Daily Management Review

In South China, Old-School Factories Stay Alive by Using Day Labor


In South China, Old-School Factories Stay Alive by Using Day Labor
A new strategy for surviving in Business - hiring workers by the day, is being used by some factories in southern China's manufacturing heartland as they are squeezed by high costs and unpredictable demand.
Reuter5s reports that on a warm morning in the southern town of Shiling, dozens of workers gather on a city street to haggle for a day of work making bags for $20 to $30. This is far from the vision that Beijing had of a slick, hi-tech manufacturing future of computers and chip makers.
Even if day wages can be higher, individually, than full-time salaries, just-in-time labor allows them to stay competitive, say factory owners in this leatherworking town and in those nearby, say Reuters.
They tolerate the conditions because many fear factories offering permanent jobs could fail to pay if clients dry up and the manager runs off, say workers operating in a legal grey area.
"We never used to hire temporary workers, because labor costs were not very high. Our workers were on staff. But recently we've started to hire more temporary labor," Huang Biliang, who runs a button factory in the southern city of Dongguan told Reuters.
"Every additional (permanent) worker I hire is an additional risk," agrees David Liang, manager of Chiefy, a stainless steel factory in the nearby town of Jiangmen.
keeping the country's hold on some labor-intensive work that it might have lost to cheaper regions elsewhere in Asia, his has resulted in a section of China's manufacturing base that has adapted to volatile conditions and higher wages.
This is a change for China, where authorities have sought to crack down on precarious employment, introducing tougher rules in 2012 to protect so-called 'dispatch' workers even as some struggling companies do occasionally turn to temporary workers.
Casual labor could help the country's plethora of small manufacturers remain sellers of cheap shoes, toys and stainless steel pans for a few years yet even though China wants to shift away from piece-work toward a high-tech consumer economy, reflects Shiling’s experience.
Specifically in clusters that have created a base of experienced workers such as in toys, garments and in the bag and stainless steel industries in southern Guangdong province, casual work has been thriving in pockets of the industrial landscape.
"It's an indication that China will probably succeed and maintain its manufacturing base," said Ben Simpendorfer, managing director of consultancy Silk Road Associates.
Academics, consultants and factory managers say undocumented day laborers has risen since the financial crisis and accelerated in the last two years, it is hard to capture in statistics.
Surveys show Chinese factory workers are leaving their jobs more quickly even though there are no official statistics on informal work. The percentage of Chinese workers who said they had been in their jobs less than one year rose from 33 percent in 2014 to 40 percent in 2016, shows surveys by Laborlink, a San Francisco-based polling group

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