The Inverse Trend of China’s Workforce
China needs more children or the country will lack of workers. The Chinese government is considering whether to eliminate the limit to the number of children that a couple can have to reverse an unexpected trend.
Since 2012, Chinese President Xi Jinping has gradually loosened population controls. The infamous one-child policy, introduced in 1979 to control population growth, was revised towards the end of 2013, when couples were granted the right to conceive a second child, if one of the parents was an only child. Two years later, in 2015, the one-child policy ended and all the couples were allowed to have two children. The one-child policy was instituted to limit population growth, to curb the population boom and to tighten the gap between needs and resources. It is considered as one of the far-sighted and wise measures that have fostered economic development and wealth in China. While the demographic containment policy has allowed China to develop and redistribute wealth, on the other hand, in recent years, China is facing some problems: the number of working age people is decreasing in the face of an aging population. By 2050, according to UN calculations, 30% of Chinese people will be over 60 (compared to 10% in 2000).
The hypothesis of eliminating the limitations on children that couples can have had already been considered, but the simple abolition of family planning could not lead to a real increase in births, due to the highs costs of families living in Chinese cities to maintain more than one child. Furthermore, analysts expect that the size of families will not grow significantly. In fact, demographers have observed a pattern that is common to advanced societies and economies: cultural aspects are leading people to opt for small households, more individual liberties, more income and few children to whom optimal conditions can be guaranteed.
The effects of demographic changes are tangible. The government is under pressure since the aging of the population puts a strain on the social security regime, while the burden of supporting older people is up to the younger workforce. However, labor erosion could be mitigated by a shift from a labor-intensive economy towards a more sustainable growth model, driven by sectors in which the quality of labor counts more than quantity. According to some government estimates, in China the workforce, quantified in 998.3 million people in 2016, could fall by 40 million in 2030. The latest statistics show that the Chinese population between 16 and 59 years, the so called working age, is 902 million, almost 65% of the total population. This is more than 5 million less than 2016. In the meantime, people over 65, at the end of 2017, have become 158 million (11.4% of the total population) and 8 million more than 2016. If no provision is taken to address it, the decline of population will only increase the cumulative damage resulting from a reduction in the labor force on demand, income and GDP production. Acknowledging the problem, at the end of 2017, President Xi Jinping ruled that the government will promote coordination between birth policies and other economic and social strategies and a decision, in this regard, is expected for the last quarter of 2018 or 2019.
Luca Masoero