China's labor force has sharply reduced 20 million skills talent gap in 5 years

The impact of demographic changes on China's economy is gradually becoming dominant. In recent years, the “double change” in the quantity and quality of the working-age population has already forced the upgrading of the industrial structure.
Zeng Xiangquan, director of the China Employment Research Institute, predicted that the working age population will continue to decline in 2016, and the cumulative reduction in the past five years is about 20 million. Rising labor costs, industrial shifts and technological alternative labor are the future trends.
Zhang Chewei, director of the Institute of Population and Labor Economics of the Chinese Academy of Social Sciences, said that current university graduates account for half of China's new labor force. The quality and structure of the labor force have undergone fundamental changes, and the labor market is no longer available in large quantities. The simple labor force required for traditional manufacturing, the past high-investment economic development model cannot be sustained.

The working-age population is accelerating
China's working age population aged 15 to 59 reached a peak of 925 million in 2011, and decreased by 3.45 million in 2012 compared with 2011. This is the first decline in the working-age population. In 2012, it began to decline year by year, with a decrease of 2.44 million in 2013, a decrease of 3.71 million in 2014 and a decrease of 4.87 million in 2015.
Zeng Xiangquan predicted that at least the decline in 2015 will be maintained in 2016, or the decline will be even greater. “Even with a calculation of 4.87 million, the total working-age population has fallen by 19.34 million over the past five years. This is not a small amount.”
The decline in the working-age population is a reality that has to be faced in the course of China's economic development. Li Zhong, a spokesperson for the Ministry of Human Resources and Social Security, said that in 2015, China’s working-age population fell to 911 million, which will continue to decline, and there will be a sharp decline after 2030, with an average annual rate of 7.6 million. By 2050, the Ministry of Human Resources and Social Security predicts that the working-age population will drop from 830 million in 2030 to about 700 million.
Zeng Xiangquan believes that the continuous decline in labor supply has brought about a rapid increase in labor costs. In recent years, the average growth rate of salary growth in the whole industry has remained at around 10%, for example, 11.3% in 2011, 10.5% in 2012, and 9.7% in 2013. Many foreign-funded enterprises have left China in recent years and turned to Southeast Asia, which has a direct relationship with the rapid rise of domestic labor costs.
The reduction in labor supply has also led to an increase in the frequency and scale of human resource flows. The data shows that the labor-intensive company turnover rate was 35.5% in 2011, 37.2% in 2012, and 36.2% in 2013. Zeng Xiangquan said that even some enterprises report that the turnover rate of employees has reached 50%, and labor disputes have also occurred frequently, which have brought severe challenges to the management of human resources.

"scissors difference" in labor qualifications and abilities
Another factor that must be transformed in China's industrial structure is that the labor age structure and knowledge structure can no longer support the human resources needed for traditional manufacturing in the past.
In the more than 20 years from the reform and opening up to the beginning of this century, the manufacturing line has imposed strict restrictions on the age of workers. They use the youngest workers with the highest labor productivity, and they have to put them until the "labor shortage" Open age limit.
Behind the "labor shortage" is the sharp decline in the labor force of young people aged 15-24. Zeng Xiangquan said that the 15-24-year-old youth labor force is the most obvious group with the decline of working-age population. In 2006, this group had 120 million people, and it is predicted that it will drop to 60 million by 2020. Correspondingly, the working-age population aged 55-65 will rise and the labor structure will age.
Zhang Chewei told the First Financial Reporter that with the popularization of higher education over the years, the knowledge structure of China's labor force has also changed. In the past, for a long time, more than half of the newly added employment population was below junior high school education. They become low-cost laborers in the manufacturing industry.
Today, the situation is different from the past. The gross enrollment rate of higher education has reached 44%. In 2015, university graduates accounted for about 50% of the newly added labor force, and the junior high school education level accounted for about 20%. "The quality and structure of the workforce have undergone fundamental changes. In the past, the high-input development model could not be sustained." Zhang Chewei said.
Zhang Chewei believes that the changes that are taking place in the Chinese economy are that the link between economic growth and the growth of physical capital has weakened, and the connection with human capital has become stronger. This is also the reason why GDP growth slows down and employment is better than expected.
"The problem now is that although the level of labor education has improved, the requirements for the evolution of university students' own quality and skills industry structure are not matched, resulting in structural unemployment risks. There is a certain gap between the actual skills of college students and market demand." Say.
The gap in skilled talents will be a major concern for China's economic transformation and upgrading. The data shows that at present, China's labor market only accounts for 4% of high-skilled talents, 20% of ordinary skilled talents, and 76% of unskilled.
According to the 2014 kelly service global employee index report, 92% of Chinese companies' core competitiveness is currently affected by the shortage of labor force and capacity (quality). Among them, the quality of labor is particularly acute.
Zeng Xiangquan told the First Financial News reporter that it is necessary to pay attention to training and human capital investment to alleviate structural contradictions in the labor market. In recent years, the government has invested a large amount of money in labor training, but the effect is not obvious. The next step should be to strengthen the evaluation of training programs, improve the efficiency of training, and spend money on the cutting edge.

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