Recruiting in China

China's labor market is in the pincer grip of dwindling surplus labor on one hand and growing unemployment on the other as a result of mass closures of outdated factories.

Apparently contradictory, these two rising trends have come to define the labor market of late. Employers are finding it difficult to find suitable workers and employees are scratching heads in their search for ideal positions.

In terms of labor supply, which has long been seen as a factor in the nation's economic miracle, China has already entered a complicated era of a dwindling workforce and a shortage of skilled workers.

But don't panic.

Cai Fang, a senior think tank economist from the Chinese Academy of Social Sciences, assured the Chinese leadership while correcting the widely accepted perception that China's labor supply is still endlessly abundant.

According to some economists, the number of surplus laborers in rural areas alone surpasses 150 million, equivalent to half of the US's total population.

But Cai insisted that this figure was inaccurate. He said 52 million would be a more realistic estimate.

Cai reported the research result when China's highest leaders lent their ears to the country's top-level economists in July to find solutions to the current economic headaches.

"Our research finding has revealed that surplus labor is far less than we expected," said Cai, who is also a member of the Standing Committee of the National People's Congress.

The number of surplus laborers is declining in rural regions. Cai assured the leadership, currently puzzled by rising inflation, energy supply and possible economic slowdown, that by 2020, China's labor supply would increase at an encouraging pace.

To ensure a healthier economy, Cai said China needs to upgrade its economic structure and further improve the treatment of laborers and equip them with new skills and knowledge.

Since last year, the government has been determined to close the labor-intensive but energy-crunching factories. The impact is obvious as many of China's factories are labor-intensive. This will continuously result in unemployment, said Liu Junsheng, a senior researcher from the Labor-Wage Institute affiliated to the Ministry of Human Resources and Social Security.