It is often said that a nation’s greatest asset is its people: particularly its young people.
Ever since Deng Xiaoping started to liberalize the country’s economy in the late 1970s, Chinese cities like Shenzhen, Shanghai and Chongqing have become vast export centres that are now critical to the functioning of the global economy. The success of this model has relied on a constant flow of young people moving from the countryside to the city in search of a better life and better wages. The urban pay and conditions they find are an improvement on life on a farm, but cheap by Western standards, so the boom has worked well for both Chinese workers and Western consumers. But now there are serious and growing concerns that China’s changing demographics are threatening this flow of labour: and with it the whole world’s economic setup.
In January 2013, the Chinese National Bureau of Statistics announced that the population at working age (between 15 and 59) stood at 937 million: that might sound a lot, but it marked a decline of nearly three and a half million since 2011. For the first time, the workforce fell (to 69%) as a proportion of the total population, and is thought by some to have peaked in 2010 (http://www.forbes.com/sites/gordonchang/2013/01/20/is-china-running-out-of-workers).
The challenge of continuing the smooth flow of recruitment, without upsetting existing wage and price models, will therefore be a major issue for Chinese employers and HR professionals in the years to come. Looking at the numer of vacancies on Michael Page’s site for human resources job (http://www.michaelpage.com.cn/jobs/human-resources-hr-jobs.html) the issues doesn’t appear to have arrived yet..
For now, the movement of workers from farm to city is continuing, but at a slower pace than we’ve come to both expect and rely on. Clearly this has implications for wages: assuming demand remains stable or grows, employers might be fighting over fewer unskilled or semi-skilled workers to fill their factories; those workers might find themselves in a better position to negotiate wage rises, which might also have implications for inflation.
There are also ramifications for China’s drive towards urbanisation: already the sight of huge but empty ‘ghost cities’ has made some observers nervous about the capacity of the country’s housing boom to continue, with knock-on effects for those countries supplying many of its raw materials, like Australian iron ore and Indonesian timber. Some analysts think it will be necessary to reform the ‘hukou’ system — whereby Chinese residents registered as ‘rural’ aren’t able to access all urban-based public services — to keep up the movement of workers into towns and cities, as well as loosening other forms of red tape (http://www.economist.com/node/18832092).
The elephant in the room in this debate, and the primary reason for the shift in the country’s demographic structure, is the one-child policy. Despite many challenges and exemptions — some openly permitted at a local level, some the result of corruption — the policy remains the official position of the central government (http://www.eastasiaforum.org/2012/09/09/population-and-the-challenge-of-chinese-growth). The irony is that the one-child policy was introduced at almost exactly the same time as the country was starting to open up economically. At the time, the main concern in China — and throughout the world — was that there would soon be too many mouths to feed, rather than too few hands to do the work. Environmentalists and economists were warning of a ‘population timebomb’ and an unsustainable future, so China took the initiative by limiting the number of children allowed to one per couple.
As China’s supply of cheap labour runs down, we might find that multinational manufacturers will move to other developing countries that still have more favourable population pyramids: for instance India, southeast Asia and parts of Africa or Latin America (http://www.thedailybeast.com/articles/2012/03/26/china-is-running-out-of-cheap-labor.html). To some extent this has already started happening, and we can expect it to accelerate as China itself becomes wealthier.
The author has an interest in both recruitment and global trends.
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We are Gadi and Tun - the midlife runaways. We regard our selves as a “world citizens” and currently we live and explore in China. We've decided to start this blog to share our awe and adventures with friends, family and all the people who love to travel. Feel free to comment and to join. And most important, don’t forget the state of “Being in Awe” with the world.
Hi there! We are a couple, and we like to travel. We regard our selves as a “world citizens” and currently we live and explore in China. We’ve decided to start this blog to share our awe and adventures with friends, family and all the people who love to travel. Feel free to comment and to join. And most important, don’t forget the state of “Being in Awe”.