China Factories Turn to Undocumented Labor as Local Wages Jump

China's embrace of higher wages to
help bolster consumer spending has sparked a jump in factories
along the east-coast export corridor bringing in undocumented
and lower-paid workers from Myanmar and Vietnam.

Border police found 59 illegal immigrants from Vietnam in a
bus heading for the Pearl River Delta on July 29, the official
Xinhua news agency reported on Aug. 6. "Thousands" of workers
from Vietnam and Myanmar were discovered working illegally in
Shenzhen between 2010 and 2012, the state-run China News Service
reported, citing a local prosecutor.

China, the world's most populous nation, faces elevated
labor costs as the government drives up incomes and the working-age population starts to shrink. While official data show
domestic migrant workers currently earn an average 2,477 yuan
($405) a month, some illegal employees made about 1,400 yuan a
month in 2011, with 200 yuan of that going to snake-heads, a
term for labor traffickers, China News said.

"The problem will become more serious, as salary gaps
between China and neighboring countries such as Vietnam are
actually widening," Qu Jian, a researcher with the China
Development Institute, said in a telephone interview from
Shenzhen. "It's time for the government to think of a
systematic approach to address the issue, say making it easier
to hire overseas laborers legally," said Qu, whose research
group provides advice to the government.

Happy Hiring

Employers are happy to hire undocumented immigrants because
they don't have to pay pensions or health-care insurance, China
News Service reported. The minimum monthly wage at Vietnam state
firms and government agencies was $55 in June, according to the
Vietnam labor ministry's website.

The share of China's population that's of working age saw
its first consecutive annual decline since at least 1995 last
year, statistics bureau data show. A survey of 325 members of
the American Chamber of Commerce in China in November and
December found that rising labor costs were the biggest business
risk in the country.

"It's an emerging criminal act of organizing people from
southeast Asian countries to work illegally in Shenzhen," Huang
Yong, a Shenzhen prosecutor, was cited as saying by China News
Service. "The workers are obedient, hardworking and never
complain about overtime -- in short, they are very attractive
for some firms struggling with costs."

China's Ministry of Public Security conducted a four-month
campaign in 2012 that targeted the provinces of Guangxi, Yunnan,
Guangdong, Fujian, Hainan and Jiangsu, catching 139 organizers
of illegal labor and 3,410 illegal immigrants, according to
Xinhua.

To contact Bloomberg News staff for this story:
Xin Zhou in Beijing at
xzhou68@bloomberg.net

To contact the editor responsible for this story:
Paul Panckhurst at
ppanckhurst@bloomberg.net

Aug. 9 (Bloomberg) -- Julian Callow, chief international economist at Barclays Plc, discusses the outlook for the Chinese economy.
He speaks with Francine Lacqua and Guy Johnson on Bloomberg Television's "The Pulse." (Source: Bloomberg)

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