China's labour market faces tough challenges ahead

China's labour market is in a state of flux. The needs of employers and the demands of employees are increasingly out of sync, and this dislocation is only likely to worsen as growth continues to slow and the economy moves away from a reliance on exports towards greater domestic consumption.

Although the working-age population will almost certainly decrease in the coming decade, the kinds of jobs that have driven China's economic growth in the past could decrease at an even faster rate. Many low-cost, labour-intensive industries have already shifted substantial numbers of jobs to Southeast Asia, while the creation of the value-added jobs the Chinese government covets has been constrained by the limited skills the labour market can currently provide.

In a new report on the employment situation in China, CLB examines the latest official data on the regional and age distribution of workers, looks at the industrial sectors and types of ownership that have seen an increase in employment over the last five years, and at the groups of workers that have experienced the most difficulties in finding employment.

The report analyses the problems faced by college graduates, a record number seven million of whom will be looking for work this year, as well as elderly and disabled workers who have long been discriminated against in the job market. It also examines how demographic changes have created labour shortages in some areas, forcing employers to reassess their hiring practices.

In order to address China's deep-seated and complex employment problems, CLB recommends that the government and employers:

  • Tackle the widespread and widely-accepted practice of employment discrimination, which is currently one of the biggest obstacles to an open and healthy labour market.
  • Provide more on-the-job training. Employers routinely complain that they cannot find suitable candidates but at the same time set unrealistic requirements and are reluctant to provide training for new workers or retrain older employees.
  • Ensure job-seekers understand and have realistic expectations of the job market. The education system needs to be consolidated and restructured so that students better understand their job prospects.
  • Ensure that all workers have the social insurance they are legally entitled to. As the population ages, the need for decent pensions and healthcare will become ever more pressing.
  • Give workers greater say in their pay and working conditions through collective bargaining with management. Ultimately, the best way to ensure that workers get the right pay for the right job is to give the workers themselves a more prominent voice in the regulation of the labour market.

CLB's study on Employment in China is published today in the Resource Centre, a section of the website designed to give readers a comprehensive overview of the key labour issues in China. Other topics include migrant workers and their children, wages, social security, employment discrimination, the labour dispute resolution process and the system of work-related injury compensation.

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