Tuesday, April 19, 2011

Editorial: China's New Labor Revolution: Impact on China's Broad Economy

The Asian Times is out with an op-ed piece describing the evolution of the Chinese labor force over the better part of the last two decades. Truth is Liberty, below, has provided a breakdown on key elements contributing to China's steam engine rapid growth in the face of no social safety nets, high domestic inflation and few labor protection laws. 

  • China has the largest labor force in the world
  • Unlike Western economies where wages have remained stubbornly flat, migrant worker wages have gradually risen over the past decade (roughly 14.1% increase)
  • China's working age population (aged from 15 to 64) has experienced steady growth over the past few decades- totaling 71% of China's population.
  • The working-age population will stop increasing in 2017, when it reaches a peak of about 999.6 million, and will reduce gradually from then on.
  • The demand for labor resulting from rapid economic growth was filled by the steady mobility of a rural surplus labor force. It is estimated that more than 200 million farmers have left the agriculture industry since the mid-1990s.
  • the abundant absorption by cities and non-agricultural industries, the number of rural surplus labor has been greatly decreased
  • the supply of young labor force under 30 years old is gradually tightening. The second national agricultural census data showed that nearly one quarter of the rural labor force went out for employment in 2006, of which 52.6% were young workers under 30 years of age.
  • China is still at the stage with the most abundant labor resources and the lowest dependency ratio. China has not yet entered the era of labor shortage.
  • With economic development, living standards of Chinese urban and rural residents have shown a substantial improvement and the cost of living a corresponding increase. Therefore, reservation wages of migrant workers have started to rise.

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