Wednesday, August 3, 2011

Low Labor Costs, A Sustainability Hurdle for China?

This post is based on a hunch (a typical leg for an China-intern to stand, whether its hunting out a new restaurant or locating a bike-rental kiosk). All of my assignments thus far have been focused on sustainability planning best practices and I have been asking myself the question-- Is it the relatively low cost of labor in China an added hurdle to sustainable development?

This question is based on two ideas. First, developers in the United States and U.K. have sited profit margins as a check in the pro-column for “going green.” The BedZED (Zero Energy Development) project in Hackbridge, London totes its function mix as revenue earning strategy. I understand it to be a commonplace argument stateside that green developments, even with added upfront costs, can be profitable developments.

Second, A South China Morning Post article from last month “(Built on Ignorance” by Sophie Yu, July, 16th 2011) stated that construction projects in the U.S. typically spend around 55% of project costs on labor. While in China is standard for labor to make up only 30% or less of construction costs. With materials making up a larger portion of total project costs, and given the added cost of green building materials versus standard building materials, “going green” costs relatively more in China. Is it more challenging to develop green projects in China because of the weight materials hold in the feasibility function and the added cost of green construction materials?

There is a hairsplitting amount of construction going on constantly in my neighborhood in Shenzhen. A new subway line opened days before I arrived, a three lane road has been torn-up and repaved a block from my hotel, and brick-layers are building sidewalks literally under my feet. I see construction workers everywhere, often they seem to sleep (and eat and bathe) on-site in temporary housing that ranges from trailers to bamboo scaffolding and tarp. Most construction workers are migrant workers and it is typical that only a few workers on project team will have formal training.

For me this begs the question-Would increasing job quality in the construction industry be a roundabout step toward sustainable development in China? By shifting the pendulum so that labor makes up a higher percentage of project costs (through increased wages and required certifications) and materials make a smaller piece of pie (more similar to the U.S.) would it increase the financial feasibility of sustainable projects in China? UIC Professor Xiangming Chen has noted that China's manufacturing companies reliance on cheap labor to squeeze by profit margins is acting as a barrier to industrial upgrading.

The recent tragic Wenzhou train accident has, maybe for the first time, called into question the rapid pace of development and put slapdash construction practices underneath a media microscope (well as focused as the Chinese-media can get). Further I ask--Would the increased regulation of the construction industry “pump the brakes” of the roaring pace of development?

As per usual in China, I seem to be left with more questions than answers.


Alex said...

Very interesting, maybe as the cost of living and wages increase in China, we will start to see a shift in the role that labor plays in construction. Also, you used slapdash and "pump the brakes" in the same paragraph. you get bonus points for that.

Caroline Chapman said...

Really interesting. I came across this yesterday while doing some research on, what else, sustainable construction in China.

"Yet developers’ enthusiasm for “green” buildings has been dampened by the higher construction cost, which averages 100–150 yuan (US$13–19) more per square meter than a standard building. Buyers, too, are typically more concerned about location, design, or neighborhood than environmental variables when selecting buildings. But advocates of green building say the upfront costs are often outweighed by the savings that come with greater energy efficiency over the long term. While the buildings typically cost an extra 2–5 percent initially, the benefits over 20 years can be more than 10 times the original investment, according to the newly released Worldwatch Institute report State of the World 2007: Our Urban Future"

Along the lines of Alex's thoughts, as wages increase maybe we'll see more demand from consumers for these types of buildings and living environments (and fancy organic vegetables).

So to save the environment, raises for everyone! See you all at Coco Park!

Unknown said...

A much bigger hurdle seems to be corruption ...

Post a Comment