Does China still need its Hukou system?

Migrant workers in China still in demand

Even if many companies in the Middle Kingdom are thinking of layoffs rather than new hires in the context of the current corona crisis (especially in the export-oriented south of the country), the times when the Chinese workers' army was considered inexhaustible are long gone.

The working population has been declining since 2010. At the end of 2019, the People's Republic had around 897 million economically active persons (16 to 59 years old), of which around 775 million were actually in employment. According to forecasts, the number should shrink to 824 million people by 2030. Furthermore, the qualification of migrant workers is increasing. Young Chinese in particular, even if they come from poorer families, simply don't feel like bothering themselves as it was common for the older generation.

Correspondingly, complaints from companies that factory workers were becoming increasingly difficult to come by were part of the norm, even before the outbreak of the coronavirus. This is especially the case in industrial clusters such as Shanghai and Guangzhou, the Yangtze Delta and the Pearl River catchment area. Less attractive "bone jobs" that are also poorly paid are particularly difficult to fill.

Less qualified employees are in great demand

Against this background, the Ministry of Human Resources and Social Security (MOHRSS) published a list of the 100 most wanted job positions for the first time in December 2019. At the top, China Daily reported, were sales staff, cashiers, operators in the catering industry and security guards, followed by blue collar jobs in production.

Even if many salespeople and service staff in the catering industry have lost their jobs in the wake of the corona crisis, unskilled workers are still in demand. Fever is measured everywhere and the tracing app is checked. There are three workers on a Chinese bus: a driver, a ticket seller and a security guard. In the subway, not only are fevers measured at the entrance and luggage x-rayed; In addition, there is security personnel in every car. The security sector in particular is booming. In addition, there are millions of courier drivers across the country without whom China's door-to-door logistics could not be sustained.

Better provincial conditions compete with industrial metropolitan areas

Many of the so-called migrant workers have so far mainly earned their living on the construction site, in the factories' workshops or in the catering trade. However, they now prefer locations where wages are lower but the cost of living is also lower. Due to the sharp rise in the cost of living on the east coast, it has now become more attractive for them to work in their homeland or at least their home province, where the job offer has improved considerably in recent years.

The loosened Hukou system is intended to facilitate work fluctuation

This trend is likely to intensify in the future because the household registration system (Hukou) is to be further relaxed. The right to a school place, for example, is linked to the Hukou. If you don't own a Hukou, you often have to pay the high school fees yourself. This leads, for example, to migrant workers leaving their children under the supervision of relatives (mostly grandparents) in their homeland so that they can earn a living in the city alone. In China, people are considered migrant workers who work outside of the hukou that is registered for them.

According to the guidelines that came into force at the end of 2019, the hukou system is to be abolished for cities with fewer than 3 million inhabitants and relaxed for those with 3 to 5 million inhabitants. For locations with more than 5 million inhabitants, the number of years in which social security payments were made should play a role. Local implementation is the responsibility of the municipalities.

Migrant workers on the coast are becoming rarer

Regardless of this, the number of rural migrant workers continues to increase, at least according to official statistics, namely most recently to around 291 million in 2019. However, both the proportion and the absolute number of those looking for work on the east coast are tending to decrease (2019: 54 percent; 2016: 56.7 percent). Accordingly, there are geographical bottlenecks that companies complain about.

Beijing has the highest salaries in the country

However, it can still be financially attractive to "piss off" in a geographical sense. Because regional wage differences are enormous. According to data from the Chinese statistical office for 2018 (most recent year available), the average gross monthly wages (excluding social security contributions and benefits) More than doubled between the front runner Beijing with the equivalent of US $ 1,837 and Liaoning with US $ 849. Liaoning is by no means the bottom of all Chinese provinces. The national average in 2018 was US $ 1,039.

The survey initiated by the company "Zhaopin.com" for the first three months of 2020 resulted in the following average wages for ten sample cities:

Average wages by city in Q1 2020

city

in RMB

in US $*)

Beijing

10.921

1.565

Shanghai

10.468

1.500

Shenzhen

9.912

1.420

Guangzhou

9.207

1.319

Hangzhou

8.779

1.258

Nanjing

8.245

1.181

Suzhou

8.162

1.170

Cheng you

7.696

1.103

Chongqing

7.464

1.070

Tianjin

7.328

1.050

Even if wages in the big cities are well above the Chinese average, the cost of living is rising even faster. As a result, more and more young people are moving to smaller cities. In the meantime, particularly expensive locations (such as Shanghai) have started programs to attract sought-after talent with suitable housing offers.

Average gross monthly wages in 2018 by region (nominal change compared to the previous year in percent)

in RMB

change

in US $*)

National average

6.868

10,9

1.039

Beijing

12.147

10,7

1.837

High-wage region (example: Shanghai)

11.700

8,2

1.770

Low wage region (example: Anhui)

6.198

14,2

937