Chinese cheap labour drying up
CHINA'S seemingly bottomless pool of cheap peasant labour will soon
be dry, according to research by China's leading labour market
analyst.
Thirty years of double-digit economic growth has reduced the rural
population of surplus labour to as few as 25 million, or just 5 per
cent of the national workforce, says Professor Cai Fang, the
director of the Institute of Population and Labour Economics at
China's most influential think tank, the Chinese Academy of Social
Sciences.
This means China has reached an historic turning point in the
bargaining position of labour, where workers are becoming scarce
and therefore more valued, he says. There are fewer employers
ripping off workers by failing to pay wages - and those wages have
suddenly spiked after a decade of stagnation.
"We show that the idea that there is a 'bottomless' surplus labour
pool in agriculture - the widely accepted belief that there are
nearly 200 million surplus labourers, accounting for more than 40
per cent of the total rural labour force - is actually out of
date," writes Professor Cai and his colleague Wang Meiyan.
Their paper, Counterfactuals of unlimited surplus labour in rural
China, models three scenarios using different assumptions,
including how many peasants are needed to farm the land and whether
they can be expected to work 250, 300 or 320 days a year.
The three scenarios suggest China has a labour surplus of 25
million, 63 million or 108 million workers.
Rising wages and work standards might force up the price of Chinese
goods - against the declining trend of the past decade. It would
also force its leaders to consider loosening the one-child policy,
eroding a discriminatory residency permit system that hinders urban
migration, and protecting rights of migrant workers.
