Holiday travel rush becomes another source of increasing cost for Chinese companies

09:30, February 16, 2010      

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This year's Spring Festival holiday was special and sweeter to Liang Xiulong, a 39-year-old migrant working at a textile dyeing company in East China's Zhejiang Province.

For the first time in her life, she had a ride on an airplane, and for free.

The 1,700-km journey to her home in Southwest China's Sichuan Province took no more than three hours.

"I wouldn't certainly travel by plane if I had to pay for the ticket myself," Liang said. A one-way air ticket costs more than 1,600 yuan (234 U.S. dollars), almost equivalent to her monthly salary, while a train seat needs no more than 500 yuan.

In previous years, the journey took her about 40 hours on packed trains. At worst, she had had to stand for most time in the journey without a seat.

"But no matter how hard it is, (I) want to go home and celebrate the (Lunar) New Year," she told Xinhua.

For millions of Chinese migrant workers, the weeklong Lunar New Year holiday, the most important traditional festive event in a year, is best chance to see their families each year and celebrate the occasion with beloved ones. Nothing could deter them from making the journey. This year's New Year holiday began on Saturday.

Liang's employer paid the air ticket. She enjoyed the free ride as one of the best 10 employees of the company based in Shaoxing County, Asia's biggest textile base.

This year, more than 100 employers in Zhejiang jointly organized three chartered flights to fly home about 1,000 of their best employees coming from Sichuan Province.

Sichuan is a major source of migrant workers for Zhejiang, the southern wing of the Yangtze River Delta, which is one of China's most important export-oriented industrial heartland. More than 2 million Sichuan-based migrants work in Zhejiang.

Free air or rail tickets is just one of the many measures that enterprises in Zhejiang and other coastal industrial regions take to lure migrant workers, all of which certainly increased their cost.

For fears of worsening labor scarcity, companies in Zhejiang and other regions have also offered, or promised to offer, pay rise for all workers, plus higher meal allowances and better medical insurance.

Government data showed wages of migrant workers in Zhejiang, Jiangsu and Shanghai had doubled within the last five years, increasing at a rate twice as much as GDP growth rate during the same period.

Jiangsu, the northern wing of the Yangtze River Delta, announced late last month to increase workers' minimum wages by 12 percent to 960 yuan per month.

Some enterprises in the southern Guangzhou-centered Pearl River Delta had also voluntarily increased payment for workers given worker shortage since late last year owing to an accelerating economic recovery.

Adding to the fear of labor shortage is that fewer people in such inland provinces as Sichuan and Anhui are willing to work in companies hundreds of miles away from home.

"To migrant workers, working at factories in coastal regions does not seem as attractive as it used to be. They have more job opportunities at home as the country pours investment into inland regions," said Chen Shida, head of Zhejiang's Research Institute of Labor and Social Welfare.

Free tickets and pay rise lead to increasing labor cost for Chinese labor-intensive companies and force them into a dilemma. In addition, growing land price is increasing production cost for China's manufacturers and is whittling away their profits.

"How much can the low-end manufacturing companies raise workers' wages? We only earn one U.S. dollar at every 100 pairs of socks we sold," said Weng Rongdi, Chairman of Langsha Group, the country's largest producer of socks and stockings.

Zhuo Yongliang, a researcher with Zhejiang Provincial Institute of Development and Reform, warned that Chinese manufacturers would be facing lasting pains due to the diminishing advantage of low cost.

Zhuo and other analysts suggested Chinese enterprises should change their growth pattern and seek for more profits through technological upgrading, innovations and branding.

Source: Xinhua
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