October 3, 2008

Future of daily wage labour

Most developing nations are seen to be an ideal place to put up production units for all major world giants, predominantly due to the cheap labour which is available. Most parts of the population is trying to move to the towns/ cites from their rural lifestyles in hopes of giving their children a better lifestyle and future. This is has been happening for some years now, and now all of a sudden there is this huge uproar of a shortage of labor in China.

I am not too sure whether the government has an accurate account of the population especially after reading about the Hukou system. This system is very much like a SS system in the US, but a more rigid and region specific. This system does not allow anyone to even travel to another region without a temporary residence permit. How can anyone be required to have a residence permit requirement within one's own country? This would mean that one is ideally only the citizen of a state and not of a country. Here is an interesting read from someone who knows about this first hand.

In 2006, the NY times stated that the shortage in labor in China would end up pushing up the wages and hence make products made in China not the bargain prices which was the case during those times. The Chinese wages/hour in 2006 were alarmingly low at a urban - rural average of just 64 cents, and the present rate is approximately 2.67 USD with 1 USD being spend on living expenses by the workers. These wages are mostly what is seen by a sweatshop worker in the most industrially inclined districts.

We hear that there has been a certain shift in the outsourcing of production work, be it from the car manufacturers or the dress makers, the number of items that you see in a common market place, with the tag ' Made in India' are far more common now. There are so many export rejects which you find at Sarojini Nagar of 'good' brands all available at dirt cheap prices, and all of them carry the ' Made in India' tag too.

On poking around a little more on the web, I came to know that the Indian daily wages are almost 2-3 times what a Chinese person would be getting for the same level of work. India is also seen to serve more in the service market rather than in the manufacture segment, this might also have a very strong link with the higher minimum wages recorded in India. As per the country, there is not a single minimum wage prescribed, but there are some set standards which are set on a state to state or industry to industry basis.

Now with China's increase in wages, the next best option as seen by many are India, even though it might prove to be a slightly more expensive bet than what China was a few years ago.


  1. Interesting read on hukou.
    China is wierd. I dont know if you know this but you cannot access your mail account in China, if its not a gmai.cn account.

  2. That is real weird...
    That's like Yahoo asking everyone from India whether they would like to to be routed to only yahoo.co.in.

    In fact, I still like the fact that my email id is at yahoo.com and not at co.in, makes me feel like a long time web user!


Thank you for stopping by. I would love to hear your thoughts ...