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I don't know what percentage of labor that has been shifted to rural areas or to other other countries like Vietnam.

With regards to rural areas in China, according to the New York Times article I quoted (and linked to wrongly above):

Visiting villages from tropical Gaoyao in the southeastern corner of the country to dusty Houxinqiu in the northeast, it is striking how few young adults remain after so many have left for the cities. A recent government survey of 2,749 villages in 17 provinces and autonomous regions found that in 74 percent of villages, there were no workers fit to travel to distant cities, according to the official Xinhua news agency.

A separate report by the Chinese Academy of Social Sciences warned of coming labor shortages even in rural areas as soon as 2009.

Wages Up in China as Young Workers Grow Scarce

According to Asia Times,

According to official statistics, the total number of rural laborers is now about 500 million. The Ministry of Agriculture estimates that at least 170 million laborers are needed to sustain the country's agricultural production and another unspecified, but considerable number is needed for other rural labor. Another 150 million are estimated to be working at township enterprises run by farmers themselves.

Various estimates put the number of rural migrants working in cities at between 80 million and 130 million. That means available surplus rural labor is between 20 million and 70 million. Not many indeed, considering the current labor shortage in economically developed regions such as the Pearl River Delta, where the annual shortage alone is estimated to be at least 2 million.

And things may become worse as the countryside absorbs more surplus labor under Beijing's policy to boost rural development and farmers' income.

The shortage will eventually trigger a demand for higher wages, possibly as soon as in three years, the CASS green paper says.

China's cheap labor pool running dry

i.e. "things may become worse" for employers and businesses, but better for workers.

With respect to Vietnam, here is a headline from 1995:

Unemployment Looms in Vietnam : The Baggage of Reform

Now, despite adding 1.3 million workes a year to the labor pool, Vietnam has cut its poverty rate from 51 percent in 1990 to 8 percent in 2006, and here is a headline from this August:

Labour market forecast to be hot at year's end

A survey of the HCM City Job Service Centre shows that the serious shortage of labour continues to occur at textile-garment, footwear, wood processing enterprises and in the tourism field.

According to Navigos' recent human resources report, the need for labour of 45/46 fields increased remarkably in the second quarter of 2007, focusing on jobs that require high skills and qualifications.

Recently, banks expanded their networks and as a result, their human resources increased by 57% in the second quarter, followed by accounting and financial institutions with 42%, waste treatment with more than 40%, real estate and translation, 39%.

Though the supply of labour rose in the second quarter the source of supply didn't catch up with the demand: the supply increased by 30% while the demand was up by 142% compared to the first quarter.

Labour shortage, thus, is forecast to not be solved in the remaining months of the year.

Is it unreasonable to expect that while labor costs are still cheaper in Vietnam than in China, just as in China, they will get higher -- and so will standards of living -- as more production is shifted there, as competition continues to grow for labor, and as wages go up to attract and keep workers?

Truth unfolds in time through a communal process.

by marco on Sun Oct 28th, 2007 at 06:21:57 PM EST
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