A labour crunch looms for the mainland and, while the problem has been recognised by authorities, they have so far been unwilling to take the tough measures necessary to head off the impending crisis. Yet the prescription for the cure is straightforward: further shedding of state control of the economy in favour of liberalisation.
There are ample signs of the trouble ahead. Labour and Social Security Minister Tian Chengping has, for example, predicted that by 2010, a further 10 million people will have joined the ranks of the mainland's urban jobless. The official figure for urban unemployed was 8.39 million in 2005. Officials bend towards the conservative when imparting estimates, so it can be assumed that the jobless figure is likely to be bigger.
Unemployment will worsen because children born following the economic good times since the late 1980s will be entering the workforce. There will not be enough jobs to meet demand. Without reforms, there is no likelihood of employment for these baby boomers.
Measures intended to form part of a new employment promotion law, including incentives for job creation and training, will help. But broader reforms are needed if the problem is to be overcome.
There are two other matters critical to the evolution of the mainland's labour market: the quality of university graduates and the outdated hukou system of registering residents.
China currently has about 23 million university students, more than any other country. The high figure is hardly surprising given that the nation has a population of more than 1.3 billion, but there is a worrying trend in that those graduating are often not sufficiently skilled for the jobs for which they have trained. Foreign firms, in need of increasingly better skills as their operations become more technologically advanced, are finding local graduates are simply not up to the task.
Universities also appear out of touch with the courses they offer and the job market. Determining future employment needs is difficult even for developed nations, as the shortage of doctors and nurses in such places attests; with a growing demand for workers in the information technology and research and development sectors, but not enough quality graduates, the mainland is clearly struggling as it tries to come to grips with the challenge.
