Is Dongguan the Key to Pearl River Delta

C O N F I D E N T I A L SECTION 01 OF 03 GUANGZHOU 000114 SIPDIS STATE FOR EAP/CM, DRL E.O. 12958: DECL: 02/19/2034 TAGS: ELAB PGOV PHUM CH SUBJECT: Is Dongguan the Key to Pearl River Delta Stability? Guangdong Labor Bureau Thinks So ¶1. (U) Classified by Consul General Robert Goldberg for reason 1.4 (d). ¶2. (SBU) SUMMARY: Guangdong authorities are more worried about the current labor situation in Dongguan, an hour south of Guangzhou on the way to Hong Kong, than they are about Guangzhou, Shenzhen or other PRD cities. The provincial government has involved 38 agencies in an effort ("Warm Spring in Guangdong") designed to avoid labor unrest throughout the PRD by helping migrant workers find and keep jobs. There may well be fewer migrants chasing fewer job openings than last year, but with workers outnumbering vacancies (unlike last year) and jobs in manufacturing and export sectors declining in comparison with those for office workers and service providers, concerns about social stability remain uppermost in the minds (and performance evaluations) of most officials. END SUMMARY. Dongguan a Source of Concern -------------- ¶3. (C) The labor situation in Dongguan is more worrisome than that of Guangzhou or Shenzhen, according to Guangdong Labor Bureau Director of Training and Employment Ge Guoxing. Ge said that, of the three largest cities in the Pearl River Delta (PRD),Dongguan has the largest number of export-oriented companies and migrant workers, yet its administrative level lags behind Guangzhou and Shenzhen. (Comment: Though Ge did not elaborate on Dongguan's administrative shortcomings, Guangzhou's standing as the provincial capital and Shenzhen's historical status as the poster-child for reform and opening have long attracted high-level attention -- and the assignment of upwardly mobile leaders -- from the central government, a phenomenon less pronounced in Dongguan. End comment.) A "Warm Spring in Guangdong" -------------- ¶4. (U) In an effort to help migrant workers find and retain jobs, 38 government agencies led by the Guangdong Labor and Social Security Department have participated in the "Warm Spring in Guangdong" campaign, according to Ge. The Campaign includes ten measures which, according to an official website, will: -- organize 10,000 job fairs with free admission aimed at providing jobs for five million migrant workers (no time frame is given); -- make it easier for migrant workers to start their own business by exempting from registration fees businesses with less than RMB 100,000 (approximately USD 14,620) in capital; -- simplify the process for migrant workers to claim unemployment benefits, transfer their social security funds and claim medical expense reimbursement; -- intensify enforcement of non-payment of wages and pay wages to migrant workers in the event that their employer absconds; -- simplify procedures for migrant workers to file labor arbitration or litigation cases; -- offer job training for up to four million migrant workers in 2009; -- improve the education system for, and increase the enrollment rate of, children of migrant workers; -- offer family planning services to female workers and provide immunizations for migrant workers' children; -- expand official labor-rights telephone hotlines and GUANGZHOU 00000114 002 OF 003 distribute 10 million handouts on migrant workers' rights; and -- improve the transportation system and flow of information relating to the Chinese New Year migration. Keeping Track of Worker Migration Patterns -------------- ¶5. (SBU) The Guangdong Labor Department is relatively confident in its estimates that, of the 10.25 million migrant workers who returned home during the Chinese New Year holiday, 8.5 million would return and would be supplemented by an additional 1.2 million first-time workers coming to Guangdong. When asked about the methodology used to account for the travelers, Ge said that, in addition to tracking the volume of train and bus tickets sold during the holiday travel season, the Labor Department interviewed migrant workers, observed passenger flow in train and bus stations and monitored attendance at job fairs. Data from labor bureau monitors working in 300 selected PRD enterprises and statistics reflecting the change in the number of social security fund participants were combined with anecdotal reports to arrive at the estimate, according to Ge. ¶6. (U) Guangdong Province has also increased the level of information sharing with labor-exporting provinces, especially Hunan, Sichuan, Jiangxi and Guangxi, which provide the bulk of migrant workers. Ge noted that one important factor was the provision of information regarding Guangdong's employment situation -- including cities, areas and companies looking for workers -- for other provinces to pass on to outgoing migrants. Fewer Job Seekers Chasing Fewer Jobs -------------- ¶7. (C) The number of migrant workers returning to Shenzhen following the end of the Chinese New Year holidays is lower than last year, according to Shenzhen Spring Breeze Labor Dispute Service Director Zhang Zhiru, a longtime labor NGO contact of the Consulate. Zhang observed that the reduction in job seekers does not necessarily mean that finding work is easier, because there are also fewer job opportunities. In fact, according to Ge, the labor bureau estimates that the supply and demand ratio currently stands at 0.95, meaning that job seekers outnumber vacancies, a change from last year's situation of an overabundance of vacancies. Zhang said that the demand for office workers in Shenzhen is currently greater than the demand for unskilled workers, and that factories in the city are offering lower wages than last year. ¶8. (C) Media reports highlighting the problem of migrants being taken advantage of by illegal job agencies in Shenzhen have left legitimate job agencies there underutilized, according to Raindrop Action Labor Hotline Director Huang Zhiming. Huang also said that there appear to be fewer migrant workers in the city's streets than last year. Zeng Feiyang, director of the Guangzhou- based Panyu Migrant Workers Documentation Center, said that although numbers of both job seekers and job opportunities have decreased, more migrant workers would continue to come to Guangdong well into March -- a prediction also made separately by Huang. A Failure to Communicate -------------- ¶9. (C) All of our labor NGO contacts remained concerned about what they viewed as increasingly lax government enforcement of labor law violations and a predisposition to favor companies over workers. Huang said that the local labor bureau "turned a deaf ear" to workers claiming that their employer had stopped paying their social security contributions. Zhang echoed this, saying GUANGZHOU 00000114 003 OF 003 that Shenzhen labor authorities had changed their attitude toward handling labor disputes, now giving clear preference to employers when ruling on arbitrations. ¶10. (SBU) The failure of Labor bureaus to communicate policy changes with unregistered labor NGOs may be the cause of some of this consternation. Noting that the Guangdong government had implemented new measures to help enterprises survive the difficult economic conditions, Guangdong Labor Bureau's Ge said that enterprises experiencing financial difficulties are now allowed to suspend payment of social security funds for workers for up to one year. In addition, unemployment insurance, which enterprises are required to pay for workers, has been reduced from three percent to two percent, said Ge. GOLDBERG