ACFA Briefing Note: China’s Looming Labour Shortage

The explosive growth of manufacturing in China has dramatically increased the requirement for entry level workers under the age of 24, says the Economist, a British magazine.

China Faces a Shortage of Entry Level Workers

The number of young workers available to work in factories in China’s coastal cities is expected to fall short by one third over the next decade and a half says Joseph de Varda, Chairman of the Australia China Foundation Association (ACFA).

Over the last 20 years China has become the factory of the world and its requirement for workers which was only temporarily halted at the beginning of the global financial crisis is again reaching critical levels.

China has been able to expand its workforce in the manufacturing centers by attracting youth from rural areas with a unique set of solutions including providing (fairly Spartan) accommodation for young workers who have been willing to live in dormitory style lodging, eat in cafeterias and do the necessary but boring repetitive work in factories for low wages.

A Factory Dormitory in Shenzhen

A factory Dormitory in Shenzhen

China Strategy for the Future

However as the demand for workers between the ages of 18 to 22 has outstripped supply companies have had to raise wages to attract workers and look at improving other conditions. But even these measures will not be sufficient in the future and factory bosses are now looking at other strategies including:

  • Building factories in rural cities where there are more workers available and wage costs are lower.
  • Achieving greater economies of scale by amalgamating smaller companies into larger conglomerations which can better absorb the cost of higher wages by reducing costs of manufacture.
  • Changing the structure of future exports towards higher value products
  • Moving operations to other low wage countries such as Vietnam and Bangladesh

China’s Rising Middle Class

However the rising middle class in China means more people than ever before can afford to buy the products that China manufactures and future economic growth will come not only from exports but from satisfying local demand.

As governments around the world have surveyed their people to ascertain their feelings about their future prospects, Chinese and Australian citizens are frequently at the top of the list of those who see a positive future ahead and both countries face challenges in the labour market of quite a different nature to those in Europe and America, they need more workers.

3 comments for “ACFA Briefing Note: China’s Looming Labour Shortage

  1. October 22, 2010 at 6:34 pm

    good article. I have see exactly this situation. In China incomes rising and people now can afford buy products and travel. Life is better people more rich. This is blessing and problem but all developed countries face this problem of rising costs. Is better than to be poor.

  2. December 26, 2010 at 10:24 am

    Super :)

  3. December 30, 2010 at 5:16 pm

    С Новым Годом Вас !
    Пусть принесет удачи и счастья !!!

    Which Translated says:

    Happy New Year to you!
    Let it bring luck and happiness!

Comments are closed.