Author Profile
Cai Fang (Chinese Academy of Social Sciences )
Published in "China Economist" No. 1, 2016
Abstract
This article uses the latest population and labor data to reveal the changes in the quantity of labor supply, and proves that the key to China's employment problem is no longer the total quantity contradiction, but is increasingly manifested as structural contradictions related to the matching of the labor market. At the same time, when the actual economic growth rate is consistent with the potential growth rate, at least the current cyclical unemployment phenomenon is not prominent. Ignoring the friction and structural characteristics of the labor market and continuing to use traditional policy means to stimulate economic growth to expand the total number of employment will not only not help solve the employment problems faced in actual conditions, but may also cause hidden dangers in the labor market. The main employment contradictions facing China should turn to dealing with and resolving structural employment contradictions.
keywords
cyclical unemployment; frictional unemployment; structural unemployment ; total employment contradiction; structural contradiction
* Author's email: [email protected]
1. Introduction
developing countries with binary economic characteristics usually faces employment problems that are different from those in developed countries. In a typical binary economy, there is a large amount of surplus labor in agriculture and other traditional industries. The employment problem is manifested as a total contradiction. The solution is to rely on economic growth to create jobs and increase the labor participation rate of workers in the modern economic growth sector. In developed countries, economic growth is neoclassical and there is no long-term and persistent surplus labor force. Therefore, the employment problem is mainly manifested in frictional and structural unemployment, as well as cyclical unemployment related to the macroeconomic prosperity. The solution to the former is to improve human capital such as education and training, and to improve the functions of the labor market, while the latter depends on the macroeconomic policy aimed at regulating the economic cycle.
The main contradiction in developing countries is overwork or underemployment, and does not mean that there is no natural unemployment and cyclical unemployment composed of frictional and structural unemployment. For developing countries, natural and cyclical unemployment caused by labor market matching problems and macroeconomic fluctuations are superimposed on the labor surplus problem. However, under the conditions of China's planned economy, natural unemployment and cyclical unemployment are not reflected in the form of public unemployment, but only aggravates the degree of insufficient employment such as labor surplus and redundant employees.
For most of the time during the reform and opening up of , China was in a stage of dual economic development defined by Lewis, with the characteristics of unlimited labor supply to . According to official and scholars' estimates, the ratio of surplus labor in agriculture and redundant employees in urban state-owned enterprises and collective enterprises in was as high as about one-third (Carter et al., 1996; Zhang Xiaojian, 2008). The economic system reform carried out at the same time mobilized the enthusiasm of workers, enterprises and local governments by improving incentive mechanisms, and promoted the transfer and mobility of labor through the development of the labor market. With the continuous expansion of opening up to the outside world, the rich and low-cost labor force has been transformed into a comparative advantage of labor-intensive products and gained competitive advantages in the international market.
Therefore, although governments at all levels always regard underemployment as a difficult task, regard breaking the big pot and iron rice bowl as a daunting path, they are worried about employment pressure when the economy is down, and even when economic growth returns to normal, in fact, the transfer of abundant labor is exactly the demographic dividend of China that has achieved rapid growth during this period. All government efforts to solve employment problems by promoting economic growth and to promote labor mobility through reforms have in turn promoted economic growth and ultimately benefited people's livelihood. It can be seen that grasping the contradiction between total employment and focusing on the growth of GDP was a correct and appropriate policy choice at the development stage at that time.
As expected by the Lewis model, when the binary economy develops to a specific moment, the growth rate of labor supply cannot keep up with the growth rate of labor demand, and there will be shortages of ordinary workers and wages, which is the so-called Lewis turning point. Judging from the supply and demand relationship in the labor market, wage rise and wage convergence, 2004 was the time when China's Lewis turning point reached (Cai, 2015). On the one hand, since the essential characteristic of the binary economy of unlimited supply of labor has been changed, the arrival of Lewis' turning point is ultimately the change in the economic development stage. On the other hand, as China's economic development enters a new stage, the nature and characteristics of employment problems have also fundamentally changed. This new situation requires profound adjustments to the government's employment policy.
This article uses the latest population and labor data to reveal the changes in the quantity of labor supply, and proves that the key to China's employment problem is no longer the total quantity contradiction, but is increasingly manifested as structural contradictions related to the matching of the labor market. At the same time, when the actual economic growth rate is consistent with the potential growth rate, at least the current cyclical unemployment phenomenon is not prominent. Based on domestic and foreign experience, this article makes a policy warning: using traditional policy means will not only become increasingly difficult to deal with current and future employment problems, but also poses greater policy risks, creating hidden dangers in the labor market. Finally, based on the analysis, this article puts forward suggestions on key areas that government policies should focus on under the new situation of the labor market.
2. Changes in total labor supply
With the absorption of labor by high-speed economic growth, the transfer of rural labor surplus, the development of urban labor market and population structure, China's labor supply relations have undergone fundamental changes, and in 2004 it crossed the Lewis turning point marked by labor shortage and wage rise. Subsequently, in 2010, the turning point of the population dividend disappearance of the population dividend with working-age population changed from growth to negative growth. This further changed the total labor supply situation in non-agricultural industries. We can observe the changes in the total labor supply from the following aspects.
First of all, in the new stage of population transformation, the working-age population has experienced a slowdown, slowdown, zero growth, and then negative growth. According to census data, the working-age population aged 15-59 peaked in 2010 and has since entered negative growth. As the labor participation rate (the ratio of the working-age population willing to find employment) has increased in recent years, the economically active population (the working-age population multiplied by the labor participation rate) is still growing slowly, but it is expected that China's total economically active population will also peak in 2017, and will definitely decrease subsequently. According to forecasts, the total number of working-age population aged 15-59 in China in 2017 was 918 million, and the labor participation rate was 87.2% in the same year. Therefore, the peak of the economically active population was 800 million by then.
Secondly, the large-scale transfer of rural labor to local non-agricultural industries and urban departments has significantly reduced the degree of surplus of agricultural labor. According to official statistics, the proportion of employment in the primary industry among the country's labor force is still as high as 29.5%, the secondary industry is 29.9%, and the tertiary industry is 40.6%. Many researchers cite the proportion of agricultural labor in this source, so they think that China still has a large surplus labor. Many people also ignored the fact that labor shortages and wages rose, and denied the arrival of Lewis' turning point. However, in the face of the logic and experience of China's economic development, whether it is this official statistics or this academic viewpoint, it seems that there is a lack of consistency in the face of at least two experiences.
First, the judgment that there is still a large amount of surplus labor force in agriculture is inconsistent with the large-scale labor mobility experienced by China during the reform and opening up. According to data from the National Bureau of Statistics (2015), the total number of migrant workers nationwide in 2014 was 274 million, of which 168 million migrant workers who left the township for more than 6 months were 106 million, and 106 million were employed in non-agricultural industries in the township. The result is inevitably that the number of labor force remaining in rural areas for farming has decreased significantly, and the proportion of agricultural labor has decreased significantly.
Secondly, if we look at this official data, during the period of rapid growth and drastic changes in the industrial structure, the proportion of agricultural labor has declined every year less than half of that in the corresponding periods of Japan and South Korea. For example, during the period 1978-2012, the proportion of agricultural labor force decreased by only 2.2% per year. Japan was 4.5% from 1953 to 1987, and South Korea was 5.1% from 1963 to 1997.
By reasonably revising the definition of agricultural labor by the National Bureau of Statistics, Du Yang and Wang Meiyan (2010) re-estimated the actual agricultural labor force in 2009, indicating that the official figures overestimate agricultural labor by about 13.4 percentage points. Using this method, the author of this article reconstructed the actual agricultural labor data from the period 1984 to 2014, and concluded that by 2014, the proportion of actual agricultural labor was at least 10 percentage points lower than the figures of the National Bureau of Statistics (Figure 1). This estimate is highly consistent with that made by Brandt and Zhu (2010) using other data sources. In the figure, I treat the difference between the official data and the revaluation data as residual (residual). Under normal labor market conditions, it is distributed in the secondary and tertiary industries respectively. When non-agricultural industries encounter shocks, they often return to the surplus labor reservoir of agriculture. However, with the increase in labor productivity of agricultural mechanization, agriculture is no longer playing the role of this surplus labor reservoir.
Figure 1 Re-estimation of labor in the third industry
Source: The author estimates based on relevant data of the National Bureau of Statistics (Previous Years) and Du Yang and Wang Meiyan (2010); see Cai (2016).
Finally, since the urban employment reform in the late 1990s and early 21st century, enterprise employment has gradually achieved marketization, and redundant staffing is no longer a significant phenomenon. Although the government often persuades enterprises, especially state-owned enterprises, to try not to implement large-scale layoffs, in the face of macroeconomic fluctuations, the company's response is usually to laid off some employees, resulting in open unemployment of urban household registration workers and migrant workers returning home. Before the state-owned enterprise employment system and urban labor market reform in 1995, employment in state-owned enterprise units accounted for 59.1% of all urban employment. After radical reforms and painful adjustments, this proportion has dropped sharply to only 16.1% by 2014. The difference between the employment proportion of state-owned enterprises in these two periods reflects that a large number of redundant employees have experienced laid-off and unemployment, and through the labor market rather than the iron rice bowl system, the reemployment of individual private and corporate enterprises has been achieved. Therefore, when considering the urban labor supply stock, it should no longer be considered that there are a large number of enterprises that can serve as industrial reserves.
3. Employment difficulties: periodic or structural?
Government departments and researchers are worried about the labor market, which is indeed based on observations on the employment difficulties faced by some groups. However, according to the analysis in the previous section, the traditional concept should be abandoned, that is, these problems are still considered as a result of a surplus of total labor. It is worth further exploring whether these labor market performances are cyclical or structural, because employment issues of different natures need to be dealt with with completely different policy means.
Generally speaking, cyclical unemployment occurs when the actual growth rate is lower than the potential growth rate, thus forming a growth gap, that is, the economic growth rate fails to reach the full employment level of production factors, especially labor. According to our research, due to the significant reversal changes in factors that affect economic growth such as the supply of production factors and productivity, such as the decrease in labor supply, the slowdown in the improvement of human capital, the decline in the return on capital, and the slowdown in the improvement of total factor productivity, the slowdown in the increase of total factor productivity, etc., the annual potential growth rate of China's GDP has dropped significantly since 2010.
Before 2010, every decline in economic growth rate meant that the actual growth rate was lower than the potential growth rate, resulting in a growth gap.For example, in the early 1980s, the lowest real growth rate was in 1981, with a real growth rate of 5.2%, and the potential growth rate was 7.6%, and the difference between the former and the latter was -2.3 percentage points; in the late 1980s and early 1990s, the lowest real growth rate was 1990, with a growth gap of -3.0 percentage points; from 2008 to 2009, the lowest real growth rate was in 2009, with a growth gap of -1.4 percentage points. In the low years of the above three cycles, employment pressure and unemployment rate increased accordingly. Therefore, these three downward trends in growth rates are typical macroeconomic cycle phenomenon (Figure 2).
Figure 2 Economic growth gap during reform and opening up
Source: The author calculates based on data provided by Cai and Lu (2013).
The economic growth slowdown since 2012 and continues to this day has not been lower than the potential growth rate, so there is no growth gap. Correspondingly, the labor market is in normal conditions and the unemployment rate remains stable. It is obvious that the decline in economic growth rate this time is a structural change accompanied by the decline in the potential economic growth rate, and is a manifestation of China's economic development entering a new normal, rather than a cyclical phenomenon. According to the definition of potential growth rate and Okun’s Law, the growth rate that is consistent with growth potential can achieve full utilization of production factors and thus will not cause cyclical unemployment.
Since 2002, the registered unemployment rate of urban areas has remained at around 4.0%-4.1%, and the highest has only briefly reached 4.3%. Coincidentally, according to estimates by Du Yang and Lu Yang (2011), the natural unemployment rate of in Chinese urban areas has also been roughly 4.0%-4.1%. We know that the overall unemployment rate is composed of two parts: one is the natural unemployment rate composed of frictional unemployment rate and structural unemployment rate, and the other is the cyclical unemployment rate caused by macroeconomic fluctuations. So, does the horizontal overlap between the registered unemployment rate of and the natural unemployment rate mean that there is no cyclical unemployment in the urban labor market?
The problem is that the statistical objects for registering unemployment rates only include urban residents, and their statistical methods are based on self-registration, rather than calculated based on sampling surveys, so that they cannot accurately and completely reflect the real unemployment situation in the labor market. Therefore, we need to analyze it based on an unemployment rate index obtained by surveying according to unified international standards - urban survey unemployment rate . Although the National Bureau of Statistics has not systematically released the urban survey unemployment rate figures so far, in recent years, Chinese leaders and official reports have released some relevant data sporadically, indicating that the urban survey unemployment rate has remained at around 5.1% until the first half of 2015. If this is used as the accurate overall urban unemployment rate, the cyclical unemployment rate (i.e., the difference between the survey unemployment rate minus the natural unemployment rate) is only 1%.
However, based on previous research experience, the coverage level of migrant workers in urban unemployment rate surveys is relatively low, and there is a lack of representation for this group, and their unemployment rate is very different from that of urban residents. For example, according to a survey conducted by the Institute of Population and Labor Economics of the Chinese Academy of Social Sciences in 2010 in six major cities, the surveyed unemployment rate of local urban workers was 4.72%, while that of migrant workers was only 0.73%. Since migrant workers currently account for more than 1/3 of urban employment (less than 2/3 of local urban workers), if this is used as a weight, the coverage of urban unemployment surveys will be revised to make them a full-scale urban survey unemployment rate, including urban registered labor and migrant workers, the results will definitely not be significantly higher than the natural unemployment rate. This means that, at least in recent years, cyclical unemployment has not been the main reason for employment difficulties.
's actual growth rate declines with the potential growth rate, which certainly indicates that there will be no cyclical unemployment phenomenon, but the decline in the potential growth rate means that the traditional source of growth can no longer support the previous double-digit growth rate, but must explore new sources of growth. This process of transformation of growth momentum is a process of creative destruction of industrial structure upgrading and optimization.At the same time, the creative destructive effect will also eliminate a considerable number of traditional jobs while new jobs are constantly created. Economic history shows that the disappearance and creation of jobs occur simultaneously, which is an inevitable result of the upgrading and optimization of industrial structure. For China, which has entered the new normal of economic development, faster and more drastic changes in industrial structure mean that creative destruction of such a job is inevitable.
A labor market supply and demand indicator collected and published by the human resources and security department - the ratio of job vacancy to job seeker (ratio of job vacancy to job seeker) confirms the above analysis from two aspects. On the one hand, this ratio was analyzed based on the supply and demand information of public employment service agencies in nearly 100 cities across the country. Taking 2010 as a turning point, from less than 1 indicating that the supply in demand of jobs is less than 1 to more than 1, the labor market has always shown that the labor market is tight, that is, the number of jobs corresponds to the number of job seekers (Figure 3). The information reflected is consistent with the overall trend of the labor market where the total employment contradiction is slowing down. On the other hand, we can also see a clue from the figure, that is, after the rate of seeking people reached a higher level (1.15) in the fourth quarter of 2014, it showed a downward trend, and was 1.06 in the second quarter of 2015. Although it cannot be judged from this that the tendency of the labor market to be tight will undergo reversal changes in the future, as the industrial structure adjustment accelerates and the intensity of efforts increases, structural employment contradictions become more serious.
Figure 3 The seeking ratio of urban labor market
Source: China Employment Network [EB/OL]: http://www.chinajob.gov.cn/DataAnalysis/node_1522.html
The recent eye-catching "New Northeast phenomenon" can well interpret the creative destruction of such positions. Northeast region is an old industrial base, with traditional industries, especially heavy industries and resource-based industries, and it is also difficult to transform the development model and adjust the industrial structure. Therefore, as economic development enters a new normal, the growth rate of the region lags behind other regions. For example, the national GDP growth rate in 2014 was 7.3%, while the GDP growth rates of Liaoning, Jilin and Heilongjiang were only 5.8%, 6.5% and 5.6% respectively. Correspondingly, in recent years, the national urban labor market has generally become tighter, that is, when the number of job vacancies is greater than the number of job seekers (the number of job seekers is greater than 1), the number of job seekers in cities such as Shenyang and Changchun has continued to be lower than the national level, and has been below 1, indicating that a new industrial structure with comparative advantages has not been formed due to the decline of traditional industries, and the labor market in the Northeast is still in a situation where the number of damaged jobs is more than the number of newly created jobs.
4. The policy of dealing with cyclical unemployment along with the policy that focuses on resolving the contradiction between total employment, that is, it is to try to use macroeconomic policies, industrial policies and regional policies to stimulate and promote economic growth in order to create more jobs. In the former, it is to reduce the public unemployment rate; in the latter, it is to alleviate the degree of underemployment. For observers of China's economy during the reform and opening up, they must be familiar with these two policy concepts and practices.
First of all, since the 16th National Congress of the Communist Party of China in 2002, the CPC Central Committee and the State Council have listed promoting economic growth, increasing employment, stabilizing prices and maintaining balance of payments as the main goals of macro-control . Since then Prime Minister Zhu Rongji proposed the requirement of achieving a growth rate of no less than 8% in 1998 in response to the Asian financial crisis, 8% has become the bottom line of the central government's economic growth rate for a long time, that is, the famous "Baobao". Many years later, when explaining the necessity of "guaranteeing the eighth", then Prime Minister Wen Jiabao clearly stated that he was considering employment first.
Secondly, promoting economic growth in order to expand urban and rural employment has always been the number one priority for the Chinese government's economic work. After the 16th National Congress of the Communist Party of China, in the policy formulation of the Party Central Committee and the State Council, it gradually gave a position to promote employment to become increasingly prominent in economic and social development, and proposed an employment priority strategy and a more active employment policy.The creation of total employment is closely combined with economic development and well-being, forming a contemporary Chinese version of the development of the dual economy.
No matter what stage of economic development is, the above two policy concepts will not be outdated and should undoubtedly be adhered to. However, once the nature of the employment problem has changed, the methods and methods of response should naturally keep pace with the times in order to implement targeted measures and achieve good results. Under the new normal of economic development with the accelerated speed of industrial structure upgrading and optimization, natural unemployment caused by frictional and structural factors stubbornly exists, as well as the corresponding employment difficulties, are the main contradictions in China's labor market at present and even for a considerable period of time.
The large-scale transfer of agricultural labor to non-agricultural industries that occurred during the reform and opening up is usually expressed as a kind of reconfiguration of labor resources, thereby obtaining resource reconfiguration efficiency, which became the main source of the improvement of total factor productivity during this period. In fact, we can also describe it as creative destruction of employment. The proportion of agricultural labor has dropped from more than 70% in 1978 to less than 20% in 2014, which means that the cumulative destruction of nearly 130 million agricultural jobs and the creation of nearly 500 million non-agricultural jobs. In the future development stage, with such stormy industrial structure changes and the speed of job changes caused by them, it will inevitably slow down. However, the creative destruction process of employment positions will intensify between the secondary and tertiary industries of the non-agricultural industries, between industries within the industry, and between enterprises within the narrow sense of industry. Research by economists shows that in the developed economy like the United States, enterprises are newly established and bankrupt, or entered and exited, and the resource reconfiguration brought about by the expansion and shrinkage of different enterprise scales, so that enterprises with high productivity win, and enterprises with low productivity are eliminated, contributing to productivity improvement by as much as 1/3 to half (Foster et al., 2008). Correspondingly, economists have also found that large and high-frequency job creation and job destruction continue to occur, and the resulting job reconfiguration can explain 35%-56% of the worker mobility phenomenon in the labor market. In addition, job reconfiguration is more frequent in newly grown and small businesses and has no direct correlation with macroeconomic cycles (Davis and Haltiwanger, 1991).
Under the new normal, maintaining medium- and high-speed economic growth requires relying on the survival of the fittest among enterprises. Realizing the upgrading of the industrial structure to the middle and high-end will inevitably lead to creative destruction. Therefore, what can be expected and inevitable is that the creation and destruction of employment will accelerate at the same time. The employment changes that are taking place in China's labor market are manifestations of this creative destruction. In the future, there are three situations of job changes, which can be summarized into three types of reconfiguration, which bring corresponding challenges respectively.
The first situation is that with the change of new and old enterprises caused by differences in productivity and competitiveness, workers will also go through a process of reconfiguration, namely transfer. Even if this transfer does not have skills changes or requirements for skill improvement, a time lag is often required from leaving the old position to finding a new position, which means that transfer workers will encounter frictionless unemployment.
The second case is that since the reconfiguration from old positions to new positions is usually the result of the upgrading and optimization of the industrial structure, it often puts higher requirements on the skills of workers. Since the time required for mastering these new skills, whether long or short, varies by the worker's human capital endowment and other demographic characteristics, workers may be in structural unemployment during the skills development period.
The third situation is that while the upgrading of the industrial structure causes the disappearance of old positions, the demand for corresponding skills to the relevant positions decreases, and even the relevant skills are eventually abandoned. There are countless such phenomena in economic history, and today, with the accelerated occurrence of the new technological revolution of , this phenomenon is becoming increasingly common.For example, while the phone replaced the telegraph, the caller replaced the telegrapher; while the email impacted the traditional postal service, the software designer and the network administrator replaced the mail sorter; when online shopping impacted the physical store, the network administrator and online store owner replaced the store owner and salesperson and other 1. In these situations, frictional unemployment and structural unemployment inevitably occur.
1 Some researchers have listed a very long list of new and old positions and skills due to technological changes. In the history of economic theory, this phenomenon is discussed together with the issue called "technological unemployment". See Cox and Alm (2015).
In view of this, it is urgent to understand the new characteristics of employment issues and to keep pace with the times to change policy ideas and adjust policy means. Ignoring the friction and structural characteristics of the labor market and continuing to use traditional policy means to stimulate economic growth to expand the total number of employment will not only not help solve the employment problems faced in actual conditions, but may also cause hidden dangers in the labor market. For example, when stimulating economic growth, investment is often over-concentrated in construction areas with high demand for unskilled labor, resulting in the following negative effects.
First, under the condition of changing labor supply, this will further aggravate the labor shortage, which will in turn contribute to the decline in the potential GDP growth rate. The disappearance of the demographic dividend leads to a decline in the potential growth rate, and labor shortage is the most decisive factor, because this factor not only affects labor supply and wage costs, but also affects the improvement of human capital, return on capital and productivity improvement. Therefore, the expansion of labor demand in the construction industry caused by stimulus policies, in turn, reduces the potential growth rate, which not only fails to maintain the sustainability of economic growth, but also increases structural employment contradictions.
Second, the demand for unskilled labor is large and wages are growing rapidly. It tends to narrow the wages between skilled workers and unskilled workers. It produces negative incentives for human capital accumulation. Whether workers can adapt to new skills needs ultimately depends on education and training, and the development of the latter depends not only on supply, but also on demand. Labor shortage, especially the shortage of unskilled labor, has led to the rapid rise in wages of unskilled labor, increasing the opportunity cost of human capital improvement. In the short term, ordinary workers may benefit from rising wages, but the result of delays in human capital accumulation is to further aggravate the structural employment difficulties caused by skill mismatch, which ultimately will be endorsed by these groups.
Third, stimulating economic growth under the policy, although increasing labor demand, also causes unskilled labor to be over-concentrated in these industries with potential over-glut and even bubble risks, posing future labor market risks. International experience shows that the overcapacity of the real economy and the excessive development of the non-real economy will ultimately inevitably lead to the bubble bursting, followed by serious cyclical unemployment. The artificially amplified labor shortage makes the process of capital replacing labor or robots replacing humans prematurely. In addition, human capital accumulation is delayed, and periodic unemployment will then be transformed into long-term structural unemployment.
5. Conclusion and Policy Recommendations
Putting employment issues at the priority of economic and social policies. Implementing a proactive employment policy is an important development experience in China, which is worth summarizing and persisting for a long time. As economic activities increasingly need to face the influence of internal and external fluctuations, macroeconomic policies should also pay more timely and keen attention to employment changes and use them as an important reference for policy formulation. However, when the total labor supply is in a negative growth trend and there is no growth gap with the actual growth rate lower than the potential growth rate, the main employment contradictions faced by China and the choice of policy focus and implementation methods should turn to dealing with and resolving structural employment contradictions. To this end, we make the following policy recommendations.
First, further develop the labor market and insist on the market allocating labor resources.Experiences from Japan and South Korea show that after the overall economy crosses the Lewis turning point and there is a continuous labor shortage, the proportion of agricultural labor will continue to decline, at least further dropping below 10%. Taking this as a reference, in the process of China moving towards high-income countries, there is still huge room for agricultural labor transfer . In the 10 years from 2004 to 2014, migrant workers' work and business contributed about 1/4 to the increase in urbanization rate. With the absolute decrease in the number of newly grown rural labor force, the growth rate of migrant workers will inevitably slow down. For example, between 2005 and 2010, migrant workers increased by 4% each year, only 1.3% in 2014, and fell to only 0.1% in the first half of 2015. The reform of the household registration system with the urbanization of migrant workers as the core can further unblock the labor market and block the return of labor from cities to rural areas, thereby maintaining the normal process of urbanization and stabilizing the labor supply of non-agricultural industries.
Secondly, accelerate the accumulation of human capital through education and training and resolve structural contradictions in the labor market. Whether in terms of years of education or skills, the human capital of China's labor force is not yet adapted to the needs of drastic changes in the industrial structure. Therefore, human capital accumulation should not be just a long-term vision, but should be an urgent task. Currently, migrant workers constitute more than 2/3 of the increase in urban employment labor force, while the average education period of is 9.6 years, which is only suitable for labor-intensive positions in the secondary industry (the workers are required to have 9.1 years of education), and labor-intensive positions in the tertiary industry (the 9.6 years of education is required). However, according to the current job requirements for human capital, the capital-intensive position in the secondary industry is 10.4 years, and the technology-intensive position in the tertiary industry is 13.3 years. If we admit that the future trend of industrial change is that the capital-intensive and technology-intensive aspects of non-agricultural industrial jobs will be significantly improved, the education level of migrant workers is not enough to support them to switch to these new positions.
Again, adapting to the creative destruction process of employment positions, labor and employment statistics should reflect both the creation of new positions and the destruction of old positions. According to data released by the Ministry of Human Resources and Social Security (2015), the number of new urban jobs in 2014 was 13.22 million. However, this year, the number of new urban and rural economic active populations in the country was only 3.8 million. Obviously, first, this statistically counts a number of migrant workers who were not included in the urban employment statistics as urban employment; second, this new employment is not a net increase, that is, it only counts the entry of positions and does not count the exit of positions. On the other hand, when the media and some experts emphasize employment pressure, they often rely on some overcapacity or resource depletion industries, as well as job damage in inefficient enterprises, but do not reveal the job creation of emerging industries and new growth enterprises in a similar manner. Neither of the above two types of information is helpful to understand the real labor market and the real new normal of economic development.
Finally, provide basic public services more equitably and use social policies to support the flexible and efficient labor market. In the new stage of development, improving resource allocation efficiency and total factor productivity is the only way to maintain medium- and high-speed economic growth, and creative destruction mechanisms must be used. Protecting existing jobs under the pretext of preventing an increase in unemployment rate is tantamount to protecting the old economic structure and traditional development methods, and hindering China's economy from gaining new growth momentum. However, the special production factor of labor is based on humans. Although industries, production capacity, enterprises and even positions need to be creatively destroyed to achieve upgrading and optimization, workers cannot simply throw them to market competition and take a lethal attitude towards them. Therefore, the faster the speed of industrial structure adjustment, the more urgent it is to establish a social safety net and improve the level of public employment services, so as to help workers acquire new skills and smoothly turn to newly created positions when old positions are destroyed. This is the government function and policy focus that is compatible with the new characteristics of employment.
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