Challenges and Resolutions in China s Labor Market

Transcription

1 Challenges and Resolutions in China s Labor Market Xiangquan Zeng Yumei Yang ( CIER, Renmin University of China, Beijing) 09-09, 2015, Cape Town

2 Part I Challenges in China s Labor Market

3 `` Recruitment Difficulties Imbalance of Competence Structure Rising of Labor Cost vs. Widening income inequality Impact of the Third Industrial Revolution Challenges 3

4 Recruitment Difficulties:Wave I vs. Wave II with Population Aging 4

5 Recruitment Difficulties Wave I vs. Wave II Wave I Wave II Period now Jobs/posts Skilled workers Skilled &unskilled workers Areas coastal areas coastal & inland areas Sector industrial sector industrial & service sector

6 一季度 二季度 三季度 四季度 一季度 二季度 三季度 四季度 一季度 二季度 三季度 四季度 一季度 二季度 三季度 四季度 一季度 The Changes of CIER Index from 2010 to 2014 Caused by the rising demand and the sluggish supply 人数 : 百万人 需求与供给变动对 CIER 指数的影响 竞争指数 全部求职申请人数 全部招聘需求人数 CIER 季度指数 CIER index is used to reflect the intensity of labor market CIER Index= Number of job seekers Number of job vacancies The larger the CIER index is, the more competitors there are for job vacancies and the more intensive the labor market is. The changes in CIER index are affected by both the number of job seekers and job vacancies. 6

7 What has caused labor shortage? Population aging the share of the population from 15 to 24 increasingly slumped. Skill shortage Electrical engineering industry employs about 70,000 people, would have to rely on imported labour if no effort was made to train young locals. -chairman of the Electrical Engineering Professional Employees Association Irrational industry structure youngsters were preferred in Labor-intensive industry for the pursuit of maximum profit. Low wages and harsh working environment Main reason migrant workers who are powering China's economy today increasingly have higher expectations for life and more job options. 7

8 The speed of population aging is extremely fast in China

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10 Total population by major age groups(medium fertility) Total population by major age groups total Proportion of major age groups (%) Source: World Bank: World Population Prospects: The 2012 Revision.

11 11 Imbalance of Competence Structure

12 Regional Structure imbalance in cities in 2009 and 2010 Second-tier cities and third-tier cities becomes new growth areas of employment while labor supply in these areas is still insufficient compared with first-tier cities in China. Changes in first-tier / Second-tier cities ratios of labor demand(supply) Years ratios of labor demand ratios of labor supply :1 1.09: :1 1.28:1 12 Sources: CIER

13 Regional Structure imbalance is relieved even reversed in 2013 Changes of CIER index from 3rd Quarter to 4th Quarter in 2013 among regions and cities Region 3 rd Quarter 4 th Quarter Cities 3 rd Quarter 4 th Quarter 13 Eastern First-tier cities Central Second-tier cities Western Pressures of job-hunting competition in central and western has been more intensive than eastern areas, which reveals regional structure imbalance is relieved even reversed in the end of China's second-tier cities are also facing the pressure of a severe labor shortage as the firsttier cities used to be.

14 Competence Structure: from the perspective of supply 60% 50% 40% 30% 20% 10% 0% Levels of technical skills distribution 57% 23% 20% none technician Senior technician Sources: Report on new-generation migrant workers development in 2013 by Rural migrant workers Office of the State Council 40% of new-generation migrant workers are only junior middle school graduates and 57% of them don t have any technical skills, even more than ¼ of them never joined any skills training program. 14

15 Competence Structure: from the perspective of demand The lists of long-term skill shortage & occupation with high Mobility in Suzhou Industrial Park in 2013 long-term skill shortage Occupation with high Mobility 1 skilled operatives skilled operatives 2 Process Engineer unskilled operatives 3 Electrical Technician welder 4 R&D Lead engineer Sr. Maintenance Engineer 5 Product Engineer R&D engineer Sources: CIER 15

16 Competence Structure imbalance: Graduates Large Population of Graduates, but Low Employability The big obstacle of transformation is the low employability of graduates Survey of McKinsey China trained about 1.6 million engineering graduates each year, which is 9 times the number of that in the US. However, among the 1.6 million young engineers in China, only about 160,000 have the practical skills and linguistic skills as required by multinational companies. Survey of Boqing Wang

17 17 Rising of labor cost VS. Widening income inequality

18 average wage (yuan/year) Wage Increased, but Low Wages still Common Average Wages of Staff and Workers ( ) All State-Owned Companies Urban collective units Other companies Since 1998, the average wage has increased rapidly and the average wage growth rate for state-owned companies is greater than that for other companies. Data from Wind Info.

19 Average Wage of Employed Persons in Urban Units and Output per Head of Enterprises above Designated Size (adjusted to 2011 level) average wage output per head The growth rate of average wage of employed persons is much smaller than the growth rate of productivity. Average Wage of Employed Persons in Urban Units are adjusted by CPI, and Output per Head of Enterprises above Designated Size are adjusted by PPI. The data is calculated from Wind Info.

20 The Average Labor Costs per Worker for Manufacturing Industry (unit: 1,000, unadjusted) Year Percentile /00 ratio The Average Labor Costs per Worker for All Industry (unit: 1,000, unadjusted) Year 14/ Percentile ratio Note:Data shows the situation of companies in manufacturing industry of Shanghai and Shenzhen stock, and the data from Wind Info.

21 Labor Distribution Rate (manufacturing companies listed before 2000) 100% Total net profit Total depreciation and amortization Total sum of all taxes Total Labor Costs 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% There is no obvious overall change of labor distribution rate, but there are fluctuations from year to year. The data shows the circumstances of companies in the manufacturing industry in Shanghai and Shenzhen stock, and the data from Wind Info.

22 Labor Distribution Rate in Listed Companies ( ) 40% 38% 36% 34% 32% 30% 28% 26% 24% 22% 20% manufacturing companies listed before 2000 all There is an obvious uptrend of listed companies labor distribution rate. The data shows the circumstances of companies in Shanghai and Shenzhen stock, and the data from Wind Info.

23 Despite of the continuous rising of the average labor cost in the past 15 years, it remains low. Average Labor Monthly Wage: US$ /month 4,000 3,500 3,000 G7 SINGAPORE 2,500 2,000 TAIWAN 1,500 HONG KONG 1,000 BRAZIL 500 CHINA Percentage of Average Income of Chinese Workers in that of Major Economies:% 60 BRAZIL HONG KONG TAIWAN SINGAPORE Copyright Accenture All 2000 rights reserved G7 资料来源 : 埃森哲研究 From the Accenture

24 Gini coefficent in China, China's Gini coefficient has remained higher than the UN warning level of 0.4 since 2000

25 Impact of the Third Industrial Revolution on the Chinese Labor Market 25

26 Internet+ will pleasantly surprise the Chinese labor market with its convenience, low-cost and efficiency, but will, at the same time, bring in unforeseeable impacts to China s employment and income through structural change and creative destruction.

27 1. Created job opportunities, but has also threatened the traditional job market. In China, the employment size directly boosted by Internet startups is approximately 10 million. Among the Internet startup stores, over 90% are individual-owned online stores. These individual-owned online stores have pushed the employment number of Internet startups up to 6 million. The emergence of mobile taxi apps has eased the hardship to find taxis and the traffic situation. It reduced the rate of idle cars, satisfied the demands of consumers and increased the rate of full employment for certain workers.

28 a great amount of physical stores across China have experienced difficulties in operations and gone bankrupted due to the prevalence of online shopping. A large number of people in these industries have therefore become unemployed or half-unemployed. there is at the moment a severe tension between the newcomers of this industry with great enthusiasm and the traditional taxi drivers fighting for the job market. In 2015, there have been one after another strikes and demonstrations by groups of taxi drivers at Chengdu s Tianfu Plaza and train station

29 2. Changing the income distribution structure of the labor market With its low sales price, it expanded the market share, raised labor productivity and increased the incomes of Internet managers. Stories of escaping poverty or even a quick rise in fortune are happening in China every day.

30 The realities is that the income gap is still widening and the expectation for the Internet economy to shorten that gap is still but a beautiful vision. It is true that a certain amount of physical stores are going bankrupt or facing difficulties, but simply bringing all service online does not guarantee success. The titan Internet companies own a majority of market shares and are in a competitive or even monopoly position. This means that many smaller companies are suffering and barely holding on. Their revenues and their employees employment qualities have declined significantly compared to before.

31 The third industrial revolution, headed by the Internet, did ultimately transform the methods of production, the costs of logistics, and the state of society s consumption. Yet it does not forecast the termination of the hired labor system established since the first industrial revolution, and it cannot fundamentally change the distribution relationship between strong capital and weak labor.

32 3. The possibility to make a living within one s own home becomes reality The blending of residential and work place has realized the modern belief of work-life balance. It is possible that people will no longer have to spend a great amount of time on commute between home and work. Deorganization and the return to life, nature, freedom and independence, is the new hope the third industrial revolution has brought to a better human life.

33 The dramatic increase in non-standard employment has brought trouble, even crisis, to the traditional definition of employed, unemployed and not in the labor force from labor market. Human resources management concepts and techniques that stemmed from the traditional working place are also facing challenges. People rely less on companies but more on markets. This working pressure, lack of sleep and sunshine, eating disorder have all become a threat to health. The employees death in internet companies from overwork news often found in newspapers.

34 The structured mechanism of management and constraint that evolved in the working space since Industrial Evolution is not bound to disappear. However, it is still necessary for the management regulation system to meet the modern needs. For examples, the contract system from working place, payment, extra hours, labor dispute and social insurance systems all need to be reconsidered and restructured.

35 Part II Policy Orientation of the Government

36 Expansion of Labor supply Policies to introduce much easier population policy. loosening of the country's family planning rules, allowing to have two children per resident couples. to progressively raising the retirement age. should have an equal retirement age of 65 by the year of allowing employees to continue working and getting paid for several years after the retirement age, which will increase their incomes and reduce the pension fund's outward payments. 36

37 discussion on proposals of retirement age delay Positive: to relieve the stress on pensions pension fund can grow by 4 billion yuan ($656.5 million), save 16 billion yuan in spending and decrease 20 billion yuan in fund shortage if the retirement age is extended by a year. Negative: to put the pressure on employment for increasing the labor supply of old workforce. Older workers would monopolize key jobs and affect employment prospects of young workers. Uncertain: may have different impacts on different social groups. Those who work in mainly intellectual positions with high technologies mostly wants to extend the retirement age and can bring significant economic benefits to the society, while those working in physically difficult jobs may oppose the proposal. 37

38 Promotion of labor demand to keep sustainable growth of economy (active employment policy) to upgrading the industrial structure and increase product added value,so more jobs will be created as a derived demand from products. to support small and medium-sized enterprises, cut taxes for small business owners and stimulate their potential of creating jobs. to accelerate efforts of upgrading the industrial structure and make independent innovations 38

39 Adjustment of employment structure Employability promotion strategy to carry out educational reform e.g. curriculum reform as well as reform on National College Entrance Examination to vigorously develop vocational education with the focus on supporting rural secondary vocational education and to establish an education system featuring vocational education with general education. to promote intermediary service to reduce frictional unemployment. 39

40 Reform of income distribution mechanism to implement targeted policy to groups in different income levels : to maintain the scale of low-income people, scale up middle-income groups, limit high-income groups size and deepened reform in monopolized industries. to adjust the structure of national income distribution gradually increase the proportion of the incomes of resident, and increase the share of work remuneration in the primary distribution, which can boost consumer demand to realize continuous and stable economic growth to Avoid the middle income trap To transform the pattern of economic growth from export-led, investment-led and governmentdirected to consumer-led. An expanding middle class can use its increasing purchasing power to buy high-quality, innovative products and help drive growth As South Korea has proven, building a high-quality education system to invest in human capital is critical to avoiding the middle-income trap. launching immediately a war on poor education, health, vision care and nutrition as one step in helping China avoid the Middle Income Trap in the coming years. 40

41 to actively promote the reform of pension insurance system advancing integration process: urban-rural integration & government agencies and institutions enterprises integration upgrade administration of social security funds to higher-level and work out unified methods for transferring social security accounts nationwide. to realize professionalization of trade unions and promote collective bargaining system and improve their collective bargaining capacity. 41

42 it is necessary to conduct thorough research on how the law and policy based on the traditional labor market can be transformed for the new working context of the new industrialization. 42

43 Welcome to visit the website of China Institute for Employment Research (CIER)

44 Thank you!