China: Economical progress and an unbalanced labour market

China’s labor market is suffering from an unbalance between high qualified jobs and low- salary jobs, driving the People’s Republic in a dilemma. On the way to a superpower, the former low-wage country wants to climb the value chain and get a producer of high-tech and high quality products. Higher wages are supposed to boost domestic consumption. This realignment creates problems, because for the top jobs, China’s new graduates often are not qualified enough. On the other hand, more and more Chinese workers do not want to do the “dirty work” anymore because of an improving standard of living.

In the labor-intensive export industries profit margins are falling short. Manufacturers of textiles, footwear and consumer electronics often only pay their workers the minimum wage, which is currently at 1120 Yuan per month (128 €) in Shanghai, in poorer provinces even lower. Although, the minimum wage increased this year by an average of 24 percent, the additional revenue, however, is relativized to a large extent by the high inflation.
In the area around Hong Kong a worker earns, on average, just 30 Yuan more than the average amount of living costs. And because the salary is barely enough to live, these jobs are unattractive, leading to about 550,000 missing workers in the area.

Most migrant workers of today were born after 1980, so after the start of economic reforms and not in the hard Mao era. They claim at least a reasonably comfortable life in the city. Some therefore avoid the traditional assembly-line career. Meanwhile, many companies complain that graduates fresh from the – such as engineers – are often not qualified enough. 27 million Chinese have graduated between 2006 and November 2010. One in five of them had not found a job six months after graduation.

 Additionally, the number of graduates exploded during the last years, from 830,000 in 1998 to six millions in 2010. This fast increase of academics cannot be absorbed by the labor market. Who has a degree of a small provincial university and comes to Beijing or Shanghai, has little chance of a good employment – especially if he lacks personal contacts in the executive department.
These developments have lead to a stagnation of the average starting salary for university graduates between 2003 and 2009; taking the inflation into account, it even decreased.

 This development will for sure lead to social, economical and political tensions in China. With a fast growing economy, people demand to be participated in this success. But how will China’s regime react?



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