Why is social mobility important everywhere?
Developing a market economy requires competition and survival of the fittest – even if you are a socialist. However, looking at human rights and development, there should only be “winners” and no “losers”. Social mobility is an opportunity for the next generation to improve their life status compared with their parents.
The ‘Great Gatsby Curve’, proposed by Alan Krueger, shows the relationship between income inequality and intergenerational income mobility. Krueger predicted that “the persistence in the advantages and disadvantages of income passed from parents to the children” will “rise by about a quarter for the next generation because of the rise in inequality that the U.S. has seen in the last 25 years.”
Social mobility can help achieve common prosperity by improving everyone’s income. If a couple is not optimistic about their children’s future progress in social status and income, their willingness to have children will also be reduced. Social mobility is thus an important means to promote fertility. Social mobility is an effective driving force for social vitality. Innovation and entrepreneurship flourish under social equity and justice.
China needs a new type of ‘urbanisation’ with people at the core
In China’s definition, urbanisation means not simply people living in cities. People in cities are generally more prosperous than those in the countryside. Urbanisation means bringing country people to the level of urban people.
How to promote social mobility?
The first way is to extend the horizontal flow of population – that is from country to city – to upward mobility, so that individuals’ income level, social identity, occupation level, education level and other aspects can be improved.
China’s labour moves around the country seeking for work. Current labour migration is generally therefore, horizontal mobility. Vertical mobility does not occur this way. Nearly 30% of the urban resident population in China does not have an *urban registration. This group is mainly migrant workers. Because they do not have an urban registration, they do not have equal access to basic public services. They have unstable employment and income and cannot consume like permanent urban residents. Thus, there is little room for this group to move upwards.
(*Under the Chinese (hukou) household registration system introduced the 1950s, Chinese people are classified as either rural or urban residents depending on where they were born. Rural residents can enjoy certain land use rights but are not officially allowed to live in cities or have access to government services in those areas such as education and health care.)
Only 66% of the rural registered population lives there permanently. In other words, more than one-third of the rural population does not actually live in the countryside. This part of the non-resident rural population are migrant workers who live in cities but are not city residents. Because they work in cities, they no longer make direct contribution to the countryside either.
There is room for improvement in China’s levelling up in the future. The improvement refers not only to the increase in the urbanisation rate of the permanent population, but more importantly, the urbanisation rate of the resident population. At present, the urbanisation rate of China’s permanent residents has reached 63.9%, but the proportion of the real urban household registration is only 45.5%. If this gap can be narrowed, more migrant workers can have access to urban addresses. Then they can enjoy equal basic public services without worries, and thus can increase their consumption.
Thus, obtaining a city registration alone can increase the consumption of migrant workers by 27%. Research by OECD China Research Department puts the figure at 30%. The settlement of migrant workers in cities will also improve social security coverage, especially expanding the common pool of pension security. In addition, urbanization will not only promote horizontal mobility, but also set up social ladders so that migrant workers and their families can move up education level, occupation category, income level and social identity. They will truly become middle-income groups and achieve the goals of the middle-income group.
Match human capital and employment by increasing the number of years of education
Over the past few years, education in China has benefited from nine years of compulsory education and the expansion of college enrolment. The labour force has a higher level of education, higher per capita education years, and higher human capital potential. However, the employment opportunities of this group have not kept pace. A considerable number of these high-potential people are “flexible employees” or in “informal employment”. This is a waste of educational resources and potential human capital.
To correct this, first, we need to change exam-oriented education and focus on significantly increasing the number of years of education. Most studies have found that the number of years of education for the working population contributes significantly to economic growth. The length of years of education is very important. What we need to do now is do everything possible to extend the school system.
We also need to extend compulsory free education to preschool and senior high school by adding three years of preschool education and three years of senior high school education. We should also pay attention to improving the general level in vocational education, improving students’ learning ability, adaptability, and general cognitive ability, not just learning a skill. The labour market is ever-changing. A vocational skill may be gradually eliminated by the market. But learning and cognitive ability can benefit people forever. We also need to strengthen on-the-job training to improve the employment skills and labour market adaptability of older workers.
Break the internal structure of the family time budget
Nowadays, excessive working hours and excessive overtime not only lead to anxiety and depression among workers, but also may cause long-term adverse effects on physical health. Ultimately this creates a barrier to social mobility. The burden of domestic activities has a similar impact. Both work and family responsibilities jointly affect the family.
According to the survey of the National Bureau of Statistics in 2018, the length of unpaid domestic work is more than half of the length of paid labour.
The proportion of women in the labour force is high. At the same time, women also bear a heavier burden of housework. This hinders their social mobility. One of the most straightforward conclusions is to convert unpaid work in the family into employment. In addition, enterprises also have a lot to do to help expand family time by reducing overtime and long working hours. The increase in the family time budget can have many positive effects.
In short, the core of common prosperity is that the fruits of productivity improvement are more fully and reasonably shared throughout society. There are lessons here for all countries.