While wages for production line workers in the "factory to the world" have increased by nearly 50 percent over the last two years, wages for office workers and those in the service sector have remained relatively static in real terms.
Production line workers at medium and large-scale manufacturers in Dongguan can now earn a basic wage of around 1,300 yuan a month, rising to around 2,800 yuan a month with overtime and bonuses etc. An office clerk or sales executive meanwhile will struggle to get 2,000 yuan a month, while a shop assistant or restaurant cashier can only get around 1,400 yuan.
The driving force behind the increase in factory wages is very clear. The cost of living in the Pearl River Delta is going up all the time, and migrant workers now have far more employment opportunities in inland China. Enterprises in Dongguan have been struggling for well over a year to both to recruit and keep workers, and many are now offering a wide range of incentives to lure new workers and retain existing staff.
Nearly all factories now offer loyalty and productivity bonuses in addition to the usual overtime payments in a bid to hang on to their employees. At Celestica Electronics in the Songshanhu Science and Technology Park, for example, the company claimed that wages for production line workers, including a basic wage of between 1,100 yuan and 1,400 yuan, overtime payments, a loyalty bonus, night shift subsidy, and a skills attainment bonus, now ranged between 2,200 yuan and 3,000 yuan a month.
In addition, many major factories and some smaller ones are now offering pensions, unemployment, work-related injury and health insurance, as well as paid vacations and housing subsidies for those workers who want to live outside the factory compound.
A selective labour shortage
Despite all the talk of labour shortages in the Pearl River Delta, these larger factories generally do not have a problem recruiting workers, indeed the largest factory of them all, Foxconn, in neighbouring Shenzhen, has on average about 4,000 vacancies to fill each day but more than 8,000 jobseekers queuing up outside the factory gate, according to a factory spokesman interviewed by Southern Weekend. The spokesman said the basic wage for new recruits in Shenzhen was now 1,550 yuan, rising to 2,000 yuan after nine months and a performance evaluation. Workers on a basic salary of 2,000 yuan could earn a total of between 2,700 yuan and 3,600 yuan each month, he said.
Contrary to media reports that Foxconn was moving most of its production inland, the spokesman claimed that the company's two Shenzhen plants would retain a total workforce of around 300,000 for the foreseeable future.
Even at the opposite end of the scale, in the small family-run workshops of Dongguan's outlying townships, workers can also earn between 2,000 yuan and 3,000 yuan a month. However they are paid on a piece rate basis, have no medical or social insurance and absolutely no job security.
In Chashan township, about ten kilometres from downtown Dongguan, there are hundreds of such workshops producing and packing soft toys, garments and accessories, each employing a few dozen workers huddled over sowing machines in cramped, poorly ventilated and dimly lit rooms about the size of a small restaurant. They tend to employ older men and women who have difficulty getting a job in the larger factories that still restrict their intake to workers under the age of 35.
But even in relatively poor districts like Chashan, workshop employees can sometimes earn more than white collar workers in downtown Dongguan. Office clerks and front desk staff at the city's four and five star hotels can usually only earn between 1,300 yuan and 1,800 yuan a month. And an examination of the job advertisements at Dongguan's main recruitment centre showed that an assistant accountant could earn just 1,500 yuan per month and a qualified accountant around 3,000 yuan. Jobs in sales and marketing started at around 1,300 yuan, plus commission, and even white collar jobs requiring a reasonable level of skill, such as a website manager, only paid between 1,500 and 3,000 yuan a month.
Greater bargaining power
Factory workers have been able to get higher wages because they have greater bargaining power and are generally better organized than white collar workers. While strikes are not uncommon in the service sector, especially in the transport industry, most industrial action occurs in the manufacturing sector, usually in factories that employ between about 300 and 3,000 workers. Workers know that if a factory has orders to fill, any work stoppage could be very costly, and as such management will try to resolve the dispute as soon as possible. Most factory strikes are resolved within a few days after management agrees to at least consider workers' demands.
Moreover, the focus of the government and trade union's push for collective wage negotiations this year also seems to be on the manufacturing sector, with the one major success so far coming at the Nanhai Honda plant in Foshan, the components factory that triggered a wave of strikes across the automotive industry last summer. The Southern Metropolis Daily reported on 2 March that collective wage consultations between the trade union and management had concluded in an agreement to increase wages by 561 yuan in 2011, with the monthly bonus increasing by another 50 yuan, bringing the monthly wage of production line workers at the plant to just over 2,600 yuan.
Not only do service sector employees find it more difficult to make collective demands for higher wages, employers are often less able to meet those demands. The service sector is certainly expanding in Dongguan, with far more shops and restaurants open than a year ago, however customer numbers remain relatively low. And, as such, employers will find it difficult to raise employee wages until local factory workers start to spend more money on those goods and services. And it will take a while for the gains made by factory workers to filter into the service and retail sectors, especially now that inflation is rapidly eroding any additional spending power factory workers might have.
The cost of food, clothing and accommodation are all increasingly rapidly in Dongguan, and many workers said they would struggle to get by on less than 2,000 yuan a month, especially if they had elderly parents or young children to support. Factory workers complained that as soon as they got a pay increase, the cost of food in the shops and cafes outside the factory gate would increase, as would the rent for apartments in the neighbourhood and local transport.
A new service sector
Tellingly, one of few growth areas in the service industry is in recruitment and training. Such is the demand from manufacturers for new employees, all the major recruitment companies in the Pearl River Delta are hiring new staff to travel across China to locate and "capture" (抢) new workers. The recruitment agencies are also hiring job trainers to channel precisely the kind of workers factories want into the positions they need to fill.
One other growth sector in Dongguan seems to be personal care and domestic services. Agencies in the city are now offering professional pediatric and senior care and personal tutors for school children, as well as domestic helpers and cleaners, indicating there is now a growing middle class in China's biggest factory town. More and more families are now able and willing to pay professionals to do the work traditionally handled by other family members. And they are willing to pay a reasonable wage as well. One agency in the city was offering personal tutors a monthly wage of between 2,000 yuan and 3,500 yuan per month, and qualified nurses between 2,500 yuan and 5,000 yuan a month for pre- and antenatal healthcare.
The growth of Dongguan's middle class is further evidenced by the expansion of luxury goods and service providers in the city. It is difficult to assess the value of this market at present but if it expands it could eventually translate into better wages for service workers too.
For the time being however, service sector workers are in danger of becoming the new urban poor.