Child labour scandal highlights worrying trend in China

DONGGUAN, China (Reuters) - Police in southern China havetaken into custody scores of youngsters suspected of beingunderage workers after a muckraking newspaper exposed a childlabour racket this week.

The government is investigating thousands of factories inone of China's main export hubs, sometimes called the "factoryof the world".

The scandal, first reported by the newspaper SouthernMetropolis, is an example of the desperate measures employersare taking in the face of rising costs and a chronic labourshortage, experts in Chinese manufacturing say.

It also underscores challenges employers face verifyingworkers' ages and ones authorities face in enforcing labourlaws, say factory managers and agents who export Chinese goods.

The child labour scandal comes at a sensitive time forChina as it readies for the Beijing Olympics in August.

A spokesman for the township of Shipai, an hour and a halfnorth of Hong Kong, said police were looking after at least 79children believed to be from the remote, impoverished area ofLiangshan in Sichuan province.

None had identification to prove their age, he said.

Southern Metropolis said hundreds of children fromLiangshan, mostly 13-15 years old, had been sold or kidnappedto work in factories in the south, particularly in Dongguan, amajor export centre where Shipai is located.

The story prompted swift reaction from the city government,which set up investigation teams to sweep for underage workers.

A Hong Kong newspaper reported police had already rescued167 children sold to work as slave labourers.

Child labour does not rank among the most rife ofviolations in Chinese factories, but anecdotal evidencesuggests it is on the rise, particularly when workers are hiredthrough private agencies or vocational schools, said IanSpaulding, a consultant working on labour compliance issues inChina.

"There has been a noticeable increase in the number ofchild labourers employed in order to address what some estimateto be a 2 million worker shortage in Guangdong," he said.

SELLING FAKE ID CARDS

Walking down Shixing North Road, a nondescript side streetin Shipai lined with small, three-storey factories churning outeverything from luggage to computer parts, it is easy to seewhy.

On nearly every factory gate hangs a poster advertisingwork. Others announce that factory space is for rent, evidencethat cost pressures are taking a toll.

Competition for workers is fierce. "All you need is a valididentity card to get hired here," said a guard at a plasticsfactory seeking female employees.

But every lamp post along the street is covered from kneeto eye level with stickers pedalling fake ID cards and officialchops, each bearing a mobile phone number. A woman who answeredone number said: "We can do an ID by tomorrow morning."

An agent who sources made-in-China bags for major "big box"retailers in the United States and has been in the businessover a decade said verifying age was a major problem.

"I have called workers in and compared the picture on theID to the face. I've asked questions like 'When is yourbirthday?' It's a real challenge," he said.

Samuel Wong, whose company, Social Compliance Service Asia,does factory audits, said there were many ways to verify theinformation on Chinese IDs, which have computer chips in them.

"The problem is that factories just ignore it," he said."They have no choice but to take the risk."

The manager of a Hong Kong-owned screw factory in Dongguanrecently fired a worker who "looked 13 but his ID said 19".

Chinese law states that nobody under 16 can work.

China announced a nationwide crackdown on slavery and childlabour last year after reports that hundreds of poor farmers,children and mentally disabled people were forced to work inkilns and mines in Shanxi province and neighbouring Henan.

Despite periodic campaigns, enforcement of labour lawsremains weak, said Alexandra Harney, author of the book, "TheChina Price: The True Cost of Chinese Competitive Advantage".

By the end of 2006 China had 22,000 full time inspectorsoverseeing workplaces that employ 764 million people -- farfewer inspectors than even government regulations stipulate,she said.

"I'm relatively optimistic because China wants to move upthe value chain, and at the higher rungs of the value chainChina can't afford to be treating its workers poorly," shesaid. "You can't expect people who are treated poorly to bemaking semiconductors well."

(Editing by Bill Tarrant)