Are middle-aged migrant workers a demographic dividend?

category:Finance
 Are middle-aged migrant workers a demographic dividend?


It is recognized that the demographic dividend is related to the age structure of the population. However, there are quite different views on what age group of population is the dividend and what age group is not.

According to the definition of the United Nations Population Fund, demographic dividend refers to the economic growth potential brought about by changes in the age structure of the population, especially when the proportion of the working age population aged 15-64 is greater than that of the non working age population. When a countrys labor age population accounts for more than 50% to 60% of the total population, it is generally considered that the countrys population dividend. This should be Mr. Yang Weimins point of view. According to this view, since the middle-aged migrant workers who retired in the non-agricultural industry to the age of 60 belong to the working age population, they are part of the demographic dividend. Let them return home in their 40s, of course, is the loss of demographic dividend.

But there is another view on the issue of population dividend. This view excludes the middle-aged working age population from the demographic dividend, and holds that only the proportion of working age population under 30 years old (up to 40 years old) is high, can it be considered as a demographic dividend. Scholars with this view have noted that in the next 10 years, compared with the whole working age population, Chinas young labor force aged 20-34 or 20-44 will be reduced by 35-50 million more. They believe that the labor productivity of young and middle-aged workers is high, and they are the main force of social innovation and the main body of social consumption. The reduction of young and middle-aged labor force will lead to the reduction of social labor productivity, the weakening of social innovation ability and the reduction of consumption ability. Instead of retaining middle-aged migrant workers by settling down, they advocate supplementing the young labor force by encouraging birth and even opening up migration.

The employer wants young migrant workers

Chinas nationwide shortage of migrant workers broke out in 2004, after the employers were extremely picky about the age of migrant workers because of the oversupply of migrant workers of all ages. For example, in 2004, in Dongguan, Guangdong Province, which was dominated by labor-intensive manufacturing industry, enterprises in the city accounted for about 80% of the labor force aged 18-25, more than 10% of the labor force aged 25-34, and the rest of the labor force aged 35 and over. Even so, enterprises still feel that the proportion of young workers is not high enough, and the requirements for new recruitment of migrant workers are: in terms of age structure, 87% of them are aged 17-25, and 10.8% are aged 26-35.

Since the outbreak of the national shortage of migrant workers, the number of young migrant workers in China has been decreasing, and the younger the migrant workers, the more. In 2008, the proportion of migrant workers aged 16-20 and 21-30 was 10.7% and 35.3% respectively. In 2019, the two proportions dropped to 2.0% and 23.1% respectively. In 2008 and 2019, the total number of migrant workers in China was 225.42 million and 290.77 million respectively. During the 11 years, the number of migrant workers aged 16-20 and 21-30 dropped from 24.12 million and 79.57 million to 5.82 million and 67.17 million respectively.

Mr. Yang Weimin believes that the reason why migrant workers return to their hometown in their 40s is that they cant settle down in the city, which the author disagrees with. At least in the last 10 years, the number of migrant workers in their 40s and 50s has been on the rise. In 2010, the proportion of migrant workers aged 41-50 and over in total migrant workers was 13.4% and 4.7% respectively, from which the absolute number was 16.43 million and 5.76 million respectively. By 2019, the above proportion will rise to 19.2% and 13% respectively, with an absolute amount of 33.46 million and 22.65 million respectively. From 2008 to 2019, the number of migrant workers out of China increased from 140.41 million to 174.25 million, an increase of 33.84 million; in the same period, the number of migrant workers over 40 years old increased by 33.92 million.

The author believes that the real reason why migrant workers return home in their 40s is the contradictory attitude of the employers towards them: on the one hand, they have to use them, on the other hand, they use them as little as possible. This contradictory attitude is due to the difference of labor ability of migrant workers of different ages. The employment of ordinary migrant workers is mainly in labor-intensive industries. In this kind of industry, the middle-aged migrant workers are not as good as the young migrant workers in terms of physical strength, response sensitivity and action accuracy; with the growth of age, the gap between the middle-aged and the young migrant workers in terms of labor productivity will be larger and larger. The employers are reluctant to use middle-aged migrant workers, in the final analysis, to reduce the cost of employment.

Are middle-aged migrant workers a demographic dividend?

First of all, the calculation of labor force is based on people rather than age groups.

The underemployment of middle-aged labor force will affect all aspects. For example, the reason why ordinary workers have such a big opinion on delaying retirement is that they become poor employment households 10 years before retirement. For them, delaying retirement is not between work and retirement, but between unemployment and retirement. China is gradually bringing migrant workers into the endowment insurance system, and the employment situation of middle-aged migrant workers will affect the implementation and smooth operation of endowment insurance.

Secondly, the survival of the fittest is difficult to solve the employment problem caused by the age factor.

As an incentive mechanism, the survival of the fittest should have prompted workers to work hard. However, for most occupations, especially labor-intensive occupations, it is a common phenomenon that the working ability of workers over a certain age declines with the increase of age, which cannot be changed no matter how motivated.

For employers or migrant workers, survival of the fittest can really eliminate the fittest. However, China is a country with a large population, and the vast majority of the eliminated middle-aged migrant workers are still making a living in China, which cannot be eliminated at all. No matter the employer or the destination, the government of migrant workers hometown cant ignore it, and the first choice is to let these middle-aged migrant workers return home to earn income through work. Due to the poor investment environment in hometown, enterprises are not easy to make profits, and local governments can only subsidize; due to the limited local fiscal revenue, subsidies can only be paid by the transfer of the superior government, and the source of transfer payment is often the fiscal surplus of the coastal migrant workers inflow. In other words, the so-called survival of the fittest is just another way to solve the employment of middle-aged migrant workers.

Finally, even if some middle-aged migrant workers no longer engage in non-agricultural production after returning home, they are also the performance of the demographic dividend at home.

As a laborer, migrant workers have two functions at the same time: one is to earn money to support the family; the other is to look after the old, the young, the sick and the disabled in the family. The reason why migrant workers who have traveled thousands of miles to work in other places can work 996 overtime efficiently is based on the premise that someone at home looks after the old, the young, the sick and the disabled left in their hometown.

Looking after family doesnt create GDP, but ordinary families cant do without this kind of work. Through the tangle of who brings the baby, everyone knows the truth. Whats more, the grandparents and mothers who stay in the countryside to look after their families can no longer be regarded as surplus labor. Since the middle of 2010, almost all of the new migrant workers are migrant workers over 50 years old. For example, in 2019, there will be 2.41 million new migrant workers nationwide, of which 24.6% will be migrant workers over 50 years old, 2.2 percentage points higher than the previous year, and the proportion will increase year by year in the past five years. Among the newly increased migrant workers, there are also a large number of non existing working age groups. In 2017, the number of migrant workers over 60 years old increased by 2.22 million over 2016. When looking after family members and competing for workers in urban areas, we can only admit that it should also be part of the demographic dividend for middle-aged migrant workers to return home to look after the old, the young, the sick and the disabled.

In a word, there used to be a large number of surplus labor force in Chinese countryside in history. This kind of reality uses workers to hire young migrant workers. The theoretical behavior of employers is the concept of dividend of young labor force. With the decrease of rural surplus labor force and more and more middle-aged migrant workers entering into non-agricultural industries, the concept of demographic dividend of young labor force has fallen behind the times. (author: Guanghua School of management, Peking University) source: Guo Chenqi, editor in charge of the first financial daily_ NBJ9931