China is facing labour shortages
Dr. Abdulla Al-Madani*
may be surprising
to know that China,
the world’s most populous country, whose economic boom has largely depended on the advantage of having a huge supply
of low-cost workers, faces
labour shortages. Studies conducted recently show that China’s
problem of worker shortage, which first appeared sporadically in 2004, has now become a more persistent one. The
problem has pushed up wages at a time when costs of manufacturing
goods are already rising due to increases in energy prices. This is likely to weaken
Chinese-made products’ competitiveness on world markets,
and force investors to move to lower-cost countries such as India,
Vietnam, and Bangladesh.
factories had to raise the minimum wage this year
by as much as 30 percent to between
$70 and $85 a month. With this increase,
the largest in a decade, a worker in China
today is paid 30 percent more than his counterpart in Vietnam
shortage of workers is most acute in the country’s export regions, namely the Pearl River Delta, which feeds into
Hong Kong, and
the Yangtze River Delta, which funnels into
Shanghai. For example,
it was officially
reported that the city of Shenzhen,
on the Hong Kong
border, alone faced a labour
shortage of about 300,000 workers
this year. Commenting on the issue, a Chinese human resources
expert said that a few years ago, millions of young people were still flooding into Shenzhen to search for any job at any
wage, and factories did not need to put up advertisements to recruit workers or tempt them with
incentives and benefits. He added:
“Now we put up a sign looking for five people, and maybe one person shows up”.
contributing to making a
country with a population of 1.3 billion have a
labour shortage of nearly two million people according to
an estimate are numerous.
demand on workers has enormously increased in recent years, owning
to the vast expansion of industrial, construction, and
Second, low wages, tax
cuts, and long-working hours have all pushed a large number of migrant workers to quit their jobs in the booming coastal provinces and move back to their farms in western provinces.
The government’s decision last year to eliminate the agricultural tax has fuelled the trend.
policy of closing the income gap between the urban
rich and the rural poor through developing the economies of poor inland provinces and launching housing
and infrastructure projects
has created many jobs. As a
result, young workers from the
countryside are less willing to leave home for booming areas in search of a better life.
old generation, whose members sought
employment without proper education or skills, members of the new generation are more ambitious and would
rather first develop their skills
or have university degrees
in order to avoid jobs that are harsh and pay little.
This can be supported by the increasing number of university students. Last year, for example, over 14 million Chinese students joined local colleges and universities,
up from 4.3 million in 1999.
China’s one-child policy, which was implemented
in 1979, has turned it into a country of more old and less young
people. This is most acute in
model of economic prosperity,
where the age group of 60 and above is
expected to account for 30%
of the population by 2020. Because of this policy, the
number of Chinese aged 15-19 will decline by 17 percent in five years, to about 103 million from
124 million today, according
to a report.
dilemma, however, is not confined to the shortages of unskilled or semi-skilled workers. In addition, both public
and private companies are having trouble finding enough talented employees and highly skilled
labour to fill junior and
senior managerial and other posts. The
evidence can be derived from
a decision last month by the Shanghai
municipal government to hold
job fairs in North
America in an effort to attract expatriates and overseas Chinese
professionals to work in the city.
to a recent study conducted by McKinsey Global Institute,
Chinese firms seeking to expand abroad and continue growing in the years to come will
need up to 75,000 internationally
experienced leaders. Currently,
only 5,000 such leaders are
available in the country.
Local universities must be held responsible for this, given its
failure in producing more graduates capable of working successfully in world-class-companies
and brilliantly serving the fast-growing
domestic economy. Among the 1.7 million students who graduated
in 2003 from over 1,500
local colleges and universities, only a few hundreds had good
English and practical experience- a requirement of most multinational
researcher and lecturer on Asian affairs