Labor Migration and Skill Demand in China

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Labor Migration and Skill Demand in China

• Zhang Juwei
• Institute of Population and Labor Economics
• Chinese Academy of Social Sciences

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Contents

• Impacts of Rapid Demographic Transition on Labor
  Supply in China
• Rural-urban labor migration as a main source for
  urban labor supply in China
• Demand for skills and the challenges in China

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1.1 Rapid Demographic Transition
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1.2 TFR from the Census and Pop Sample Survey by
NSB
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1.3 Rapid Change of Demographic Structure
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1.4 Impacts on Labor Supply

• Population projection in China
• Growing of Pop at Working Age will continue for
  another 10-15 years
• Urban labor supply will depend more on migrants
  from rural areas

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Population Projection in China 2000-2020 (100
millions, )
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Projection Working Age Population and Dependent
Ratio
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Change of Dependent Ratio
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Rural Migrants Main Source for Urban Labor Supply

• Rural Surplus Labors 150-200 Million
• Increasing Differences between Rural and Urban
• Migration Linking Rural and Urban Development

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Change of the Proportion of Urban Pop to Total
since 1990
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Accelerated Urbanization Estimation for
Urbanization Rate
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Projection Urban Population at Working Age
(Unit 10,000)
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The flow of rural migrants between 1995-2000
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Some basic facts on migration

• It is estimated there are about 120 million
  migrants at present, and increased by 4 annually
  since 1997.
• Migrants moving from rural to urban, from middle
  and western areas to eastern areas
• Migrants are mostly young workers
• Migrants have more years of schooling than their
  counterparts in sending areas
• More and more migrants tend to move with their
  families since 1990s.
• Migrant workers tend to take informal works, low
  pay, and less social security

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Strong demand for labors in urban areas

• Since late 2003, coastal areas have been facing
  shortages for labors
• The wages of migrant labors increased rapidly
  since then, increased from 600 yuan per month in
  2003 to 1000 yuan per month in 2005.

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Increased demand for migrant labors a survey
result
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The willingness to pay for new migrant workers
increased rapidly
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Economic growth is creating more off-farm jobs in
China
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Elasticity and annual growth of off-farm
employment
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Annual entry of labor force with education less
than Senior High
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Will China Be Facing Labor Shortages?

• Can urbanization or rural labor migration grow
  fast enough?
• Can the growth of labor productivity catch up
  with the rise of labor costs?

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The key is not the quantity of labors, but the
quality

• Supply and demand relationship is pushing up
  costs of labors
• It seems that there are enough number of workers
  in China, but not many qualified workers
• Shortage of labors vs shortage of skills

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Challenges for providing training in China

• Only a small proportion of new labor force are
  trained.
• Training market has not yet been developed, lack
  of training facilities including both hard and
  soft ones
• There are too many governmental departments
  involved in training, such as MOE, MOLSS, MOA et.
  
• Segmented labor markets

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Thank you!