CHENGDU YET TO SEE SURGE OF RETURNING WORKERS FROM CLOSED

UNCLAS SECTION 01 OF 02 CHENGDU 000267 SENSITIVE SIPDIS DEPT FOR EAP/CM E.O. 12958: N/A TAGS: ECON ELAB FCS PAS POL SUBJECT: CHENGDU YET TO SEE SURGE OF RETURNING WORKERS FROM CLOSED FACTORIES CHENGDU 00000267 001.2 OF 002 ¶1. (U) This cable contains sensitive but unclassified information - not for distribution on the internet. ¶2. (SBU) Summary. While laid off workers from the coast returning to Sichuan may eventually boost unemployment in Sichuan Province, Chengdu labor experts have yet to see evidence of this trend. Disagreeing with recent press reports, Consulate contacts say that the softening local economic conditions over the past year have contributed more to increasing unemployment than an influx of returning workers. Local government officials lack a good plan to help boost employment. End Summary. Job Demand Rising in Chengdu -------------- ¶3. (SBU) During a recent visit to Chengdu's Jiuyanqiao Labor Market, Congenoff saw 200 or more unemployed laborers, many of them migrant workers, seeking employment as handymen, cooks, construction workers, and in other low-skilled positions. One worker said he was from a town 60 miles outside of Chengdu, and Congenoff saw other workers still carrying luggage, who appeared to have just arrived in Chengdu. Congen LES observed that the number of people seeking jobs appeared higher than in the past, echoing claims made in recent local press reports. Many migrant workers come to Chengdu from other parts of Sichuan Province, which has a population of 80 million. ¶4. (SBU) A scholar at the Sichuan Academy of Social Science, Guo Xiaoming, told Congenoff that the weakening economy during the second half of 2008 has boosted unemployment in the provincial capital. He said businesses in Chengdu were already feeling the effects of the global financial crisis as demand eased for Chengdu's exports. Guo also noted that the yearlong real estate downturn had reduced jobs in construction and other related fields. Inaccurate Labor Statistics? We Really Aren't Sure. . . -------------- -------------- ¶5. (SBU) Guo and labor market officials told Congenoff it was difficult to quantify the increase in job seekers in recent months. Local press reported a 30 percent increase in the number of laborers seeking work, but Guo expressed skepticism about this figure. He felt the reported figure is probably inaccurate, and said he did not know whether the actual number of unemployed workers was lower or higher than the reported figure. An official at another labor market that caters to skilled workers and college graduates said that the 30 percent figure was based on applications for specific jobs rather than the number of unemployed workers. She also believed that the 30 percent number could well be inaccurate, but did not offer her own estimate. Laid Off Workers Try to Find New Jobs, Stay on East Coast -------------- -------------- ¶6. (SBU) Workers returning from shuttered factories in China's more prosperous eastern region have not had a clear impact on the Chengdu job market. Guo said that many recently laid off workers in coastal areas would likely not return to Sichuan immediately after losing their jobs. He noted that workers typically need to wait for some time after they are laid off to receive unpaid wages from their former employer. He added that workers typically would spend time looking for new employment before deciding to return home. Congenoff spoke with migrant workers who supported Guo's point. Two workers said their adult children lived in coastal Guangdong province, but could not find CHENGDU 00000267 002.2 OF 002 work. The children did not want to return home, however, and were waiting in Guangdong to find new employment. ¶7. (SBU) Guo said that migrant workers typically return home for the Chinese New Year, which falls in late-January 2009. He expects that workers who were unable to find work would likely return home for the New Year and not go back to the coast. If this occurs, the current employment situation could worsen as demand increases for a limited supply of jobs. Guo also said a surge of returning workers could begin as early as December, but he did not explain why he thought this would be the case. Post-Quake Rebuilding to Provide Some Needed Jobs -------------- -------------- ¶8. (SBU) Guo saw great potential for the earthquake rebuilding effort to provide a significant number of jobs to Sichuan workers. At the same time, he cautioned that reconstruction could not provide all of the jobs he estimated would be needed if migrant workers begin returning in larger numbers from the coast. One difficulty emerging already is funding for rebuilding projects. Much of the money local governments across China, and the central government in Beijing, pledged for rebuilding earthquake-damaged areas has yet to materialize, according to Guo. He explained that available funds were being used for unspecified projects that would help make villagers more comfortable during the winter in the mountainous areas hardest hit by the May earthquake. ¶9. (SBU) Guo said that the Sichuan provincial government did not, as of early November, have a plan for dealing with a possible surge in returning workers. He mentioned that Sichuan sent survey teams to coastal provinces to assess the size of the potential returning labor pool. Sichuan officials determined that returning laborers would not be a significant problem for the province, according to Guo. ¶10. (SBU) Comment: Although the effects are not yet fully clear, declining exports and the global financial crisis come on top of an already difficult year for Sichuan business, hit hard by the May earthquake and unrest in its Tibetan areas. Thus far, Sichuan's internal conditions remain the most important factor in affecting the local job market, although that could all change if dire predictions of increased year-end factory closures on the east coast come true. ONUFER