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Cablegate: China/Migrant Unrest: What Happened to Fears Of

VZCZCXRO1158
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #2716/01 2650932
ZNR UUUUU ZZH
P 220932Z SEP 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 6169
INFO RUEHC/DEPT OF LABOR WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUEHOO/CHINA POSTS COLLECTIVE

UNCLAS SECTION 01 OF 03 BEIJING 002716

DEPT PASS USTR FOR KARESH, STRATFORD, LEE
STATE FOR EAP/CM
LABOR FOR ILAB
TREAS FOR OASIA/ISA
USDOC FOR 4420/ITA/MAC/MCQUEEN

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON ELAB PGOV EFIN CH
SUBJECT: China/Migrant Unrest: What Happened to Fears of
Unemployment and Social Unrest?

REF: A) GUANGZHOU 528
B) SHANGHAI 374

THIS CABLE IS SENSITIVE BUT UNCLASSIFIED.

1. (SBU) Summary: After reporting that 20 million migrant workers
returned home for the 2009 Chinese New Year holiday unemployed, the
Chinese government recently announced that the migrant labor
situation has significantly improved, thereby reducing the
likelihood of social unrest. China's Ministry of Human Resources
and Social Security (MOHRSS) reported 95 percent of migrants have
returned to urban areas and 97 percent have found jobs. The
National Bureau of Statistics (NBS) quantified the current number of
unemployed migrants as 4.2 million. Other officials, factory
owners, and migrant laborer NGOs also support these claims of
greatly reduced unemployment, though some add that much new
employment is part-time or temporary. Factories in the export
production areas of Guangzhou and Shenzhen have increased hiring,
and there are even some reports of labor shortages in the area.
While migrant labor employment rates are difficult to confirm and
Chinese government officials have a vested interest in putting the
most positive spin on unemployment, information from non-government
sources appear to substantiate what seems to be a general turnaround
in the migrant labor employment situation. End Summary.

--------------------------------------------- ----
Unemployed Migrants: From 20 Million to 4 Million
--------------------------------------------- ----
2. (SBU) Chen Xiwen, China's MOHRSS Director of the Office of the
Central Leading Group on Rural Work announced in February, shortly
after the 2009 Chinese New Year holiday, that 20 million migrants
had returned home without jobs. MOHRSS later lowered this figure to
18 million unemployed, based on a survey jointly conducted with
China's NBS.

3. (SBU) In a recent press conference, MOHRSS Minister Yin Meimin
said that while migrant worker employment has not returned to
pre-financial crisis levels, it has increased significantly over the
summer months; 95 percent of the migrant laborers who returned home
before the holiday are now back in the urban areas, and 97 percent
of them have found work. MOHRSS officials also touted these migrant
employment gains in a meeting with Embassy's labor officer, adding
that MOHRSS also increased job training assistance for migrants who
remained in their home provinces.

4. (SBU) Peoples Bank of China Governor Zhou Xiaochuan provided a
similar outlook to a visiting Congressional Delegation on September
2. According to Zhou, about 90 percent of the idled migrants have
returned to the cities, and about 70-80 percent of those who had
lost their jobs during the crisis now are employed, with roughly
one-third of them working in manufacturing or export sectors,
one-third in construction, and one-third in services. He said the
government hoped further development of service sectors would
generate more jobs for the migrants.

5. (SBU) In addition to the migrants who returned to the cities
after the New Year holiday, Deputy Director Wang Yadong of the
Employment Promotion Department of MOHRSS announced that an
additional ten million new migrants headed to cities to find jobs in
the first six months of 2009. The NBS on September 15 also
announced the results of a recent survey that showed the total
number of migrant laborers employed outside their hometowns
increased 2.6 percent from the end of March to 151 million. The
same survey found that by the end of June 2009, 4.2 million migrants
were still unemployed, of whom 28.7 percent had left their previous
jobs because of "low income" and 50 percent due to "not having yet
found a proper job" or "payroll cuts resulting from business closure
or bankruptcy."

6. (SBU) Some academics are skeptical that the migrant labor
situation is as rosy as MOHRSS and the NBS report suggest, noting
that the figures are manipulated: for example, by including migrants
registered at training centers and labor dispatch agencies as being
employed. They also argue that much of the current employment
increase is into part-time or temporary jobs. However, even the
skeptics agree that the migrant laborer employment situation has
improved greatly from early 2009.

--------------------------------------------- ---------
Reports of Labor Shortages Support Message of Recovery
--------------------------------------------- ---------
7. (SBU) Numerous recent Chinese press accounts detail labor

BEIJING 00002716 002 OF 003


shortages emerging in Yangtze and Pearl River Delta areas previously
hit by the economic crisis, though some academics note that the
shortages are mainly due to a lack of skilled labor. Reftel A
describes a tight labor market among toy manufacturers in southern
China due to factory owners' inability to find skilled labor at wage
rates they want to pay, and reftel B notes Zhejiang Province's
increased employment and some shortages of skilled labor.

8. (SBU) Similarly, in recent meetings with NGOs and export
manufacturers in Guangzhou, Dongguan and Shenzhen, Embassy Beijing
Labor Officer and CG Guangzhou PolOff heard consistent reports of
labor shortages in the area, a big change from the dire migrant
laborer employment situation earlier in the year. Nike Guangzhou
representatives reported that their supplier factories have recently
increased hiring, and that they have experienced some labor
shortages in coastal areas. Walt Disney representatives reported
similar findings. Finally, several Beijing-based labor academics
also verified reports of recent labor shortages, particularly in
coastal areas.

9. (SBU) These reported labor shortages may not necessarily be
entirely due to increased economic activity. As noted in reftel A,
there are numerous reports of factories trying to control costs by
cutting overtime as they recover from the crisis, which makes it
more difficult for them to attract skilled workers who might be able
to make more money elsewhere. Some experts also have said the
shortages are a result of caution among migrants, some of whom may
be unwilling to make the significant personal and financial
commitments to return to urban areas without more stable labor
markets. Public infrastructure projects arising from the massive
government stimulus spending also absorbed many migrants. Finally,
government job-training and business start-up programs helped keep
some migrants home.

-----------------
No Sign of Unrest
-----------------
10. (SBU) Government officials, worried that widespread migrant
laborer unemployment may trigger social unrest, obviously have
welcomed signs of improving migrant labor employment. According to
local press, MOHRSS Minister Yin said that "the worst-case scenario
we prepared for earlier, in which migrant workers who lost their
jobs might turn up protesting, did not take place." He added that
"current measures taken by the central government will prevent
further social unrest from happening." Press reports and some
academics have also commented that risk of migrant worker social
unrest as a result of lay-offs earlier this year was overstated.

------------------------------------------
Increasingly Flexible Migrant Labor Market
------------------------------------------
11. (SBU) The Guangzhou-based director of training for Walt Disney's
supply chain manufacturers provided perspective as to why, in
addition to improving economic fundamentals, the migrant labor
market is increasingly flexible. As this market matures, many
migrant laborers develop new confidence and different motivations
from earlier migrants. He noted that migrant laborers exchange
information with others, particularly in their home provinces during
the New Year holiday, and return to different urban locations if
they hear of better opportunities. Also, he said migrants consider
factors other than wages; many now have additional personal
motivations including wanting to live in and see different areas,
having friends they want to be near, and even getting married and
moving somewhere that works for both partners.

-------
Comment
-------
12. (SBU) Comment. While migrant labor employment rates are
difficult to measure, and MOHRSS may be exaggerating some figures to
trumpet their effectiveness in reducing potentially destabilizing
migrant unemployment, there seems to have been a clear turnaround in
the migrant labor employment situation from early 2009. China's
official migrant laborer unemployment rate plummeted from
approximately 20 million to 4 million in 6 months. Significantly,
although there were numerous instances of localized unrest this
year, unemployment rates did not result in systemic social
instability. The improving labor situation may shape decisions by
Chinese economic policymakers who have been hesitant to rein in
China's current stimulus programs as long as unemployment remains a
serious threat to stability.


BEIJING 00002716 003 OF 003


13. (U) This cable was produced with the assistance of CG
Guangzhou.

Huntsman

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