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Migrant workers struggle as China's factories slow

The global recession is shuttering manufacturers and pushing millions out of work or into lower wages.

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"The government is pretty good at figuring out how to stanch the problem, which is frequently [by] a combination of giving in to some demands and cracking down on the people who seem to be the so-called ringleaders," he explains. This strategy works better with "bread and butter" demands, which are easier to meet than ideological ones.

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The government has survived mass layoffs before. In the 1990s, China shed 50 million jobs amid relative stability as many state-owned enterprises closed. Today's migrant workers, by comparison, "are younger and more mobile. So the task of maintaining social order seems easier," Mr. Fewsmith says.

To start, the authorities are tackling immediate grievances like unpaid wages. Labor disputes have multiplied as bankrupt factory bosses skip town before payday. Local officials then help to pay arrears.

Zhou Chunxiang, from Hunan Province, says the Shenzhen government readily paid her and her peers' back pay. She hasn't found work since her DVD factory shuttered last November, but will look again after going home for the New Year, the young woman said recently as she sat at the train station, surrounded by her luggage and thousands of village-bound migrants.

But many such wrongs aren't righted. Shenzhen, whose government is required by law to provide back pay for failed factories and has one of the best track records, is covering only about 80 percent of what's owed, says Mr. Liu.

To help preserve jobs, Beijing this month decided to prop up low-profit, high-polluting factories, which it has sought for years to close, by reinstating an export rebate tax that helps them cut costs.

In some places, labor reforms – which protected workers but also raised costs – seem to have taken a back seat. Mr. Zhang and others say officials have grown more lax about enforcing 2008 laws that strengthened rules on contracts and social-security payments. "They don't say you don't have to follow the labor laws, but now it's 'one eye open, one eye shut,' " says a manager of a 700-employee textiles factory in Dongguan.

One option Beijing has floated is to build a social safety net for migrant workers by spending part of a 4 trillion yuan ($586 billion) stimulus package announced last November on social security, healthcare, and education. Last Wednesday, it announced a $123 billion plan to provide universal healthcare by 2011.

These measures would free workers from having to save for those services. They might also help fuel domestic consumption, which Beijing has tried to boost to counter falling foreign demand.

Quick-hit projects

Much of the stimulus, though, is earmarked for job-creating infrastructure projects such as roads and power plants.

The central government would like to launch green projects that move China toward a more energy-efficient economy, such as improving the electrical grid and investing in mass-transit systems, Lieberthal says.

But with local governments pressed to create jobs fast, they may resort to quick projects that may be ill-conceived.

Meanwhile, migrants are looking for jobs available now, even ones paying half their previous salaries.

Ms. Ma, who just lost her job as a cashier, says she's going back to Henan Province indefinitely. "I will ask my friends there about work," says the young woman, who left home just a year ago.

Nine out of 10 migrants find jobs through word of mouth from fellow villagers, and Chinese New Year is the best time to swap information about different cities and factories, says Liu, of ICO.

This village grapevine will shape China's migrant workforce in the coming months. But it has flaws. Based on what they hear, "many people will move from Guangdong to Jiangsu and Shanghai, and many people will move from Jiangsu and Shanghai to Guangdong," Liu sighs.