China adjusts to rising labor costs

While there are signs that China’s economic growth is moderating, rising labor costs remain a challenge amongst the country’s seafood industry. Local seafood processing facilities are sacrificing profits to secure labor, said Landy Chow, head of Siam Canadian’s operations here.

“At this moment in China factories are running at a margin of 1 to 3 percent, which is very low,” he said. “Some factories did hire less in order to maintain the cost. However, some factories are still hiring more because if they do not hire now, then the workers will be hired by other companies, then peak season comes and you have no workers, especially for shrimp factories. They have to hire now, even if the cost is rising.”

SeafoodSource this week sat with numerous migrant workers in smoky Internet cafes in the Liulichang section of Fengtai district, a southerly Beijing suburb popular with migrant workers for its cheap accomodations, while they searched local jobsites like and, which have postings seeking workers for seafood-themed restaurants and workers for fish farmers and distribution companies in Beijing. Salaries range from RMB 2,000 to 3,000 per month. Similar terms are offered by supermarkets in the capital. A Dalian “seafood farm” listed on offers laborers RMB 3,000 to 5,000 a month for tending to fish stocks. A similar job listed for Sanya offered RMB 1,000 to 2,000 per month.

The jobs listed on the websites offer wages far beyond typcial local minimum wages in Chinese coastal cities. Increases in minimum wages kick in across China next month. Shanghai will raise the monthly minimum wage for workers by 13 percent to RMB 1,450, a figure that excludes overtime pay and subsidies for working under hazardous conditions, according to the city’s labor bureau. Southerly Shenzhen city raised the minimum monthly wage by 13.6 percent in March, allowing full-time workers to earn no less than RMB 1,500.

Central government has pushed local officials to lift minimum wages by 13 percent a year up to 2015 in their territories as a way of promoting consumption. Nearby Guangzhou will likewise in April lift its minimum wage to RMB 1,470 per month, a year-on-year rise of 13 percent. Granted there are regional disparities in wage levels: Chongqing’s minimum wage is RMB 870 while westerly Lanzhou will raise its minimum monthly wage by 13.5 percent to RMB 860, effective 1 April.

Even as Chinese export growth slowed year-on-year in February, fierce competition between prosperous east coast cities and poorer provinces — which are now getting their own investment — was underlined by Guangxi province, one of China’s poorest, raising its minimum wage by an above-average 22 percent in January, giving local workers a good reason to stay home.

A survey published in March by labor consultancy Manpower showed labor shortages emerging in the Pearl River Delta, a major center of seafood production. It sees employment climbing 17 percent in Guangzhou and 20 percemnt in Shenzhen in 2012. The Manpower survey pointed to increasing spending on factory automation as firms battle to keep staff content to take jobs nearer to home companies are turning. 

Several seafood companies nationwide polled for this article reported a rise in wage bills. Mao Xin, international sales manager at Avic Seafood in Dalian, said labor costs are up. So too in the south — Eric Zhang at Asian Seafood in Guangdong said his firm is squeezed between limp demand from the European Union and United States alongside climbing wages. “As the minimum wage rises, people are less willing to do the dirty, hard jobs,” he said.

China’s Ministry of Human Resources and Social Security recently announced that the average monthly salary for the country’s migrant workers from rural areas reached RMB 2,049 (USD 325) in 2011, up 21.2 percent from 2010. The department also reported that the number of rural migrant workers rose 4.4 percent year-on-year to 252.78 million by the end of 2011.

As migrant workers’ wages increase, so too local officials have been pressured to urgently resolve disputes over unpaid wages and labor contracts. Worried about the potential of unrest, government has lately stressed improving access to education and medical services and obstacles such as the Maoist Hukou household registration system, which limits migrants’ rights to social services to their hometowns.

With inflation tamed at 3.2 percent — the monthly figure reported in March — rises in wages put China’s workers in a good position to spend more, in line with government targets. Back at the Internet café in Fengtai, job seekers pointed with excitement to openings for trawler “catcher” workers, listed at RMB 15,000 a month.

However, some quickly had other thoughts. Weighing up job offers for fish farm feeder or trawler worker, Guo Yan, a 20-year-old native of Henan province in central China, worried about the high seas: “It means you have to on the boat for a long time on the sea. It implied lots of things, like you have to leave your family, you have to work probably much more time than a feeder, and you also might have to face lots of dangers. Because it is on the sea, nobody could ensure anything. Also, you have to finish the workload before deadline. Working as a feeder is an easier job compared to the catcher.”


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