Page 31 - The South China Business Journal
P. 31
of all employment in 2017. The oversupply education among their workforce was relatively
of unskilled workers is driving down wage-growth high, workers in these countries were able to
rates in the informal economy. Informal low-skill shift from construction sites and the factory floor
wage growth fell by 4.66 percentage points (or into higher-skill jobs. Propelled by investment
44%) between the early 2010s (2010–14) period in training and education, countries that have
and more recently (2015–17). Formal, high-skill graduated from middle- to high-income status
wage growth, on the other hand, rose by 1.32 broke through the skill-intensive barrier to provide
percentage points (or +17%) during the same higher and consistently rising wages across most
time period. segments of the workforce. Unfortunately,
OECD data show that China has one of the
Are wages of unskilled workers continuing lowest educated labor forces of any middle-
to fall? An August 2020 survey of 700 villages income country.
from six provinces indicated that a large share
of rural workers who wished to work could not Implications for Common Prosperity in
find work, even though China's economy was China. Beijing's Common Prosperity initiative
beginning to recover from the pandemic (and its may not be sufficient to reverse China’s income
third-quarter GDP was growing by nearly 5%). inequality, wage polarization, and increasing
More than half of the respondents reported either informality among its less-educated workers.
difficulty finding jobs or that their wage levels For middle-income economies like China, strong
were too low. economic performance initially driven by an
abundant supply of low-skilled rural laborers
Education key to reaching high-income going into urban industrial and construction
status. China can draw important lessons sectors is often followed by wage polarization that,
from historical precedents of middle-income in turn, is associated with getting caught in the
countries that successfully transitioned to high- middle-income trap. In addition to reforms to the
income status. Countries like Singapore, Ireland, household registration system and increased social
and South Korea, for example, were induced to welfare, far-reaching investments in education,
automate and outsource to replace increasingly particularly in rural areas, may be needed for
expensive low-skill labor, but because the level of China to escape the middle-income trap.
SOSUOTUHTCHHCINHAINBAUBSUINSEINSESSJSOJUORUNRANLAL2828
of unskilled workers is driving down wage-growth high, workers in these countries were able to
rates in the informal economy. Informal low-skill shift from construction sites and the factory floor
wage growth fell by 4.66 percentage points (or into higher-skill jobs. Propelled by investment
44%) between the early 2010s (2010–14) period in training and education, countries that have
and more recently (2015–17). Formal, high-skill graduated from middle- to high-income status
wage growth, on the other hand, rose by 1.32 broke through the skill-intensive barrier to provide
percentage points (or +17%) during the same higher and consistently rising wages across most
time period. segments of the workforce. Unfortunately,
OECD data show that China has one of the
Are wages of unskilled workers continuing lowest educated labor forces of any middle-
to fall? An August 2020 survey of 700 villages income country.
from six provinces indicated that a large share
of rural workers who wished to work could not Implications for Common Prosperity in
find work, even though China's economy was China. Beijing's Common Prosperity initiative
beginning to recover from the pandemic (and its may not be sufficient to reverse China’s income
third-quarter GDP was growing by nearly 5%). inequality, wage polarization, and increasing
More than half of the respondents reported either informality among its less-educated workers.
difficulty finding jobs or that their wage levels For middle-income economies like China, strong
were too low. economic performance initially driven by an
abundant supply of low-skilled rural laborers
Education key to reaching high-income going into urban industrial and construction
status. China can draw important lessons sectors is often followed by wage polarization that,
from historical precedents of middle-income in turn, is associated with getting caught in the
countries that successfully transitioned to high- middle-income trap. In addition to reforms to the
income status. Countries like Singapore, Ireland, household registration system and increased social
and South Korea, for example, were induced to welfare, far-reaching investments in education,
automate and outsource to replace increasingly particularly in rural areas, may be needed for
expensive low-skill labor, but because the level of China to escape the middle-income trap.
SOSUOTUHTCHHCINHAINBAUBSUINSEINSESSJSOJUORUNRANLAL2828
