How old-school factories stay alive in China's south

Squeezed by high costs and unpredictable demand, some factories in the southern manufacturing heartland are turning to a new strategy to survive: hiring workers by the day.

It is a far cry from Beijing’s vision of a slick, hi-tech manufacturing future of computers and chip makers: 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 US$20 to US$30.

Factory owners in this leatherworking town and in those nearby say just-in-time labour allows them to stay competitive, even if day wages can be higher, individually, than full-time salaries.

Workers operating in a legal grey area say they tolerate the conditions because many fear factories offering permanent jobs could fail to pay if clients dry up and the manager runs off.

“We never used to hire temporary workers because labour costs were not very high. Our workers were on staff,” said Huang Biliang, who runs a button factory in Dongguan.

“But recently we’ve started to hire more temporary labour.”

In a stainless steel factory in the nearby town of Jiangmen, David Liang, manager of Chiefy, agrees: “Every additional [permanent] worker I hire is an additional risk.”

The result is a section of the nation’s manufacturing base that has adapted to volatile conditions and higher wages – keeping the country’s hold on some labour-intensive work that it might have lost to cheaper regions elsewhere in Asia.

Struggling companies do occasionally turn to temporary workers, but this is a change for the mainland.

People in Huadu, Guangdong, gather at a square where employers seek workers for the day. Photo: Reuters

The authorities have usually sought to crack down on precarious employment, introducing tougher rules in 2012 to protect so-called dispatch workers.

The government wants to shift away from piecework towards a hi-tech consumer economy.

Shiling’s experience suggests, however, that casual labour could help the country’s plethora of small manufacturers remain sellers of cheap shoes, toys and stainless steel pans for a few years yet.

Casual work has been thriving in pockets of the industrial landscape. This is especially the case where clusters have created a base of experienced workers: in toys, garments and in the bag and stainless steel industries in Guangdong province.

While the use of undocumented day labourers by factories is hard to capture in statistics, academics, consultants and factory managers say it has risen since the financial crisis and accelerated in the last two years.

There are no official statistics on informal work, but surveys indicate that mainland factory workers are leaving their jobs more quickly.

In surveys by Laborlink, a San Francisco-based polling group, the percentage of mainland workers who said they had been in their jobs less than one year rose from 33 per cent in 2014 to 40 per cent in 2016.

(SOUTH CHINA MORNING POST)