Ben Cavender

Rising wages have already put China in the same cost-league as Portugal and South-Africa, forcing manufacturers to low-wage countries. But that is only one challenge for a major shift in the labor market, says business analyst Ben Cavender to CNBC.


As China’s economy expanded at breakneck speed, so has pay for employees. But the wage increase has translated to higher costs for companies with assembly lines in China. Some firms are now taking their business elsewhere, which also means China could start losing jobs to other developing countries like Sri Lanka, where hourly factory wages are $0.50.

Apparel manufacturing has been hit “extremely hard,” said Ben Cavender, a principal at Shanghai-based China Market Research. “The result has been that factory owners have gone on a massive investment spree outside of China.”…

With fewer jobs available — and perhaps more robots buzzing on factory floors — experts maintain unemployment will be an ongoing concern, especially as the government works to maneuver the world’s second-largest economy away from manufacturing and toward services.

“You’re talking about a way to re-skill millions of workers, but it’s not clear what jobs they’re going to be placed into,” Cavender said. “They’re creating white collar, clerical jobs here as quickly as possible, but it’s still not enough to go around.”

More in CNBC.

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