Saturday, 14 February 2009

"Eat bitterness and endure hard labor"

Sometimes economists concentrate too heavily on the big picture. As always, macroeconomics is the summation of individual behaviour and experience.

The title of this blog post is a notice for those wanting a job. I suspect a few more Western employees should be as equally truthful when advertising employment opportunities.

The story of one man's search for employment in China is revealing on many levels. Certainly a first for "Buffalo News" on this blog.

The relationship between rural-urban migration is highlighted. Family land is still crucially important - will this continue through generations? Once sold there will be nowhere to return. It is also interesting that this one man blames America for his economic woes. That may be true to an extent although it was US consumer greed that got him a job that would not otherwise have existed.

The irony of course is that average Joe in America is blaming the Chinese (and WallSteet) for his financial and employment woes.

My current prediction for China: DEFLATION. Hints of it are here in this article. The result? Carnage as the Chinese save more, spend less and add to the global crisis. The Chinese stimulus package is unlikely to be enough in my opinion. The next step towards global meltdown is nearly with us.

The other interesting observation is that many workers are "refusing" to work for "insultingly low" pay. Unfortunately for them many others will and this will provide further deflationary pressures. Deflation is around the corner.

One worker's struggle for a factory job in China [Buffalo News]

Xian Yuguo has a tattoo on his left arm with the Chinese character for wealth. But the 20-year-old was growing worried as he competed for a job with tens of millions of laborers in China's increasingly wobbly economy.

He had heard a tip about work at a toy factory in this industrial city. Time was running out.

"I've only got about 400 yuan" - $73 - "in my pocket, just enough to last me a week," he said, being bounced around in a crowded bus speeding down a southern China highway. "If I don't find something by then, I've got to go back home and just hang around my family's tangerine farm."

It was Xian's fourth day on the road during China's peak job-hunting season, when millions of rural workers migrate back to factory towns after the Lunar New Year holiday.

How they fare at finding jobs will be a key barometer of just how badly the global economic crisis is hitting China.

In past years, laborers were snapped up in the industrial zones of Guangdong province, often called the world's factory floor. But the once ravenous appetite for Chinese-made goods is shrinking: China this week said its exports plunged 17.5 percent last month from a year earlier. About 20 million of China's 130 million migrant workers lost their jobs last year, the government said.

"It all started in the U.S.," said Xian, whose short muscular body and blue warm-up suit made him look like a gymnast. "The Americans messed things up, and we just need to cope with it."

Jobs still exist, particularly for the skilled. But Guangdong's labor bureau has warned that of the 9.7 million migrants expected to flow back to the province, 2 million would have a slim chance of finding work.

Many carry only enough money to last about a week, raising fears of a surge in crime by roving groups of jobless migrants lingering in the cities. There also are fears of instability in the countryside if restless unemployed workers return home.

"The social pressures will be enormous in 2009," Pieter Bottelier, an economics professor at Johns Hopkins School of Advanced International Studies, said at a recent conference in Washington, D.C.

And wages are falling from boom-time levels, meaning workers will have to settle for less.

At a job fair in Dongguan, one of Guangdong's biggest manufacturing cities, recruiters sat behind large sign boards plastered with help-wanted notices from factories that make everything from iPods and furniture to Adidas and Reebok sneakers.

Zhang Ni, a willowy 23-year-old migrant, wasn't impressed. Most jobs were paying the minimum wage of 770 yuan ($113) per month. Zhang, from central Hubei province, wasn't ready to go that low, even though she had already been searching for five days and was almost out of cash.

In the past couple years, Zhang found work in a day or two because she has five years of experience in electronics plants.

"I used to work in a factory making flash drives for 1,600 yuan a month," she said. "Now I'd be happy to get 1,200 yuan. Before I came here, I was offered a job for about 700 yuan a month at a shoe factory in another city. I can't accept that. I'd rather go home."

Employment agent Meng Jinping accused her and two friends of being too picky. "I've already told you about several jobs. There's plenty of work. You just don't want to do it," he said.

But after the women shuffled away, Meng acknowledged that many entry-level factory jobs don't really offer a living wage.

Hundreds of thousands of workers arrive daily in Guangdong's capital, Guangzhou, once known as Canton. Most arrive by train from the frigid northern provinces, stepping into the subtropical weather still dressed in parkas and long underwear.

Xian, the worker with the "wealth" tattoo, arrived after a 15-hour bus ride from his village near the Vietnam border.

Xian said his job search began at a cosmetics factory that a friend said was hiring. But the plant was only paying about 800 yuan ($118) a month - a wage he found insultingly low - and he wouldn't get his first paycheck until he worked for three months, he said.

Another friend gave him a tip about a position at a factory making women's handbags, but it only paid 20 yuan ($2.90) a day for eight-hour shifts.

"That's what people got paid in the 1980s. This is a new era. I'd rather go home than accept anything below 1,000 yuan a month," he said. "These factories think they can pay us less because of the financial crisis."

Xian traveled with four of his boyhood friends. The thin young men looked like a touring boy band with their moppy hairdos, tight black jeans and clingy T-shirts. Xian was the leader, and the other guys took turns carrying his small black suitcase.

After two days in Guangzhou, they followed another tip that a toy factory in Dongguan was hiring. They boarded a bus packed with groggy workers.

Once in Dongguan, the men checked into the shabby Golden River Guesthouse, sharing two rooms that each cost 10 yuan ($1.50) per night. The bathroom consisted of a plastic bucket under a faucet and a toilet on a balcony. The building was littered with used plastic takeout food containers. Trash was dumped in the stairwell.

The next morning, Xian walked a few blocks to the toy factory. A tattered white sheet of paper glued to the front gate said the plant was hiring entry-level workers between the ages of 18 and 35 with a junior high education. The notice said applicants had to be able to "eat bitterness and endure hard labor."

After a 15-minute interview, Xian emerged with the news he could move into the factory dormitory in the evening and begin work the next morning.

"I'm getting paid 1,200 yuan ($175) a month. It's OK, just above my bottom line," he said.

His friends were hired by a nearby plant making electronics parts. They celebrated with a breakfast of soybean milk and rice noodles.


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