PC production lines located in Yangtze River Delta in eastern China and Pearl River Delta in southeastern China as well as Chongqing and Chengdu, in western China, have recently seen labor shortages averaging 30%, according to industry sources.

The sources expect the shortage gap will expand as the end of the year approaches; small- to medium-size players may face even stronger pressure of being eliminated from the market.

Compared to previous years when labor shortages normally occurred only around the Lunar New Year holidays, the problem in 2011-2012 has emerged a lot earlier and is believed to have been caused by workers in China having no concerns about finding new jobs after returning after the new year as production lines in these regions have always been short of workers; as a result, workers are quitting jobs earlier to return to their home towns to avoid from being caught up in holiday traffic jams.

To resolve the issues, the government of Chongqing has implemented policies to help keep workers starting from school, but the sources still expect the shortage to be at least 20-30%.

As labor shortages and increasing employee salaries have both greatly raised operating costs for enterprises, some smaller players are already facing pressure and the market may soon see another wave of eliminations.

Source:digitimes