End of labor surplus means higher productivity should result in better and institutional services for migrant workers

Labor shortages and rising labor costs in China have caused growing hostility between capital and labor. Building a collective negotiation mechanism is nothing but a makeshift measure to ease the tensions. The permanent cure lies in a mature institutional design of the labor market.

The rising cost of labor in China is an inevitable result of supply and demand and not the growing awareness of workers in sweatshops. China, which once had an abundance of low-cost workers, is reaching the Lewis turning point which pushes up wages, consumption and inflation when there is no more surplus labor.