Recruitment Difficulty and Expensive Employment Puzzle the Shipbuilding Industry

Wu Xiuxia

A graduate of a shipbuilding technical school did not want to go to a shipbuilding company to be a welder“exposed to the sun and rain”. Instead,he chose to go to the dairy tea shop to sell milk tea and get a one-yuan commission for a cup of milk tea. A plumbing worker with more than 10 years of working experience in a shipbuilding company left, switched to logistics, and became a small boss. After receiving calls from two shipbuilding companies, an unemployed worker was not in a hurry to choose which company to go to. Instead, he waited for a “price increase” to see which shipbuilding company would pay a higher salary. In the labor market of the shipbuilding industry, such stories are unfolding one after another.

The shortage of labor is becoming a serious challenge for the shipbuilding industry. Executives of a number of shipbuilding enterprises in Jiangsu told the reporter that at present, the labor force of shipbuilding enterprises is becoming older. The first generation of migrant workers in the post-60th generation are gradually quitting the shipbuilding industry as they are unable to work so hard, and the new generation of post-90s young people generally do not want to enter the industry. Shipbuilding companies are temporarily short of labor force and are facing huge fault risks, and the problem is expected to become more prominent in the coming years.

Where's the Labor Force?

At the peak of the last shipbuilding market, the front-line workers of many backbone building enterprises could reach tens of thousands of people, and the scene of “ten thousand people building ships” could be seen everywhere in the coastal areas along the Yangtze River in China. Nowadays, the “spectacular event” no longer exists, in addition to the depression of the shipbuilding market,shipbuilding companies encountering recruitment difficulty is also an important cause.

Wang Jinsong, HR head at CSSC Chengxi Shipbuilding Co Ltd, said it is becoming more and more difficult to recruit front-line production workers in shipbuilding enterprises, as mainly affected by the following factors. First of all, the shipbuilding industry continues to be depressed, shipbuilding enterprises generally suffer from poor performance,the treatment given to workers falls short of the expectations of workers,and many people are unwilling to work in shipbuilding enterprises. Secondly,the shipbuilding company has a lot of work in the field and the working environment is poor. However, many of the post-90s and post-95 young people are only kids, lack the quality of bearing hardships and standing hard work, and do not want to enter the shipbuilding company to engage in “bitter, dirty,tired” frontline work. Moreover, after the expansion of enrollment in colleges and universities, many college students have a high position for employment,and few people are willing to work on the front line. In addition, with the largescale development of the western region and the development of local economies,the central and western regions have also created a large number of jobs, the costs of employment and living in their hometowns are relatively low, attracting many people to return to their hometowns for employment.

Principals of some shipyards said most workers have come from areas of northern Jiangsu, Anhui and Shandong in the past years.In recent years,however, people in these provinces have been reluctant to engage in “bitter,dirty, tired, dangerous” front-line work in shipbuilding enterprises, and shipbuilding companies have to recruit workers in remote areas such as Yunnan,Gansu and Guizhou. Wang Jinsong said the shipbuilding industry, as a concentrated industry of dangerous jobs,has obvious disadvantages in the labor recruitment market. Compared with shipbuilding, ship repair is even more bitter, dirty, tired, and less attractive to young people. “CSSC Chengxi is located in Jiangyin City, with more than 40 local listed companies, and many workers with general skills are more willing to work in other industries and have more options,”he said。

In the process of interviewing Jiangsu, Zhejiang and Shanghai related shipbuilding enterprises, the reporter learned that in addition to the above factors, there are many objective factors that lead to the difficulty of recruiting workers in shipbuilding enterprises. With the promotion of Internet technology, the tertiary industry, represented by domestic economics, decoration, catering, express delivery and other services, has continued to expand, attracting a large number of labor force, such as the shipbuilding industry and other manufacturing workers have been continuously distributed. A shipbuilding company executive said the daily salary of a clay tile worker in the decoration industry can reach 400 yuan per day, and some employees engaged in domestic economics and express delivery industry basically earn about 300 yuan a day, while a skilled welder in a shipbuilding company can earn up to 280 yuan a day. In shipbuilding companies,the most scarce grinders in the production line earn less. The grinder does the filthiest and most tiring work in the shipbuilding company, but the average daily salary is only about 185 yuan. At present, few of the workers in this type of work come from the more affluent coastal provinces and cities along the Yangtze River, such as Jiangsu, Zhejiang and Shanghai, while most of them are farmers from remote areas of southwest China,such as Yunnan and Guizhou, with a low educational level with an average age of 40 to 50 years old. In addition,shipbuilding workers work hard and earn lower wages, but their entry threshold is much higher than that of ordinary service workers. As shipbuilding enterprises require higher requirements in the examination of workers' qualifications and safety work, many workers in remote areas because of their low level of education, fail to pass the examination,can not get a job certificate, and even if they have the willingness to work in shipbuilding enterprises, can only be shut out.

The head of a labor team in Shanghai told the reporter that in recent years, the state has increased investment in infrastructure, overpasses,bridges, tunnels and other infrastructure projects need a large number of labor,resulting in more serious labor drain from shipyards. Outsourced workers are very sensitive to wages, once there are higher pay opportunities,they will soon leave the shipbuilding company to seek other employment. In 2015, before the construction of the Shenzhen Subsea Tunnel project, several shipbuilding companies near Guangzhou suddenly lost hundreds of front-line workers, they left the shipbuilding company to engage in infrastructure work, the daily salary is between 370 yuan and 380 yuan, if they are skilled welders, the pay will be even higher. Today, many shipbuilding workers change jobs quickly after mastering a skill, so about 20% of the people in the shipbuilding industry switch to other jobs every year. The head also admitted that for workers, they value the wages they receive more than benefits such as social security.

Labor Cost Rise in the Past Decade

“It is not only difficult to recruit,but also expensive to employ.” The head of a shipbuilding company in Nantong said both the cost of the job and the employment of labor are too high.In recent years, the employment cost of shipbuilding enterprises has increased by 5% to 10% a year, which is much higher than the improvement of production efficiency of shipbuilding enterprises.How to pay rising workers' wages and raw material costs on the premise of ensuring profitability has become a very painstaking job for shipbuilding companies.

The high cost of employment is reflected in all aspects. The wages of workers are increasing year by year,the cost of employment in enterprises is rising, the average wage of welders in shipbuilding enterprises is 260 yuan a day, and the average wage of assembly workers is 240 yuan a day. At the same time, the price of ship orders undertaken by shipbuilding enterprises is still low,which can not guarantee profitability.In order to deliver the ships on time,they still need to catch up with the time limit and pay workers' wages in full on schedule. Otherwise, the drain of workers will be more serious. In this regard, some shipbuilding companies suggest reducing labor costs by improving labor efficiency,but this cannot be done in a day, more often just “engaging in idle theorizing”.

The reporter learned that from 2007 to 2008, the wages of front-line workers in shipbuilding enterprises were basically 160 yuan per day. At present,the wages of some types of workers have almost doubled. The annual salary system has been applied to many of the backbone skilled workers who have grown up from the production line. In 2008, a shipbuilding company executive predicted that with the outbreak of the international financial crisis, many shipbuilding enterprises would go bankrupt in the next few years, and there would be a large number of surplus labor in the market,and shipbuilding enterprises would not be able to recruit people. However, after the Spring Festival in 2011, shipbuilding companies in the market could not recruit much-needed labor, and career changes and job-hopping were seen everywhere.Income level of shipbuilding enterprise work lack of attraction is an important reason why shipbuilding enterprises are difficult to recruit and retain labor force.Take Shanghai as an example, because of the obvious rising trend of prices, the cost of living of labor workers in Shanghai is increasing year by year, coupled with the difficult working conditions of shipbuilding enterprises, the incentive and welfare system needs to be improved, and the problem of labor drain is obvious. The reporter learned that since 2008, some shipbuilding companies in Shanghai have tried to attract and retain labor through the use of contract workers and the payment of five insurances to migrant workers, but the effect is not obvious. Fewer than 5 percent of the new employees are recruited and able to stay with shipbuilding companies every year.

Nantong, a labor team project leader told the reporter it is now more convenient for labor workers to obtain recruitment information, just turn on the mobile phone and which line and which job is short of which workers can be fully known. In the WeChat group of welders within his company, some predict that by 2020,welders will earn 40-50 yuan an hour, or more than 300 yuan a day.

How Feasible Is It For a Machine to Replace Workers?

In view of the current situation that it is difficult to recruit and expensive to employ, shipbuilding enterprises have taken many measures to solve the difficult problems through reforming the employment mode, improving management efficiency, improving workers' skills and so on.

Xu Jianzhong, vice director of the human resources department of Taizhou Port Shipbuilding Co., Ltd., said in order to ease the tension in human resources, the port company has continued to improve the salary level and social benefits of its employees and stabilize the existing workforce in recent years; strengthen staff training and upgrade staff business skills;at the same time, improve work efficiency and reduce labor and production costs by improving technology, tooling, and working methods.

There are also some shipbuilding enterprises which promote intelligent manufacturing to a certain extent to solve the employment problem. Several related shipbuilding companies in the forefront of the industry have implemented the corresponding intelligent workshop transformation and intelligent manufacturing projects. Wang Jinsong said employment in shipbuilding enterprises has reached an important pass,shipbuilding enterprises should adopt intelligent technology and equipment as soon as possible in the operation links that can use machinery and equipment instead of manual work, steadily develop automation tools, improve the level of information technology and promote the application of intelligent manufacturing related technologies, and solve the current tight employment problems through intelligent manufacturing.

However, industry insiders point out that the shipbuilding industry is a typical discrete manufacturing industry,the promotion and application of intelligent manufacturing is still facing many problems, and it is still difficult to replace manual work with machines in many operation links in a short period of time. At the same time, when carrying out intelligent transformation, shipbuilding enterprises should take improving production efficiency and reducing production cost as the premise, and must not make intelligent transformation meaningless because of poor operation and connection of each link.

In addition, executives of some shipbuilding companies intended to recruit relatively low-cost labor from Southeast Asian countries. However,the ideal is very plump and the reality is very osseous. At present, there are insurmountable obstacles for Chinese enterprises to recruit workers from abroad. First, the policy of large-scale recruitment from abroad has not been opened; second, even if the policy gives the nod in the future, under the influence of language, words and other factors, the foreign labor force not only has a lot of uncertainty in the process of sitting for exam and taking the post, but also its working efficiency is difficult to compare with the domestic labor force for a while.

Industry insiders said that in recent years, due to the downturn in the shipbuilding market, shipbuilding companies have been facing lack of orders and lack of funds and other problems,and now the shortage of people is also beginning to seriously beset shipbuilding companies. With the withdrawal of the first generation of migrant workers from the labor market in China, how to ensure a stable labor force in the future has become a problem that the whole shipbuilding industry needs to ponder and solve.