What Does "Labor Intensive" Mean?

The labor-intensive industry refers to the type of industry in which the amount of capital (or capital) occupied by a unit of labor is small in the two elements of labor and capital (or capital) invested. This is an economic type that is divided according to the proportion of production factors invested in economic activities. A labor-intensive industry is essentially an industry with a lower organic (or capital) composition. Labor-intensive industries account for a large proportion of labor costs in product costs, while physical capital expenditures account for a small proportion. ^[1]

Labor-intensive industries

A labor-intensive industry refers to an industry that mainly depends on the large use of labor for production, and has a low dependence on technology and equipment. The measure is wage and equipment depreciation and research in production costs

Advantages of labor-intensive industries

China is the country with the richest labor resources in the world. In the international division of labor, developing labor-intensive industries is a big advantage for China. However, this does not mean that labor-intensive industries are the main form of China's industrial management regardless of the future level of China's socio-economic development. Since the reform and opening up, people have talked a lot about the positive effects of labor-intensive industries, but they have rarely dealt with the possible negative effects. This is not conducive to promoting the transformation and upgrading of the industrial structure consciously and in a timely manner.

Static advantages of labor-intensive industries

China started its industrialization on the basis of a poor and backward agricultural country, coupled with the imperialist imposition of an international market blockade on China in the early stage of industrialization (ie, the 1950s). Under these harsh domestic and foreign conditions, China chose A highly centralized planned economy system and a catch-up economic strategy that prioritizes the development of heavy industry. This was the only viable option in the context at the time. However, as the national economic development strategy that favors heavy industry lasts for decades, this will inevitably bring more serious negative consequences. This is manifested in the fact that heavy industry is a capital-intensive industry and its ability to absorb labor and employment is weak. Therefore, by 1978, although China's industrialization construction had made great progress, an independent modern industrial system had been initially established, which caused the proportion of industrial output value to total industrial and agricultural output value to rise from 10% to 74.4% in the early days of the founding of the PRC, and agricultural output value accounted for The proportion of total industrial and agricultural output value decreased from 90% to 25.6% in the early days of the founding of the People's Republic of China, but the labor employment structure of the national economy has not changed accordingly. That is, the agricultural labor force still accounts for 76.1% of the total social labor force, and the rural population still accounts for the total social population. 80%. With the growth of the rural population, the per capita area of arable land and other agricultural resources are decreasing, resulting in the increase of agricultural labor productivity and the increase of farmers' per capita net income is quite slow. In the 21 years from 1957 to 1978, the annual per capita net income of farmers increased by only 2.87 yuan; from 1965 to 1977, the annual per capita net income of farmers increased by only 1.00 yuan. Such low agricultural labor productivity and farmers' per capita income level cannot, on the one hand, form an effective market demand for industrial products, on the other hand, they cannot provide sufficient food and raw materials for industrialization and urbanization. This not only seriously restricts the improvement of farmers' living standards, but also severely restricts the development of the entire national economy.

The crux of the problem is that under the control of China's traditional division of labor, non-agricultural industry can be used to organize economic activities, which is limited to the urban population. For the majority of farmers, only agricultural resources can be used to organize economic activities. This is a modern city. Industrial and rural traditional agriculture are isolated from each other and closed to a dual economic structure. From the perspective of urban-rural integration, China's goal of industrialization is far from being achieved. This brings us to the question that the development of the non-agricultural industry must not only provide more and more modern material and technological inputs for agriculture, but also more importantly create new employment opportunities for the large rural surplus labor and promote rural surplus. The transfer of agricultural labor to the secondary and tertiary industries makes it possible to establish an economic operation mechanism that is interdependent, mutually promoting and coordinated development between industry and agriculture, cities and villages. This requires China's industrialization, especially rural industrialization, to focus on the development of labor-intensive industries. Only in this way will it be possible to gradually alleviate the employment pressure of China's hundreds of millions of rural surplus labor forces, and to give full play to China's abundant labor resources and low labor cost competitive advantages. In the more than 20 years of reform and opening up, the reason why China s industrialization and urbanization has achieved unprecedented development speed is to a large extent because we have fully leveraged the advantages of labor-intensive industries and transformed hundreds of millions of farmers into migrant workers. It can be concluded that if there are hundreds of millions of migrant workers, China's industrialization and urbanization will not develop to the scale it is today. Objective reality shows that where the largest number of migrant workers gather, the largest scale, where the highest degree of industrialization and urbanization, the most developed economic society and culture. The realities of the development of the Pearl River Delta, the Yangtze River Delta, and the Beijing-Tianjin-Tangshan region are just strong evidence.

Industrial Management Forms for Labor-Intensive Industries

Labor-intensive and capital-intensive are two corresponding concepts. Labor-intensive industries mainly rely on multiple inputs of live labor, and capital-intensive industries mainly rely on multiple inputs of materialized labor. Comparing labor-intensive industries with capital-intensive industries, labor-intensive industries belong to a lower-level industrial management form, which is linked to backward productivity and lower labor reproduction costs. In Volume 3 of "Capital", Marx often regarded the amount of capital (mainly physical labor) as an important sign to distinguish between intensive management and extensive management. In analyzing this problem, Marx pointed out that when production and operation are still in an extensive stage, the input factors of production are mainly labor and land, and only a small amount of capital needs to be invested. With the advancement of technology and the increase of intensive production and management, the importance and revolutionary significance of capital will inevitably become more prominent. (Note: The Complete Works of Marx and Engels (Vol. 25) [M]. Beijing: People's Publishing House, 1975, 756, 760, 762.) Because of the nature of technological progress, it is nothing more than using increasingly complete means of production, the so-called capital ( Materialized labor) instead of labor (living labor) in order to achieve the purpose of improving labor productivity. And the improvement of labor productivity means that more physical labor is promoted with less live labor. As a result, the total labor force, including live labor and material labor, is reduced. For a certain region, whether it is to speed up economic growth or improve the national welfare of members of society, it must be based on the improvement of labor productivity in the region. Labor productivity is the source of per capita national income and economic growth, and it also reflects the competitiveness of a region.

In view of the fact that labor-intensive and capital technology-intensive represent the different stages of socio-economic development, and that there are regional differences in China's productivity level, this will determine that certain regions of China (especially productivity) Lower-level regions) must also focus on industrialization to develop labor-intensive industries. However, when a region (such as China's coastal economically developed regions) develops labor-intensive industries to a certain stage, with the continuous improvement of the level of social and economic development, and the corresponding increase in the level of science and technology, consumption, and wages, low labor The cost advantage will gradually be lost. At this time, the location transfer of labor-intensive industries has become an objective requirement for economic development. According to the theory of industrial gradient transfer, when the economic development of coastal areas reaches a certain level, some low-level and extensive industries, such as labor-intensive industries with low technological content, will no longer have competition because of the sharp rise in local labor costs. The advantages must be gradually transferred to the inland areas, which will spread from wave to wave, thus driving the development of the industrial economy in the inland regions. However, what has happened in China is that despite the great economic development in the coastal areas and the significant increase in the cost of labor (referring to labor with local household registration), those low-level labor-intensive industries have been slow Able to transfer out. The reason is that a large number of cheap migrant workers in the inland areas continue to flood into the coastal areas, maintaining the low labor cost in the coastal areas, which makes such low-level labor-intensive industries (the advantage of China's labor-intensive industries often manifests as farmers The advantage of low labor costs) does not need to be transferred out, artificially cut off the chain of industrial gradient transfer. However, with the help of the institutionalized labor market segmentation and discriminatory labor wage treatment, artificially lowering the wages and benefits of migrant workers to support the development of low-level labor-intensive industries in the coastal areas, after all, there are certain limits and cannot Keep it for a long time.

Compared with capital-intensive industries, labor-intensive industries are low-value-added production activities, and their value-added capabilities are very limited. Labor-intensive industries have relatively low requirements for the quality of labor resources, and their labor cost advantages are mainly reflected in the value of laborer survival data. Capital-intensive industries are high value-added production activities, and their value-added capabilities are strong. Capital-intensive industries have relatively high requirements for the quality of labor resources, and their labor cost advantages are mainly reflected in the value of laborers' development data and enjoyment data. Lower labor costs can only absorb and reproduce lower-quality labor resources; higher labor costs can absorb and reproduce higher-quality labor resources. To weigh the comparative advantages of labor costs, we must not only look at costs but also efficiency. The comparative advantage of labor cost should be a comprehensive reflection of the cost of labor resources and the efficiency of labor resources. And the situation of labor-intensive industries in China's coastal areas is that with the passage of time, the cost of labor resources is increasing, and the efficiency of labor resources is decreasing. This is an inevitable product of the operation of labor-intensive industries to a certain stage, and further requires the industrial structure to be gradually upgraded. However, the process of upgrading the industrial structure is a process of simultaneously improving the quality of enterprises and the quality of workers. The continuous supply of low-quality labor resources inherent in labor-intensive industries cannot replace the requirements of industrial upgrading for improving the quality of workers. Not only that, labor-intensive industries generally belong to industries that consume large amounts of resources, that is, industries that consume a large amount of resources (including land resources and biological resources and mineral resources), and resources are not inexhaustible and inexhaustible. Resource prices There has been a large increase, and this low value-added labor-intensive industry will have difficulty digesting losses caused by the rapid rise in resource costs. Low value-added labor-intensive industries supported by low labor costs and low resource costs cannot exist forever and will eventually be eliminated by market competition. Some labor-intensive enterprises in the former coastal areas of China have already faced a crisis of survival.

Bottleneck of labor supply in labor-intensive industries

Since the reform and opening up, many people believe that the rapid development of labor-intensive industries is because China's labor supply, especially the supply of low-quality labor, is almost unlimited. However, the situation of labor supply and demand in China's labor-intensive industries has increasingly shaken this conclusion. This requires us to make a deeper exploration.

The market economy theory reveals that the reason for the movement of labor factors between regions is mainly due to the same regional differences in the prices of labor factors. It is precisely the interregional differences in the prices of labor factors that have caused interregional flows of labor factors. Labor factors always flow from low-price regions to high-price regions. Owners of labor factors will receive higher pay during the migration process. The price difference of labor factors is determined by the different supply and demand of labor factors in each region. That is to say, it is determined by the difference in the endowment of production factors and the density of factors in producing products in each region. To analyze the inter-regional differences in labor factor prices, we must start with the supply and demand of labor factors. Because the quantity, quality, and type of various factors of production in different regions are different, they form the basis of the differences in the prices of factors of production in each region. If we do not consider the demand factors of labor factors temporarily, the abundant supply of labor factors in each region determines the price level of labor. Generally speaking, when the supply of labor factors is abundant, the price level is low, and when the supply of labor factors is scarce, the price level is high. However, in addition to the supply factor, the price of the labor factor also depends on the demand factor. Even if the supply levels of labor factors are generally the same in the two regions, because the demand for labor factors is different, the price levels of labor factors in different regions will be different. China s coastal areas have a high population density and low per capita resources. Theoretically, the supply of labor factors will be significantly greater than that of inland regions. However, due to the rapid development of secondary and tertiary industries in this region, the demand for labor is quite large, even exceeding its labor The amount of supply made the price of its labor factors much higher than that of inland areas, which caused large-scale migration of labor from inland areas to coastal areas, and provided relatively cheap labor factors for the economic advancement of coastal areas.

Since the reform and opening up, the industrialization and urbanization of China's coastal areas have achieved unprecedented development speed, to a large extent due to the full use of the advantages of labor-intensive industries, transforming tens of millions of farmers in inland areas into farmers work. It can be concluded that if tens of millions of cheap migrant workers leave the inland areas, the industrialization and urbanization of the coastal areas will not be able to develop to the scale they are today. Objective reality shows that where the largest number of migrant workers gather and the largest scale, where the degree of industrialization and urbanization is the highest, the economy, society and culture are the most developed. The realities of the development of the Pearl River Delta, the Yangtze River Delta, southeast Zhejiang, and southeast Fujian are just strong evidence. Without such a large flow of migrant workers from the inland areas across the country, and the lack of such cheap labor costs to curb the excessive growth of urban wage levels, the cost of industrialization and urbanization in China's coastal areas will inevitably be extremely expensive. The speed of industrialization and urbanization must be greatly delayed. The question that needs to be answered here is whether the supply of cheap labor factors required by the economic development of coastal areas with labor-intensive industries as the main carrier can be sustained for a long time?

According to the factor price equalization theorem created by Samuelson (Note: Peter. Lindt. International Economics [M]. Beijing: Economic Science Press, 1992, 88-89.) And the actual situation of the labor market. With the increase of the degree of marketization of commodities and the marketization of factors, the result of free flow and free competition will inevitably lead to the reduction of inter-regional differences in labor factor prices and even equalization. In other words, with the large-scale transfer of labor from inland areas to coastal areas, the shortage of labor factors in coastal areas will gradually ease, and the price of labor factors will not only continue to rise, but will also decline steadily; at the same time, With the large-scale transfer of labor from inland areas to coastal areas, the oversupply of labor factors in inland areas will gradually ease, and the price of labor factors will gradually rise, thereby gradually reducing the difference between the price of labor factors in inland areas and coastal areas. As a result, the scale of labor transfer from inland areas to coastal areas is correspondingly reduced, which may cause insufficient labor supply in labor-intensive industries in the coastal areas, and even a local labor labor shortage.

(Note: Qiao Xinsheng. Can market change allocate human resources [N]. Economic Daily, 2004, 7. 23.)

What does a labor-intensive industry mean?

In the 1990s, a wave of "migrant workers" was worrying, but nowadays, some low-level laborers in coastal areas

What does the labor shortage mean?

Movement-intensive industries are also puzzled by the "shortage of migrant workers." The transition from "migrant labor tide" to "migrant labor shortage" means that low-level labor-intensive industries that rely on cheap labor as their living conditions have reached a tipping point, meaning that it is difficult for farmers to work as a transitional group. Migrant workers are a hybrid of market mechanisms and urban-rural dualism. That is, on the one hand, farmers are allowed to flow freely across the country according to market signals, and on the other hand, they cannot change the inherent identity of farmers. The so-called peasant workers are, in layman's terms, peasants engaged in non-agricultural industries, that is, workers who have not yet been converted in status and are engaged in non-agricultural industries. The identity and occupation of migrant workers are combined. The "peasant" represents their identity, and the "worker" indicates their occupation. The asymmetry in the occupation and status of "migrant workers" reflects a very contradictory reality. Only the concept of "marginal groups" can accurately reflect the basic characteristics of this social group. Under the current institutional setting, there is an insurmountable gap between migrant workers and true industrial workers. Practice has raised the question to people that, on the one hand, the industrialization process requires the continuous improvement of the quality of industrial workers as a support, and on the other hand, institutional obstacles make it difficult for migrant workers to become industrial workers. When this kind of contradiction accumulates to a certain extent, it will evolve into a "migrant worker shortage." "The shortage of migrant workers" sends a signal to people that it is impossible to rely on migrant workers with discriminatory wages and benefits to support the country's industrialization for a long time. There is no certain scale and truly meaningful industrial worker team, and the sustainable development and transformation of the industry The upgrade will fail. Although there are many expedient measures to solve the problem of "migrant labor shortage", fundamentally speaking, it is to transform farmers into citizens and transform migrant workers into real industrial workers. It is worth pondering that compared with other factors of production, labor is a living factor of production, with laborers as its carrier. It has both natural and social attributes. When we look at labor from the perspective of production and operation, we focus on examining the effective allocation and use of labor resources; when we look at labor from the perspective of income distribution, we focus on examining income in enterprises and labor. The main indicator of the division between the two is the wage rate. The wage rate not only determines the income level and living standard of the laborer's family, but also directly affects the enthusiasm of the laborer. Different from other commodities, workers who are the carrier of labor commodities pay great attention to working conditions, working environment and labor treatment. One cannot imagine that migrant workers can be effectively attracted and retained in an environment full of discrimination and neglect. At present, there are localized "migrant worker shortages" in China's coastal areas. Although there are many reasons, the most direct reasons should be that the wages of migrant workers are too low, the labor conditions and working environment of migrant workers are deteriorating, and the legitimate rights and interests of migrant workers Not guaranteed. Migrant workers can only get a smaller share of the initial distribution in the labor market. Proceeding from the principle of achieving social fairness, those groups that receive less benefits in the initial distribution under the market mechanism should be reasonably compensated for in the redistribution system arrangement. For example, the disadvantaged groups of urban residents are in a position of impaired benefits in the initial distribution of the market. However, their adjustments have significantly improved their situation after adjustments such as the city's minimum social security line. Migrant workers in cities are basically excluded from the redistribution system, and particularly prominently excluded from the social security system.

When China entered the mid-1990s, two kinds of "urban and rural dual structures" had already been superimposed. That is to say, on top of the original urban-rural barriers based on the household registration system, a kind of urban-rural disruption intertwined by the household registration system and market factors was added. In other words, the former Chinese urban labor market was not unitary but dualistic, that is, it was actually divided into the urban resident labor market and the migrant labor labor market. Because of the difference in status, they are in different labor markets. Even if they pay the same labor, or even pay double labor, they will not get equal pay. The labor market for migrant workers is actually a discriminated labor market, or a distorted labor market, because freedom and equality are the principles inherent in a market economy. In theory, discrimination benefits some members of society and hurts others. That is, the undiscriminated group is the beneficiary, and the discriminated group is the injured. If the beneficiary's beneficiary amount or range of benefits cannot compensate the loss of the injured person, then the existence of discrimination will cause the operation of the macroeconomy to deviate from the Pareto optimal standard. Of course, from a local perspective, from a short-term perspective, the differences caused by discrimination are beneficial to non-discriminatory groups and detrimental to discriminated groups. However, from a global perspective, from a long-term perspective, Not only will the "winner" gains not be able to cover the losses of the "loser", but in the end, the gains already made by the "winner" will be lost, and even the beneficiaries will become the losers, and the "winner" will become " loser".