GUANGDONG PROVINCE, CHINA -- Are wages among factory workers in China about to rise? Reports from several news sources seem to indicate that a massive shortage of manpower coupled with modest inflation of the national currency will lead to higher costs for manufacturers later this year.

Global Sources this week said that inflation is ahead due to anticipated appreciation of the China's currency, the yuan, against the U.S. dollar. The timing is especially bad for the region, which has endured steady price inflation and flat wages. Local companies are facing persistent labor shortages and China has been recording more than 2 million vacancies annually, Global Sources said.

Separately, a report today said the local government is set to raise salaries for workers by 16.7%, to $70 a month.

The rate hike would go into effect May 1. DigiTimes said, citing Taiwanese companies with investments in Guangdong. It would mark the second hike in a year; last year wages rose about 14%.

Average monthly wages of consumer electronics assembly workers range from $85 to $120, with a large percentage coming from overtime work, Global Sources said. The heavy hours are taking a tool, however, and workers are leaving in droves for lower pressure climates.

Guangdong province is home to Dongguan, Shenzhen, Zhuhai, Zhongshan and Guangzhou. There, the labor shortage has lasted a year, and some firms are resorting to "sizeable" salary increases in order to attract workers. However, said Global Sources, the vast majority of companies are opting to improve facilities and amenities, adding air conditioning, karaoke rooms, swimming pools and better dormitories.

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