February 5, 2009 / 3:08 PM / in 9 years

Workers return to bleak future in China export hub

DONGGUAN, China (Reuters) - Train and bus stations in China’s southern export hub are swollen with migrant workers returning from their annual holiday -- but the signs are not good for many hoping to find their factory open or seeking new jobs.

Fixated on social stability, China’s ruling Communist Party is watching closely what happens in the Pearl River Delta, where thousands of factories have closed or slashed work forces because of a slump in export orders.

“How can I be optimistic?” asked Xie Fuyuan, a square-jawed job seeker, hauling two bundles of belongings at the bus station in Changan, one of the many towns in this wedge of Guangdong province where belching factories have replaced rice fields.

Xie said he had spent the past week trawling the streets of several factory towns in a door-to-door approach favored by poorer workers unable to afford rising fees at job centers.

“Before, as long as you showed up you could get a job. But this year it’s not possible,” said the muscular, 26-year-old Xie.

The competition for once-plentiful factory jobs is heating up among migrant workers, raising the risk of social tensions as millions arrive from distant villages after the Lunar New Year break, despite bleak employment prospects.

For the past three decades, the factory zones of coastal China have offered an escape from harsh and poor-paying farmwork for many millions of rural migrants. The industrial work can be tough and dangerous, with long hours for meager wages. But now even that passageway from rural poverty is shrinking.

Xie, who hails from a poor mountain village in western Guangdong province once earned around 1,200 yuan ($175) a month in a toy factory, which he used to support his family back home.

Now down to his last few hundred yuan, he says he can only afford to hold out for another three days.

WORKERS NOT DETERRED

About 20 million Chinese rural migrant workers -- or some 15 percent of the country’s total -- have lost their jobs as the nation’s growth has faltered under a global economic slump.

But these bleak numbers will not deter millions of migrants from crowding trains and buses to travel thousands of kilometers to try their luck in export hubs such as Guangdong, Fujian and the Yangtze River Delta.

Dragging two suitcases in a wobbly line while jostled by migrant workers spilling from trains at Dongguan’s East Railway Station, Hu Mengmeng, 25, said she was determined to find fresh work after losing her previous job before the Chinese New Year.

“I wanted to come back early this year to find a better job,” said the chirpy factory girl after a day’s journey from her village in central Hubei province to Dongguan, a hub for foreign-invested factories that have been hard-hit by shriveling demand for China-made goods.

“I heard many people say that due to the financial crisis, it’s difficult to find a job anywhere,” she added, before heading to a huge bus terminal where touts herded workers onto buses bound for numerous smoggy factory towns spread across the delta.

In Changan town -- known for its clusters of electronics and light-manufacturing factories -- passenger flows at bus stations were picking up as businesses began opening.

Other plants were chained or put up for rent.

“I went to many factories and they’re all closed,” said Xie.

Other migrants interviewed across the Pearl River Delta complained of rising petty theft and scams, including job agencies charging deposits for jobs that never materialize.

Labor disputes over wage arrears and unfair dismissals have also increased, with authorities perceived to be turning a blind eye to violations to help firms get through the downturn.

“It’s very difficult at the moment, while many workers will somehow find a way to survive and make a living, it will increase social tensions and this strain could spark social instability,” said Liu Kaiming, the head of the Institute of Contemporary Observation in Shenzhen that advocates labor rights.

“February and March are the most critical periods for China’s export enterprises. If orders fall 20 percent, I believe nearly 10 percent of China’s total processing factories could close and cause another 10-20 million layoffs,” Liu told Reuters.

THREAT OF UNREST?

Factory owners meanwhile, see more small and medium-sized firms folding or suspending operations, leaving limited scope for re-employment opportunities in the short term.

“From what I know, a lot of factories are pushing back their opening to the middle or late February,” said Eddie Leung, a Hong Kong industrialist and head of the influential Dongguan Association of Enterprises with Foreign Investment.

“We may see employees being asked yet again to come back to work later, for example to push things back two months till April. I expect that in the second quarter some orders should start increasing again,” Leung added.

Economists differ on where this will lead.

Last year, Guangdong, which makes nearly a third of all of China’s exports, suffered its toughest year since the Asian financial crisis a decade ago, with GDP growth slowing to 10.1 percent, while export growth tumbled to 5.6 percent last year from 22.3 percent in 2007.

Yiping Huang, Citigroup’s top Asia economist, said the number of migrant workers laid off could double to 30-40 million eventually, if government stimulus plans fail to offset dwindling western orders for Chinese goods.

UBS economist Tao Wang played down the threat of large-scale social unrest.

“The scale of job losses, as large as it may be, is not really unprecedented in China,” she wrote in a January research note, referring to when millions of workers lost their jobs when China reformed its state-owned firms between 1998 and 2002.

“Most of the migrant workers do have a family plot of land to fall back to in the rural area.”

But many migrants, determined to scramble into urban prosperity, do not relish that idea.

“We just want a steady job in a relatively stable factory -- one that won’t be open today and suddenly go bust tomorrow,” said He Tao from northwest Shaanxi province as he stood outside a job center in Changan.

Editing by Dean Yates

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