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Migrant workers worst hit by textile industry slowdown

The global economic slowdown, combined with increased mechanization in the textile industry, has made life extremely difficult for unskilled migrant workers in China’s silk capital, Shengze, in southern Jiangsu province.

On 13 September 2008, China Central Television’s Economic Half Hour reported that many small and medium-sized textile factories in Shengze had halted production and laid workers off. Those migrant workers out of a job had little prospect of finding alternative employment but even so most still preferred to stay in the city rather than return to their home village.

The program took viewers into the textile factories of Shengze and into the homes of workers and revealed the plight rural migrants had to endure just to earn a minimal wage in the city. To view the program in Chinese, click here, or read the translated extracts below.

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China’s economy is facing a severe test, and the textile industry is feeling the pressure most intensely. There have been predictions that one-third of Chinese textile enterprises would go under, with over four million workers laid off. This has not happened yet but could it happen in the future? Recently, our reporter Sun Jing headed to the Chinese silk capital of Shengze, located in the municipality of Wujiang in Jiangsu, to investigate the worker layoff situation.

Small and mid-sized textile enterprises halt production - workers feel dual hardship

In China’s silk capital, Shengze, there are over 5,000 shops clustered in around the silk market.  It has been called the number one cloth market in China, but according to market indices business has been falling off at an alarming rate over the past half-year.

At present, Shengze has 2,400 textile enterprises spread out among over 30 villages in and around Shengze. These enterprises have absorbed a quarter of a million workers from all over the country. If all of these textile enterprises go under, what will happen to these workers?

Reporter: “The village of Hong’an is only five kilometres from the centre of Shengze, yet its appearance is completely different. One can see textile enterprises everywhere, and surrounding them is rented housing, home to many migrant workers. During our first two days in Shengze, we met Pan Shengchun, a worker from Anhui, and arranged to come over to his home today for a look.”

“Pan’s house is in front of us here, in this compound where many migrant workers live.”

Today Pan Shengchun will work the night shift, and his wife Zhang Xianrong has just come home from yesterday’s night shift, so they are both at home. During August, not many families had two people in work like Pan and Zhang.

Pan: “This month I was out of work for over a week.”

Zhang: “They’ve had almost no shifts in August. We’ve just worked a few days recently, and worked one day on September 3. The rest of the time, work has basically stopped. In July we only worked eight shifts.”

Pan Shengchun, his wife, and his 18-year-old son are crowded into this one less than 15 square metre room. Life is quite inconvenient, to say the very least, but they don’t want to pay another 170 yuan to rent another room. They cannot spare another 170 yuan from their monthly wages.

Pan: “One shift pays 85 yuan, so if they stop a shift, I’m out 85 yuan.

Under normal circumstances, Pan would work 20 shifts per month, working for 12 hours and resting for 24. This would pay 1,700 yuan, but due to the work stoppages in August, the most he could earn was 1,200 yuan. This month, Zhang could only earn 800 or 900 yuan. A 2,000-yuan income puts them in dire straits; living as Spartan an existence as possible with only the basic necessities of life. They can only hope the performance of the company will improve but most enterprises are struggling.

Company worker: “These days, you’re doing okay if you aren’t losing money, but we are adding inventory that can’t be sold.”

Reporter: “You can see a lot of small textile enterprises in Shengze. Most of them have only 30 or 40 machines and ten or 20 workers. These companies are mostly working hard just to get by; some are closing down for a period and then starting up again. Although some are still in production, they are increasing inventory, like the company behind me here. According to locals, they haven’t been operating since the Chinese New Year. For companies like this, no one is sure who will make it.”

Zhongxing Weaving Factory is one of those small companies with little confidence in the future. They have only 24 machines and only need two loom weavers per shift. They have closed down for nearly a month this year, and yet they still have not expended their inventory. The white cloth piled up inside the factory has already begun to turn green with mould.

Factory Manager Zhang Longxi: “The industry is not doing well. It is hard to make any sales. It is basically like this for all of Shengze now.”

But Zhang Longxi does not want to stop production except as a last resort. Stopping production can shorten the life of the machines and make product quality unstable, not to mention lose workers.

Zhang Longxi: “If we stop production, the workers leave; so we can only start and stop and start and stop. We could hire people again when the situation improves, but I worry that it will be hard to find experienced workers.”

The factory where Pan Shengchun and his wife work is not doing well this year, either, but the couple has no intention to leave. They can’t get jobs at the good companies, but don’t want to work for the bad companies, either. Most importantly, their factory has withheld 400 yuan of Pan’s earnings each month; it had added up to 3,200 yuan by August. Along with the 3,000 already on collateral, if he chooses to leave, he worries that he will never get all of this money.

Pan: “It could be like this – they give you 70 percent and deduct the rest. If you ask for it all you will be out of a job.”

There are 30 migrant worker households in the courtyard where Pan’s family lives. Though crude and jumbled, it is very clean. They work very hard, hoping to have a better future, but the factories where many of them work are struggling and the workers have no option but to be phlegmatic.

Pan: “If you don’t have any money, what is your approach? One day at a time.”

Zhang Longxi started his company in 2002, and by 2004 was able to build a second factory. Between the two factories, he planned to build sheds to use as warehouses, but he didn’t realize that the fortunes of the textile industry would shift like the wind. Zhang was not able to further expand production, and so his second factory is now used as a warehouse, and the area intended for the warehouse is overgrown with weeds. Zhang is not sure how long he can keep his business going.

Zhang Longxi: “If things stay like this, then it’s very hard to say. We may have to stop production again if the time comes.”

Can larger, more productive companies provide new jobs for workers?

There are not many factories that have permanently shut down or gone bankrupt in Shengze, but the owners of virtually all small and mid-sized enterprise complain that it is hard to do business and that their factories are continually halting and re-starting production. Workers like Pan Shengchun and his wife can only go to work, if there is work for them to go to, otherwise they wait and rest at home. They feel that life is difficult. If the small company where they currently work goes under, can those few companies in town that are larger and perform better provide them new jobs?

The Deputy Director of Shengze’s Labour and Social Security Office, Zhu Naiyan, says, “As the textile industry mechanizes, companies that originally used large numbers of workers are actually using fewer.”

With assets of US$20 million, the Hengli Group is the biggest textile enterprise in Shengze. It has spent tens of millions of yuan building 17 dormitories for its workers, and on campus there are a decent range of amenities including restaurants, laundries, post offices, banks, internet cafes, clinics, supermarkets, and entertainment facilities. Workers can live on campus for only 30 yuan per month, and a second worker can move into a single room at no extra cost. Employment is relatively stable at a company like this, and people like Pan Shengchun and his wife have little hope of getting in.

Ding Jianzhong, Deputy General Manager of Jiangsu Hengli Chemical Fibre Co., Ltd., says, “We don’t hire personnel by posting help-wanted advertisements; we hire them straight out of professional vocational schools in each province. This way, having workers with a vocational education, their quality is a bit higher.”

Because Hengli Group’s labour costs are higher, it has sought to increase productivity, as Ding explains: “Hengli Group is growing continually and, in that process, we are not adding new employees, but are looking to increase labour productivity. As a result, the number of employees needed for every 10,000 yuan in production value, and the number of employees for every 10,000 tonnes, have both declined by 20 percent.”

Ding tells our reporter that Hengli Chemical Fibre had at most 6,500 employees and now only has 5,000. The surplus workers went to their new textile plant, Boyada Textiles, a textile factory with 530 weaving machines. In the large workshop full of roaring machines, one sees few people, and monitoring instruments indicate that at this time the productivity of the machines is 98 percent. It is state-of-the-art textile machinery that has enabled them to get to this point. At the Zhongxing Weaving Factory, one worker oversees 12 machines, but here, one worker oversees 30 to 50 machines. Productivity is 300 to 400 percent higher. As the textile industry further modernizes, the number of employees will continue to decrease while production capacity remains the same.

The textile industry is experiencing a cold winter, but is still surviving

The enterprises in Shengze that are truly competitive do not have a high demand for migrant workers. They are more interested in the work capacity of their employees rather than whether or not they are cheap. In order to cut costs as best they can, the small and mid-sized companies, that used to absorb large numbers of migrant workers, are now stopping and starting production and have greatly cut back on employees. This has put many migrant workers in a very difficult situation.

“We can’t earn money here. The wages are too low, only enough for food. So we are getting ready to go back home.”

Hu Jumei and Feng Xianfa, a married couple who came to Shengze from Xuzhou to work have just sent their seven-year-old elder son back home. Hu Jumin doesn’t have a job and their family of four relies entirely on Feng Xianfa’s wages. He only earns 1,300 yuan per month.

Reporter: “Do you smoke?”

Feng Xianfa: “No.”

Reporter: “Do you drink?”

Feng Xianfa: “I don’t drink, either.”

Reporter: “So all of your money goes on subsistence?”

Feng Xianfa: “Right.”

Feng Xianfa only has a middle-school education and no specialized skills. It is therefore difficult for him to find a higher-paying job in Shengze. The pressures of making a living have caused this young man of only 30 years to lose almost all hope in the future, and they plan to return home after the Chinese New Year.

Ma Yanan: “I want to find a job rather than farm.”

Reporter: “Why?”

Ma Yanan: “Farming is no good.”

Reporter: “How is it not good?”

Ma Yanan: “There is no money left over after a year of farming, only enough for food.”

Ma Yanan, is from Anhui and has lived for 15 days in this empty rented room in Shengze’s Hehua Village. He has not found a job yet, and his dinner consists of a steamed bun and a packet of cooked peanuts. For 15 days, he has eaten steamed buns and pickled vegetables for his meals. Even so, he doesn’t want to go back to his rural home.

Ma Yanan: “At first I imagined that, over here, whatever job I could get would pay at least 1,400 or 1,500 yuan.”

Ma Yanan has inquired at many factories over the last fortnight, but no one has wanted to hire him because he lacks experience in the textile industry. It is virtually impossible for him to find to find a decent job. The only thing he can offer is his physical labour. The third time Ma Yanan went to the local labour market, he found a company hiring porters for 1,500 yuan per month. The wages were acceptable, but the labour agent did not believe he could take on this kind of physical work. He now has only 80 yuan left. Not finding a job has left him feeling hopeless and sad. Each night, he writes a few words on the wall about missing home but being unable to return.

“Mum, don’t be sad for me. I believe that I will make my fortune. This time didn’t work out, but there will be another time and another time after that, so don’t worry, Mum.”

Many workers leave Shengze everyday but just as many arrive the next day, seeking to escape poverty in their villages.

“To go to work here means you have some guarantee for a living. At home, if there isn’t a drought, there’s a flood, and you don’t have a guaranteed living.”

Huang Xiaolan has just returned from having a baby back home. She will start looking for work in a couple of days. Right now they are relying on her husband’s income. For dinner, they are having rice porridge with only a plate of stir-fried spicy soy beans. The rise in the cost of living is causing them to cut back even more.

Huang Xiaolan: “Tonight we bought five yuan worth of soy beans, and five hot peppers were 80 cents, so if we have more for lunch, that is over 10 yuan. And this is only vegetables; we’re not even getting any meat.”

Even though they are living very frugally now, Huang Xiaolan still wants to remain in Shengze. She is an experienced loom weaver and as such is more optimistic about the future.

Reporter: “Are you confident that you will find work?”

Huang Xiaolan: “Yes.”

Zhu Naiyan, Deputy Director of Shengze’s Labour and Social Security Office, says fluctuations in the labour market have been relative normal, the turnover of labour remains at industry standard levels of between ten and 20 percent. Moreover profits for the top 50 companies in Shengze were up in the first half of the year, giving people hope.

Yan Youming, Director of the Eastern China Silk Market Management Commission, says, “The profit indexes have gone up in May, June, and July. Traditionally, these are the three months in which the Chinese textile industry does not do as well. Having a rising market at this time tells us that our larger companies are bucking the trend.”

“Based on our performance monitoring, the price indices for chemical fibre products have already seen some recovery in August. In terms of the outlook, the market has already stopped its downward trend. Our analogy is that it is wintertime in the textile industry, but if everyone hangs on and finds a way to make it through, we believe that spring will come again.

We can see from this reporter’s investigation that many companies are facing great difficulties, even though not many companies in Shengze have actually gone under and not many employees have been laid off. Small and mid-sized companies are having a rough time. But the weakest group, migrant workers, has even less ability to deal with adversity.

Half-Hour Outlook: Government should lend a helping hand to migrant workers!

China’s silk capital of Shengze has not seen large-scale layoffs of textile workers. This is somewhat comforting, but we still worry about these workers’ future. Whether in the textile industry or other manufacturing industries, after the completion of the initial phase of industrialization, we must be able to upgrade our industries and focus on core areas of competitiveness like technology and branding, thereby reducing demand for labour – this is an inevitable choice during the post-industrial stage. Even if Shengze is not in crisis now, large numbers of migrant workers will still face unemployment in the next few years.

Just as companies need to upgrade, our migrant worker brothers also need to improve their own professional qualifications and ability; this is the only way they can have a more reliable rice bowl. But at present, these migrant workers labour long hours for little money and have little time or money to seek out new directions or opportunities in their career. Under these circumstances, they need our government to do more for them, such as provide free career counseling and improved employment assistance services.

An economist once told me that China’s hope for the future depends on completing the process of industrialization, and especially on whether or not our manufacturing industries can fully absorb the surplus labour from rural areas and turn these workers into genuine industrial workers. The manufacturing industries in China are at present moving, in phases, from the southeastern coastal region toward the western region. An unemployment problem may emerge in the southeastern coastal areas, while the western areas may gradually experience a lack of skilled workers. This requires that the government more fully assess and plan employment policies, while at the same better protecting migrant workers’ legal rights, allowing them to participate more in this great transformation of China’s economy.