Unemployment in China

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Unemployment has been a serious social issue in China in recent years, regarding both an increase in quantity and an unequal impact on different social regions. The influence of foreign investment in China has greatly increased since the Open Door Policy was implemented in the early 1980s. The relationship between foreign-funded enterprises and urban labor market development is dual. Opponents influence the shape of labor-market regulation; however, foreign-funded enterprises have also become a major source of demand for urban and rural areas migrant workers. Demographic factors also affect unemployment in China, such as age and sex. The position of women in the labor market has been deteriorating, with a decline in labor force participation rate, rising unemployment, increased work intensity and a widening gender pay gap. [1]

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Rural labor migration and urban unemployment

Manufacturing employment and trade deficit with China, 1965-2015 Manufacturing employment and trade deficit with China, 1965-2015.png
Manufacturing employment and trade deficit with China, 1965-2015

The unemployment rates of every country throughout the world are strongly correlated with gross domestic product and rural and urban labor. Official government statistics show that unemployment in China is unusually low relative to gross domestic product and suspiciously stable. China's labor market was highly regulated and dominated by state-owned enterprises, with an average unemployment rate of 3.7 per cent between 1988 and 1995, but this rose sharply after numerous lay-offs between 1995 and 2002, reaching an average unemployment rate of 9.5 per cent between 2002 and 2009. These changes had the greatest impact on non-technical workers from rural area, particularly less educated women and younger workers. Lastly, estimates of unemployment and labor force participation rates were provided for all urban residents, including migrants without a registered permanent residence. [2] As of 2018, the total number of registered migrant workers stands at around 288.4 million. [3] [4]

In 2002, economists Fan Zhai and Zhi Wang simulated China's economy following its accession to the World Trade Organization. The study concluded that there was a need for coordination between China's rural-urban migration policy, labor market reform, and trade liberalization measures. This action would not only prevent a deterioration in urban unemployment, but also increase the flexibility of the labor market to create more employment opportunities for rural unskilled labor workers from the agricultural sector. [5]

Impact of the global financial crisis on unemployment

2007-2009 World Financial Crisis 2007-2009 World Financial Crisis.svg
2007-2009 World Financial Crisis

Many migrant workers returned to their homes following the Global Financial Crisis (GFC). The GFC resulted in reduced consumer demand in developed countries while export orders for Chinese goods declined. During the financial crisis, prices fell sharply, businesses and consumers were unable to repay their debts, and financial institutions ran short of liquidity. Migrant workers, who were already socially and legally marginalized from the precarious nature of their employment, experienced increased poverty. At the beginning of 2009, the number of unemployed immigrants exceeded 20 million, accounting for about 40% of the total population who lost their jobs. [6] In the months following August 2008, China's export orders declined sharply, especially in coast cities. Most businesses within the Pearl River Delta Economic Zone closed. This resulted in poor job opportunities for college graduates, which further decreased labor force participation rates. However, the government provided assistance to the unemployed and was responsible for stabilizing the unemployment situation of urban registered permanent residents to increase employment opportunities. [7]

State capacity and governance issues to address unemployment

Despite the high level of economic growth, the restructuring of China's economy has resulted in an increase in urban unemployment over the past decade, resulting in civil unrest in many cities. Since 1986, and especially since 1997, the central government's policy on unemployment has focused on helping cities and towns register the unemployed and “laid-off workers” through unemployment insurance, reemployment service centers and employment services such as training and employment assistance. These efforts are aimed at controlling layoffs and job creation in state-owned enterprises by stimulating economic growth. [8]

At the same time, the Chinese government has been committed to promoting employment and industrial structure through boosting the national economy, adjusting the economic structure, advancing the reform of the political and economic system, balancing urban and rural economic development, and continuously increasing the social security system. The government has also used monetary policy, taxation and fiscal policy to reduce unemployment. The goal of such policy was to incentivize self-employment, the creation of new businesses, and medium/small enterprises (SMEs) hiring more workers. The government provided small loans and interest subsidies to support SME development for the sake of expanding employment.

Lastly, the government actively cultivates and develops the labor market. From the late 1990s onward, the Chinese government has attempted to build a scientific, standardized, and modernized labor market, and constructed a public employment service system. “All levels of [the] public employment service would provide free job placement and employment guidance to the urban unemployed and rural migrant workers. Providing a “one-stop” service ranging from registration of laid-off and unemployed population looking for jobs, job placement, social insurance coverage, and vocational skill training”. [9]

Youth unemployment

The youth unemployment rate in China is worth noting due to young workers representing a significant proportion of China's workforce. During 2004 to 2009, [10] it was easy for a low-skilled young workers to find jobs; however, due to economic stagnation, young workers today may face increasing difficulties in seeking or maintaining jobs. Jobs accessible to young workers tend to be precarious, with low wages and lacking social security benefits such as unemployment welfare and insurance. At the same time, many graduates cannot compete for jobs with top university graduates, they are not willing to take low-quality, low-paid jobs. Business professors Terence Tse and Mark Esposito (2014) consider some of these young people to be NEETs. Tse and Esposito suggest that some parents encourage their children remain unemployed and find better jobs, rather than accept the low-quality jobs that the parents already have. [11] As anti-hustle trends gained momentum in China in 2023, Gen-Z youths began opting for lower paying occupations as valid, less stressful career paths even though they were once considered low-quality. [12]

Youth unemployment can also be attributed to structural unemployment, which occurs when there is a mismatch between the skills that jobs require and the skills that workers possess. According to research by Zhao and Huang (2010), there were 750,000 college graduates who could not find a job in 2003 after graduating in 1999, which increased to 1.2 million in 2005, and nearly 2 million in 2009 (approximately 32% of the total 6.1 million graduates that year). The real numbers might be higher than official data due to the minimum standard of a 70% employment rate and possibly fraudulent reporting by the Ministry of Education. Job search success for college graduates often depends on the reputation of the university. For example, students who graduate from prestigious universities in China can often easily find high salary jobs, in contrast to graduates from less prestigious universities. This may be reflective of academic disparity, where academic conditions such as faculty and environment of top universities are better than those of unknown universities. The difficulty and competitiveness of university admission also exacerbate the problem by limiting education for high school graduates. [13]

Since 2018, China's youth unemployment rate has increased significantly, peaking at 20.8 percent in May 2022. [14] [15] Youth unemployment has stayed elevated since early 2022 as Covid disruptions and a property slump added to already existing structural problems in the labor market. [16] On August 15, 2023, the National Bureau of Statistics of China (NBS) announced the cessation of publishing the youth unemployment rate. In July of 2023, the National Bureau of Statistics of China announced that the youth unemployment rate was as at 21.3%. [17]

Numerous sources [18] [19] considered this decision to be tantamount to a deliberate coverup of information related to the youth unemployment data point, and a troubling sign for the state of the overall Chinese economy, with The New York Times reporting in August of 2023, "Beijing stopped releasing youth unemployment figures in its latest attempt to play down negative trends as growth stalls, and global concerns grow...", [19] and that, "The decision may be temporary, but it will only make it harder for investors to know what’s happening in the country — and that may be the point." [20] The NBS started releasing youth unemployment numbers in January 2024, and announced the new number excluded students. [21]

Related Research Articles

<span class="mw-page-title-main">Rural flight</span> Migratory pattern of people from rural to urban areas

Rural flight is the migratory pattern of people from rural areas into urban areas. It is urbanization seen from the rural perspective.

<span class="mw-page-title-main">Unemployment</span> People without work and actively seeking work

Unemployment, according to the OECD, is people above a specified age not being in paid employment or self-employment but currently available for work during the reference period.

Full employment is a situation in which there is no cyclical or deficient-demand unemployment. Full employment does not entail the disappearance of all unemployment, as other kinds of unemployment, namely structural and frictional, may remain. For instance, workers who are "between jobs" for short periods of time as they search for better employment are not counted against full employment, as such unemployment is frictional rather than cyclical. An economy with full employment might also have unemployment or underemployment where part-time workers cannot find jobs appropriate to their skill level, as such unemployment is considered structural rather than cyclical. Full employment marks the point past which expansionary fiscal and/or monetary policy cannot reduce unemployment any further without causing inflation.

Frictional unemployment is a form of unemployment reflecting the gap between someone voluntarily leaving a job and finding another. As such, it is sometimes called search unemployment, though it also includes gaps in employment when transferring from one job to another.

<span class="mw-page-title-main">Labor market of Japan</span>

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Social issues in China are wide-ranging, and are a combined result of Chinese economic reforms set in place in the late 1970s, the nation's political and cultural history, and an immense population. Due to the significant number of social problems that have existed throughout the country, China's government has faced difficulty in trying to remedy the issues. Many of these issues are exposed by the Chinese media, while subjects that may contain politically sensitive issues may be censored. Some academics hold that China's fragile social balance, combined with a bubble economy makes China a very unstable country, while others argue China's societal trends have created a balance to sustain itself.

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Internal migration in the People's Republic of China is one of the most extensive in the world according to the International Labour Organization. This is because migrants in China are commonly members of a floating population, which refers primarily to migrants in China without local household registration status through the Chinese Hukou system. In general, rural-urban migrant most excluded from local educational resources, citywide social welfare programs and many jobs because of their lack of hukou status. Migrant workers are not necessarily rural workers; they can simply be people living in urban areas with rural household registration.

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<span class="mw-page-title-main">Labor relations in China</span>

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<span class="mw-page-title-main">Unemployment in the United States</span> Explanation of unemployment in the United States, presently and historically

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<span class="mw-page-title-main">Economic recovery</span> Phase of the business cycle following a recession

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<span class="mw-page-title-main">Youth unemployment</span> Situation of young people who are willing to work but unable to find a job

Youth unemployment is a special case of unemployment; youth, here, meaning those between the ages of 15 and 24.

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References

  1. ↑ "Unemployment in China: Economy, Human Resources and Labour Markets, 1st Edition (Paperback) - Routledge". Routledge.com. Retrieved 2019-05-13.
  2. ↑ "Long run trends in unemployment and labor force participation in urban China". www.sciencedirect.com. Retrieved 2019-05-13.
  3. ↑ cycles, This text provides general information Statista assumes no liability for the information given being complete or correct Due to varying update; Text, Statistics Can Display More up-to-Date Data Than Referenced in the. "Topic: Employment in China". Statista. Retrieved 2020-12-02.
  4. ↑ "China Labor Market - Changes and Trends". HROne. 2020-07-06. Retrieved 2020-12-02.
  5. ↑ Zhai, Fan; Wang, Zhi (2002-11-01). "WTO Accession, Rural Labour Migration and Urban Unemployment in China". Urban Studies. 39 (12): 2199–2217. doi:10.1080/0042098022000033827. ISSN   0042-0980. S2CID   154828709.
  6. ↑ Chan, Kam Wing (2010). "The Global Financial Crisis and Migrant Workers in China: 'There is No Future as a Labourer; Returning to the Village has No Meaning'". International Journal of Urban and Regional Research. 34 (3): 659–677. doi:10.1111/j.1468-2427.2010.00987.x. ISSN   1468-2427. S2CID   142794021.
  7. ↑ Cai & Chan, Fang & Kam Wing (2009). "The Global Economic Crisis and Unemployment In China" (PDF).
  8. ↑ Duckett, Jane; Hussain, Athar (2008-04-24). "Tackling unemployment in China: state capacity and governance issues" (PDF). The Pacific Review. 21 (2): 211–229. doi:10.1080/09512740801990279. ISSN   0951-2748. S2CID   154876317.
  9. ↑ DI, Yan (2019). "China's Employment Policies and Strategies" (PDF).
  10. ↑ Fang, Tony; Lin, Carl (2015-11-27). "Minimum wages and employment in China". IZA Journal of Labor Policy. 4 (1): 22. doi: 10.1186/s40173-015-0050-9 . hdl: 10.1186/s40173-015-0050-9 . ISSN   2193-9004.
  11. ↑ Esposito, Terence Tse and Mark (2014-02-20). "Youth unemployment in China: A crisis in the making". www.cnbc.com. Retrieved 2019-05-13.
  12. ↑ Tamagno, Beatrice (2023-07-31). "Not-So-Quiet Quitting: 'Resignation Parties' Celebrate the End of Hustling — RADII". RADII.
  13. ↑ Zhao, Litao; Huang, Yanjie (28 April 2010). "Unemployment Problem Of China's Youth" (PDF).
  14. ↑ "Why has youth unemployment risen so much in China?". Goldman Sachs. Retrieved 2023-06-27.
  15. ↑ Toh, Michelle (2023-06-15). "China cuts rates again as youth unemployment hits new record high". CNN. Retrieved 2023-06-27.
  16. ↑ Tan, Clement (2023-05-29). "China's youth unemployment hits a record high, deepening its economic scars". CNBC. Retrieved 2023-07-20.
  17. ↑ "中国官方暂停发布青年分年龄段失业率数据". Lianhe Zaobao (in Chinese (China)). 2023-08-15.
  18. ↑ Xie, Lingling Wei and Stella Yifan (2023-08-20). "China's 40-Year Boom Is Over. What Comes Next?". WSJ. Retrieved 2023-08-29.
  19. 1 2 Sorkin, Andrew Ross; Mattu, Ravi; Warner, Bernhard; Kessler, Sarah; Hirsch, Lauren; Livni, Ephrat (2023-08-15). "What China Isn't Telling the World About Its Economy". The New York Times. ISSN   0362-4331 . Retrieved 2023-08-29.
  20. ↑ Sorkin, Andrew Ross; Mattu, Ravi; Warner, Bernhard; Kessler, Sarah; Hirsch, Lauren; Livni, Ephrat (2023-08-15). "What China Isn't Telling the World About Its Economy". The New York Times. ISSN   0362-4331 . Retrieved 2023-08-29.
  21. ↑ "China Brings Back Youth Jobless Rate, With Rosier Number". Bloomberg News . 17 January 2024. Retrieved 26 January 2024.


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