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September 26, 2017

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Supply of rural workers in Chinese cities gets smaller

BEIJING/The Straits Times/Asia News Network -- There may be people, people everywhere in the world's most populous country, but it is not easy to recruit young workers, as China-based Singaporean entrepreneur Brien Chua found out.

It is so competitive that employers have to grab people at job fairs, said Chua, 30, who has opened three doughnut shops in China.

"Say, if you are from a hair dressing salon, you see a pretty girl. You'd have to literally pull her to your desk. It's quite scary," said Chua, who pays wages of 1,400 yuan (US$212) to 1,800 yuan a month for front-line staff.

It is not just small businesses like Chua's which are finding it hard to hire young workers from the countryside, but local big boys like the South Beauty restaurant chain are also having a tough time recruiting enough workers.

The reasons for this are complex, and include increased expectations and better living standards in rural areas. But falling fertility rates do not help.

China's one-child policy has helped lower its fertility rate, or the number of children born to each woman on average, from about 3.0 in the 1980s to 1.65 in 2009.

The supply of young people aged 15 to 19, the age band at which most unskilled migrants get a job, has decreased by 9 percent to 59.4 million compared with that in 2005.

The pool will shrink further.

The size of incoming cohorts, those between 10 and 15 years old, has dropped 20 percent from 67 million in 2005 to 53 million last year.

Previously, analysts had forecast that China would see an end to the surge of its working-age population only around 2013. But factories in its coastal manufacturing hubs are already starting to experience a labor shortage, estimated to be nearly a million workers in Guangdong province.

This was the case during the Chinese New Year holidays last year, when many workers in the big cities returned home to their villages, never to return.

"Some of the current young labor shortages are cyclical, but there are longer-term changes because of the ageing population," said Professor Chan Kam Wing from the University of Washington.

With the government funding development projects to create jobs in the rural areas and wage levels in the big cities slow to rise, many workers are finding that life is not too bad in the countryside.

"With lodging expensive and food costing double the prices back home, no one wants to move to the big cities anymore," said Chua. Some also go back to get match-made and settle down, he added.

The upshot is that China's days of powering its growth on the backs of cheap, unskilled labor are coming to an end.

As Chan noted, the cost of young rural labor will go up gradually and this will be reflected in the higher costs of China's exports. That could spell the end of cheap shirts from China, for instance.

Dr. Liu Haoming, an economist with the National University of Singapore, noted that China would have to switch from a labor-intensive economy to a more capital-intensive one.

In time, as the pool of young people continues to shrink and living conditions in the rural areas continue to improve, China-based Singaporean businessmen like Chua may not be the only ones to find it tough to hire Chinese workers. It is likely to be the same for businessmen in Singapore too.

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