Cities need ‘low-end’ work­ers to pros­per

China Daily (Canada) - - LIFE -

ome peo­ple sup­pose in­dus­trial up­grad­ing means wan­ing de­mand for “low-end” work­force, and there­fore ur­ban ar­eas should re­strict the in­flow of “low-end” work­ers by im­ple­ment­ing a stricter house­hold reg­is­tra­tion pol­icy. This is a big mis­un­der­stand­ing.

It is not true that big cities with high la­bor pro­duc­tiv­ity and high­in­come lev­els re­quire fewlowskilled work­ers. In fact, the con­cen­tra­tion of high-skilled tal­ents in one place in­creases the de­mand for low-skilled work­ers. The pro­por­tion of blue-col­lar work­ers should gen­er­ally be higher in big­ger cities com­pared with smaller ones.

High-skilled tal­ents and lowskilled work­ers are com­ple­men­tary to each other. In a so­ci­ety with high divi­sion of la­bor, lowskilled work­ers can ben­e­fit from highly skilled tal­ents and im­prove their lot. For in­stance, work­ers in the ser­vice in­dus­try who get more chances to serve for­eign­ers can learn a for­eign lan­guage faster than other work­ers. And the more peo­ple earn, the more they spend to get ser­vices, which in turn re­quires more lowskilled work­ers to serve them.

Re­search shows that in the United States, one post in a high­tech in­dus­try can cre­ate five posts in other in­dus­tries— two in the com­par­a­tively high-end ser­vice in­dus­try (such as the med­i­cal and le­gal pro­fes­sions) and three in the con­sump­tion-cen­tric ser­vice in­dus­try (such as re­tail and restau­rants).

But un­like ma­jorUS cities, their Chi­nese coun­ter­parts have failed to in­crease the em­ploy­ment of low-skilled work­ers. In ma­jorUS cities, the pro­por­tions of high­skilled tal­ents and lowskilled work­ers are both high, but that of mid­dle-skilled work­ers is lower com­pared with smaller cities and towns.

The prob­lem with mid­dle-skilled work­ers is that de­spite be­ing un­able to com­pete with high-skilled tal­ents, they are re­luc­tant to do low-skilled work. That’s why they are less likely to make bigUS cities their base.

Sta­tis­tics show that China’s big cities at­tract more high-skilled tal­ents— but fewer low-skilled work­ers— than mid­dle- and small-sized cities. This is not be­cause China’s big cities don’t need low-skilled work­ers, but be­cause they im­ple­ment strict poli­cies to re­strict the in­flow of such work­ers. Re­strict­ing the in­flow of low-skilled work­ers in big cities, how­ever, could have a neg­a­tive im­pact on ur­ban de­vel­op­ment. When en­ter­prises in big cities have dif­fi­culty in hir­ing low-skilled work­ers to ren­der low-end ser­vices, they have to hire com­par­a­tively high-skilled peo­ple to do the jobs. That’s the rea­son why some col­lege stu­dents do me­nial work that could be ac­com­plished by peo­ple with a high school di­ploma, and this is a waste of ta­lent. Since there are not enough lowskilled work­ers in the ser­vice in­dus­try to serve the high-skilled tal­ents in big cities— and de­mand ex­ceeds sup­ply— there has been a rapid growth of salary in the ser­vice in­dus­try. And the high costs have forced many en­ter­prises to keep the re­cruit­ment of low-skilled work­ers to the barest min­i­mum. As a re­sult, high-skilled tal­ents spend more time on ser­vice­ori­ented work in­stead of im­prov­ing their pro­duc­tiv­ity. And the de­cline of pro­duc­tiv­ity of high­skilled tal­ents un­der­mines the com­pet­i­tive­ness of an en­tire city.

More­over, re­strict­ing the in­flow of low-skilled work­ers in ma­jor cities also re­duces mi­grant work­ers’ con­sump­tion. Mi­grant work­ers save more money for fu­ture risks be­cause they can­not be cov­ered by the ur­ban so­cial se­cu­rity sys­tem. They don’t spend money on durables, for they be­lieve they will even­tu­ally have to re­turn to their home­towns.

Re­strict­ing work­ers’ mo­bil­ity in ur­ban ar­eas also se­ri­ously dis­torts the de­mand and sup­ply of la­bor, un­der­min­ing eco­nomic growth and com­pet­i­tive­ness of cities, as well as the well-be­ing of ur­ban res­i­dents.

So in­stead of re­strict­ing the in­flow of mi­grant work­ers, city au­thor­i­ties should try to cope with the so­cial prob­lems re­lated to la­bor mo­bil­ity by en­hanc­ing in­fra­struc­ture con­struc­tion and pub­lic ser­vices, and im­prov­ing their ur­ban man­age­ment.

The au­thor is a pro­fes­sor at An­tai Col­lege of Eco­nomics andMan­age­ment in Shang­hai Jiao Tong Uni­ver­sity.

But these facts are not enough for the an­a­lysts to aban­don their China-pho­bia. In­stead, the an­a­lysts aban­doned ra­tio­nal think­ing to con­nect a Chi­nese world-class com­pany’s project in Aus­tralia with a hacker at­tack in Ukraine— pur­port­edly by Rus­sialinked hack­ers —which US of­fi­cials called a night­mare sce­nario be­cause of their self­ish in­ter­ests.

HowwillMor­ri­son and those an­a­lysts ex­plain the oust­ing of SGCC from the Trans­grid bid in Novem­ber and grant­ing it to an in­vestor group whose 40 per­cent stakes are con­trolled by in­vestors from theMid­dle East, a re­gion which theWest of­ten as­so­ciates with ter­ror­ism?

Ac­cord­ing to KPMG, China has in­vested about A$70 bil­lion ($54 bil­lion) in Aus­tralia since 2009, and re­placed the US as the largest in­vestor in Aus­tralia in 2013. Chi­nese in­vest­ments have gone into Aus­tralia’s strate­gi­cally im­por­tant sec­tors such as min­ing, agri­cul­ture and in­fra­struc­ture, and helped boost the coun­try’s econ­omy and im­prove its peo­ple’s liveli­hoods. The $7.7 bil­lion bid for Aus­grid could have been spent on Syd­ney’s rail and road in­fra­struc­ture. NewSouth Wales Trea­surer Gla­dys Bere­jik­lian said she re­spected the fed­eral govern­ment’s de­ci­sion, but em­pha­sized: “There will be no de­lays to our in­fra­struc­ture pipe­line.”

The turn­ing point in Aus­tralia’s at­ti­tude to­ward Chi­nese in­vest­ments came in Oc­to­ber when China’s Land­bridge Group leased the Port of Dar­win for $506 mil­lion for 99 years. The deal was crit­i­cized by some Aus­tralian strat­egy ex­perts and US of­fi­cials but sup­ported by the lo­cal gov­er­nor. North­ern Ter­ri­tory ChiefMin­is­ter Adam Giles said the crit­i­cisms are aimed at in­still­ing fear among Aus­tralians against China, es­pe­cially be­cause the Chi­nese com­pany “has sub­mit­ted a full ap­pli­ca­tion to the For­eign In­vest­ment Re­viewBoard of Aus­tralia re­gard­ing its de­sire… and also con­sulted heav­ily with the De­part­ment of De­fense.”

Even if the Sino-Aus­tralia Free Trade Agree­ment, the re­sult of nearly 10 years of hard ne­go­ti­a­tions, comes into ef­fect two months later, Chi­nese in­vest­ments in Aus­tralia will re­main a con­tentious is­sue be­cause Can­berra chose to side with­Wash­ing­ton against Bei­jing in the South China Sea dis­pute.

Af­ter the Tans­grid farce, Aus­tralia re­jected Chi­nese con­sor­tiums’ bid to pur­chase two pas­tures early this year. Aus­tralia’s de­ci­sions, to a large ex­tent, have been in­flu­enced by the US’ re­ac­tion. In the process, fair play has been fallen prey to a par­ti­san game.

But if Aus­tralia con­tin­ues to see its largest in­vestor and trade part­ner as a threat to its na­tional se­cu­rity, China has enough rea­sons to take coun­ter­mea­sures.

The au­thor is a writer with China Daily. liyang@chi­nadaily.com.cn

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