Chinese Part-Time Workers Soar As Economy Deteriorates

Not only is China facing a significant risk of an economic hard landing, but, as we have noted on many occasions, the country is also facing what perhaps may be an even greater risk: social unrest.


As the economy continues to weaken, and layoffs continue to mount, China has started to relax its own labor rules in order to try and keep everyone happy... for now; as China is experiencing a surge in part-time workers. In order to control costs, but still meet whatever demand comes, Reuters reports factories are now hiring by the day instead of keeping workers around in a full employment contract. In turn, workers are happy with the arrangement of course, because at least it provides the opportunity to make a day's wage, knowing that if they are hired for that day it means there is work, and they'll get paid for their efforts.

Squeezed by high costs and unpredictable demand, some factories in southern China's manufacturing heartland are turning to a new strategy to survive: hiring workers by the day.


It is a far cry from Beijing's vision of a slick, hi-tech manufacturing future of computers and chip makers: on a warm morning in the southern town of Shiling, dozens of workers gather on a city street to haggle for a day of work making bags for $20 to $30.


Factory owners in this leatherworking town, and in those nearby, say just-in-time labor allows them to stay competitive, even if day wages can be higher, individually, than full-time salaries.


Workers, operating in a legal grey area, say they tolerate the conditions because many fear factories offering permanent jobs could fail to pay if clients dry up and the manager runs off.


"We never used to hire temporary workers, because labor costs were not very high. Our workers were on staff," said Huang Biliang, who runs a button factory in the southern city of Dongguan. "But recently we've started to hire more temporary labor."


In a stainless steel factory in the nearby town of Jiangmen, David Liang, manager of Chiefy, agrees: "Every additional (permanent) worker I hire is an additional risk."


The cost of social unrest is well known to the government, and if allowing slightly different rules of employment means that the masses will be happy, then its something officials are willing to tolerate. Although, at the end of the day, officials may have no choice but to soften their stance. As He Fan, chief economist of Caixin Insight Group points out, the manufacturing sector is shrinking, and casual workers may already be on track to outnumber permanent workers as it is.

Though China has tightened rules, officials have also expressed concerns about them. In March, Finance Minister Lou Jiwei publicly criticized the labor contract law, which requires companies to provide employees a written contract.


The same month, Guangdong province - which has raised its minimum wage at regular intervals in recent years - said it would scrap scheduled rises to the local minimum wage in 2016, and keep it at 2015 levels through 2018.


"The total employment of the manufacturing sector is shrinking," said He Fan, chief economist of Caixin Insight Group, but not the informal portion of that. He sees the shift to more casual labor as also partly led by younger workers.


"If my assumption is correct, then the casual workers may outgrow the permanent workers."


Needing to maintain employment, local authorities appear to tolerate the arrangement.

For now, workers like 39 year old Wang Binge, are happy with the part-time arrangement while looking for more stable work.

In Shiling, in China's bag capital, men and women gather in the early morning looking for a day’s work.


Factory managers in vans and on scooters each hold a sample of the bag they produce; workers crowd around them, examining the sample and discussing the per-piece wage.


Among the workers is 39 year-old Wang Binge, who until three years ago ran her own small handbag workshop nearby. The workshop was once profitable enough to allow her to buy a Toyota and build a house in her hometown in southern Hunan province.


But orders dried up, and now Wang looks for jobs that pay at least 180 yuan ($27) for about a 12 hour day.


So many factory owners have fled without paying their staff, Wang and other workers said, that they feel safer being paid cash by the day, while hoping for more stable work.

At the end of the day, if workers are even tentatively happy, it improves the chances that the government won't have to deal with further unrest. For China officials, that's all that matters at the moment.