Labour shortage threatens delta factories' future
Dongguan's labour situation is continuing to deteriorate, and Hong Kong shoemaker Lam Chin-yick says he knows the days of labour-intensive industries like his are numbered.
'All factories here are short of workers,' he said. 'Every province is developing and even if the salary is 100 or 200 yuan less than here, workers prefer to stay home because it is too far to come to Guangdong and they are afraid of being cheated by employers. The problem started the year before last, and every year it gets worse.'
Mr Lam said a Hong Kong-owned electronics company was trying to start up with 2,000 workers, but could recruit only 500, even though it offered comparatively good wages.
He said he needed 150 workers but had been able to recruit just 100 and would have to make them work extra shifts to meet orders.
Companies such as Mr Lam's pay their staff about 600 yuan a month, but the total cost to the factories is between 900 yuan and 1,000 yuan, including full board and social security benefits. Many factories are so afraid of losing workers that they offer other benefits, such as paying their water bill of 1.2 yuan a day.
'We can't afford to pay more because the competition from privately owned enterprises is very intense,' he said. 'They are driving down prices to get orders and unlike us foreign-invested enterprises, they are not regulated by labour laws.'
When times were good, Mr Lam's factory turned out two million pairs of hotel room slippers a year, but is now filling orders for only 400,000 pairs because he can only make them at 3 yuan a pair, while privately owned mainland factories undercut him by as much as 1 yuan.
'The situation is like Hong Kong in the late 1960s and early 1970s when wages rose to $1,000 and factories all relocated to the mainland when it opened up,' Mr Lam said.
Large companies and those that rent their factories in Dongguan will move to places where they can readily find labour. But those such as Mr Lam, who owns his factory, have no choice but to hang on until they eventually get out by finding tenants for their factories.
Mr Lam said he was coping by moving up the value chain, hoping that mainland competitors would be unable to produce upmarket bedroom slippers that sold for about US$10.
'We have planted our roots in the Pearl River Delta. We can't just uproot,' he said. He pins his hopes on the fact that foreign buyers have been burned by shoddy products from mainland companies and are returning to Hong Kong firms.
