[OPE-L] China: Labor Power Shortage Looms

From: glevy@PRATT.EDU
Date: Sat Jul 01 2006 - 09:48:09 EDT


I saw this on Globolist.  With all of the talk of "over-population"
in recent decades, this article raises some important issues.  Given
the age distribution of the population in certain regions in China, will
it face a labor-power shortage?  If so, how will that affect its terms of
trade and manufacturing costs?  How might it be overcome? (e.g. by
internal [wrom where?] or external migration?)  Will manufacturing shift
to other regions in search of lower labor costs? Is the "boom" in
Shanghai about to end?

In solidarity, Jerry

============================================================
NY Times, June 30, 2006
As China Ages, a Shortage of Cheap Labor Looms
By HOWARD W. FRENCH

SHANGHAI, June 29  Shanghai is rightfully known as a fast-moving,
hypermodern city  full of youth and vigor. But that obscures a less
well-known fact: Shanghai has the oldest population in China, and it is
getting older in a hurry.

Twenty percent of this city's people are at least 60, the common
retirement age for men in China, and retirees are easily the fastest
growing segment of the population, with 100,000 new seniors added to
the rolls each year, according to a study by the Shanghai Academy of
Social Sciences. From 2010 to 2020, the number of people 60 or older is
projected to grow by 170,000 a year.

By 2020 about a third of Shanghai's population, currently 13.6 million,
will consist of people over the age of 59, remaking the city's social
fabric and placing huge new strains on its economy and finances.

The changes go far beyond Shanghai, however. Experts say the rapidly
graying city is leading one of the greatest demographic changes in
history, one with profound implications for the entire country.

The world's most populous nation, which has built its economic strength
on seemingly endless supplies of cheap labor, China may soon face
manpower shortages. An aging population also poses difficult political
issues for the Communist government, which first encouraged a
population explosion in the 1950's and then reversed course and
introduced the so-called one-child policy a few years after the death
of Mao in 1976.

That measure has spared the country an estimated 390 million births but
may ultimately prove to be another monumental demographic mistake. With
China's breathtaking rise toward affluence, most people live longer and
have fewer children, mirroring trends seen around the world.

Those trends and the extraordinarily low birth rate have combined to
create a stark imbalance between young and old. That threatens the
nation's rickety pension system, which already runs large deficits even
with the 4-to-1 ratio of workers to retirees that it was designed for.

Demographers also expect strains on the household registration system,
which restricts internal migration. The system prevents young workers
from migrating to urban areas to relieve labor shortages, but officials
fear that abolishing it could release a flood of humanity that would
swamp the cities.

As workers become scarcer and more expensive in the increasingly
affluent cities along China's eastern seaboard, the country will face
growing economic pressures to move out of assembly work and other
labor-intensive manufacturing, which will be taken up by poorer
economies in Asia and beyond, and into service and information-based
industries.
[...]
India, the world's other emerging giant, also stands to benefit, with
low wages and a far younger population than China.

Even within China, Mr. Zuo said, many foreign investors have begun
moving factories away from Shanghai and other eastern cities to inland
locations, where the work force is cheaper and younger.

Full:
<http://www.nytimes.com/2006/06/30/world/asia/30aging.html?
hp&ex=1151726400&en=92530c7ed24b728e&ei=5094&partner=homepage>


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