Recruiting in China

Lack of young workers could push up the cost of Chinese-produced goods

Persistent labour shortages in China's factories are pushing up wages and benefits, which could make Chinese-made products less of a bargain, according to economists.

Government estimates suggest that major export industries are looking for at least one million more workers, but the real number could be much higher.

According to the government, minimum wages, which averaged $58 US to $74 US a month in 2004, have climbed 25 per cent in the past three years in big cities like Shenzhen, Beijing and Shanghai.

But as wages increase, some companies are looking to move to lower-cost countries such as Vietnam and India.

One economist said these persistent shortages are the result of a shinking supply of uneducated workers as more and more young people are going to college to avoid working in factories. Last year, more than 14 million students enrolled in post-secondary education, up from 4.3 million in 1999.

Government policy is also contributing to the shortages. Last year, in an attempt to bridge the enormous gap between the urban rich and the rural poor, the government eliminated the agricultural tax and stepped up efforts to develop local economies in poor, inland provinces.

Instead of going to the coastal regions, where the majority of China's factories are located, many young people are choosing to stay close to home and work on farms or take part in the growing local economies.

The country's one-child policy is also contributing to the shortages, with fewer young people entering the workforce as the first generation born under the policy emerges from post-secondary education.

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