Cities need ‘low-end’ workers to prosper
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. firstname.lastname@example.org