How China is Hiring in the World’s Largest Labor Market

Even though China is the most populous country in the world, their government and leaders of industry are increasingly concerned about China’s working-age population which has, of late, been shrinking each year.

Furthermore, the effects of the trade war between China and the United States in the form of tariffs on imports, has made it easy to imagine that in an environment of uncertainty and overall economic slowdown, there will be negative effects on the Chinese labor market. The current issues created by the trade war have also increased the Chinese government’s investment in their small to medium sized enterprises with new tax reductions and other benefits in order to provide the Chinese economy with more stability.

From 2007 to 2015, China represented the fastest growing economy in the world, but that pace has since slowed over the past few years. This overall growth has led to higher urban living costs, as well as increased labor costs for companies operating in large cities. The increase in highly qualified labor has also pushed up labor costs. Even for entry-level jobs, the rate of pay for employees in China is now five times the current entry-level rate for employees in India.

All of these cost increases have since generated a need for organizations to cut expenses in a variety of ways such as relocating staff to cheaper cities, laying off workers, or increasing the reliance on technology. Technology may initially create a higher necessary output of resources, but over time, the cost of technology levels out, eventually making it a much cheaper option than human workers. Furthermore, the Chinese government also has plans to cut the employer’s share of pension premiums for urban workers in an attempt to help with cost savings for organizations.

Beyond the cost of labor, there are other factors affecting employment opportunities for Chinese workers. Individuals are looking for more flexibility and freedom within their jobs. This has made the tertiary jobs industry (such as those found in the service sector) much more attractive to employees, especially younger workers. Even though these jobs may pay less than other, more structured, roles, individuals are discovering that they would rather have more time for leisure or other personal development opportunities than to be working inflexible shifts for a little bit more money.

Additionally, work location is still a major factor in determining job preferences. With the increased cost of living in cities, and with more and more organizations moving to more rural surroundings in order to afford their operations, more people are relocating out of the overpopulated urban areas, in search of calmer and more prosperous lives.

Furthermore, more Chinese adolescents are successfully completing school and going on to pursue and receive advanced degrees in order to land white-collar jobs. This puts a strain on organizations that require labor-intensive skills from people without advanced degrees.

Finally, as a result of the historical one child per family rule in China, the number of people in the workforce peaked in 2015 and has since been declining. In 2018, the country saw nearly 250 million people retire from the workforce. Recruiters are now finding that with a steady outflow of workers retiring from their jobs, finding sufficiently qualified employees is becoming harder each year.

Overall, to combat these changes to the available labor market, it will be important for the government of China to adapt their international and domestic migration requirements. Otherwise, the country will inevitably end up with some major issues in regards to being able to afford, recruit and hire skilled and desirable employees for all of their businesses.

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