China's unlimited labour supply will end

25 October 2005
The era of China's "unlimited labour supply" would end in near future and the total labour force would start decreasing from 2021, according to a recent report of the official Xinhua News Agency. The news report said that although the Ministry of Agriculture estimated that there were 150 million population of extra labour force in the rural areas, some official research centres found that "unlimited labour supply" would not continue to flood the labour market. According to a report of the State Council's Research and Development Centre, the labour force in 20% of the villages across the country is decreasing.

In the middle part of China, the number of young people, aged between 16 and 25, has been diminishing. The Institute of Population and Labour Economics at the Chinese Academy of Social Sciences also had similar research findings. In 2004, the growth rate of rural labour force was the lowest in the last five years, i.e. a 74% drop compared with the same period of 2003. The official research institute also estimated that the labour supply would stop growing by 2011, and the total labour force would start decreasing from 2021. "At the moment, the new labour force supply and the new demand have reached equilibrium, so you won't see an absolute labour shortage in the near future," said Cai Fang, who heads the Institute of Population and Labour Economics. "However, as the structural shortage has started to take shape, the gap between labour supply and labour demand will get bigger each year," he added.

The same news report also quoted some examples, indicating that there was only limited labour supply in some rural areas. The phenomenon of labour shortage in China's coastal area has spread to other inland provinces. Chongqing Municipality and Henan Province, where migrant workers usually come from, also face the same problem of limited labour supply. "Unlimited labour supply used to be China's advantage in the world market. But as we can see that the structural labour shortage is happening, such an advantage will be weakened," Cai Fang said.

Source: Xinhua News Agency (10 October 2005)
http://news.xinhuanet.com/mrdx/2005-10/10/content_3601858.htm

25 October 2005
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