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The author of the article reports that China is currently faced with a labor shortage as there has been a drastic decrease in the number of peasants moving to cities in search of unskilled labor. What this means is that the wages paid to unskilled laborers will increase. As a result, many businesses in China that rely heavily on low-end labor are relocating to other cities where they hope to get cheap labor (Frum para. 1). In other words, it has become costly to do business in China. Some of the examples of countries where Chinese businesses are finding surplus and cheap labor include Vietnam, Indonesia, Pakistan, Honduras, and Africa, among others.
The author of the article opines that the idea of a country with a population of over 1 billion people to lack skilled laborers appears to joke. Although we still have a number of countries with surplus laborers, nevertheless, the estimates that this will only last for about 20 to 25 years. Therefore, we are likely to be faced with a global shortage of unskilled laborers in the next 2 decades (Frum para. 3).
The anticipated shortage in low-wage workers means that companies in the United States, for example, will also find it hard very hard to hire low-wage workers to work in their industries either in the united states or overseas. This will more than likely affect immigration policies. As a result, the United States will no longer appeal to unskilled laborers, and they will opt to remain home and take local jobs in spite of the poor pay. In the same way, most Americans may be forced to take low-skilled jobs in spite of the poor pay.
How the article is related to the course content
The current article is relevant to the course content in that it talks about one of the factors of production-labor- and how its shortage can affect an economy and, in the process, the business world. It is important to note that most organizations are mainly focused on maintaining profits in order to fulfill the ultimate goals of their shareholders. In this case, the ultimate goal of a shareholder is to get a return on his/her investment. One way of doing this is by outsourcing cheap labor. However, when cheap labor is no longer affordable, companies have to pay more for it, and this is of great concern to shareholders. As such, the article is very relevant to the course content.
Why I chose this particular article
The reason why I chose this particular article is that it is easy to understand, not to mention that the author has made use of various examples to drive the point home. More importantly, the article has dwelt on the issue of labor, which happens to be a critical component of any business entity. In this case, the article talks about how an acute labor shortage could have implications in the decades ahead.
The author’s arguments are well thought out and coherent. As such, the article tends to flow smoothly. In addition, the author has made use of the cause-effect principle, and this helps the reader to understand what the shortage of unskilled workers would mean to the economy. However, the author has failed to use statistics to back his claims. For example, when he says that the number of peasants in China’s cities has declined, we are not told by how many. Also, the author has not quoted other credible sources to support his claims.
Frum, David. 2012. China is running out of cheap labor. 2012. Web.