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R 110821Z DEC 07
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 6726
INFO RUEHOO/CHINA POSTS COLLECTIVE
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UNCLAS SECTION 01 OF 02 GUANGZHOU 001275 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM, DRL 
 
E.O. 12958: N/A 
TAGS: ELAB PHUM PGOV CH
SUBJECT: The World's Factory Floor: Unions and Government 
Officials Downplay Labor Shortage Concerns 
 
REF A: Guangzhou 1256 
 
¶1. (SBU) SUMMARY: Widespread reports of a labor shortage in 
the Pearl River Delta are exaggerated, according to 
representatives from the Guangdong Federation of Trade 
Unions (GDFTU) and local and provincial government labor 
officials.  Union officials boasted both of portable 
pension schemes allowing migrant workers to take their 
pensions with them for retirement in other provinces, and 
of monitoring working conditions through a network of 
thousands of informers. Though generally optimistic about 
the impending Labor Contract Law, officials said that its 
initial implementation would likely be challenging.  END 
SUMMARY 
 
¶2. (U) This is the second of three cables reporting on 
current labor conditions in the Pearl River Delta.  Reftel 
examined the state of labor NGOs, and a subsequent cable 
will describe conditions for migrant workers here. 
 
What Labor Shortage?  Oh, That One. 
----------------------------------- 
 
¶3. (SBU) The media is responsible for blowing the issue of 
labor supply out of proportion, according to Guangdong 
Labor Department Labor and Employment Service Center Deputy 
Director Chen Ruibin.  In his personal experience, said 
Chen, the labor shortage was not serious.  Chen placed much 
of the blame on companies and factories, whose low wages 
were sometimes insufficient to attract workers.  In a 
separate meeting, labor NGO director Huang Zhiming echoed 
Chen's comments, saying that if factories were willing to 
pay more in wages, there would be no problem recruiting 
enough workers. 
 
¶4. (SBU) Shenzhen Labor and Social Security Bureau 
Assistant Researcher Huang Hanlin also thought the labor 
shortage was not a serious problem.  Huang said the new 
generation of migrant workers has higher expectations when 
job hunting than did its predecessors.  In a separate 
meeting, EBox Digital Technology Product Company General 
Manager Boder Lau also noted this shift in job-seekers' 
expectations, saying that his company had had to raise 
wages by 20 percent in 2007 to attract enough workers. 
 
¶5. (SBU) Guangdong Labor Department International 
Cooperation and Exchange Division Director Wu Ling 
described the Pearl River Delta (PRD) labor situation as a 
"structural shortage," in which only certain sectors and 
groups -- such as skilled workers or young, female workers 
-- did not have enough people.  Huang Hanlin added that the 
high-tech sector in particular could not find enough 
skilled workers, but it was also true that unskilled 
workers in the garment, footwear, metal, and toy industries 
were in short supply, due to low wages. 
 
Seven Thousand Informants 
------------------------- 
 
¶6. (SBU) Approximately 7,000 informants working in 
factories all over the province feed information about 
working conditions to the union, according to GDFTU Legal 
Aid Division Director Liu Guobin.  Liu said that these 
informants were expected to report incidents -- especially 
those with the potential to develop into labor disputes -- 
to the union, which would then attempt to resolve the 
incidents before they escalated into something more 
serious. 
 
¶7. (SBU) Due to a high prevalence of labor incidents 
relating to the non-payment of wages, the province also has 
developed an electronic system to monitor wage payment, Liu 
said.  The system allows the Labor Bureau and the GDFTU to 
scrutinize factories' payment practices, making it more 
difficult for employers to refuse payment or to make late 
payments to workers. 
 
A Portable Pension Scheme, but Many Do Not Participate 
--------------------------------------------- --------- 
 
¶8. (SBU) GDFTU Grassroots Organization Division Director 
Zhou Wangsen said that, regardless of home province or 
where they decide to retire, migrant workers in Guangdong 
can benefit from the province's pension scheme at 
retirement as long as required contributions are made to 
the program for fifteen years. Guangdong Department of 
 
GUANGZHOU 00001275  002 OF 002 
 
 
Labor's Chen Ruibin noted that only about half the migrant 
workers in Guangdong participate in the pension scheme, 
which he said was modeled on a pilot program originally 
launched in Shenzhen. 
 
Rocky Start Likely for Labor Contract Law 
----------------------------------------- 
 
¶9. (SBU) GDFTU's Liu said that implementation of the new 
Labor Contract Law would initially be difficult, since it 
would take time for companies to become "accustomed to the 
law."  Nonetheless, our government contacts were generally 
optimistic that the new law would benefit workers. 
Shenzhen Labor and Social Security Bureau Policy and Law 
Division Chief Mo said he believed the law would "offer 
stronger protection to workers" while simultaneously 
keeping the labor market "well-regulated." 
 
The Guangdong Federation of Trade Unions 
---------------------------------------- 
 
¶10. (SBU) Founded in 1953 with the mission of organizing 
workers and protecting their legal rights, GDFTU has nearly 
15 million members and 137,000 grassroots-level trade 
unions, according to Vice Chairman Lin.  Zhou Wangsen noted 
that 30,000 of Guangdong's 40,000 foreign companies had 
unions, including 534 of 692 branches of Fortune 500 
companies in the province. In response to a question about 
why the national-level All China Federation of Trade Unions 
has so publicly targeted foreign-invested enterprises for 
union organization when China's trade Union Law makes no 
distinction between domestic and foreign enterprises, Zhou 
denied that foreign companies were particularly targeted, 
claiming that GDFTU makes equal efforts to unionize 
domestic and foreign companies alike. 
 
GOLDBERG