Man Without Qualities

Saturday, December 06, 2003

Global Manufacturing Jobs Shrinkage II

In the post linked above, the Man Without Qualities expressed extensive skepticism over some aspects of reports that manufacturing jobs have declined recently in China:

With respect to China, for example, there are also reports that manufacturing in China often tends to substitute human labor for the technology employed in the country from which the jobs "come."

China also has some peculiar labor laws that one can imagine creating some very strong incentives for employers to report the "loss" of manufacturing jobs. ... This is just one peculiarity of Chinese employment law that might distort employment statistics.

There is also generally and worldwide a rather strong relationship between the number of employees an employer claims and the employer's tax obligations. The reader may wish to take a private moment to contemplate the traditional relationship between a Chinese business owner and the tax authorities.

I would be very skeptical of the reliability of Chinese employment statistics generally. This is a country that for decades officially denied that it suffered any unemployment at all!

Indeed, it is difficult in the extreme to ... accept easily the proposition that China saw a 15 percent drop in factory jobs...

Another report in the New York Times details yet more legal incentives for some Chinese manufacturers to suppress the number of employees reported to the government:

A more recent memo, issued to prepare for an inspection that took place on Nov. 26, urged workers to memorize false numbers for wages and working hours to reflect Shenzhen's regulations. The memo promised bonuses to workers who responded as directed when approached by inspectors.

Workers said the elaborate ruse had one happy result. Because few of the employees have legal work contracts on file, the factory must pretend that its work force is smaller than it is when inspectors visit. On such days most of the factory's 850 workers get a rare treat: a day off.

On Nov. 26, with an inspection under way inside the plant, workers congregated in their rented homes or food stalls to eat, chat, smoke and gossip.

"I thank the inspectors for one thing," said a Kin Ki worker from rural Sichuan. She was crouching over a bucket of cold water in the warm afternoon sun, washing her hair. "I needed a rest," she said.

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