Posted by Paul Daley - Director, APAC
Posted on April 25th, 2012 at 11:19 am

China’s ticking talent time bomb

The economic growth in China has been well documented. A seemingly insatiable global appetite for manufacturing exports combined with a growing domestic demand appear to have put the country on course for world domination. However, despite the apparent economic miracle, demographic shifts could lead to a nasty shock.
This weeks issue of ‘The Economist’ (21st – 27th April 2012) contained some interesting statistics on China’s changing demographic landscape. Over the last 30 years, the fertility rate in China has dropped from 2.6 to 1.56 (partly as a result of the well documented ‘one child policy’ and also through social choice).

The net result has been a reduction in population growth and a significant ageing of the workforce. In 1980, the median age (the age at which half the population is younger, half older) was 22. This has now increased to 34.5 and is predicted to rise to 49 by 2050; nearly nine years older than America at that point.

So what?

So what’s the implication? The impact of a rapidly ageing population has been evidenced in other countries around the world (think, Japan, America and many markets in Europe) ;spiralling healthcare costs, high dependency on social support and more people ‘consuming’ the economy than contributing to it. It also has a critical impact on the availability of talent to drive the economy forward.

Many agree that China is already in a grip of a talent crunch; not enough talent supply to meet that demanded of growing organisations. Given the above demographics, the picture is likely to get far worse.

Potential solutions?

Some may argue that a high proportion of the Chinese population is still to be employed in ‘modern’ jobs (despite rapid urbanisation, just under half the population still live in rural communities, and we can assume, fulfil ‘old economy’ jobs) and that this source will continue to meet the future talent needs. However, the transition for this population into new economy jobs is frequently difficult; the skillsets and experience required aren’t there.

Others believe migration could be the answer. Given the rate of consumption of land and raw materials, in China, opening the flood gates to young, highly educated immigrants does not seem a viable solution (nor is it likely to be attractive to policy makers in the country).

Unsolvable problem?

Whilst China has the ability to do almost anything it puts its mind to (for those of you that have witnessed the growth in the major cities will know what I mean), will dramatically shifting the population balance be a step too far?


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