Hong Kong Manufacturing SMEs: Preparing for the Future

14The implication is that there may be a permanentshortage of the types of workers generally employedby Hong Kong manufacturing SMEs in the PRDgoing forward. This concern was echoed by themanagers interviewed for this study. Intervieweesindicated that the global economic crisis made analready troubling situation worse because manyworkers without full-time employment returnedto their home provinces and have not returned.Many that returned in 2009 could not findwork. Some managers believe that many of thedisappointed workers will not come back again. 14Interviewees also pointed to the success of theChinese Government’s stimulus package in creatingemployment in interior provinces that have beenthe sources of migrant labour.Interviewees also expressed the view that the impactof an increasing male-female ratio and the onechild policy is now being felt in the manufacturingsector. Many assembly manufacturing industriesemploy young female labour, and there are nowfewer and fewer young females available for workin general. In addition, young women now havebetter educational opportunities and can becomedoctors, lawyers, teachers, and hotel workers,occupations that have higher status than jobs inmanufacturing. The growth of the service sectorand office employment in China is absorbing many14 ESA Project Interview, 2010-04-07.15 BMI estimated number, “Country snapshot: Indiademographic data,” India Defence & Security Report, Q12010.16 Minimum monthly wage in Ho Chi Minh City and Hanoi asreported in Pacific Bridge Inc., “New Minimum Wage Levelsfor Foreign Enterprises in Vietnam,” 3 March 2009. www.pacificbridge.com.17 ILO, Labour Force Survey (for persons aged 15 years andover).18 ILO, Labour Force Survey (for state-owned units, urbancollective-owned units and other ownership units).19 Department of Human Resources and Social Security ofGuangdong Province, “Guangdong’s new minimum wagestandards will be implemented starting 1 May 2010.” www.gd.lss.gov.cn.people that would have gone into manufacturing inthe past. Even within the manufacturing sector, thegrowth of the Yangtze River Delta, the Bohai Rime,and other parts of China creates competition forworkers. As a result, there are many more optionsfor young Chinese workers today than there were15 to 20 years ago when manufacturing in thePRD was the only option for many to get out ofsubsistence agriculture in the interior of China.Wage IncreasesLabour costs in the Pearl River Delta grewsubstantially from 2002 to 2008 due to rises in theminimum wage and greatly expanded demand forworkers. During this period, exports and industrialoutput from the Pearl River Delta and YangtzeRiver Delta regions grew in excess of 20 per centper year and 15 per cent per year respectively.Average migrant worker wages in China wentfrom around RMB 780 per month in 2004 to RMB1,000 per month in 2006. Minimum wages inthe main manufacturing cities of the Pearl RiverDelta were raised on the order of 18 per cent from2002 to 2006 and by another 10 per cent in 2007.During that period, many factories were payingsubstantially above the minimum in order to obtainworkers. As a result, average wages in the mainmanufacturing cities of the PRD grew by over 20per cent from 2002 to 2006 and another 10 to 15per cent in 2007.By 2008, the PRD was no longer considered aparticularly low cost location for unskilled or semiskilledlabour. According to the InternationalLabour Organisation (ILO) and Business MonitorInternational (BMI), in 2008, monthly wages inmanufacturing were on the order of US$57 inIndia, 15 US$69 in Vietnam, 16 US$87 in Indonesia, 17and US$290 in China. 18Since the minimummonthly wages were US$161 in Guangzhou,US$161 in Shenzhen, US$134 in Dongguan,US$134 in Foshan, and US$140 in Zhuhai, 19 thefigures indicate that most manufacturing workersin China earned well above the minimum. Takingthe apparel manufacturing industry as a specificexample, labour costs in 2008 were US$0.22 per