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China is losing its edge in the worldwide labor market as it will suffer a shortage of laborers due to the family planning policy, a think tank said yesterday in a report.

China needs to put more emphasis on education, both in cities and rural areas, to cope with its rising labor challenges, the report said.

The move to improve China's global labor competitiveness is urgent because the country is losing its edge in the worldwide labor market, with fewer workers in the labor pool.

Also, the country will continue to upgrade its manufacturing-oriented economy, requiring more skilled and educated workers, according to the report.

"China is gradually losing its labor surplus, which has created the country's success story in the past 30 years," said Wang Dewen, professor of the Institute of Population and Labor Economics of the Chinese Academy of Social Sciences, the publisher of the yearly report.

"But now it needs a second labor advantage," he said. "And that is the improvement of labor skills and their level of education," Wang said.

The average student in the countryside attends school for only 6.8 years, despite the country's mandate for a nine-year compulsory education.

The report found that a rural resident who finishes senior high school will have a higher productivity rate - 21.1 percent - compared to 8.8 percent for those who only finish lower levels of education.

In the city, the government should encourage more residents to receive further education after high school, said the report. Those with more education earn at least 29 percent more.

The current average time for schooling is 9.5 years.

China's working-age population has been growing slowly, with rural surplus labor down to about 20 million from 150 million in recent years.

The report notes that in the manufacturing sector, one more year of education increases productivity by 17 percent.

The manufacturing-oriented economy is expected to upgrade to high value-added industries that demand highly-skilled workers who have more education. Currently it is supported by a large number of low-skilled labor at relatively lower training costs.

Public investment in education in China is only 2.8 percent of the GDP.

About the broadcaster:

Nancy Matos is a foreign expert at China Daily Website. Born and raised in Vancouver, Canada, Nancy is a graduate of the Broadcast Journalism and Media program at the British Columbia Institute of Technology. Her journalism career in broadcast and print has taken her around the world from New York to Portugal and now Beijing. Nancy is happy to make the move to China and join the China Daily team.