Hong Kong’s poorer workers can profit from the Greater Bay Area, with the right skills
Gary Lai calls for a sizeable allocation of scholarship and grant money for vocational training for Hong Kong workers, so that they can benefit from the higher wages and technological shifts brought by increasing development in the Pearl River Delta
Given the tremendous promise in the development of the Pearl River Delta – or the Guangdong-Hong Kong-Macau “Greater Bay Area” – there is certainly something in it for the poor people of Hong Kong, if not the rest of the delta. Right? Not quite.
Covering less than 1 per cent of China and comprising only 5 per cent of its population, the Pearl River Delta produces more than 10 per cent of the country’s gross domestic product, exports more than 25 per cent of the total, and has attracted over US$1 trillion of foreign direct investment since 1980. The region has a higher per capita GDP than the Bohai Economic Rim and the Yangtze River Delta and serves as an important link between China and the world.
Yet, the factors that are prompting great shifts in the economy for the better are also keeping the poor and under-educated from sharing in the windfall.
First, the labour pool in the Pearl River Delta is shrinking and, as a result, wages are rising. Therefore, factory owners are moving their plants to cities – not necessarily within the delta – with better labour conditions. This would require job-seeking workers to be as mobile as these factories. This is not reasonable to assume for poor people, especially when they may have hukou (household registration) restrictions.
Companies, in order to diversify, are also redirecting their exports to the Chinese market. At best, this phenomenon is a wash for labourers, if they do not need to retrain for this market shift. At worst, poor labourers are unable to acquire the new skills at work and lose their jobs.
Second, the Pearl River Delta will see a massive investment in infrastructure. Goldman Sachs calls advanced infrastructure building with continuous upgrades a “mega trend” in the region. Greater integration is necessary for many reasons, such as political fragmentation, internal trade barriers, market separation and inadequate coordination with the urban sprawl, spatial mismatch, environment degradation, and an excessive use of scarce resources. These may cause a decline in regional competitiveness and keep regional blocs from becoming important domestic economic engines and global players.
As the Pearl River Delta retools its infrastructure, originally built for exports for logistics networks in the domestic market, it is building great projects like 6,000km of highway in Guangdong, 1,400 million tonnes of cargo capacity in five major ports by 2020, three airports: in Foshan, Huizhou, and Guangzhou, several “one to two hours commuting circles”, and the well-known Hong Kong-Zhuhai-Macau and Shenzhen-Zhongshan bridges.
These will improve industry delineation by driving cities into industrial clusters that synergise through the division of labour. But the Pearl River Delta has highly dispersed cities with equally dispersed human, physical, and educational resources, which do not benefit the poor people. They would again need to move where the projects go for low-paying work and/or retrain for new jobs.
Third, the Pearl River Delta is set on a path to automation. Migrant inflow to the delta is decreasing, and the low birth rate means the cheap labour pool is not being replenished. To make up for the deficit in productivity – now increasing at 7 per cent per year compared to 8.5 per cent in 1996 – factories will have to introduce robotics in the manufacturing process. This is now at an early stage, with China currently using 10 times fewer robots in manufacturing than a country like South Korea.
Dongguan has set aside 200 million yuan (HK$236 million) for this, Guangdong has committed 943 billion yuan to eliminate 80 per cent of its industrial workforce in three years. This is not good news for poor and under-educated people, many of whom work in plants.
The process of phasing in automation through a market-driven process, furthermore, would require knowledge in manufacturing techniques like Six Sigma, lean manufacturing, and smart automation. This would require additional education.
Finally, innovation seems to be an important trend in the delta. Cities like Shenzhen have moved beyond sweatshops to advanced manufacturing, robotics and genomics – attracting companies like Huawei, Tencent and Apple. All of this requires a highly educated workforce.
To private companies, innovation means manufacturing higher-value-added products with more advanced technologies, while to the government, innovation is a long-term strategy to produce more competitive, internationally-oriented Chinese companies, whose traditional advantage was cheap labour and the economies of scale.
The government, however, recently announced its support for innovation through creating a one-stop investment and financing information service for small and medium-sized enterprises and a one-stop intellectual property rights service for patent examination, rights protection and verification, and an innovation-oriented evaluation and incentive scheme within state-owned enterprises. These may be opportunities for the under-educated in the Pearl River Delta.
The ultimate success of globalisation depends, among other factors, on the mobility and flexibility of the labour force.
If world conditions change so that an agrarian society transforms into an industrial economy, its labour force must adapt through retraining – or be ready to be displaced by foreign workers with the requisite skills.
The poor in Hong Kong and the rest of the delta are under-educated and often unable to move for work. A sizeable cache of scholarship and grant money for vocational training should be a good start for Hong Kong’s poor labourers.
What is the Lok Ma Chau Loop?
The Lok Ma Chau Loop, an innovation and technology park jointly developed by Hong Kong and Shenzhen, is a prime example of what the poor need in the coming years.
Shenzhen, in this venture, is expected to contribute its start-ups and capital, while Hong Kong will contribute its professional expertise in scaling, branding and managing companies at a global level. Many economic activities in the Pearl River Delta – from reconfiguring the logistics from an international market to a domestic one, to building infrastructure, introducing automation, and innovating – require greater training and education. It is a good place to start to make sure that no one gets left behind.
Gary Lai was the founder and director for 10 years of the anti-poverty campaign TKO Poverty