Unlike the all-so-familiar story of automation equipment taking jobs from workers, in China there is a unique force that we don't really see in the United States.
You probably have guessed it right. It's China's strong-willed and heavy-handed government.
Usually the government would take extra caution when a large number of workers are losing jobs to robots (imagine a cut of 60,000 workers at one time from the same factory), due to negative impact in terms of unemployment rate and other disruptions to the local economy.
But the local government in Kunshan, near Shanghai, recently saw Foxconn's factory in that city reduce its headcount by 60,000, according to Chinese media. The factory now has 50,000 workers left. Did it worry about a spike in unemployment rate and social unrest? Apparently not.
In fact, the government said that $610 million was spent by 35 Taiwan-invested firms in that city last year alone to replace workers with automation equipment. The number of companies in this initiative will be increased to 600 this year, and these companies make up for 60 percent of the city's GDP. The government has revealed that the number of jobs to be lost in Kunshan could possibly reach millions in the next couple of years.
The reason the government isn't losing sleep over the army of jobless workers is simple: these are migrant workers who, when unable to find another job, would leave the region. Chinese state media Beijing Youth Daily said in a recent editorial piece that local government could see the departure of the migrant workers as a benefit – lightening the burden on the local public security, education, health care, and housing resources.
And, since the companies like Foxconn are staying [as opposed to moving to a lower-cost alternative], regardless of the headcount, the local authorities would be able to keep their tax revenue – at least that's part of the thinking.
In fact, more and more cities on the east coast are joining this trend, supporting and incentivizing companies to radically increase automation level and raise productivity.
Under China's current social benefit system, if these unemployed migrant workers can't find new jobs somewhere, they would eventually have to go back to their hometown – mostly from inland and less-developed rural areas.
Just yet another challenge for China as it tries to cope with economic slowdown and industrial upgrade.