Employed population in China shows 1st drop since 1961 at end of 2018

24, Jan. 2019

TOKYO, NNA – The number of China’s employed population fell for the first time in nearly six decades last month in a fast-aging society, adding upward pressure on labor costs in the world’s most populous economy.

The employed workforce in the country stood at 775.86 million at the end of 2018, down by a slight 0.1% from 776.40 million a year earlier, official data showed Monday. It was the first drop since 1961, Chinese news media reported.

China’s working population aged between 16 and 59 fell sharply to 897.29 million at the end of 2018, down over 100 million from five years earlier.

Older workers gradually moved out of the workforce, causing the slight dip in the number of employed, according to media reports.

“There has been debate about raising the retirement age in China for the past several years, but nothing has yet to be decided,” said Yusuke Miura, senior economist on China at Mizuho Research Institute.

Generally, the current mandatory retirement age is 60 for men and 50 for women.

“The government is considering raising it to 60 or 65, a level more common among industrialized economies,” Miura said.

“Overall, labor supply shortages are somewhat offset by lower employment demand in the short term,” he said, as the world’s second biggest economy posted the slowest economic growth in 28 years last year.

He added that the aging population and declining workforce would continue in the longer term, which in turn would weigh on corporate activities.

“The decline in the number of employed affects economic development,” Li Hong Jian, a researcher at China University of Labor Relations in Beijing, told the 21st Century Business Herald newspaper. “A number of firms, especially manufacturers, will face difficulty in hiring.”

Monthly wages for Chinese factory workers more than doubled in the 10 years up to 2017, far outpacing wage hikes at factories in Southeast Asia.

Rising labor costs are the top concern among Japanese companies operating in China, the latest annual survey of the Japan External Trade Organization has shown.