What Challenges Do Migrant Workers Face in China’s Megacities?

Michael Gan

One of the biggest challenges China faces today is achieving inclusive and sustainable urbanization amid the country’s drive to upgrade its economy to an innovation-driven and high-value-added economy.

China’s large body of low-skilled workers, totaling over 500 million between the ages of 18 and 65 without a high school degree, cannot take advantage of the economic transition (Rozelle and Hell). For most workers with low education attainment, the only viable path is to enter the informal service sector. This sector is dominated by low-cost and labor-intensive jobs ranging from housekeepers, security guards, delivery drivers, or streetside vendors (Mazzocco).

The labor-intensive informal economy accounts for over 200 million people in China today (Mazzocco). Statistics from the National Bureau of Statistics (NBS) show that informal urban employment continues to grow — today, it accounts for nearly 60% of non-agricultural workers, up from 40% 15 years ago (Mazzocco). However, the increase in the demand for these services has not been as pronounced as the increase in the supply of unskilled workers: this has resulted in stagnant wages. This has exacerbated economic inequality, most clearly reflected in the Gini coefficient. As shown in Figure 1, both China Family Panel Studies (CFPS) and the NBS give Gini values higher than the benchmark of 0.4 for a highly unequal society (Mazzocco).

Figure 1: Gini Coefficient of China (Source: Mazzocco)

Aside from the income disparity highlighted by the Gini coefficient, migrant workers also face policy discrimination in megacities like Shanghai. The Hukou (residency permit) is tied to the social welfare system and labor protection. Most low-skilled migrants lack urban hukou, thus preventing them from accessing healthcare, pensions, and unemployment insurance. Cities tend to set high standards for getting a Hukou — it is difficult for those without a university education to obtain turban residency. The consequence of enlarging income disparity, stagnant income, and inadequate social welfare is that a large segment of the labor-intensive service workers have to save for rainy days and their old age.

The combination of income inequality and lack of documentation means that migrant workers are often spatially segregated from local residents. They are forced to live in urban villages where the environment is poor, but rents are lower; if they choose to live in the inner city, most live in group-rental housing (群租房).

As we found in our questionnaire survey, most migrant workers are dissatisfied with their status quo and intend to move up to technical or management jobs. However, low education attainment means that many labor-intensive, low-skilled workers lack the capabilities needed to make the transition to the high-skilled, high-wage jobs on offer as China upgrades its economy.  As a result, upward mobility is highly limited. Take the delivery worker for instance. Notwithstanding the fact that many of the delivery workers regard the delivery job as transitory, many of them find themselves stuck in the highly dangerous and highly pressurized job seemingly forever, as they lack the education attainment and/or skills to make a move to high-skill, high-income service jobs (Sun).

Thus, the urban-rural disparities in education are exacerbating the challenges low-skilled workers experience that bar them from upward mobility. This suggests that reducing the urban-rural discrepancy in education is crucial to the upward mobility of marginalized communities. Rural education is especially important as over 70% of China’s children are rural hukou holders — they are thus unable to access public schools in China’s cities even if their parents decide to relocate to those cities for work (Mazzocco).

The situation is urgent. A systematic review and meta-analysis concluded that 45% of children across Chinese rural schools have delayed cognitive development before reaching the age of five (Rozelle and Boswell). This ability gap has been attributed to the absence of their migrant worker parents, who are unable to accompany the children through much of their formative years. As a result, young people in rural communities may find themselves unable to learn complex skills. These deficiencies tend to follow individuals through life, impeding intergenerational mobility further down the line (Rozelle and Emmers, “Early Parental Training”).

The compounded effects of limited upward mobility, stagnant income, inadequate access to Shanghai’s high-quality health insurance, pension, social insurance, labor protection, and other support, and precarious housing conditions make the migrant worker community feel marginalized and excluded from the urban fabric. As my questionnaire indicates, most have no sense of belonging to Shanghai.

A society where a large segment of the population is alienated from public goods, services, and consumption opportunities cannot be considered cohesive. Instead, a cohesive society should be one where strong policy protections are in place such that each individual has a guaranteed level of minimum access (Turzi). Just like Shanghai’s motto “all rivers running into sea,” the sustainable development of Shanghai needs not just a highly-skilled workforce but also migrant workers who contribute to the everyday functions of this metropolis. Throughout history, cities have been places of opportunity — they should continue to live up to this expectation. Inequality is permissible only when it is produced as an inevitable consequence of cities as spaces of social mobility, where people from different socioeconomic backgrounds can find home and success from their labor. Policies like vocational training, measures to improve housing and working conditions, as well as measures to reduce the urban-rural discrepancy in education are all conducive to building such an inclusive, cohesive, and dynamic cosmopolitan city as Shanghai.

Referenced works

Mariano Turzi, Social Cohesion in China: Lessons from the Latin American Experience, The Whitehead Journal of Diplomacy and International Relations, Winter/Spring 2008

Mazzocco, Ilaria. “How Inequality is Undermining China’s Prosperity.” Big Data China, 26 May, 2022. https://bigdatachina.csis.org/how-inequality-is-undermining-chinas-prosperity/

Rozelle, Scott and Boswell, Matthew. Complicating China’s Rise: Rural Underemployment, The Washington Quarterly, 44:2, 61-74, 2021, DOI: 10.1080/0163660X.2021.1932097

Rozelle, Scott and Emmers, Dorien. “Early Parental Training to Foster Human Capital in Developing Countries.” Stanford Rural Education Action Program (REAP), 22 Jun, 2023. https://sccei.fsi.stanford.edu/reap/publication/early-parental-training-foster-human-capital-developing-countries 

Rozelle, Scott and Hell, Natalie. Invisible China: How the Urban-Rural Divide Threatens China's Rise. Chicago, University of Chicago Press, 2020.

Sun, Pin. Transitional Labour: Food-delivery Workers in the Platform Economy in China, Shanghai, East China Normal University Press, 2024.