"Reserve army of underemployed - Is China's pool of surplus labour drying up?" The Economist, September 4th 2008

Résumé du document

Published in the September 4, 2008 issue of The Economist, this article is based on "Reserve army of underemployed - Is China's pool of surplus labor drying up? According to the article, China's growth model has been based on its cheap labor force, supported by its huge population. The country is the most populated in the world, with more than 1.3 billion people. Yet, wages are increasing, due to the slowdown of the labor force available, resulted by the slowdown of the population growth and of rural-urban migration. If some are worried that this phenomenon could mean the end of the Chinese growth model, others think that those fears are premature, that solutions exist, and last but not least, that the situation will enable China to face its new challenge: to deal with a real and complete economic development, and a high economic growth. Analyzing this article leads us to the following question: Is the current slowdown of the surplus labor force and the increase of the wages a reality and a fatality as well? Does it mean the end of China's growth model or the advent of a new era characterized by the quest for an effective economic development?

Extraits

[...] Older people are less employable and in average less willing to move (as most of them have children); only 60% of men and 30% of women aged over 50 have jobs. In a word, China's surplus labour has been “virtually exhausted” said Mr Cai. The expected widespread deficiency of workers will push up industrial wages. Considering that China has based its growth model on low industrial wages, does that mean death of China's growth model?” II- Toward a real model of economic development? [...]

[...] Yet, China's growth has increased inequality and deteriorated income distribution. Moreover, there is an enormous pressure of human numbers on an intrinsically limited supporting environment. In today's China, the challenges of development have replaced the challenges of transition. There is now a real need to invest in human skills and physical infrastructure, to create efficient institutions, and to protect the most vulnerable and poor sections of the population. To conclude, if China's surplus labour will eventually run out, it still seems some years away. [...]

[...] Does it mean the end of China's growth model or the advent of a new era characterized by the quest of an effective economic development? death of China's growth model?” II- Toward a real model of economic development? China's growth model is based on cheap The necessity to temper this statement and aboudant labour forces: facts (i.e. the deficiency of workers) How can we account for such an increase Solutions to face the current decrease in average wages and why is it so worrying? [...]

[...] Thus, some are concluding that China is running short of “surplus” labour. According to Jonathan Anderson, China's sustainable growth rate will loose two points by 2025 (from to 7.5 In point of fact, China has a very young and economical active population, which is favourable to economic development. “Rapid growth and huge population have long implied that China would eventually emerge into the front ranks of world economies.” affirms Barry Naughton. As a matter of fact, China is now the fourth largest economy, and the world's third- largest trading nation. [...]

[...] the deficiency of workers) Those fears may appear premature, as affirms the economist Stephen Green. First of all, we unfortunately cannot analyze the situation properly, as data are lacking as often in China. According to Mr. Green, the surplus will not run out for the next ten years. The 20-something group will even rise again from now to 2015 thanks to the baby-boomers' children. This rise will slow the increase of urban pay. Moreover, the recent increase in urban wages doesn't necessarily mean that the surplus has gone. [...]