Manufacturers in China's inland provinces are now competing with factories in the coastal areas for workers. Not only are they targeting the same group of migrants, they are offering similar wage levels as well.

The labor shortage is not a new challenge for China's export manufacturing industry. The current deficit, however, is said to be more severe than in past years. In fact, one month after the annual spring festival, more than 90 percent of factories are estimated to still be 10 to 30 percent short of workers. This deficit is 3 percent higher than in 2010.

Unlike in previous years, factories in the southern and eastern provinces now have to compete with those in the central and western regions for workers. Even Sichuan province, which traditionally has been where most migrant workers come from, is experiencing a shortage in labor, whether skilled or not.

Wages remain the key point of contention. Workers think living costs are climbing much faster than minimum wage levels, particularly in Shenzhen in Guangdong province, Hangzhou and Wenzhou in Zhejiang province, Beijing and Shanghai. Frequent and large rises in food prices, rent and other daily necessities almost cancel out whatever salary increases workers may have received.

Unfortunately for factories along the eastern coast, manufacturers in the inland areas have been raising wages as well, to the point that salaries are now nearly on a par with those offered at traditional hubs. The cost of living in the interior region, however, is just one-third that in the southern and eastern provinces. Because of this, more migrant workers now prefer to find jobs near their hometowns rather than head to factories along the coast.

Small factories have actually been mushrooming in the inland provinces, particularly in the urban-rural integration areas. These plants typically hire workers in nearby villages, offering monthly salaries that range from 1,000 to 1,500 yuan ($152 to $228). Free accommodation is provided by some factories as well.

As of February 2011, most manufacturers in the Nanchang Industrial Park and the Hengfang Laobing Industrial Park in Bao'an, Shenzhen, are offering basic monthly wages of 1,100 to 1,500 yuan. In fact, small and midsize consumer electronic factories in the area offer 1,200 yuan ($182) monthly, on average.

While Shenzhen's city administrators raised the minimum wage to 1,320 yuan ($200) per month beginning March 1, this base salary is still within the range being offered by factories inland. In addition, one of the female workers at the Nanchang Industrial Park said that although it seems wages are rising, their workload and overtime hours have also been increasing.

Copyright © 2011 Trade Media Holdings Ltd. Copyright © 2011 Trade Media Ltd. All rights reserved.

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