lunedì 14 febbraio 2011

The effects of single-child policy, the Chinese economy.

On the day that Japan congratulated China on the success of an economic nature that are closer and closer to the second world economy, an interesting fact emerges in relation to social policies and labor in China: labor shortages.
This phenomenon, although already experienced since 2004, coinciding with the Spring Festival, Chinese culture with which greets the new year, today seems to be an endemic feature. Economic development in interior provinces has attracted in recent years, an increasing number of workers to the inside where employment opportunities are beginning to challenge those on the coast.
According to data recently released by the China Human Resource Center in monitoring and market information, the annual ratio of labor supply / demand in 116 cities examined reached 1.01 in 2010 suggesting that labor shortages may no longer be considered a concomitant seasonal event the holidays.
Monitoring data show that labor market demand for workers in the last quarter of 2010 decreased by 496,000.
While traditionally the labor shortage was endemic to the territories on the coast, today we also experience in some inland provinces, including Sichuan, Anhui and Hubei. The increasing demand for labor in the interior provinces has reduced the number of workers who would have been directed towards the coast and has increased the potential wages.
The main cause of the overall scarcity is the growing inflation that began last year. However, behind this phenomenon can be seen on demographic and socio-economic development, which suggests that a shortage of migrant workers can become a phenomenon of long duration.
The key problem is the demographic structure. Over the last decades the abundance of labor force has provided cheap labor for the needs of China's economic growth.
But today, with a declining birth rate resulting from the policies of the past-the-one-child, growth in labor supply has slowed, and China will steadily decrease over the next decade. This concerns in particular the percentage of workers to migrate from 25 to 35 years. China still has an estimated 100 million surplus workers in rural areas but the rate of growth of workers entering the urban labor market is falling and will continue to decline in coming years.
The other key change is the urbanization and development of inland areas where the cost of living is significantly lower than it is on the coast. This made the interior more attractive to migrant workers. Meanwhile, the income gap between eastern and western regions was reduced from 15 percent five years ago to the current 5 percent.
Another problem is the imbalance in terms of quality of work measured by education, workers with secondary education account for over half of total demand, on the contrary, graduates, they face a tougher job market.
The ongoing restructuring could mean better prospects for economic growth in the inland provinces, but the competition for migrant workers suggests that both regions will be characterized by low-end manufacturing industries.
This pattern of development in the educational level seems to have its Achilles heel. Today, low-skilled industries and manufacturing show that it did not need a high quality workforce and this trend in the long run could be detrimental to the future second world economy.