China’s economy has relied for years on a large group of migrant workers to support it, and as China’s demographic dividend disappears, the country’s group of migrant workers is shrinking and becoming the biggest problem facing China’s economic growth, an independent economic commentator specializing in data analysis, Laoban (Old Barbarian), wrote Monday.
On May 10, Laoban published an article titled “Migrant workers have no future,” saying that after China joined the WTO in 2001, the demographic dividend became the biggest driver of economic growth in the past 20 years, and the huge group of migrant workers supported China’s position as the world’s largest basic manufacturing country, producing 20 percent of the world’s final consumer goods. Now, with China’s demographic dividend running out and the overall loss of growth of migrant workers, China’s economy is in the midst of its biggest trouble, bar none.
According to the bulletin of China National Bureau of Statistics’ migrant worker survey in the past years, Old Barbarian collected the important data on the bulletin from 2008 to 2020 and compiled a table of “Migrant Worker Data Tracking”.
Migrant workers data tracking
Laoban elaborates several key points of the table as follows.
First, in 2008, the average age of migrant workers was 34 years old, and in 2020, the average age reaches 41.4 years old, which shows that the group of Chinese migrant workers is aging. At this overall aging rate, the average age of migrant workers will be over 45 years old by 2025. It is never possible to expect a group of middle-aged and elderly people to continue to maintain China’s status as a major basic manufacturing country.
According to Laoban, this set of data on the average age of migrant workers shows exactly the trend of China’s aging population. When the average age of the core labor force exceeds 40 years old, the demographic dividend has been depleted. What is more troublesome is that this group of 280 million aging migrant workers does not have any retirement and medical protection. Thus, within 5 years at the earliest, China will be faced with hundreds of millions of old and helpless workers who have no more strength, cannot find new jobs, and cannot enjoy pension benefits. This may be something that China’s top designers have not even thought about.
Second, the number of migrant workers engaged in manufacturing reached a peak of 87.61 million in 2016 and has been on a downward path since then, dropping to 77.97 million by 2020, an 11.0% drop in four years.
What is of concern is that the expansion of China’s property bubble has not led to an increase in construction employment, according to Laoban. The number of migrant workers in construction peaked at 61.88 million in 2015 and shrank to 52.26 million by 2020, a 15.5 percent decline over five years, which is greater than the decline in manufacturing. One of the reasons may be that migrant workers as a whole are getting older, and the number of migrant workers who can withstand the strong physical labor on construction sites is decreasing as a whole; meanwhile, the rising express and take-away industries have absorbed more young migrant workers, and it is always more comfortable to take orders and deliver orders on motorbikes than to go into construction sites, so although China is full of construction sites in residential communities, it has also lost the ability to absorb the new generation of migrant workers.
Third, the number of migrant workers with college education or above is increasing, from 13.4 million (5.3% of the total number of migrant workers) in 2011 when data are available, to 34.84 million (12.2%) in 2020. This set of data reveals a phenomenon: there is basically no way out for college students from rural areas, and most of them can only go to work as migrant workers.
Fourthly, the number of migrant workers going to work abroad, after reaching a peak of 176.49 million in 2016, decreases to 169.59 million by 2020, down by 3.9%.
This shows that migrant workers as a whole are getting older and more and more reluctant to go out of town; the new generation of migrant workers are no longer willing to enter factories and construction sites, and prefer to deliver couriers, according to Laoban. I don’t know what the situation will be like in a few years. By 2025 at the latest, China may really enter the dead end of the economy without workers.
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