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China is amidst an unprecedented demographic shift. Repeal of the one-child policy won’t suffice to alter broader workforce trends irreversibly set in motion by past birth patterns. While official debate continues over the most effective ways to reverse China’s long-term demographic outlook, businesses need to anticipate likely repercussions on the future operating environment.
The key impacts on labor and talent are:
- Shrinking overall labor supply
- Progressive aging of the workforce
- Slowdown in growth of skilled entry-level talent supply
- Progressive decline in workforce entrants with vocational skills
- Significant gender skew for workforce entrants
- Upcoming retirement wave of post-famine baby boomers
- Old-age and youth dependency dynamics
As the working-age population continues to decline, contracting labor supply conditions are setting in. From an HR strategy viewpoint, changing workforce supply, composition, and dependency ratios will change work preferences and create new and unusual recruitment and retention challenges.