Younger Chinese are rejecting the factory jobs that underpin the economy

SHENZHEN (Reuters) – Growing up in a Chinese village, Julian Zhou only saw his father a few times a year when he returned for a break from his grueling job at a textile factory in the southern province of Guangdong.

For his father’s generation, working in factories was a lifeline out of rural poverty. For Zhou and millions of other young Chinese people, low wages, long grueling hours and the risk of injury are no longer worthwhile sacrifices.

“After a while, this business makes your mind go numb,” said the 32-year-old, who left the production lines a few years ago and now makes a living selling milk formula and delivering scooters to a shop in Shenzhen, the tech hub of southern China. . “I couldn’t stand the repeat.”

Zhou and other Chinese’s rejection of milling factory business in their 20s and 30s deepens a labor shortage that frustrates manufacturers in China, which produces a third of the goods consumed globally.

Factory bosses say they will produce more, and faster, with young blood replacing the aging workforce. But offering the higher wages and better working conditions that young Chinese want would risk undermining their competitive advantage.

Smaller manufacturers say large investments in automation technology are either prohibitively expensive or unwise when rising inflation and borrowing costs dampen demand in China’s key export markets.

A survey by CIIC Consulting showed that more than 80% of Chinese manufacturers faced a labor shortage of hundreds to thousands of workers this year, which amounts to 10% to 30% of their workforce. China’s Ministry of Education projects a shortfall of nearly 30 million manufacturing workers by 2025, larger than Australia’s population.

In theory, there is no shortage of labor: nearly 18% of Chinese between the ages of 16 and 24 are unemployed. This year alone, a cohort of 10.8 million graduates has entered a job market that, besides manufacturing, is very weak. The Chinese economy, battered by COVID-19 restrictions, a property market downturn and regulatory curbs on technology and other private industries, is facing its slowest growth in decades.

Klaus Zinkel, who heads the European Chamber of Commerce in southern China, moved to the region about two decades ago, when university graduates were less than a tenth of this year’s figures and the economy as a whole was about 15 times smaller than the current US dollar. reformers. He runs a factory in Shenzhen with about 50 workers that make magnetically shielded rooms that hospitals use for MRI scans and other procedures.

Zinkel said China’s rapid economic growth in recent years has raised the aspirations of the younger generations, who now see his line of work as increasingly unattractive.

“If you’re young, it’s easier to do the job, climb the ladder, do some machine work, handle the tools, etc., but most of our fitters are between 50 and 60 years old,” he said. “Sooner or later we need to get more young people, but it’s very difficult. Applicants will have a quick look and say ‘No, thank you, that’s not for me.'”

The National Development and Reform Commission, China’s macroeconomic management agency, and the ministries of education and human resources did not respond to requests for comment.

modern times

Manufacturers say they have three main options for addressing labor market misalignment: sacrificing profit margins to increase wages; invest more in automation; Or jump on the wave of decoupling unleashed by the growing rivalry between China and the West and move to cheaper pastures such as Vietnam or India.

But all these options are difficult to implement.

Liu, who runs a factory in the electric battery supply chain, has invested in more advanced production equipment with better numerical measurements. He said his older workers struggle to keep up with speed or read data on screens.

Liu, who like other factory bosses declined to give his full name so he could speak freely about China’s economic slowdown, said he tried to lure younger workers with 5% higher wages, but was not receptive.

“It’s like Charlie Chaplin,” Liu said, describing his workers’ performance, referring to a scene in the 1936 film “Modern Times,” about the anxieties of American industrial workers during the Great Depression. The main character, Little Tramp, played by Chaplin, fails to keep up with the tightening of bolts on a conveyor belt.

Chinese policymakers have emphasized automation and industrial modernization as a solution to an aging workforce.

The International Federation of Robotics said the country of 1.4 billion people, on the verge of a demographic contraction, accounted for half of its robotics facilities in 2021, up 44% year-on-year.

But automation has its limits.

Dotty, a general manager at a stainless steel processing plant in Foshan, has automatic product packaging and worktop cleaning, but says a similar repair for other jobs would be too expensive. However, young workers are vital to keep production moving.

“Our products are really heavy and we need people to move them from one processing procedure to another. It is labor intensive at high temperatures and we are having a hard time hiring for these procedures,” she said.

Orders have halved in recent months, said Brett, a manager at a factory that makes video game consoles and keyboards in Dongguan, and that many of his peers were moving to Vietnam and Thailand.

He said he was “just thinking about how to survive in the moment,” adding that he expects to lay off 15 percent of his 200 workers even though he still wants smaller muscle on his assembly lines.

Conflicting aspirations

The competitiveness of China’s export-oriented manufacturing sector has been built over several decades on state-subsidized investment in production capacity and lower labor costs.

Maintaining this status quo now runs counter to the aspirations of a better-educated generation of Chinese for a more comfortable life of sleep, work, and daily naps for tomorrow’s meal that their parents bore.

Rather than settle for jobs below their level of education, a record 4.6 million Chinese have applied for postgraduate studies this year. This month, state media reported that there were 6,000 applications for each civil service job.

Many young Chinese are also increasingly embracing a minimalist lifestyle known as “laying down,” doing just enough to outsmart China Inc.’s rat race and rejection.

Economists say market forces may force young Chinese and manufacturers alike to lower their aspirations.

“The youth unemployment situation may be much worse before the mismatch is corrected,” said Qiu Chen, a professor of finance at the University of Hong Kong.

By 2025, he said, there may not be so much of a labor shortage “because the demand will definitely go down.”

“You feel free”

Zhu’s first job was installing fake diamonds into wristwatches. After that he worked in another factory, molding tins for mooncakes, a traditional Chinese baked goods.

His colleagues shared horrific stories about workplace injuries involving sharp sheet metal.

Realizing that he could avoid taking back his father’s life, he quits.

Now, doing sales and deliveries, he earns at least 10,000 yuan ($1,421.04) per month, depending on how many hours he puts in. This is almost double what they could earn in a factory, although some of the difference is made in accommodations, as many factories have their own dorms.

“It’s hard work. It’s dangerous on busy roads, in wind and rain, but for young people, it’s much better than factories,” Zhou said. “Feel free.”

Xiao Jing, 27, now earns 5,000-6,000 yuan a month as a masseuse in an upscale area of ​​Shenzhen after three years in a printer factory where she made 4,000 yuan a month.

“All my friends who are my age have left the factory,” she said, adding that bringing her back would be a difficult task.

“If they paid 8,000 before overtime, sure.”

($1 = 7.0371 CNY)

Editing by Marius Zaharia and David Crashaw

Our standards: Thomson Reuters Trust Principles.

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