China continues to have a surplus labor force but is plagued by an unhealthy labor-capital relationship, top researchers say.

However, Xie Fang, deputy director and a researcher with the Institute of Population and Labor Economics at the Chinese Academy of Social Sciences, points out that nation may experience a shortage of labor in the near future due to a lower increases in population growth among laborers in recent years.

According to Xie, future labor force shortages may drive the country to become more reliant on rural migrant laborers to pump impetus into domestic economic growth. Consequently, the unobstructed transformation of the labor force from rural areas to urban areas will become an even weightier obstacle on the road to the nation's successful development.

China's population is expected to peak at 1.44 billion by 2033 while the labor population is expected to no longer increase by 2011. However, the peak time came much earlier than expected thanks to that the national policy of family planning has worked and that the old-age population grow. As a result, the decline of the increase rate of the labor population has materialized in recent years.

Statistics show the proportion of jobs and job hunters is increasing year by year in 117 cities nationwide, climbing as much as 95 percent in the second quarter in 2005 when compared with 65 percent in the first quarter of 2001.

Xie believes the domestic labor force has already been driven from the stage of "limitless supply" into "limited surplus," and resulting labor supply gaps among some regions might occur throughout the country. Though employees consequently could receive higher pay, labor shortages may pose a new thorny problem, causing some economic growth slowdowns, Xie said.

Xie warned that the supply of rural workers could fall unless migrant laborers' income levels are increased in line with the income they earn in their hometowns. With preferential policies and diversified ways to make money in their hometowns, the income level of rural folks is increasing year-on-year.

As the labor force moves towards tension in supply, sustained economic growth will demand more migrant laborers. Chinese economists estimate that the transformation of rural labor forces have contributed 21 percent toward domestic economic growth during the past 25 years, though the World Bank estimates the number at 16 percent.

As a main contributor to economic growth, transformation of the rural labor force is a vital issue to be dealt with to maintain economic growth. According to a 2004 survey, the number of rural migrant employees reached nearly 100 million that year, and those without urban households claimed 57.6 percent of the jobs in secondary industries, 52.6 percent in the commerce and service sectors, 68.2 in processing and manufacturing sectors and 79.8 in construction.

In spite of that, Xie worries that the number is not enough. China still needs to move no less than 500 million rural population to urban areas in order to be ranked by 2020 as a moderately developed country, when per capita gross domestic product (GDP) is due to reach US$3,000 and the rural population percentage is due to fall to 23 percent, which is the average level of other such countries.

(China Daily September 8, 2005)