Han Jun

Research Report No. 042, 2008

I. New Features and New Trends of the Issues of Peasant Workers

Peasant worker is a special concept that appeared in the course of China's economic and social transformation. It mainly refers to the people who have household registered in the rural areas but mainly work in the nonagricultural sectors and live on wage incomes. In the broad sense, peasant workers include those working in the secondary and tertiary industries inside their native counties and also those working outside their native regions. In the narrow sense, peasant workers generally refer to those working outside their native regions. At present, China's peasant workers outside their native regions total about 120 million. If the rural people working in their local township enterprises are added, the total number is about 200 million. Peasant workers have made unique and important contributions to improving the looks of the countryside and to accelerating industrialization and urbanization.

1. While oversupply situation of rural labor remains unchanged, structural contradiction in supply-demand relations becomes ever prominent

Overall, the supply of China's rural labor still exceeds the demand. Currently, about 200 million of the 490 million rural labor force has migrated to nonagricultural sectors. Based on the current level of productivity, agriculture in China needs about 180 million people all the year round. Accordingly, the countryside still has about 100 million laborers in surplus, mostly in the central and west regions. They are predominantly middle-aged or older, and are manifested in underemployment and in surplus labor time in agriculture. As a result, China still has a formidable task to transfer the surplus rural labor.

Although China has an oversupply of rural labor on the whole, the supply-demand structural contradiction has become acute. The supply of skilled rural laborers is grossly insufficient and the supply of rural labor under the age of 30 is also short of demand. The amount of newly-added rural laborers has sharply dropped. The average annual growth rate of the number of rural laborers was 1.5% for the period between 1985 and 2005. While the rate was about 2.5% in the late 1980s, it has been staying at 1.1% since the 1990s. An overall undersupply of skilled workers began to appear in China's labor market in 2002, and a shortage of ordinary laborers began to hit the east developed regions in 2003. This problem became more prominent in 2004, especially in the Pearl River Delta and the southeast parts of both Fujian and Zhejiang Provinces, where manufacturing enterprises were concentrated. This labor shortage began to spread to some inland areas after 2005. The Development Research Center of the State Council conducted a nationwide survey on the utilization of rural labor in 2006, which covered 17 provinces (municipalities and regions), 20 prefecture cities, 57 counties (cities), 166 towns and townships, and 2,749 villages. About 74.3% of the villages surveyed believed that the young and middle-aged people of their villages who could leave their villages to seek employment elsewhere had already left. This ratio was 71.6% for the east region, 76% for the central region and 76.4% for the west region. The ratio of the young and middle-aged rural people remaining in their villages was 17.8% across the country on average. In regional distribution, the ratio was the lowest in the east region at 11.3%, followed by the central region at 20.4%. The west region had the highest ratio of 26.1%. Our basic judgment is that although China on the whole still has an oversupply of young and middle-aged rural labor, more and more regions have seen their remaining young rural labor being totally attracted away as a result of over 20 years of persistent labor transfer. We should not look at the supply-demand relationship of rural labor abstractly and purely from the perspective of the aggregate amount. Rather, we should analyze the supply and demand relations of rural labor more from the structural perspective. The supply and demand of rural labor is evolving from a prolonged "oversupply" to a "mixture of surplus and shortage". "Surplus" refers to an aggregate oversupply when labor is measured by converting labor time into labor. "Shortage" refers to a structural undersupply of the skilled and young rural laborers.

2. While seeking employment outside native regions remains main channel for rural labor transfer, the trend of returning to native places clearly gains momentum

The general trend is that rural labor has become growingly mobile and is seeking employment in a wider scope. As a result, seeking employment elsewhere continues to be the main channel for rural labor transfer. According to a latest nationwide survey on over 100 model labor-exporting counties jointly conducted by the Peasant Workers Office of the State Council and the rural economic research department of the Development Research Center of the State Council, the average annual growth rate of the number of peasant workers seeking employment outside their native counties was 7% from 2000 to 2006, accounting for as high as 44.6% of the total rural labor in these counties. On average, the rate of labor exported by each county to non-native provinces rose from 52.0% in 2000 to 58.3% in 2006. In most provinces and regions in the central and western parts of the country, the ratio of those seeking employment outside their native provinces outnumbered those seeking employment locally.

As the coastal developed region quickened the transfer of their labor-intensive industries to the central and western regions and as the central and western regions improved their conditions for development, more and more peasant workers have returned to their native places either for employment or for setting up their own businesses. According to the sample survey covering 301 villages in over 100 model labor-exporting counties, the returned peasant workers accounted for 23% of the peasant workers working outside their native places and for 10% of the total rural labor force in 2006. It is particularly noteworthy that a wave has risen in recent years of peasant workers returning to native places for business creation. The above survey indicated that the peasant workers returning to native places for business creation accounted for 16.06% of all the returned peasant workers. The return of the peasant workers to their native places for business creation has encouraged more rural labor to find employment locally. The same survey indicated that each returned business creator could offer 3.8 job opportunities and that the returned business creators and the people they employed altogether accounted for 18% of the labor remaining in the rural areas. Based on the 100-county survey, we preliminarily estimate that about 8 million peasant workers have returned to their native places for business creation and they have created about 30 million job opportunities. Although the outgoing peasant workers still far outnumber the returning peasant workers and although the inter-regionally transferred peasant workers still far outnumber the locally transferred peasant workers, a new pattern of rural labor transfer is taking shape, in which the trend of going to the urban areas for employment and the trend of returning to the native places for business creation are developing in parallel.

3. The scale of peasant workers continue to swell, and the new-generation peasant workers have become a vital force

The supply of rural labor continues to rise, and the total number of the peasant workers continue to swell. Since 2002, the number of peasant workers has risen by about 7 million annually on average. Currently, the young peasant workers, born after the 1980s and aged 16 or over, total more than 100 million. They have become the main force of the peasant workers. Comparatively, the new-generation peasant workers have much weaker affection for land and their way of thinking, life style and way of behavior have become increasingly urbanized. As the mainstay of the peasant workers, the new-generation peasant workers are evolving from "part-time workers and part-time peasants" to "full-time nonagricultural workers", from the "two-way flow between urban and rural areas" to the "integration into cities", and from "making a living" to "pursuing equality". This indicates that China has an urgent need to solve the problem of its urban-rural dualist system.

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