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In China, 80 million could already be unemployed. 9 million more will soon be competing for jobs too

In China, 80 million could already be unemployed. 9 million more will soon be competing for jobs too

Wang is not his full name. He asked CNN Business not to use his full name because he did not want his friends or family to know the details of his unemployment – a fear echoed by others in China who have spoken of losing their jobs. Some also expressed concern that disclosure of their personal circumstances could affect their chances of finding work.

It is difficult to understand the magnitude of the number of people who have lost their jobs in the country. The Beijing data are notoriously opaque, and the official unemployment rate – which tracks only the number of unemployed in urban areas – has barely dropped from 4% to just over 5% in years.

But even the official count started to peak. The unemployment rate in March was 5.9%, slightly lower than the record 6.2% recorded a month earlier. This would represent more than 27 million unemployed people, according to a CNN Business calculation using government data.

“Unemployment in China could be seriously underestimated,” said Willy Lam, assistant professor at the Center for Chinese Studies at the Chinese University of China. Hong Kong. “It is unusual for them to be ready to report this bad data. Since the government often scores the numbers, the real situation must be worse.”

An “unprecedented” problem

The Beijing data, after all, does not include people living in rural communities or many of the 290 million migrant workers who work in construction, manufacturing and other low-wage but vital activities. If these migrants are included, up to 80 million people could have been unemployed at the end of March, according to an article co-written last month by Zhang Bin, economist at the Chinese Academy of Social Sciences, a think tank managed by the government.

Other experts say the figure of 80 million is probably much closer to reality. It is also much more worrisome – it would mean that almost 10% of people in China who are supposed to be employed are in fact unemployed, according to Societe Generale economists.

“The Covid-19 shock to the job market is unprecedented in scope, duration and nature,” wrote Wei Yao and Michelle Lam in a research report last week.

The Commerce Department did not respond to a request from CNN Business to comment on this story. Speaking last month, a spokesperson for the Chinese National Bureau of Statistics admitted that the labor market was under a lot of pressure, but insisted that overall employment was “stable”.

“Although the coronavirus had a severe impact [on jobs], there are no mass layoffs in the country, “Mao Shengyong said at a press conference.

But Beijing is preparing for additional pain in the months to come. A record number of people are graduating from university this year, which will put further pressure on the job market. And while the economy may still have some growth in 2020, its road to full recovery is likely to be long.

The Chinese government has never been forthright about its economic problems. But recent messages from officials have clearly shown that unemployment is a problem.

Economic growth was already the lowest in decades before the outbreak, the country entered its first contraction since 1976, when the death of the Communist Party leader Mao Zedong ended a decade of economic and social turmoil.

Strengthening the economy – and preventing the unemployment rate from getting out of hand – has become more critical in recent months. In April, the Communist Party’s Politburo, its main governing body, told all government officials to prioritize job security and social stability before anything else, according to the official Xinhua news agency. .

Getting people back to work is important in part because authorities fear that a spate of unemployment will lead to social unrest, creating a huge political headache, according to Lam, a professor at the Chinese University of Hong Kong.

“Beijing’s biggest concern is not GDP growth, but jobs,” he said.

‘I feel miserable’

Job seekers are not optimistic about the imminent improvement of the situation. Wang, the technician from Beijing, said it seemed like life was difficult for everyone at the moment.

“I feel miserable, but there is nothing I can do about it,” he said. “I think no one can.”

Wang said the current environment contrasts sharply with his university degree in 2015. At that time, Beijing offered grants and other forms of financial support to startups, which encouraged entrepreneurs to start millions of new businesses. The unemployment rate that year was around 5%.

Even before the coronavirus outbreak, Wang said the offers were running out. The tech startups in which he worked in 2018 and 2019 ran out of cash as Beijing tightened regulations on how to get investment.

But now he says that finding work is almost impossible. He and his friends have started to lower their expectations, and some of them don’t even know if they can stay in Beijing.

“There were already signs last year [of mass unemployment], but this year the situation is getting worse, “said Wang. I don’t know when things will get better … I’ll just wait. “

It has been proven that it has become more difficult to find work. Job vacancies fell 28% in the first three months of 2020 compared to the fourth quarter of last year, according to a recent survey by China Institute for Employment Research and Zhaopin.com, one of the most great job sites in China. Competition, meanwhile, was fiercer: the number of job seekers jumped by almost 9% in the first quarter, according to the survey.

And service sector companies in China – which account for almost half of all jobs in the country – have laid off workers at a record pace in April, according to survey data released Thursday by media group Caixin and research firm Markit.

“I think the job market is shrinking at a rapid rate,” said Yi Feng, 32, who lost his job in March at a logistics company in Shanghai. Yi asked CNN Business to use a pseudonym for him, which he chose, adding that being afraid to speak up about his problems would be like burning ties with potential employers. “It is extremely difficult to find a job now, as most companies have frozen their hires since late March.”

An influx of job seekers

The landscape could become even more difficult in the coming weeks. Beijing expects around 8.7 million people to graduate from colleges and universities this year, creating even more competition for work.

“Before I graduated, I was planning to become a journalist. But this year, it’s really too difficult,” said Andrea Yao, a 22-year-old 22-year-old at the Communication University of China in Beijing . She said she was supposed to speak to a newspaper in Wuxi last month, but was unable to go because she could not get the “health code” required to enter in the city.

Yao told CNN Business that she had contacted 61 companies about the job, but only five asked for her resume. Many companies were looking for candidates with previous experience.

Recently, “when I took the subway to [an internship], I suddenly felt an explosion of anxiety in my heart when I thought about the fact that I had not found a job, ”she said.

Others said the coronavirus had disrupted their plans. Li Cuiyu, a graduate of the Chinese Agricultural University in Beijing and holding a master’s degree, said she wanted to become a civil servant in order to obtain a coveted “hukou” or household registration permit in the capital. Chinese. But the annual exam required for this job has been postponed due to the epidemic.

While Li was considering other options – she was looking for jobs in foreign companies in Beijing, for example – it was not easy either.

“There are just not a lot of recruitment announcements, and some foreign companies are already laying off staff,” she said.

A job seeker made a call to an on-site job fair in Wuhan last month. The job seeker landscape may become even more difficult in the coming weeks, as approximately 8.7 million people graduate from colleges and universities.

Help from above

Beijing is aware of the impending wave of new job seekers. The government unveiled a plan this week to help new graduates find jobs as teachers and create other “base” jobs, according to Xinhua. The project also includes a proposal to increase enrollment in postgraduate programs.

But the authorities still have a difficult task ahead of them as they try to help others who have lost their jobs.

“A particular concern is that the safety net does not catch the most vulnerable,” wrote Mark Williams, chief economist in Asia for Capital Economics, in a recent research note.

All employers in China are legally required to provide unemployment insurance. But less than half of the urban workforce was covered by this program at the end of last year, according to data from the Ministry of Human Resources and Social Security. And experts, including Societe Generale economists, have noted that the program is ill-equipped to cope with the sharp increase in unemployment figures.

The government appears to have recognized these problems, added Williams, as it has recently committed to helping unemployed people access insurance.

But other experts pointed out that Beijing faces other challenges as it tries to push its citizens to return to work.

China is trying to revive its economy without risking more lives. The world is watching
China is already struggling with growing debt, making it difficult to spend more on infrastructure projects that could create more jobs, according to Joseph Cheng, democracy activist and retired professor of political science at City University of Hong Kong. State media in China recently suggested that regional governments could invest $ 1.1 trillion in roads, airports and other projects, but the funds have not yet been set aside and are not clear if such goals could be achieved.

Several experts said that Chinese policymakers should do more to ensure that people can meet their basic daily needs. Societe Generale economists, for example, said that a “more direct but daring measure” would be to give money directly to low-income households, to circumvent the need for an unemployment insurance program.

Even Zhang, the economist at the state think tank, made a similar proposal. He said the government’s response to the economic fallout from the virus – which amounts to tens of billions of dollars in relief and financial incentives – should include cash payments for the poor.

source–>https://www.cnn.com/2020/05/08/economy/china-unemployment-intl-hnk/index.html

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