China: Finding New Resources for Cheap, Quality Labor

China

China is finding new places in the world for cheap, quality labor resources and one of the countries they have found it in is Ethiopia. One factory owner stated that Ethiopia reminded him of China 30 years ago, and that Ethiopia is ripe for change. However, poor infrastructure, an inefficient local government and lower productivity is dampening the mood of this factory owner, who expressed frustrations with the fact that production levels at his factory in Ethiopia is not on the targeted levels that Chinese workers produce.

Transportation and logistics cost as much as four times those in China, due to Ethiopia being a developing country. It is taking two hours for trucks supplying oil and goods to get 18 miles to this factory, due to poorly maintained roads. Livestock often wander near the road and will even go into bumper-to-bumper traffic.

There is potential in Ethiopia. 80 percent of Ethiopia’s labor force is in agriculture. With the second-largest population in Africa, there is no shortage of workers here. China, however, is watching their labor pool dry up. Africa may become the new China, with global investors eyeing countries such as Tanzania, Rwanda, and Senegal. This could be a boon for Africa, which can easily fill some of the 80 million jobs projected to export from China. Justin Lin, a former World Bank chief economist, states that China’s manufacturers are losing competitiveness. China’s inland regions have been tapped dry of laborers, causing China to lose its appeal.

China, however, is finding new resources for cheap yet quality labor. The Chinese government has decided to provide more vocational training to migrant workers from inland, increasing their incomes and creating a high quality work force that is key to China maintaining and surpassing its position as a major exporter of goods. The State Council in China is also putting a plan in place that will improve services to migrant workers and enhance their job skills.

The Chinese government is looking into ways to improve the marketability of students who do not finish high school by offering those students a chance to receive an education at a vocational school. This will provide a higher quality of labor for China, and improve the chances of these students finding better paying jobs with better working conditions. China’s plan is to have all migrant workers receiving training by 2020, allowing them to acquire the skills needed to advance socioeconomically.

The lack of skills in the workforce has been noted by Chinese human resource executives, who have a growing number of clients looking for experienced workers. This is leaving companies with the opportunity to partner with these vocational schools to get the best students working at their factories. Another aspect that companies are looking at is building more factories in more inland cities, putting workers in closer proximity to their villages. This is giving employees time to spend with their families, and to send their children to school without having to lose daily interaction with them. China’s plan for finding new, cheap and quality labor resources signals a change in strategy towards economic growth and development, and shows a more compassionate side to the maligned view the world has of how they treat their workforce.

By Adrianne Hill

Sources:

Bloomberg
Xinhua
Global Sources.com

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