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China’s Declining Work Force Creates Serious Labor Shortages

Last year China’s labor pool, workers between the ages of 15 and 59, declined by 3.5 million, creating a critical hiring crisis.

Employee vacancies at factories are on the upswing, and new hires are avidly sought with poor results.  At the same time, employees are leaving factory jobs with less than desirable working conditions.

Analysts attribute the labor shortage to several factors, including the Chinese government’s thirty-year old one-child policy.

Adding to the shortage, is an emerging demographic of the young and well educated who want more than just a job and salary from potential employers.

Addressing the desire for those special requirements in employment is Michael Liu, manager of a toy factory in Dongguan, a city in China’s manufacturing belt.

“We want to give them [employees] a sense of belonging and the feeling of being respected,” said Mr. Liu, quoted in an article in Financial Times.

Also among the hiring inducements offered by Liu’s factory are better housing, and the opportunity to offer suggestions to management.

Meanwhile, China’s minimum wage has increased to $211 monthly, but employers on the hunt for new hires, or to retain personnel, pay more than the minimum.

Although the Chinese labor pool stood at 937.27 million in 2012, the long term population trend is down, along with a shrinking work force, according the Chinese National Bureau of Statistics.

Still, the Chinese government is pursuing its announced plan to build 20 cities annually over the next 20 years to accommodate the anticipated move of vast numbers of people from farm to city, an ongoing trend of Chinese modernization.

But with less working consumers to drive the domestic economy, analysts see the potential for serious, long-term economic problems ahead.