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| - Investigation: Widespread ‘劳动供养率 [labor dependency ratio]’ in China is not a real indicator and more than a decade old
In April, a post on X claimed that an indicator called “劳动供养率” in China (literally, “labor dependency ratio”) is 1.1 while that of the U.S. stands at 4.8, Japan and South Korea at 3.8, and Germany, France and the U.K. at 6.8.
It said the indicator depicts the average number of individuals who can be supported by one person’s salary, suggesting the figure shows how hard it is for Chinese families to have housewives, whereas, in other countries, housewives are more commonly seen (because they can be financially supported easily).
Similar claims using the term “劳动供养率” have been popular for some time on Chinese social media such as Weibo and Zhihu. A self-media article from Sohu also linked this figure to the low marriage rate in China.
However, the term “劳动供养率” in Chinese does not appear to have any internationally recognized equivalent indicators or a similar concept used by any organizations or researchers studying labor-related issues.
Globally, “dependency ratio (or age dependency ratio)” describes the percentage of the population that is dependent on working age groups, according to the World Health Organization, and “labor dependency ratio” refers to the percentage of the population that is dependent on people in employment, as explained by the International Labour Organization.
However, neither of them concerns wages, household income, or any other financial factors, as implied in the “劳动供养率”. The labor dependency ratio can literally be translated into Chinese as “劳动供养率,” but the two are totally different concepts.
The widespread usage of this Chinese term and its figures seems to have no basis. Annie Lab talked with a couple of experts, including the one who introduced this concept in an article. In our investigation, we found no formula, equation or data source that can explain the ratio.
Wen Zongyu, a researcher in applied economics and macroeconomic policy at the National Chinese Academy of Fiscal Sciences, wrote an article in 2010 titled “收入分配：关键时期的关键改革 [Income Distribution: Critical Reforms at a Critical Time]” in the financial magazine “Directors & Boards.” In it, he discussed the concept of the “劳动供养率” and mentioned the same figures from the six countries quoted by the X posts.
In the article, Wen suggested that China needed to reform the income distribution system and raise wages, which would allow workers to support more people. He argued that this would alleviate urban traffic congestion because one family member in dual-income households can quit jobs voluntarily.
This article appears to be the source of many claims using the same figures. Even a think tank in Beijing founded by renowned Chinese economists, the Economists 50 Forum, quoted this “indicator” in 2012 without mentioning the data source.
Annie Lab emailed Wen to inquire about how he calculated the ratios of different countries and their data sources. In his reply, Wen repeated what he wrote in the article but did not provide a formula or his data sources.
“It needs to be measured through various data collection and sampling. I have not followed up and collected the relevant data in recent years. Neither can I provide the indicators of the ‘labor dependency ratio’ of major countries or regions,” said Wen in Chinese.
We also asked if he thinks the current spread of his 14-year-old figures would misinform people about today’s China but he has not yet responded to that question as of this writing.
Professor Joe Leung from the Department of Social Work and Social Administration at the University of Hong Kong, who has studied the social welfare system in China for many years, said the term “劳动供养率” and its idea has “definitely not existed in my field of study and in the international reports published by the World Bank, OECD” and other ogranizations in an email.
He said he had “no idea how the ratio is derived because it is complicated,” adding that “it has to take into consideration the differences in cost of living in different countries as well as in different provinces.” Wage measurement, for example, was “overall reliable in developed countries, but not in developing countries,” and the standard of basic needs can be different across countries, Leung continued.
What are dependency ratio and labor dependency ratio?
According to the WHO definition, the (age) dependency ratio refers to “the average number of economically dependent population per 100 economically productive population, for a given country, territory, or geographic area, at a specific point in time.”
Children below 15 and seniors over 64 are grouped in the economically dependent category, and those between the two age groups make up the productive population who are active in the workforce.
A document by the United Nations says dependency ratios indicate the potential effects of changes in population age structures for social and economic development, pointing out broad trends in social support needs.
The latest data from The World Bank show that China’s dependency ratio was 44.9% in 2022. Data from the other six countries mentioned in the claim are shown in the table below.
Meanwhile, the ILO explains that labor dependency ratio refers to “the ratio of dependents (persons under age 15 plus working-age persons outside the labour force or unemployed) to total employment” on its online database.
The global database shows modelled estimates of the “employment-to-population ratio” and the labor dependency ratio in many countries worldwide. For 2023, mainland China’s estimated employment-to-population ratio is 63.1% and its labor dependency ratio stands at 0.90.
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