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December 09, 2003

China's Job Problem is Our Problem

This is why any jobs recovery in the US is unlikely to be stable. Our millions of unemployed are competing against hundreds of millions of Chinese unemployed for scarce global jobs:

Experts estimate that as many as 200 million farmers and rural workers are either unemployed or underemployed in a country of 1.3 billion people. And one report in the state news media found that only half of college graduates got jobs this year, compared with 95 percent in 1997.
Read that last line. China is producing millions of trained university graduates who are on the hunt to underbid even our most skilled jobs.

Labor Repression: For years, China has been covering up massive worker discontent, even riots, in the industrial heartland where few foreigners go. Journalists caught covering such stories are often expelled (see this 2002 story):

Reporters Without Borders (Reporters sans frontiers) has protested against the arrest and deportation of Canadian journalist Jiang Xueqin, who was covering demonstrations by workers in the north-east of China. "Having prevented foreign and Chinese journalists from covering the AIDS epidemic in Henan, the Beijing authorities are now imposing a news blackout on another sensitive issue. While a number of workers' representatives have recently been put behind bars, it is now a question of silencing all those who try to report on their struggle," stated Robert Mard, Secretary-General of Reporters Without Borders.

Other human rights organizations have detailed the brutal repression of Chinese unions demanding that the government address workers concerns. From Amnesty International:

Labour unrest in China is widespread. In March and April 2002, protests, strikes, demonstrations and factory occupations by angry workers have been reported nearly every day. Workers are demonstrating against low pay, illegal working conditions, lay-offs, redundancy terms, management corruption and delayed welfare payments.

Independent trade unions are not permitted in China. Such protests by workers are therefore generally illegal and have often been dispersed with excessive force by police...Many peaceful protests by workers over pay and benefits have turned into pitched battles between the workers and armed police, resulting in casualties and arrests. Workers and activists have been harassed or imprisoned for taking part in such protests or publicizing them.

Wages Not Keeping Pace with Productivity: And here's the frightening point for workers globally. Productivity of employed Chinese workers is increasing rapidly, yet wages are stagnant. As The Economist detailed earlier this year:
Economic theory says that differences in countries' wage rates should be reflected in differences in their productivity levels, and that any misalignment will be smoothed out over time. The fear is that, in China, that time could be painfully long. Millions of people are moving from the countryside to the cities. At the same time, state enterprises are shedding huge numbers of workersójust one of the four big state-owned banks has laid off 110,000 employees in the past few years. This huge pool of surplus labour helps explain why Chinese wages have been rising less quickly than productivity since 1996.
What this means is that these hundreds of millions of Chinese workers are producing more goods without compensurate income to purchase a similar quantity for themselves.

End of Fordism: Once upon a time, Henry Ford promoted the idea that higher wages for his employees (and similar industrial workers) would benefit everyone by giving workers the income to drive demand for those same industrial products.

But today-- given multinational production outsourcing to a Chinese regime brutally suppressing unions and worker wage demands, you now have a spiral of rising productivity and falling wage growth-- leading to a situation of global insufficiency of consumer demand.

Chinese workers can't buy their own products and they sure can't buy most goods produced by US workers, yet their productivity means they can increasingly substitute for US workers in many areas of production. This inexorably pressures US companies to lay off workers here and, where they don't, puts pressures on surviving employees to accept lower wages to keep their jobs.

Essentially, Chinese government repression of labor demands is the handmaiden of slashed wages and union busting here in the United States.

There is probably no more important issue for US workers than fighting for labor rights for Chinese workers. Their labor conditions are our future, one way or the other.

Posted by Nathan at December 9, 2003 05:46 AM