In addition to the rapidly aging percentage of the Chinese population, China is facing a growing labor shortage even for unskilled jobs.
This twin problems will slowly and steadily, if continued, create a deficit in China’s social security and pension fund revenues and as the need for pensions and old-age services increases exponentially.
The period is critical, as China has managed to overcome the Covid-19 pandemic in a short period of time, launching its economy very quickly and the demand for Chinese products is increasing.
by Trust Economics-https://trusteconomics.eu
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Reasons for lack of Manpower
- More and more Chinese are choosing to stay in the countryside instead of in cities, and as development in recent years in areas outside major urban centers has relatively reduced the gap with cities.
- China’s youth are turning their backs on out-of-factory work and directing their efforts to find work in the service sector due to better working conditions and wages.
- This shift in youth is not accidental and is due to the growing number of higher education graduates, creating an imbalance in the structural correspondence that must exist in a labor market in terms of the number of graduates and the number of workers.
These ratios consistently lead to a numerical contraction of production capacity. Forecasts for the next 10 years speak of a 40 million reduction in China’s workforce.
The labor gap that will be created may reach 11.8 million if no measures are taken by the Chinese government.
Measures to correct the situation but with controversial results
- Fifteen days ago, China introduced the new “three children” policy as the maximum number of children per family. But this is a measure of controversial effectiveness because as the standard of living and income of Chinese citizens rises, they focus more on fulfilling personal ambitions with a small family.
In addition, the low-income classes may be in the mood for a large family, but financial hardship does not allow them to do so.
- The Chinese government has committed to supporting labor-intensive industries with more and more vocational training programs.
- At the same time, labor-intensive enterprises are increasingly increasing the automation of their production, reducing the number of their workforce.
- The lure of rising wages and monthly / hourly wages respectively as an incentive to bring in workers, combined with rising raw material prices, will increase production costs by increasing final product prices, making China an expensive country of production by reducing demand for Chinese products.
Measures in the right direction
- Change the immigration policy to achieve a large influx of labor from other countries. The integration of this workforce into Chinese society will reduce if it does not eliminate the deficit in insurance and pension funds from the declining insurance contributions of China’s ever-shrinking workforce.
- Increase retirement thresholds outside of heavy and unhealthy occupations, to increase the social security and employment horizon of workers in China respectively.
- Vocational training programs should become more and more demanding in terms of knowledge and work experience, respectively, while primary and secondary education should become much more demanding and competitive in terms of employment rights and privileges, without he to pursue higher education.
- Linking the labor market with the number of graduates of all kinds of schools and higher education.
In this way, it will be known in advance how many students will be accepted and graduated from universities in order not to create a deficit or surplus of jobs, while at the same time avoiding disturbing the structural correspondence between graduates and workers.
