China's shrinking workforce is well documented, and the shifting demographic from working age to elderly retired people is leading to labor shortages across the country. So with this in mind, what is the future for doing business in China and how can the China work visa process be adjusted to aid the situation?
In this blog we'll explore some of the data surrounding China's workforce, and what the solution may be in order to improve matters...
China has the world's largest population. Surely there are enough workers?
China's large population cannot be denied, however it's also an ageing population. In fact, Cai Feng the respected Chinese demographer believes that the Chinese workforce peaked in 2010 and that it's downhill from here.
Indeed, the decline is underway, and not even the scrapping of the controversial one-child policy looks like it can arrest its fall.
(Image source: GlobalChange.com)
Basically there are less young people entering the workforce than there are retiring, thereby leaving the working pool smaller. It gives the Chinese government a problem, because how can there be enough money to pay for all of those pensions?
Even if urban families are now allowed to have two children, the decline will continue for the best part of the next two decades, so the question is, what's the future for those of us doing business in China?
The solution? Import workers to boost China's workforce.
It may seem a little absurd to talk about importing overseas workers into the most populous country on earth, but a country populated with the elderly isn't going to be able to sustain the economic growth that China requires.
China needs to find a way to sustainably attract and retain legal workers in order to boost its ailing workforce.
According to Bloomberg's Adam Minter:
In recent years, China has opened its doors to high-skilled immigrants. But like most East Asian countries, China isn’t a diverse place, and citizens and leaders alike remain suspicious of outsiders. Though a naturalization process exists, it’s rarely used except for cases of marriage or individuals perceived to have made major contributions to Chinese society.
The chances of those rules being changed are slim. But China could take other less dramatic steps, starting with a temporary guest worker program for factories. In advance of the 2020 Olympics, Japan is trying something similar, allowing skilled construction workers into the country temporarily. China could target the lower end of the labor spectrum. (Source: Japan Times)
China is in fact a friendly place for foreign workers.
Easy to get acclimatised to? Arguably not, but it isn't the rural backwater that many folks 'back home' in the West think it is.
As a developing country though, it can be difficult for foreign workers to get to grips with the sometimes archaic and bureaucratic China work visa process and apply for a Chinese work visa.
Even if foreign workers fulfill the demands to gain a residence and work permit, which is basically only open to skilled workers and graduates, the Chinese-heavy and confusing procedure can be a labyrinth which is off-putting.
Skilled foreign workers are always going to be welcome to do business in China and work for Chinese companies, now and in the future, but at present there is little allowance made for lower-skilled workers, the type of whom would work in construction, manufacture, and heavy industry. This could also include service workers too, like nurses for instance. It is largely impossible for workers at this level to gain a work visa through official channels.
China is a homogenous country who still have their struggles when it comes to trusting and accepting foreign people and their cultures. While this is not uncommon in most Asian countries, China always had a seemingly bottomless pit of unskilled workers to call upon for its manufacture and export driven industry and so didn't have to pay much heed to the potential pool of workers from its less developed South East Asian neighbours.
Now that the domestic well is running dry China is going to have to consider Minter's suggestion: Allowing guest workers to come in and perform some of the typically 'Chinese' tasks that lower skilled Chinese workers have previously performed in order to have a large enough workforce to continue to dominate well into the 21st Century. This can happen by offering China work visas for specific lower-skilled jobs, as well as for those performed by experts.
Furthermore, streamlining the oftentimes difficult China work visa procedure for skilled foreigners will also be a boon, and should attract more overseas experts to further enrich the country's workforce, as well as shrinking the 'grey labor' market which is, at the moment, a large part of business in China.
What will it take?
- A willingness to invite more SE Asian workers into the workforce in a legal way
- Changes to be made to the current China work permit procedure to make it easier, more accessible, and less bureaucratic
What's your opinion on the shrinking workforce's affect on doing business in China? Are you an employer who is affected by this issue? How do you think that the work visa process can be improved? Please share your thoughts with us by leaving a comment below.