July 1, 2010｜China
Senior Economist, Norinchukin Research Institute, Co., Ltd.
In China, from around the end of May, the movement of factory workers demanding hikes in wages has spread nationwide. Strikes have broken out even at the affiliated component manufacturers of Japanese automobile manufacturers, such as Honda and Toyota, and there has been a spate of cases where production has stopped.
The first instance of the current wage-rise demands was at Foxconn (Shenzhen), a Taiwanese electronics contract manufacturer, with a series of suicides of its young workers. While the reasons for the suicides are probably personal, such as work pressure and relationships, what they have in common appears to be that “I don’t have hope for the future”. Workers are placed in a harsh environment, including long hours of work that is severe and at low pay, a poor living environment with a large number of people crammed into one dormitory room, and pay arrears.
Most, needless to say, are rural migrant workers or “nongmingong”, and especially those around age twenty know almost nothing of rural areas and agriculture and are the “new generation of rural migrant workers” who cannot tolerate a poor environment. How far the treatment of factory workers will be improved will greatly affect the shift of the labor force from the agricultural sector to the industrial sector, which for many years has supported China’s high growth rate. At the same time it will also be a case of grappling with the modernization of Chinese agriculture through a solution for the surplus labor force in rural areas, and with the success or failure of measures for the strengthening of competitiveness.
So then what is necessary now?
Up until May the monthly basic salary of the aforementioned Foxconn was only 900 yuan (approximately 12,000 yen). The company, which came under societal criticism, has announced that it will carry out two sets of large wage increases by this October. Salaries will double in under six months. Other foreign-invested companies too have taken the step of large wage rises, and at first sight it appears that the position of rural migrant workers has been improved. Even so, however, there is a stunning gap in real incomes vis-à-vis the urban middle class. No matter how much the rural migrant workers strive to save, “one’s own home, car, and foreign travel”, which have become the symbols of the middle class, are something completely alien.
What is becoming the greatest problem here is the household registration system, which strictly divides so-called peasants and urban residents. Rural migrant workers with a rural registered permanent residence, no matter how much they work in cities, are unable to receive the same education, health insurance, pensions and housing allowances as urban residents. Although having nothing at all to do with agriculture, they are systematically being discriminated against with the term “rural migrant worker”. This discriminatory treatment is greatly opening up the difference in real incomes of rural migrant workers and urban residents.
The rural migrant workers—especially the new generation of rural migrant workers—who have witnessed such disparity and discrimination, will probably not be satisfied with some increase in their wages. For the rural migrant workers to acquire the same rights as those of urban residents, and to be able to enjoy the same treatment, radical systemic reform will be essential. The Chinese government has been undertaking, on a trial basis and in limited areas, the reform of the household registration system, yet they are looking toward a period of reform that will close the gap overall. At the same time as this, a policy switch is also imperative to raise the incentives for private-sector firms in research and development and job creation, etc., with the country not allocating the budget in skewed fashion to the state-owned economy. This is because it is the very development of the private-sector economy which makes possible the sustained movement of the labor force from rural areas and heightens the competitiveness of the Chinese economy.
If China is to maintain social stability and seek sustainable economic growth, it is coming to the stage where it has to clearly indicate a path whereby the rural population is able to transition to the middle class, and not just the sleight-of-hand reform of the treatment of rural migrant workers.
[Translated by ERINA]