China has built its rapid ascent on the shoulders of its migrant workers, but higher costs are deterring rural Chinese from moving to cities, causing a looming labor shortage that is worrying top legislators.
Many of China’s more than 220 million migrant workers already face tough conditions, unable to access healthcare or education for their children in the cities where they work, under a residence permit system.
Now, experts say the spiraling cost of living has made moving to China’s cities a less attractive option for jobseekers than ever before, with serious implications for the country’s already slowing economy.
The issue is expected to be high on the agenda when the country’s top legislators meet next week for the annual session of the National People’s Congress (NPC).
Shi Yinhong (時殷弘), a professor of politics at Renmin University in Beijing, said it could include plans to address the plight of migrant workers, after a series of strikes and protests hit China’s southern manufacturing heartland last year.
“The biggest challenge in China now is the social challenge — balancing between rich and poor, rural and urban — and the government at the NPC will be looking closely at this,” Shi said. “I think the government will place emphasis on addressing this situation for migrant workers because they know it is important for them to come into urban areas as this produces economic growth.”
China’s State Council recently said it would reform the residence permit system, making it easier for migrant workers to apply for permits in small and medium-sized cities.
Analysts believe more details could be made public in Chinese Premier Wen Jiabao’s (溫家寶) work report, a blueprint for the country’s development over the next year, which is scheduled to be released on Monday.
More than half China’s migrant workers were born after 1980, and the new generation is both better educated and more demanding than the last.
A slowdown in exports has forced many employers to cut wages and benefits, even as the cost of living has risen, with inflation hitting a three-year high of 6.5 percent in July last year before falling back.
Wages in urban areas are about 60 percent more than those paid in the countryside, according to the government’s latest five-year plan for employment.
However, while rural wages are forecast to maintain an average growth of 13 percent a year over the next four years, many urban companies — particularly small and medium-sized enterprises — are struggling to meet salary demands.
Rising prices are also affecting office workers — Shi said students at his university were increasingly returning to their home towns after graduating, deterred from staying in Beijing by the high cost of living.
Ze Jianzhao, head of the -Beijing-based Orient Talent recruitment agency, said that businesses in cities face an uphill battle to recruit China’s 6.8 million graduates.
“As living costs — including food, accommodation and travel — have recently increased in big cities such as Beijing, some people who had planned to find jobs in these cities have decided to leave,” he said. “This has also become a problem for companies who are recruiting there.”
The problem is even more acute in mid-sized cities, where Yao Yuqun (姚裕群), professor of labor and human resources at Renmin University, said the government’s planned reform of the residence permit system was expected to focus.