By ZHAO Meng
China’s working-age population (WAP) – those aged 16 to 59 – now make up 62 percent of its 1.4 billion population. That’s a mere 875 million, almost 7 million down on the year before. Businesses and local governments are now prioritizing the scrap for workers and talent.
Falling dividend
China’s WAP has been heading steadily south for a decade and this year’s decline was big, but not the biggest. In 2011, The all-time of 940 million in 2011 dropped to below 900 million in 2018. In 2020, the national census reported a WAP of under 880 million, down 17 million in just one year. Today’s WAP has fallen more than 65 million in ten years.
The early 2010s was a turning point in China’s history when the supply of workers began to significantly erode China’s so-called “demographic dividend.”
CHEN Gong, head of population research at Peking University, points out that China’s population is still easily large enough to provide adequate labor. Statistician YAO Meixiong takes the contrary view that the shrinking population will reduce output, lower productivity, and lead to higher labor costs, less consumption, a smaller market and reduced internal demand.
Hitting the buffer
Urbanization is hit by reduced migration. Lower productivity and eventually slower growth may slow, or even halt, development.
The employment situation is generally healthy. In the short term, the market will fluctuate due to the pandemic and downward pressure from the economy and the supply side of the labor market will continue to be squeezed.
The past decade has been a buffer period when the reduction of the WAP was rather slow. Now with negative population growth, this shrinking will accelerate and hit the economy harder and harder. A manpower surplus in rural China will offset negative population growth to some extent, but that means continually draining the countryside of its labor force and forcing them into cities again.
It’s quite obvious that this is no solution to the problem as the rural population will quickly become completely unproductive. The WAP is also the breeding-age population. Without them, there will soon be no population at all.
China is still home to more than 1.4 billion people and will continue to benefit from its giant population and super-large market for a long time to come.
In the meantime, China’s workforce is more educated, which is generally seen as a positive factor in production. But a more-educated workforce, of course, is a higher-paid workforce.
