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that could move into industry. This surplus labour may take at least two decades to absorb. 74

Are China’s potential manufacturing employees willing to move from the village, town, or city where they are to wherever there are jobs? In general, the answer appears to be yes:

Now [in China] people are concerned with…can I find a higher paying job, can I move to a different place to get better opportunities? Seven years ago, people were concerned about getting opportunities from where they were. Now they are increasingly asking ‘Can I move somewhere else, from the countryside to the city or from this province to another province? And if I am trained properly, can I compete for better jobs and how do I compete?’ [Interview with World Bank China Program Director Yukon Huang.] 75

There are increasing numbers of reports that manufacturing and other industries in the Pearl River Delta (PRD) or other parts of Guangdong Province are experiencing labor shortages in the most recent several years. Fujian and Zhejiang provinces have also been affected. The main reasons for these shortages of manufacturing workers in the booming coastal provinces are:

--Many city governments continue trying to protect urban-born workers from competition for jobs by restricting migration from rural areas. Cities still have labyrinthine and costly systems in place to control and minimize in-migration, including quotas for the number of migrants enterprises can employ, fees that firms have to pay in order to employ a migrant, expensive required migrant identity cards and migrant employment cards and temporary resident cards, and restrictions on giving formal sector jobs to those without local permanent residence registration. Migrants from rural areas are barred from more desirable jobs and subjected to significant wage discrimination in urban areas. 76

--Continuing hidden barriers to migration, including lack of social security and health care for migrants and inability to get urban residence registration. Policies that continue to dampen labor mobility are keeping China’s labor markets segmented. 77 78

--In 2004, rural incomes appear to be rising in some areas that normally supply low-paid manufacturing labor to PRD factories, inducing some potential migrants to decide they are better off staying in the countryside nearer their homes.79 Grain prices and agricultural subsidies have increased, making agricultural work more attractive than before. 80

--Flat and extremely low pay rates and poor working conditions in PRD factories, which make them less attractive to migrants than east coast factories that pay more and have begun to improve benefits. 81


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