Labor cost rise burdensome

A seemingly unlimited supply of cheap labor has been a hallmark of China's economy as it has risen to become a global manufacturing powerhouse. But with more and more small-and medium-sized enterprises complaining of rising labor costs in the world's most populous country, Chinese policymakers should take the issue more seriously.

A recent survey by the China Center for Promotion of SME Development found that some 79 percent of the businesses surveyed ranked rising labor costs as one of their major concerns, up 10 percentage points from a year earlier.

A rise in labor costs has long been expected to reflect the diminishing supply of cheap rural labor and the improved living standards of workers. However, the double whammy of economic headwinds and a rapidly aging population have unfortunately made life extremely difficult for small businesses. Sluggish global demand and a continuous slowdown at home have already forced many SMEs into a patch rougher than expected. Worse, the labor shortfall that China's demographic change has long predicted has begun to bite deep into their balance sheets.