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Country roads take migrant workers home
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This is maybe the strangest but most frequent question that anxious Chinese employers are asking.

To recruit enough new hands for the increasing orders they are taking, human resources people are searching through labor markets, but to little avail.

In a year that begins with about 20 million farmer-turned migrant workers having returned home jobless as a result of the global recession, it is really hard to believe that China, the world's most populous country, would again suffer labor shortage so soon.

Just a few years ago, a shortage of working-age rural laborers started to spread from the nation's coastal areas to inland areas. Since late last year, the global financial and economic crisis has sent unemployment rates through the roof in many countries. Given the heavy toll the global crisis has taken on China's labor-intensive export sector, it is only natural that Chinese policymakers have since preoccupied themselves with saving as many jobs as possible.

However, with the Chinese economy showing more signs of strong growth and the world economy bottoming out more evidently nowadays, the phenomenon of labor shortage has unexpectedly re-emerged in large parts of the country.

It was first reported that employers in coastal areas have had difficulty in expanding their staff quickly as overseas orders began growing in recent months.

That was in line with the broad picture that the overall situation of employment for rural migrant workers has taken a turn for the better, with 151 million employed outside their hometowns at the end of June - up 2.6 percent over the first quarter figure.

But uncertainty about the sustainability of a strong rebound at home and the nature of recovery around the world have prevented policymakers from recognizing the looming gap between labor supply and demand.

Last week, a media report found that even in inland provinces like Sichuan a tight supply of migrant workers are frustrating urban employers on the look out for recruits.

If that is the case, policymakers need to pay close attention to this newly-found shortage of migrant workers, which might herald a significant change in the country's labor market.

A previous explanation for the lack of jobseekers in the coastal region, home to most of China's export champions, was that most of the migrant workers from the central and western provinces have been slow to return because of uncertain employment prospects. It was believed that the recent increase in demand for workers was mainly propelled by more seasonal orders or restocking efforts that will not last long.

But the latest media report shows that migrant workers were hard to find even in the labor markets of inland provinces. And, a particularly interesting finding is that, in the mean time, a shoe-making factory set up last year at some rural site in Sichuan province has easily recruited hundreds of former migrant workers. These are people who have left coastal areas at the end of last year.

Conventional wisdom holds that the country now has about 200 million migrant workers and at least another 100 million farmers will seek urban jobs as urbanization goes on. The huge development gap between China's rural and urban areas is once regarded as a sort of guarantee of ample supply of cheap labor for urban industrial growth.

Nevertheless, entrenched institutional discrimination has long prevented most cities from accepting migrant workers as equal permanent residents and thus forced many of them to leave family members in rural homes.

The current tight labor markets in big or coastal cities seemingly indicates that an increasing number of migrant workers choose manufacturing jobs as along as it is close to home.

There will be vital policy implications behind such a trend.

Can the return of migrant workers to their rural homes be made a boost to rural development? Or should migrant workers be eventually encouraged to stay in cities? What will be the impact the reverse flow of migrant labor exerts on the country's labor cost, a long-term comparative advantage underpinning export growth?

These are questions Chinese policymakers should prepare to answer, and the sooner the better.

(China Daily September 28, 2009)

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