Addressing the annual session of the National People's Congress, Human Resources and Social Security Minister Yin Weimin dwelt on the labor shortage faced by some companies, especially small- and medium-sized companies (SMEs), indicating that the era of demographic bonus may have come to an end, says an article in Beijing Times. Excerpts:

The labor shortage problem that Yin Weimin analyzed from four aspects is not new. It has been faced by developed and developing regions both. But in China it has mainly affected SMEs.

Though the creation and development (strong in some cases) of SMEs started with the reform and opening up, they have almost always been at a disadvantage in terms of market competition.

Behind the labor shortage faced by SMEs are many deep-rooted problems. The biggest problem for SMEs is heavy taxes. And high inflation has raised their cost of operation further. As a result, many SMEs now face bankruptcy.

Hence, the government should reduce taxes for SMEs. This will not only help them survive, but also give them enough incentive to raise salaries to attract better-qualified and more skilled workers.

The economic restructuring process may see many SMEs fold up - which they would have anyway because of market competition. But the others, more efficient and important ones, can survive and serve society in the long term, and it is the government's duty to help them overcome their difficulties.

(China Daily 03/17/2011 page9)