China’s Labor Shortage and Institutional Loss of the Social Security System for Migrant Workers: An Analysis

In the past more than 30 years, surplus labor have been flooding the rural areas, migrating to the cities and working in the industrial sectors. This is an important factor that has been promoting China’s sustained and rapid economic development. However, since the beginning of 2004, the flow of migrant workers from inland China to the eastern coastal areas started to recede and currently it doesn’t exist. Instead of the tide of migrant workers, China’s eastern coast has since then been encountering “labor shortage,” and the situation of labor shortage has now become serious. Indeed, along with the rapid aging of the Chinese population, the structure of the labor supply has changed quite a lot in today’s China. The new working-age population began to decline and the demographic dividend based on unlimited supply of labor has ended. Some scholars assert that the economic and social development in China has entered into the Lewis turning point, meaning the situation of excess labor supply has turned into labor shortage. Has China really entered into the Lewis turning point? Still there are debates, apparently. In fact, the structure change of China’s population has been leading to the slowdown in growth of the working-age population; China’s population might show negative growth in the near future, which is a tough challenge for Chinese population policymakers. However, it must be mentioned here that, despite the existing 260 million migrant population in China today, there are around 150 million population surplus in rural China that needs to be transferred to the non-agricultural sector (Zhang Tongsheng, 2011).