Friday, May 16, 2014

269 Million Chinese Workers @ $1.90/hour

China's National Bureau of Statistics (NBS) reported its annual statistical profile of rural workers employed in nonfarm work. It shows a gradually growing class of rootless untrained workers who man factories and construction sites. Their wages are rising rapidly, but are still low at $1.90 an hour. Living expenses are rising even faster. About half receive free or subsidized housing from employers, but that proportion is gradually falling.

NBS estimates that the country had 268.9 million rural nonagricultural workers in 2013. The number of rural workers increased 6 million from 2012 and is up 45 million from 2008 when NBS first started reporting annual numbers. (In English translations, NBS calls these people "rural migrants" but many work near home and live at home.)

China's rural nonagricultural labor force of 268.9 million equaled 34.5 percent of China's employed workers in 2013. It was roughly twice the entire U.S. nonagricultural labor force of 136.4 million.

Most, but not all, of the work is performed away from home: 102.8 million were employed in their home township while 166.1 million worked away from home. Of those working away from home, 47% were outside their home province.

Wages have been going up much faster than the number of workers. The average monthly earnings of rural nonagricultural workers rose 13.9 percent in 2013. This follows increases of 11.8% in 2012, 21.2% in 2011, and 19.3% in 2010.

Monthly earnings for rural workers averaged 2609 yuan, or $421 at an exchange rate of 6.2 yuan per dollar.

On average, they worked 25.2 days per month and 8.8 hours a day. Based on 222 hours of work per month, the average worker earned 11.75 yuan per hour, or $1.90 per hour at the current exchange rate. This doesn't include the cost of housing and feeding the workers borne by employers.

Most are employees working for wages; only 16.5% were self-employed. Of employees, 60% worked in manufacturing and construction sectors, while 82% of self-employed worked in services.

These are workers, not consumers. They live on a shoestring, presumably saving or sending most of their earnings home. They only spent an average of 892 yuan ($144) per month on living expenses. Most of that was spent on their housing--453 yuan ($73)--although 47% received free housing from their employer and 9.2% got money for housing from their employer. The predominance of employer-provided housing underlines the rootlessness of the workers. Less than 1 percent of migrants owned a home in the city where they work.

Expenses are going up faster than earnings--average living expense increased 21.7% in 2013. The share of workers getting employer-provided housing fell 3 percentage points. Expenses are higher in big cities, at 972 yuan, versus 807 yuan in small towns.

Most workers are unskilled: 29.9% received nonfarm occupational training and 32.7% received technical training. Only 10% had received any agricultural training.

The workers spent 9.9 months on average in nonfarm employment. Presumably, they spent significant time at home in their villages helping with seasonal farm work like planting or harvesting. No one knows how many people work on Chinese farms. Much of the work is now part-time.

China's unsustainable development model has taken it far down an alley it will be hard to get out of now. In a normal economy, workers are also consumers who spend their earnings, creating more demand that creates a self-sustaining economy. Since the 1990s China's growth model has relied heavily on exploiting a massive surplus of unskilled impoverished population that was locked up in the countryside on subsistence farms for decades. This group--a third of China's labor force--provides cheap labor to turn out manufactured goods and build edifices to support the near-first-world living standards of China's privileged urban minority.

The migrants keep coming, but at a slower rate--they increased in number by 2% in 2013. Their wages, however, are rising at double-digit rates, but the workers remain rootless itinerants in the cities where they spend most of their time. They save or send most of their earnings home to villages to support dependents and build new houses. The cash flowing into villages is monetizing the countryside economy, boosting costs and prices and changing the character of farming.

Meanwhile, life in cities is becoming less tenable for migrants as living expenses rise even faster than wages.

The rural migrants also have traditionally carried out much of the trading and transportation of agricultural commodities and other goods, but are increasingly being pushed out to make room for more capitalized logistics companies.

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