The global supply of cheap labor is under threat as factories across Asia are struggling to hire younger employees.
- Factories across China, India, Vietnam, Thailand, Malaysia, and Indonesia are reporting that it is becoming increasingly difficult to hire young workers and avoid high turnover.
- Young educated workers are seeking a wider range of job opportunities, having fewer children, and feeling less pressured to seek employment in manufacturing jobs.
- “Everybody wants to be an Instagrammer or a photographer or a stylist or work at a coffee shop,” factory co-founder Paul Norriss tells The Wall Street Journal.
- Toy companies Hasbro and Mattel both report that labor shortages are driving up labor costs and increasing the prices of their products.
Why It’s Important
The twilight of Asian manufacturing markets is creating a problem for the global economy and supply chain that must be addressed in the coming decades. While automated factories and manufacturing could reduce the number of employees necessary to keep supply chains operational, the decline of what The Journal calls “the world’s factory floor” will still have a severe impact on global prices and productivity.
A rapid decline in Asian manufacturing could see consumers worldwide paying higher prices for everything—including clothes, electronics, toys, furniture, and more.
“There’s nowhere left on the planet that’s going to be able to give you what you want. People are going to have to change their consumer habits, and so are brands,” says Norris.
Asian factories have already responded to the labor shortages by implementing new strategies to attract new workers and retain current ones. They are increasing wages, improving cafeteria offerings, providing childcare, and more.
Paul Norris co-founded the garment factory UnAvailable in Ho Chi Minh City, Vietnam. He tells The Journal that his factory has added features, including a new cafe, free yoga and dance classes, team-building sessions, and fun events, including go-karting and bowling. The company has no choice but to make working for the factory as enticing as possible.