NN38, February 2007
Technical and Vocational Skills Development
MIGRATION, LABOUR AND SKILLS TRAINING IN THE PEOPLES REPUBLIC OF CHINA
By Zhang Juwei, Institute of Population and Labour Economics, Chinese Academy of Social Sciences
KeywordsMigration, labour, skills development, China
Summary
This article highlights the challenges faced by the rapid rural-urban migration in China and argues that providing skills training to these rural migrant workers is essential if the country?s impressive growth record is to be sustained.
****
As the most populous country in the world, China has never run into a labour shortage in its thousands of years of history. With rapid demographic transition and accelerated population aging, is this going to change? The projection based on the census data in 2000 suggests that the working population aged 15-59 would stop growing in less than 10 years while the annual growth of the working population has already declined dramatically. Being used to enjoying unlimited supply of labour could then be translated into a problem of labour shortage in China.
One way that China differs from other countries, especially from the developed countries, is its divide between rural and urban areas. As the majority of the population are still living in rural areas, the migration of labour from rural to urban areas can certainly compensate for the impact of population transition on labour supply. In fact China is now experiencing the most rapid process of urbanization in the world. The estimated rate of urbanization is about 1% between 1990 and 2002, and such a process seems to have accelerated after 1995. It is estimated that the rate of urbanization is near to 1.4% between 1995 and 2002. In 2006, a 1% increase of urban population suggests that about 13 million working age people will be added into urban labour force, and a 1.4% increase means a number of about 16 million urban labourers. Theoretically, such labour migration can serve as a stable source of labour supply for non-agricultural sectors over a relatively long period of time, say 20 or 30 years, in China.
But the reality is not always consistent with the presumption. As the annual growth rate of the population of working age is decreasing and rapid economic growth is creating more jobs, some fast growing coastal areas, especially the economic engines like Zhujiang River delta and Yangzi River delta, have already felt the pains in recruiting qualified labour since late 2003. As a result, the wages for migrant rural workers have increased rapidly. Thus the wages for new rural migrant workers increased from about 600 yuan per month in 2003 to about 1000 yuan per month in 2005, up by 50% within two years, as revealed by some surveys conducted by the Ministry of Labour and Social Security in early 2006. We all know that China?s fast economic growth over the last nearly 30 years is to a great extent contributed to by its cheap labour, but will the rapid rise in labour costs undermine the economic competitiveness of China?
The rise of labour cost itself does not say much about the competitiveness of Chinese economy. For example, in 1991, a US manufacturing worker was 40 times more productive than a Chinese worker, but this figure decreased to 10 times in 2000, suggesting that the competitive advantage of Chinese industry seems to have been strengthened, not reduced, during this period. Economically, as long as labour productivity grows as fast as the costs of labour, the competitive advantage will remain. But the pressures on increasing productivity will definitely be translated into a great demand for quality skills apart from for the quantity of labour in China.
Is China well prepared well for providing the skills demanded? The answer is certainly not. There are about 120 million rural migrant workers in China, and this number has increased by about 4% annually since 1997. Most of the rural migrant workers are young males, lack technical and vocational training, and work in the manufacturing and construction sectors. Due to a lack of training and qualified skills, earnings differentials between migrants and urban residents are large, coupled with occupational segregation and wage discrimination. Without status in the formal sector, migrants typically do not have access to social protection instruments, nor to administrative or legal mechanisms to ensure their rights as workers.
It is calculated that there were about 17.34 million people who first entered the labour market in 2006; among these, about 7.6 million are rural graduates who have educational attainments of junior high school or less. From 2006 to 2010, there would be a total number of 34 million such rural migrants who are eager to find a job in urban areas. Without providing training opportunities for them, it can easily be envisaged that the bad situation of the rural migrant workers will remain, the difficulties in recruiting qualified workers in coastal areas will continue, and the prospect of economic growth in China will be undermined. Could we see anything that is more important than providing training opportunities for the new rural migrants in China today?
Back to full contents of NORRAG NEW 38.
Download the full issue of NORRAG NEWS 38 in pdf.