Employment And Influencing Factors Of Producer Services In China

Employment issue relates to economic development and people’s livelihood of a country, andthus an important subject in the research field of labor economics. China is a developing countrywith a large population and great employment pressure, and promoting employment growthcontributes to steady growth of economy, stable development of the society, and continuousimprovement of people’s living standards. Nowadays the developed countries are stepping into theera of service economy, and service sector’s contribution in stimulating economic growth andemployment growth has exceeded70%. Accompanied with the development of service industry,the proportion of consumer service is declining, while producer services rising, with the growthrate not only higher than the average level of the tertiary industry, but also far higher than that ofthe national economy. Producer services have become an important force and a main channel inpromoting employment growth in many western developed countries.In accordance with service characteristics of meeting intermediate demand or final demand,the service sector is further divided into producer services and consumer services. Producerservices serve production activities and producers. As the knowledge, technology and capitalintensive service, it is in the high-end of the value chain, and plays an important role in theproduction process. Corresponding to this, consumer services provide a variety of services forindividuals and households. The degree of social specialization, development of service industry,and satisfaction of producers and consumers of a country could be reflected from the scale ofproducer services and consumer services, and their proportion in GDP. Theories of industryeconomics show that producer services play an important driving and supporting role in thedevelopment of other sectors of a country. Its steady and sustainable growth contributes toeconomic development and employment growth, upgrading industrial structure and optimizingemployment structure. Compared with producer services, consumer services’ role in employment isindeterminate, with the possibility of promoting, crowding out or substituting.China’s sustained and rapid economic growth mainly results from the secondary industry sincecarrying out reform and opening up policy, while in employment, service sector contributes thebiggest proportion among all three industries in terms of the amount of increase and the growth rate.However, producer services employment is still a new subject in the research field in Chinapresently, with definition and classification of producer services having not yet unified,employment related research being still in its infancy stage, the theoretical research and empiricalanalysis being relatively weak, and lack of in-depth study and effective conclusions. What are the characteristics of producer services employment in China? How do producer services interact withother sectors, especially manufacturing, to promote employment? What is the internal mechanismof employment growth? How large is the direct and indirect employment contribution? How largeis the job growth potential? What are the influence factors of job growth? These questions areworthy of our in-depth discussion, hence to form a relatively complete research system of producerservices employment.Nowadays the world is confronted with recession and unemployment problems, and in view ofproducer services’ outstanding achievements in promoting employment in developed countries, andwith the purpose of optimizing China’s industrial structure and employment structure, it is ofpractical significance to conduct the research on employment of producer services (the services inthe high-end of the value chain), so as to eliminate the negative impact of economic recession onemployment, fundamentally alleviate current employment pressure, and solve the problem ofunemployment in China.This paper is aimed at analyzing the impact of producer services’ development onemployment growth, through a through and systematic research, and with the aid of econometricmethod and sufficient theoretical knowledge. Based on analyzing the current situation of producerservices and its employment characteristics, this paper firstly explores its internal mechanism ofemployment growth, then determines the extent of impact, and finally finds out influence factors ofemployment growth through theoretical study and empirical test. Basic conclusions are drawn asfollows.Producer services show obvious cluster development trend in China and the spacial patterncharacteristics are large region concentration, sub-region dispersion, concentration and dispersioncoexistence, and central-peripheral circle agglomeration pattern is common. Currently our producerservices and manufacturing industry present interactive and integrative development pattern. Thedevelopment of producer services currently presents a trend of virtualization, networking, andoutsourcing. Furthermore, there is obvious trend in extension of both industry chain and producerservice chain. China’s producer services have a high position in national economy, but the scale anddevelopment level are comparatively small and low. There existing difficulties and problems in theinteractive development with manufacturing, and the effective concentration ratio is low whichrestricts its development.Development and employment of producer services are linked closely. Accompanied by therapid proportion rise of service sector in the total employment, producer services’ employmentproportion in service sector is improved steadily, and the proportion in total employment risessignificantly. As for divisions within producer services, the employment appears diverse change and obvious high growth. Employment proportion of producer services is lower than its outputproportion, and its employment growth lags behind the output growth. within service sector,producer services have a smaller employment proportion than that of consumer service, and itsproportion in total employment is still lower compared with that of the developed countries, andeven with some developing countries.Mechanism of employment growth of producer services is mainly through its uniqueintermediate service function affecting the internal conduction mechanism of national economy,and ultimately inducing and promoting economic development and overall employment growth.The basic path to follow is producer services development economic growth employmentgrowth. Producer services on one hand promote employment growth directly through its owndevelopment, and on the other hand, through interaction with other sectors, mainly integrativedevelopments with manufacturing, and the forward and backward correlation among all sectors,promote employment growth indirectly.Employment contribution assessments show that producer services have significantadvantages in promoting employment growth indirectly, and fully show its role of synergy,inter-relevancy and interactivity. In contrast, consumer services have obvious direct employmentpromoting role. Producer services having the highest profit-to-cost ratio among all sectors of thenational economy, and the structure deviation of employment being far below zero both indicate itsstrong potential for employment growth.Theoretical analysis on influence factors shows that the level and the mode of economicdevelopment, institutional factors, market mechanism, policy factors, and technical progress affectthe development of producer services and employment growth. Empirical analysis indicates that, atselected time intervals, the extent of foreign capital dependence, urbanization rate, and tertiaryindustry capital output ratio do not have significant impact on producer services’ job growth. Mostobvious impact is from GDP per capita, followed by tertiary industry and the secondary industryadded value contrast. Technical progress of labor productivity, increased foreign trade dependencyof economic openness, increased budget of government intervention in the market have negativeimpact on employment of producer services, resulting in crowding out or substituting effect.