At seven o’clock in the morning, the wet market on Wulumuqi road in Shanghai is hitting rush hour. The city’s army of ayis, or maids, are picking up vegetables, eggs and meat for the day, or are walking the kids of wealthy families to school. Street sweepers clear the debris spilling from the roadside shops onto the street. Opposite the market, builders are noisily renovating a tea house.
It is a typical scene in Shanghai’s leafy French Concession. But almost nobody in it is Shanghainese. They are migrants from other parts of China who came to seek their fortune in the big city, and Shanghai’s entire economy is built on their backs.
For three decades now, China’s economic miracle has been powered by this huge pool of cheap labour, as waves of migrants left the countryside and moved east.
But life for China’s hundreds of millions of migrant workers is changing: their wages are rising; their home provinces are developing economically, and calling them back; the competition for their labour is increasing; and cities like Shanghai, which once tried to limit their numbers, are now fighting to keep them. These trends have the potential to help rebalance not just China’s, but the world’s economy.
MASS MIGRATION
Today, migrant workers make up almost half of Shanghai’s population, according to the latest census. Their numbers have more than doubled in the past decade, from 3.8 million in 2000 to over 9 million last year. Without them, Shanghai, like every other major city in China, would grind to a halt, without anyone to staff restaurants and call centres, shops and building sites, small businesses and factories.
“You only have to look at how the city operates during the Chinese New Year holiday, when all the migrants return to their families in their home provinces,” says Zhou Haiyang, an expert on the city’s population at the Shanghai Academy of Social Sciences (SASS). “Life suddenly becomes very inconvenient. The streets are dirty; the price of food goes up because deliveries stop; and without the domestic help, there is no one to take care of the elderly.”
The first wave began in the mid 1980s, as farms were decollectivized and families were left to fend for themselves. Back then, life in the countryside was precarious: infant mortality in some poorer areas was six times higher than in China’s cities; malnutrition was widespread; and education was scarce. According to the census in 1982, almost three-quarters of people in the countryside had gone no further than primary school.
By 1989, the year of the Tiananmen Square protests, 30 million people had moved to the coast. Today, according to the latest official figures, at least 145 million have moved from their home towns to other provinces.
The first generation of migrants “went out” to find money, usually leaving their families at home and working from job to job and city to city. They built Shanghai’s glittering skyline, its elevated highways and the metro lines that run beneath. They staffed, and continue to staff, the factories and docks, taking on jobs that the locals would not do.
However, the cities they flooded to were hardly welcoming: locals were scornful of the “low quality” migrants and their poor manners; many prosperous urbanites found people from the countryside far more alien than the foreigners who had begun to arrive.
Officials fretted about being overwhelmed. Until 2004, migrants in Shanghai had no access to social security. Their children were often denied access to schools, and many migrant communities built their own, bringing teachers with them from home.
STIFLING CONSUMPTION
Official statistics show that China’s private consumption-to-GDP ratio is just 35%, having fallen steadily since the 1990s. China’s muted domestic consumption can in part at least be directly traced to this feeling of insecurity among the migrant community. Worries over healthcare, pensions and a lack of educational opportunities for their children have led migrants to save as much of their cash as they can, and to send much of it back home to their families in the countryside.
“I came to Shanghai 10 years ago,” says Fang Chunmei, a 45-year-old ayi from Yibin in the south-western province of Sichuan. “Throughout these years, I have always worried about security in my old age. I still have no social insurance at all, because I have never been employed by a company. I contacted the Shanghai government to see if I could pay for myself, but the answer was no.” Because of these worries, Fang and her husband save around RMB3,000–4,000 ($470–626) a month.
RETURNING HOME
In 1995, a hierarchy of jobs was drawn up which allowed migrants to work in heavy industries and textiles, and occasionally in the electronics and consumer goods factories if required, but never in security, administration or any white-collar jobs. “Even the maintenance of elevators was closed to non-Shanghainese,” says Zhou at SASS.
As the economy grew, however, restrictions fell away. “There was a labour shortage, and now [almost] all the frontline workers in Shanghai, especially in shipping, steel and chemicals, are migrants,” he adds.
But an enormous demographic shift is now underway. The first generation of migrants is reaching retirement age. Factories and building sites often refuse to employ workers who are older than 35, worried about the speed of their hands and the strain on their bodies. Without education, many cannot find jobs in the service industry.
And so they are returning home to their families. Some hope to translate their savings into small businesses, while others can now find work at the factories that have begun popping up inland to serve China’s domestic market, or on the projects extending and upgrading China’s inland railways and roads. Beijing allocated nearly $600 billion to stimulating the economy in 2009 and 2010, and significant money has gone inland, creating opportunities closer to home.
This inland shift is significant, as it has the potential to alleviate the yawning gap between wealthy eastern provinces and poorer inland regions. According to China’s recent census, per-capita income in Shanghai was RMB73,297 ($11,492), compared to RMB21,013 ($3,290) in Sichuan and RMB20,611 ($3,225) in Anhui, an inland province around 300km from Shanghai.
Their children have more choices. Because of the one-child policy, there are fewer of them, and as the labour pool shrinks, wages have risen dramatically. They are also better educated. China has rapidly expanded its university system, and there were 6.4 million new students in 2009 compared to just 2.2 million in 2000. A network of technical colleges offer vocational training. These children are still leaving home to find work, but now they can afford to be pickier.
ENTICING WORKERS
Nevertheless, China’s big eastern cities continue to be a huge lure. In a recent survey by the official state news agency Xinhua, over 70% of migrants said they preferred to work on the east coast, with just 14% choosing an inland destination.
“Younger people are moving to the coast because there are still better work opportunities here,” says Zhou. “More and more have a college education and can get a better salary here. Some low-end jobs have moved inland, but talent is moving in the opposite direction. We think Shanghai’s population will rise [from 20 million] to 25 million and then 27 million, and they will all be migrants. Right now, every city in China is competing for their pool of labour.”
Of the city’s 9 million migrants, 7 million are working, with the others being family members. Four million work for the city’s businesses, while the other 3 million have their own small companies. And while many still work in factories, more and more are working in the city’s service industry.
“There is plenty of space in services,” says Zhou. “As one example, we need domestic helpers. Shanghai’s natives are ageing rapidly. There are currently 3.3 million Shanghainese over 60, and that figure will double in the next 20 years,” he adds.
With a predicted shortage of 150,000 workers, once-scornful Shanghai is now frantically courting migrants. “We have a high standard of living here, and the salaries on offer are higher. If workers live economically, they can save a lot of money,” says Zhao Jiande, the director of the migrant worker department in Shanghai’s local government.
In a bid to entice workers, Zhao says Shanghai had ploughed more than 3 billion yuan ($470 million) each year for three years into the education system, transferring many migrant children into the local public school system and sprucing up the facilities of the migrant schools.
“We wanted to open up secondary schools to migrant children too, but the central government said it was too early. So instead we have technical colleges, and there were 3,000 students at them last year,” he says. Last year, Shanghai became the first city in China to offer free education to all migrant children aged between seven and 16.
Meanwhile, he says that 60–70% of migrants have now switched to an urban social security system that is roughly 10 times more generous than the old “comprehensive” insurance scheme. The new system costs employers at least 10 times as much in contributions, but will be compulsory for all firms within five years.
To protect workers, Shanghai now offers immediate compensation to workers whose factories have gone bust, or whose bosses have absconded. “We pay them, and then we will track down the bosses,” says Zhao. “That helps ease their minds, because they worry after a year of hard work they may end up with nothing.”
And he says the government had told factories to build dormitories for their workers in old and vacant workshops and warehouses. “Otherwise, we also offer buildings to rent out as dormitories. We are hoping to allow migrants to rent our low-cost housing too, but there is a limited supply, and it is only right that locals should get priority,” he adds.
Furthermore, concerted efforts are being made to provide greater support and pastoral care. Job centres have been set up in neighbourhoods where migrant workers live, as well as free internet cafes and even free cinema nights. In one Shanghai neighbourhood, a roller disco has proved particularly popular.
“We have asked all companies to provide newspapers, television and internet access... and to hire psychologists and counsellors to help give the workers ways of releasing their pressure and reducing their loneliness.”
While cities like Shanghai and Guangdong have decades of experience managing their migrant populations, many of China’s inland cities may not be equally prepared. “Factories always say they want to hire workers, but when huge numbers come, there is the realization that families have to be taken care of, housed and educated. And the new generation is not the same as the old generation. They may not be happy with factories without a good environment, or with a tough working culture. They feel frustrated by factories that are spartan and military,” says Zhao.
IN IT FOR THE LONG TERM
At a job market in Shanghai’s Putuo district, many of the migrants browsing the stands have a college education and are looking for a salary of between RMB2,000–3,000 yuan a month ($313–470), roughly twice what they would have earned before the financial crisis.
Unlike the first generation of migrants, many of whom worked in cities for just three to five years at a time before moving on, 21-year-old Liu Qing, an electrical engineering graduate from Kaifeng in central Henan province, wants to stay in Shanghai for 20 to 30 years. “I just want to stay as long as possible, and to see the world,” he says. However, he adds that many of his contemporaries chose to stay in Kaifeng rather than move east, estimating that just a third of his classmates at school emigrated after graduation.
CHINA’S NEW CONSUMERS?
The changes that Shanghai is pushing through, and which other cities in China are also likely to adopt, could help to unlock the savings accounts of migrants like Liu, who is already aspiring to lead a lifestyle his parents could only dream of.
“Migrants are more likely to become the next big consumers in China,” Cai Fang and Wang Meiyan, two researchers at the Chinese Academy of Social Sciences wrote in a recent article for East Asia Forum. “And that will support China’s transformation from export-led to domestic demand-driven growth.”
Anyone strolling along a shopping street in a major Chinese city can see that consumption figures are likely under-reported by national statistics, which still rely on obsolete, 30-year-old sample survey procedures. Retail sales are officially growing between 15–20% a year.
Until now, however, very little of the returns of China’s economic growth have gone to households. Boosting benefits, wages and rights for this second generation of migrants is an important first step in allowing consumption to rise as a share of GDP and helping to rebalance global demand.
But even now, Liu said he was unaware of the benefits and rights that the city has opened up to attract him. “It’s impossible for me to know about these things,” he says, before confessing that he had been perplexed by the enormous salary deductions taken by his previous employer. “I would rather just take the cash than have housing benefits and insurance,” he says.
Others also voiced doubts whether they would be able to transfer their pensions and benefits back to their home province, and the widespread belief is that Shanghai has opened up its pension contributions to migrants because the city’s finances are underfunded.
For Fu Chaoge, a 22-year-old from Anhui who also attended the job fair, the rent in China’s big cities remains the biggest problem facing migrants. “I share what is called a group flat,” she explains. “There are seven groups of friends, each with their own bedroom. In my bedroom we are three girls and we still pay RMB550 each per month. And then the medical costs are so high.”
However, she acknowledges that her chances of further education, career training and opportunities were all much better in Shanghai than elsewhere. “I came here for an opportunity. If there had been a big bank or a state-owned company in my home town I would have stayed there,” she says.
A GLIMPSE OF THE FUTURE
Many Chinese believe that Shanghai is 10–20 years ahead of the rest of the country in terms of development, especially in terms of providing better social infrastructure for both its native and migrant populations. Its efforts to provide greater security for migrants, if successful, may provide a glimpse into China’s future – one in which migrants help fuel domestic demand and in which the side effects and social dislocation caused by China’s low-cost manufacturing model are significantly lessened. Other cities are still struggling, however, with how to balance their migrant and local populations. In recent days, Beijing has closed down a series of migrant schools, leaving 30,000 students with nowhere to study as the new academic year began in September.
Critics said the move was nothing more than an exercise in population control, with the authorities hoping that migrants would move home to make sure their children could be schooled. “Lots of cities are simultaneously trying to attract higher-quality migrants but also trying to make sure there are not too many migrants,” says Zhou. “What has happened in Beijing is a symptom of that,” he adds.
How China’s cities cope with their migrant populations, and whether more can follow some of Shanghai’s examples, will be key to the country’s next decade of development.