some lost orders from bankrupted factories.
After randomly selecting 2,000 SMEs engaged in foreign trade and tracking and monitoring them throughout the year, Shenzhen Yidatong Enterprise Service Co., Ltd. released the "SME Foreign Trade Index Report for January to November 2011" in December. The report shows that contrary to the steady increase in orders usually seen at the end of the year for foreign trade enterprises, in the past two months, orders for SMEs have plummeted, with a decline of thirty percent. It points out that the situation facing SMEs in the first half of next year is expected to be even more severe, marking the toughest period in recent years.