The landscape of China’s manufacturing sector is rapidly evolving as suppliers adapt to the changing nature of the job market.

A steady and seemingly irreversible transition is taking place in China’s manufacturing labor market – one that may have wide-ranging consequences for suppliers and buyers alike.

Workers are heading back home.

An estimated 30 to 40 percent fewer employees returned to their jobs in the southeast following the Chinese New Year holiday. A large portion of them found new work in their hometowns – a situation which is strengthening.

As a result of the government’s multibillion-dollar stimulus package, public works projects have generated a significant number of jobs in the countryside. An estimated 20 million farmer-turned-migrant workers who were laid off at the height of the global financial downturn found improved economic conditions at home and employment to be had. Some were able to start small businesses.

This, in turn, is exacerbating the current labor shortage, which has intensified in the past two months as the country’s exports started to pick up. While overseas shipments remain down year-on-year in most sectors, the rate of decline has decelerated.

Rather than lose orders, some understaffed factories have extended lead times by a few days to more than a month. Others are offering improved salaries and benefits to attract workers, resulting in as much as 5 percent increase in export prices. Even then, many such plants remain short of hands.



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