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Edition: U.S. Article Save Email Print Reprints Most Popular Most Shared Euro heavy as EU disappoints, Aussie near 10-year high | Video 12:04am EST Factbox: Fashion world in shock over Alexander McQueen death 11 Feb 2010 U.S. dismisses Iranian uranium enrichment claims 11 Feb 2010 Rep Patrick Kennedy won't seek re-election: report 11 Feb 2010 UK govt forced to publish U.S. torture allegations 10 Feb 2010 Yahoo executives address "misconception" about search 11 Feb 2010 Stores looking to NY Fashion Week to lure shoppers 10 Feb 2010 China export hubs fear labor exodus over new year James Pomfret SHENZHEN, China Thu Feb 11, 2010 9:16pm EST Related News China sees sexual frustration causing social problems Mon, Feb 1 2010 China sees sexual frustration causing social problems Fri, Jan 29 2010 SHENZHEN, China (Reuters) - After six months working long, grinding hours churning out a stream of sports goods on a factory line in southern China, Wang Lili tried to quit her job, only to be rebuffed by her bosses who threatened to fine her instead. World | China "A lot of people want to quit but they won't allow them to," said the slim, pony-tailed factory girl over a meal in Songgang, where her employer, Leader Sporting, makes skating equipment for top Western brand K2 Skates in the export hinterland of the Pearl River Delta. "I feel tired all the time. The pressure on us is growing and I can't stand it any longer." Wang's plight reflects a seemingly growing trend in China's export hubs, of factory bosses scrambling to recruit and retain workers, sometimes illegally, as Western orders for Chinese goods gather pace again, while labor shortages loom. "The factories are thinking of all kinds of tricks to keep the workers, including withholding wages and imposing fines," said Chen He, another worker at Leader Sporting who is clocking more and more overtime and lives in a grimy dormitory room for twelve people that provides no electrical sockets or lockers. Last year's annual Lunar New Year holiday proved a watershed for China's vast migrant worker population, as an estimated 20 million workers were laid off and forced home to an uncertain fate as factories shuttered during the height of the global financial crisis. Increasingly though, in a stark reversal, migrant workers are choosing to leave despite a flush of jobs as firms clamor to hire again. Better wages and job opportunities in China's poorer interior are partly the reason, with less incentive for enduring tough, homesick, stints on factory floors in coastal hubs such as the Pearl River Delta and Yangtze Delta in eastern China. "The rate of resignations among workers is very high," said Liao Bangli, a recruitment manager at the near deserted Tiandi employment center in Songgang, a dusty town in western Shenzhen. "Because the labor market is good now, everyone is less insecure. Fewer people are coming out to the Delta and more and more people are going home. Some enterprises can only operate at around 70-80 percent of their production capacity because of labor shortages," Liao added. A "MILLION" WORKERS SHORT This year's Lunar New Year holiday, a traditional time when migrant workers return en masse to rural villages and inland provinces for an emotional homecoming after a year of hard labor, is making industrialists especially nervous. The influential Federation of Hong Kong Industries sees a fresh wave of departures coupled with ramped up production targets, curtailing the potential and manufacturing capacity of Hong Kong-owned factories clustered in the Pearl River Delta. "We will have a shortage of around one million workers (after the Lunar New Year)," Cliff Sun, its chairman told Reuters. "Factories which hire a lot of casual workers like the toy industry, lower-cost garment manufacturers, the shoe-makers ... are quite frightened that they can't hire enough people," he said, though he adds the outsourcing of production to nearby provinces like Jiangxi and Hunan could ease some of this strain. Last month, eastern Jiangsu province, part of the Yangtze River Delta which has in recent years overtaken the Pearl River Delta as China's major export hub, hiked its minimum wage by 13 percent to 960 yuan. The move was telling, hinting at the gravity with which policy-makers saw a labor supply shrinkage, particularly given the risk of squeezing still vulnerable exporters facing wafer-thin margins to attract hard-up Western clients. "Export factories have not fully recovered, but Jiangsu's provincial officials may feel that hiking minimum wages is inevitable if the province wants to attract migrant labor post the Lunar New Year holiday," wrote Ben Simpfendorfer, a China economist for RBS in Hong Kong, in a research note. Authorities in Guangdong, home to the Pearl River Delta which churns out around a third of China's exports, are also reportedly considering a minimum wage hike after Chinese New Year. Liu Kaiming, who heads the Institute of Contemporary Observation, a Shenzhen think-tank, thinks there's an 80 percent chance of a hike. The Pearl River Delta's competitiveness and allure is widely considered to be falling further behind the newer and more advanced manufacturing landscape of its eastern rival. What's more, China's steady export recovery, including January's 21 percent rise from a year earlier could boost the case for yuan appreciation, with the currency having been locked since mid-2008 to give exporters some breathing room. "If it's going to cost another 20 percent (to produce our goods) it will be extremely dangerous for us," said James Lim of COG Design, which manufactures slick, educational toy brands such as Dino Horizons and Eino-O Science in the Pearl River Delta. "Down the road we may have no choice but to move our factory to the northern part of China to make our costs lower." Free market forces may yet recalibrate sticky wage rates in the absence of explicit policy initiatives, analysts say, with anecdotal evidence of firms not only using tactics such as cheating migrant workers to stay on, but also plying them with perks such as holiday return bonuses and discretionary pay hikes. "If they raise wages, for sure, more workers will come," said the head of a grassroots labor rights advocacy group in a western Shenzhen suburb, who declined to be named. Still, Leona Lun, a marketing manager at a large toy car maker that employs nearly 6000 workers and forecasts 20 percent revenue growth this year, is troubled by the labor conundrum. "It's very difficult to find workers," she told Reuters. "I can't understand, nobody understands why." (Editing by Megan Goldin) World China More from Reuters IMF offers to help Greece; EU disappoints markets MUMBAI (Reuters) - The International Monetary Fund on Friday joined the European Union in pledging support for Greece in its struggle to bring its ballooning budget deficit under control and contain its debt crisis. | Video Toyota chief plans U.S. trip as Congress seeks answers | Video Asia shares up on EU Greece pledge, euro dips | Video Senators unveil long-awaited jobs bill Bill Clinton doing well after heart procedure Ex-Goldman programmer indicted over HFT code theft » More Top News Analysis: Policy fears dog China stocks Worries over China's next clampdown have jittery investors taking profits where they can and reluctant to hunt for bargains. Full Article Should Obama push harder on yuan? China CPI inflation slows, lending brisk China Jobs bill breakthrough Tax breaks for businesses and fresh construction projects feature in the Senate's $87 billion jobs bill. Full Article | Video Factbox: Tax breaks, pension relief Obama: No jobs, no recovery Obama tied in generic 2012 matchup Dems can't escape Palin questions POLITICS © Copyright 2010 Thomson Reuters Editorial Editions: Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom United States Reuters Contact Us Advertise With Us Help Journalism Handbook Archive Site Index Video Index Analyst Research Mobile Newsletters RSS Podcasts Widgets Your View Labs Thomson Reuters Copyright Disclaimer Privacy Professional Products Professional Products Support Financial Products About Thomson Reuters Careers Online Products Acquisitions Monthly Buyouts.com Buyouts Europe: Buyouts Conferences: Venture Capital Journal EVCJ International Financing Review International Securitisation Report Project Finance International PEhub.com PE Week Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests. NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.

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