Demographic shifts affecting Chinese labour markets

BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/21

Labour market figures released at the end of April show the number of job applicants fell 15 % y-o-y in the first quarter. The trend reflects China’s aging population and fewer working-age Chinese relative to the general population – a trend exacerbated by China’s one-child policy. While recent policy changes have sought to loosen rules to allow families to have more children, several observers note that many Chinese do not want more children, so the child-policy changes are unlikely to have much impact.

Given an environment of lower economic growth, the reduction in the labour supply has not led to significant labour shortages. Still, for example, there are more job openings than applicants in China’s high-growth coastal provinces. The rapid rise in Chinese real wages, however, does clearly reflect pressure in the labour market. Soaring wages have accelerated the shifting of production of low-value-added export goods to countries with lower labour costs and to China’s interior provinces that have lower wage levels.

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