The Upgrading Of Manufacturing Structure In The Context Of Rising Labor Costs

Since the reform and opening up,especially after China's entry into the WTO,with the trend of global trade,relying on low labor costs and favorable investment environment,China's manufacturing industry has made tremendous progress,and China has also leaped to become the world's manufacturing center.However,with the continuous development of economy,the factor endowments in China have changed dramatically in recent years.Because of the arrival of Lewis turning point,China can not guarantee adequate supply of cheap labor.The scarcity of skilled workers in the labor market also restricts the upgrading and development of manufacturing industry.The rising wage level makes the comparative advantage of labor cost gradually lose.Therefore,the labor cost in China will continue to increase in the recent period.The rise of labor cost will have an impact on the upgrading of manufacturing structure.That is to say,the rise of labor cost will cause the proportion of labor-intensive manufacturing output to decline continuously,while the proportion of technology manufacturing output to capital-intensive manufacturing output to rise continuously.However,it is not enough to realize that the forced mechanism of rising labor costs on the upgrading of manufacturing industry structure,and there are also deviations in explaining the problems that China's manufacturing industry currently encounters.Therefore,for one of the facts that the labor cost keeps rising,we should understand it from two aspects:the reverse mechanism to upgrade the structure of manufacturing industry and the obstruction to manufacturing industry.This paper combs the relevant literature of domestic and foreign scholars on the direction of labor cost rise and manufacturing upgrading.In the theoretical part,it introduces the dual economic development theory,dynamic comparative advantage theory and new structural economics.In the study of the labor market and manufacturing structure in China,it is found that the age-appropriate labor force has shown a significant downward trend,and it is expected that there will be a shortage of supply and demand in the labor market in the next 30 years.And because of the relative shortage of skilled workers,the labor cost of manufacturing industry will continue to grow.After statistics and sorting out the proportion of the output value of the manufacturing industry,it can be found that the proportion of the output value of technology-intensive manufacturing industry has continuously increased in the past decade,but the labor-intensive industry still occupies a large proportion in the manufacturing industry of our country.In the empirical analysis part,we use two models.The first model measures the effect of rising labor costs on the upgrading of manufacturing structure.Using the statistical data of 28 sub-sectors of manufacturing industry published by the National Bureau of Statistics from 2004 to 2016,and using the method of Systematic Generalized Moment Estimation(System GMM),this paper incorporates wage level,labor input,capital input,per capita GDP level,market level and lagging industrial structure into the model,and finally draws a conclusion.The rise in labor costs will indeed promote the upgrading of the manufacturing sector.The second model econometric analysis of the impediment of the rising labor costs to the development of manufacturing industry.Statistical data of 27 sectors of manufacturing industry in the past 2010-2016 years were released by the National Bureau of statistics.The net asset profit margin of manufacturing industry is taken as dependent variable,and wage level,GDP growth rate,capital input,market scale and lagging net asset profit margin are included in the model.Similarly,the method of System GMM is used.It is concluded that the increase of GDP will increase the net asset profit margin of enterprises and increase labor.The increase of force cost will reduce the net assets profit margin of enterprises.The decline of net asset profit margin will lead to inadequate investment in capital,and turn to the virtual economy industry of financial real estate.The decline of investment level in manufacturing industry affects the sustainable development of manufacturing industry.On the basis of empirical analysis,in order to better cope with the fact that labor costs are rising,five suggestions are put forward for Chinese enterprises and government from the perspective of labor costs.Promote the level of investment in the real economy;implement differentiated industrial policies;adhere to the organic combination of market forces and government means;improve the treatment of technicians,adjust the educational structure;and promote industrial upgrading through scientific and technological innovation.