China’s era as the world’s go-to provider of inexpensive labor may be drawing to a close. Workers are demanding higher wages and low-end manufacturers in coastal areas have in recent years complained of labor shortages.
Rising affluence and increased opportunities in China’s interior certainly have something to do with that, but so does a profound demographic shift. Largely because of the one-child policy introduced in the late 1970s, the number of children per woman fell to 1.77 in 2000 from 3.78 in 1975, according to the World Bank.
Making the problem more acute, many rural parents are less willing to see their children leave home to work in the cities because they want to ensure somebody will be there to take care of them in their old age.
The United Nations projects the male population aged 15-24 will fall 18.5% between 2010 and 2020, but that the female population in that age group will fall a sharper 23.9% — a result researchers tie to the confluence of a preference for boys, the one-child policy and the increased availability of ultrasound equipment. That’s made the lack of new job entrants more acute for manufacturers that tend to mainly employ women, such as apparel makers.
Economists note that young Chinese are healthier and more educated, and thus more productive, and that many state-owned enterprises have far more workers than they need. Still, a 21% decline in the age group is a major shift.
In the not-too-distant future, young Chinese workers will also have a lot more older people to support. The U.N. projects that those 65 and older will make up 20% of China’s population by 2035 — about the same as is projected for the U.S. — up from 8.2% in 2010.