Cheaper Robots, Fewer Workers

The New York Times:  Faced with an acute and worsening shortage of blue-collar workers, China is rushing to develop and deploy a wide variety of robots for use in thousands of factories.

Waves of migrant workers from the countryside filled China’s factories for the last three decades and helped make the nation the world’s largest manufacturer. But many companies now find themselves struggling to hire enough workers. And for the scarce workers they do find, pay has more than quintupled in the last decade, to more than $500 a month in coastal provinces.

Chinese businesses and the government are responding by designing and starting to install large numbers of robots, with the goal of keeping factories running and expanding without necessarily causing a drop in overall employment.

Workers are scarce partly because of the government’s “one child” policy and the rapid expansion of the university system.

Government rules limiting most couples to just one child halved the birthrate in China from 1987 to 2003. The birthrate then leveled off at a lower level per 1,000 residents than in the United States. So China has lots of workers in their late 20s, but an ever-shrinking supply of workers now entering the work force each year.

The main ages for factory labor in China and in other developing countries are 18 to 24. Compounding the labor shortage for China’s manufacturing-intensive economy is that workers are staying in school longer — much longer. And following a Confucian tradition that the educated do not soil their hands with manual labor, graduates overwhelmingly refuse to accept factory work, except in supervisory, design or engineering positions.

As recently as 1997, China had only 3.2 million undergraduate students. With the Asian financial crisis that year, China began expanding its universities quickly, in an attempt to offset job losses among young people.

The expansion of universities has continued ever since, and 25.5 million undergraduates were enrolled by last December. Roughly a quarter of China’s young people now attend at least some university, and the proportion is rising steadily.

A few low-tech industries, like garment manufacturing, are moving from China to places that still have very low wages, like Bangladesh. But many industries, particularly electronics, are still moving factories to China. That is because so many of the parts suppliers are now in China that it is often more costly to do assembly elsewhere.

So although building robots to replace workers is seldom cheap, a growing number of companies are finding it less costly than either paying ever-higher wages in China or moving to another country. — Keith Bradsher