Foxconn's real staff problem - finding them

Foxconn’s workforce problem goes much deeper than just the latest outbreak of worker unrest.

Its real issue is it can’t find enough staff. Yes, the two issues may well be connected, but the prime issue issue is China's vast inland workforce is shrinking as demographics shift and expectations rise.

The Taiwan-owned electronics manufacturer is seeking 200,000 employees for its new Zhengzhou plant to assemble and ship the iPhone 5. And despite the active support of the Henan government, including subsidies of more than 100m yuan ($15.8 m), it appears to be falling well short.

This story (from China Business via Sina), is revealing about Foxconn’s perceived importance to regional administrations as well as about the labour shortage.

The Henan government, which had done much to lure Foxconn to Zhengzhou, promised in early Augst to find the 200,000 bodies. With a population of 94m, Henan is the third most populous Chinese province and as recently as 2010 provided as much 70% of the migrant workforce in the Pearl and Yangtze deltas.

As per usual, the provincial government delegated the work to the next level down, the city and prefectural governments, who in turn passed it on to the towns and villages.

We don't know the exact result, but the story offers to example. Zhumadian city, which was required to find 3,200 staff by the end of August, and recruited just half that. Ningling, a county under Shangqiu city, reached only a third of its 300 quota by mid-September.

These shortfalls were in spite of the 200-yuan government subsidy paid to each worker, supposedly to defray the cost of transport, food etc en route to the Zhengzhou plant.

The government explanation is that these ultimately will pay for itself. The Foxconn multiplier effect should mean that dozens of other suppliers firms will also set up in the province.

But if these numbers are indicative, it's going to take a lot more than a government subsidy to meet the mark. As this story observes, with Foxconn and other factories shifting their production base to central and north-western China, the competition for bodies is just going to intensify.