VZCZCXRO1158
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #2716/01 2650932
ZNR UUUUU ZZH
P 220932Z SEP 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 6169
INFO RUEHC/DEPT OF LABOR WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUEHOO/CHINA POSTS COLLECTIVE

UNCLAS SECTION 01 OF 03 BEIJING 002716 
 
DEPT PASS USTR FOR KARESH, STRATFORD, LEE 
STATE FOR EAP/CM 
LABOR FOR ILAB 
TREAS FOR OASIA/ISA 
USDOC FOR 4420/ITA/MAC/MCQUEEN 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ELAB PGOV EFIN CH
SUBJECT: China/Migrant Unrest: What Happened to Fears of 
Unemployment and Social Unrest? 
 
REF: A) GUANGZHOU 528 
 B) SHANGHAI 374 
 
THIS CABLE IS SENSITIVE BUT UNCLASSIFIED. 
 
¶1. (SBU) Summary: After reporting that 20 million migrant workers 
returned home for the 2009 Chinese New Year holiday unemployed, the 
Chinese government recently announced that the migrant labor 
situation has significantly improved, thereby reducing the 
likelihood of social unrest.  China's Ministry of Human Resources 
and Social Security (MOHRSS) reported 95 percent of migrants have 
returned to urban areas and 97 percent have found jobs.  The 
National Bureau of Statistics (NBS) quantified the current number of 
unemployed migrants as 4.2 million.  Other officials, factory 
owners, and migrant laborer NGOs also support these claims of 
greatly reduced unemployment, though some add that much new 
employment is part-time or temporary.  Factories in the export 
production areas of Guangzhou and Shenzhen have increased hiring, 
and there are even some reports of labor shortages in the area. 
While migrant labor employment rates are difficult to confirm and 
Chinese government officials have a vested interest in putting the 
most positive spin on unemployment, information from non-government 
sources appear to substantiate what seems to be a general turnaround 
in the migrant labor employment situation.  End Summary. 
 
--------------------------------------------- ---- 
Unemployed Migrants: From 20 Million to 4 Million 
--------------------------------------------- ---- 
¶2. (SBU) Chen Xiwen, China's MOHRSS Director of the Office of the 
Central Leading Group on Rural Work announced in February, shortly 
after the 2009 Chinese New Year holiday, that 20 million migrants 
had returned home without jobs. MOHRSS later lowered this figure to 
18 million unemployed, based on a survey jointly conducted with 
China's NBS. 
 
¶3. (SBU) In a recent press conference, MOHRSS Minister Yin Meimin 
said that while migrant worker employment has not returned to 
pre-financial crisis levels, it has increased significantly over the 
summer months; 95 percent of the migrant laborers who returned home 
before the holiday are now back in the urban areas, and 97 percent 
of them have found work.  MOHRSS officials also touted these migrant 
employment gains in a meeting with Embassy's labor officer, adding 
that MOHRSS also increased job training assistance for migrants who 
remained in their home provinces. 
 
¶4. (SBU) Peoples Bank of China Governor Zhou Xiaochuan provided a 
similar outlook to a visiting Congressional Delegation on September 
¶2.  According to Zhou, about 90 percent of the idled migrants have 
returned to the cities, and about 70-80 percent of those who had 
lost their jobs during the crisis now are employed, with roughly 
one-third of them working in manufacturing or export sectors, 
one-third in construction, and one-third in services.  He said the 
government hoped further development of service sectors would 
generate more jobs for the migrants. 
 
¶5. (SBU) In addition to the migrants who returned to the cities 
after the New Year holiday, Deputy Director Wang Yadong  of the 
Employment Promotion Department of MOHRSS announced that an 
additional ten million new migrants headed to cities to find jobs in 
the first six months of 2009.  The NBS on September 15 also 
announced the results of a recent survey that showed the total 
number of migrant laborers employed outside their hometowns 
increased 2.6 percent from the end of March to 151 million.  The 
same survey found that by the end of June 2009, 4.2 million migrants 
were still unemployed, of whom 28.7 percent had left their previous 
jobs because of "low income" and 50 percent due to "not having yet 
found a proper job" or "payroll cuts resulting from business closure 
or bankruptcy." 
 
¶6. (SBU) Some academics are skeptical that the migrant labor 
situation is as rosy as MOHRSS and the NBS report suggest, noting 
that the figures are manipulated: for example, by including migrants 
registered at training centers and labor dispatch agencies as being 
employed.  They also argue that much of the current employment 
increase is into part-time or temporary jobs.  However, even the 
skeptics agree that the migrant laborer employment situation has 
improved greatly from early 2009. 
 
--------------------------------------------- --------- 
Reports of Labor Shortages Support Message of Recovery 
--------------------------------------------- --------- 
¶7. (SBU) Numerous recent Chinese press accounts detail labor 
 
BEIJING 00002716  002 OF 003 
 
 
shortages emerging in Yangtze and Pearl River Delta areas previously 
hit by the economic crisis, though some academics note that the 
shortages are mainly due to a lack of skilled labor.  Reftel A 
describes a tight labor market among toy manufacturers in southern 
China due to factory owners' inability to find skilled labor at wage 
rates they want to pay, and reftel B notes Zhejiang Province's 
increased employment and some shortages of skilled labor. 
 
¶8. (SBU) Similarly, in recent meetings with NGOs and export 
manufacturers in Guangzhou, Dongguan and Shenzhen, Embassy Beijing 
Labor Officer and CG Guangzhou PolOff heard consistent reports of 
labor shortages in the area, a big change from the dire migrant 
laborer employment situation earlier in the year.  Nike Guangzhou 
representatives reported that their supplier factories have recently 
increased hiring, and that they have experienced some labor 
shortages in coastal areas.  Walt Disney representatives reported 
similar findings.  Finally, several Beijing-based labor academics 
also verified reports of recent labor shortages, particularly in 
coastal areas. 
 
¶9. (SBU) These reported labor shortages may not necessarily be 
entirely due to increased economic activity.  As noted in reftel A, 
there are numerous reports of factories trying to control costs by 
cutting overtime as they recover from the crisis, which makes it 
more difficult for them to attract skilled workers who might be able 
to make more money elsewhere.  Some experts also have said the 
shortages are a result of caution among migrants, some of whom may 
be unwilling to make the significant personal and financial 
commitments to return to urban areas without more stable labor 
markets.  Public infrastructure projects arising from the massive 
government stimulus spending also absorbed many migrants.  Finally, 
government job-training and business start-up programs helped keep 
some migrants home. 
 
----------------- 
No Sign of Unrest 
----------------- 
¶10. (SBU) Government officials, worried that widespread migrant 
laborer unemployment may trigger social unrest, obviously have 
welcomed signs of improving migrant labor employment.  According to 
local press, MOHRSS Minister Yin said that "the worst-case scenario 
we prepared for earlier, in which migrant workers who lost their 
jobs might turn up protesting, did not take place."  He added that 
"current measures taken by the central government will prevent 
further social unrest from happening."  Press reports and some 
academics have also commented that risk of migrant worker social 
unrest as a result of lay-offs earlier this year was overstated. 
 
------------------------------------------ 
Increasingly Flexible Migrant Labor Market 
------------------------------------------ 
¶11. (SBU) The Guangzhou-based director of training for Walt Disney's 
supply chain manufacturers provided perspective as to why, in 
addition to improving economic fundamentals, the migrant labor 
market is increasingly flexible.  As this market matures, many 
migrant laborers develop new confidence and different motivations 
from earlier migrants.  He noted that migrant laborers exchange 
information with others, particularly in their home provinces during 
the New Year holiday, and return to different urban locations if 
they hear of better opportunities.  Also, he said migrants consider 
factors other than wages; many now have additional personal 
motivations including wanting to live in and see different areas, 
having friends they want to be near, and even getting married and 
moving somewhere that works for both partners. 
 
------- 
Comment 
------- 
¶12. (SBU) Comment.  While migrant labor employment rates are 
difficult to measure, and MOHRSS may be exaggerating some figures to 
trumpet their effectiveness in reducing potentially destabilizing 
migrant unemployment, there seems to have been a clear turnaround in 
the migrant labor employment situation from early 2009.  China's 
official migrant laborer unemployment rate plummeted from 
approximately 20 million to 4 million in 6 months.  Significantly, 
although there were numerous instances of localized unrest this 
year, unemployment rates did not result in systemic social 
instability.  The improving labor situation may shape decisions by 
Chinese economic policymakers who have been hesitant to rein in 
China's current stimulus programs as long as unemployment remains a 
serious threat to stability. 
 
 
BEIJING 00002716  003 OF 003 
 
 
¶13. (U) This cable was produced with the assistance of CG 
Guangzhou. 
 
Huntsman