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

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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

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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