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Report: Why China’s migrant workers stay closer to home

Official data have shown a decline in Chinese migrants working outside their home provinces last year compared to 2021, while there was an increase in…

Official data have shown a decline in Chinese migrants working outside their home provinces last year compared to 2021, while there was an increase in rural workers entering the service sector.

The shifts have sparked concerns about a long-term labor shortage in the manufacturing sector.

More than 70 million migrants left their home provinces for employment in 2022, down 1% from the previous year, according to an annual report released by the National Bureau of Statistics in late April.

In contrast, the number of migrants employed in their home provinces increased by 0.9% last year to 101.3 million.

Although the number of rural workers leaving their hometowns increased slightly last year, the growth rate declined by 1.2 percentage points, according to the report. The drops were partly due to the now-abandoned zero-COVID policy, which intermittently confined a significant portion of the population to their homes over the past three years.
China’s rural workforce continued to expand overall, growing 1.1% last year to 295.6 million, the report said, slowing from a 2.4% rise in 2021.

The report comes at a time when China is struggling to maintain steady economic growth after moving away from its zero-COVID policy, and some factories are already facing shortages of lower-skilled workers.

The report highlights a shift in the preferences of rural workers, in which young rural workers in particular increasingly prefer working in their hometowns rather than big cities, despite the belief that urban areas offer better job prospects and lifestyles.

The decline in the number of cross-provincial migrant workers in 2022 is not an isolated occurrence, as the number began dropping in 2015 and fell 6.1% in 2020.

Scholars predict China’s rural workers will continue to look for jobs even closer to home. Policies such as social security and medical insurance are better coordinated within provinces, which is increasingly attractive to these workers, who face various institutional barriers when moving across regions, Wei Dongxia, an associate professor at Guangdong University of Finance, told Caixin.

In 2022, 51.7% of rural workers were in the service sector, up 0.8 of a percentage point from the previous year, the report said. This marks the fifth consecutive year that more than half of China’s rural workers have flocked to the sector. The service sector, which consists of wholesale and retail trade, transportation, storage and postal services, accommodation, catering and other industries, accounts for nearly 60% of the country’s GDP.
The proportion of rural workers engaged in wholesale and retail trade experienced the largest increase, at 0.4 of a percentage point. However, due to the pandemic, the share of those in accommodation and catering decreased by 0.3 of a percentage point.

“In the context of population aging and economic transformation and upgrading, the tertiary industry (service sector) is the main force in promoting employment and absorbing the unemployed,” Wei said.
Last year, 27.4% of rural workers were employed in the manufacturing sector, up 0.3 of a percentage point from 2021 and reaching the same level as in 2019. In contrast, 17.7% were employed in the construction sector, down 1.3 percentage points from 2021.

The preference of younger migrants to be gig workers, the slowing growth of the overall rural workforce and the trend of workers flocking to the service sector are among the major factors that have completely upset the balance in the long-term stability of the job market, Hu Shunping, an expert with Ministry of Agriculture and Rural Affairs, wrote in a paper, pointing to the risk of a long-term labor shortage in manufacturing.

Two other experts said in a study that the pandemic has led to a growing shortage of lower-skilled workers, forcing companies to invest in large amounts of automated equipment to replace manual production. They fear that this trend could result in an irreversible decline in labor-intensive jobs, which may limit the opportunities for these workers to return to such jobs.

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