Despite all the ups and downs of the Chinese economy over the past decade, its official unemployment rate has remained remarkably stable. Amazing means impossible to believe. Today, the registered unemployment rate in Chinese cities is only 4.1%.
Such a low figure could, of course, be explained by the power of the Chinese economy, but the problem is that this level has not changed since the end of 2010. Moreover, it has remained approximately within the same framework (4-4.3%) since 2002. ., including during the global financial crisis.
Meanwhile, a new study argues that China's real unemployment rate could be more than double the official figure. In their work for the US National Bureau of Economic Research (NBER), Feng Shuazhang of the Shanghai University of Finance and Economics and Hu Yingao and Robert Moffitt of Johns Hopkins University identified an alternative figure based on data from a government housing survey.
Scientists believe that the average unemployment rate in China from 2002 to 2009. was 10.9%, or almost 7 percentage points higher than the official figure for the same period, writes the British magazine The Economist.
However, is it possible to trust the figure named by scientists? The NBER study is based on data from a housing survey conducted by the National Bureau of Statistics of the PRC in all cities and towns of the country (which, in principle, makes it representative and trustworthy).
By the way, their unemployment index is more volatile than the official one, which more accurately reflects China's economic cycles.
But if no one believes the official figures of an unshakable 4.1% unemployment rate, then the scientists' conclusion that China suffers from chronic unemployment above 10% is also skeptical.
The study authors acknowledge that there is a significant data gap in their work. The housing survey includes only those people who have a hukou, or a document that allows them to live in the city (a kind of registration), and thus does not take into account tens of millions of rural migrants.
For example, in Shanghai, 14 million people have hukou, and another 10 million people live and work in the country's largest city without any permits.
There is another reason to question the unemployment rate of 10.9%. This level, according to scientists, was when the growth rate of the Chinese economy exceeded 10%, and the annual growth of wages in cities was 15%. It is unlikely that high unemployment could exist with such strong wage growth.
So, what is the real unemployment rate in China? To determine it, you can use the proven method of measuring unemployment in developed economies (the ratio of the number of job seekers to the total working-age population).
The PRC Ministry of Human Resources and Social Security publishes data from urban employment centers on a quarterly basis.
Using this technique, the current unemployment rate in China is 5.1%. This figure more accurately reflects the situation on the labor market, but it is most likely incomplete: the Chinese authorities report statistics from only 31 of the country's largest cities.
In addition, it should be remembered that not all job seekers turn to official employment centers for help.
There is one more nuance that is typical for China. A recent study by the International Monetary Fund notes that the Chinese economy artificially creates the impression of stability in the labor market.
State-owned companies, as a rule, do not fire employees during an economic downturn, as they have a clear political statement from the authorities: maintaining social stability in society is much more important than profit.
In addition, the countryside is still a kind of "protective valve" for migrants who lost their jobs in cities during the recession. Chinese media estimate that during the 2008 financial crisis, about 45 million people returned to their rural homes, which has certainly eased pressure on the urban labor market.
All this confusion with statistics would not be worth attention if the unemployment rate were not an extremely important economic indicator. With China's slowdown in growth and the Chinese government's desperate attempts to stimulate the economy, the lack of information about the true state of the labor market is becoming a serious problem.
As the Financial Times recently pointed out, the time has come when Beijing must finally hire an army of experts to calculate the true number of unemployed in China.
There are currently many unemployed people in China in both rural and urban areas. As a result of an increase in the life expectancy of the population and the implementation of a tough state policy to limit the birth rate in China, the proportion of the elderly population (65 years and older) has increased: it exceeds 7%. On average, there is one disabled person per person of working age, i.e. younger or older than working age.
In 2001, 63.91% of the population lived in rural areas of China, and 36.09% in urban areas. The share of agriculture in China's GDP was 15.23%, while it still employed 50% of the workforce.
It should be especially noted that at present in China 125 million people are employed in rural enterprises, and about 60-80 million peasants constantly work in cities, but according to statistics, they belong to the rural population. Opportunities for the relocation of peasants to cities are limited.
Before the start of the reform (1978), the replenishment of the workforce in the cities relied almost entirely on graduates of higher educational institutions, demobilized and re-profiling military personnel. In agriculture, in accordance with the strategic line of "bread production as the main link in the economy", the peasants did not have a free choice of work and independent management. As the population increased, the area of arable land per capita decreased. During 26 years (from 1952 to 1978) the share of people employed in agriculture in the total number of employed decreased from 83.5% to 70.5%.
During the reform period in China, two activities were carried out that had a great impact on employment in the rural areas of the country. First, the peasants were allowed to freely choose their professions and independently conduct economic activities; secondly, the peasants were allowed to do business in the cities. The first measure has resulted in the employment of 125 million workers in enterprises in rural areas. The second is to move about 60-80 million peasants from rural areas to cities. Over the course of 23 years (from 1978 to 2001), the share of people employed in agriculture in the total number of employed decreased from 70.5% to 50.0%.
At state-owned enterprises in cities, a policy of reducing the number of employees began to be implemented in order to increase economic efficiency. Thus, the reforms led to the rapid formation of the labor market in both urban and rural areas. At the same time, people with a city residence permit and making higher demands on the nature of their future work hardly turn to the rural market. And in the city market (with the exception of a few small seaside towns), people with a rural registration can only rarely find a job.
The urban labor market is also divided into two sectors: state and non-state. Although in China these sectors of the labor market have some common features, there is no unified system of remuneration, personnel selection system, and social security system. There are differences in the ratio of demand and supply of labor. In this regard, policies aimed at regulating supply and demand in the labor market, in some cases, do not bring positive results, and sometimes even give a negative effect. For example, to ensure that laid-off workers in state-owned enterprises have a better chance of employment, some cities have taken measures to restrict the migration of peasants to cities; however, former employees of state-owned enterprises preferred unemployment over employment in heavier and lower-paid jobs, etc. Measures to restrict the employment of peasants in cities did not alleviate the situation with the employment of laid-off workers of state enterprises, but, on the contrary, led to the fact that in some places there was even a shortage of labor supply.
Impact of economic slowdown on employment. Usually, employment growth is proportional to economic growth. In terms of future development trends, the rate of economic growth in China will slow down. One of the reasons for this is the increase in the baseline value of GDP. For example, in 1980, the GDP base value was 451.8 billion yuan. Its increase of several tens of billions of yuan led to 10% economic growth. In 1990, China's GDP was 1,859.8 billion yuan, i.e. to increase it by 10%, an increase of 200 billion yuan was required. And in 2000, the GDP reached 8,940.4 billion yuan, and an increase of 10% requires an increase in GDP in absolute terms of 900 billion yuan. The second reason for the slowdown in economic growth is the transition from a deficit economy to a surplus one. This reason forced China to abandon the previous development model, which was characterized by "expansion of production and extensive farming," and move to a development model that ensures quality and efficiency of growth.
Currently, China is moving from high rates of economic growth to medium rates of development, at which 8% economic growth is already considered high. This is confirmed by the examples of industrialized countries. So, for 20 years (from 1953 to 1973) the average annual GDP growth rate in the Republic of Korea was 7.5%, in Hong Kong - 8.0%, in Taiwan - 8.2%, in Singapore (1960-1973) - 9.3%; in the highest phase of economic take-off from 1970 to 1980, the average annual GDP growth rate in Korea was 10.1%, in Hong Kong - 9.2%, in Taiwan - 10.1% (1970-1981); from 1980 to 1993 in the Republic of Korea - 9.1%, in Hong Kong - 6.5%, in Singapore - 6.9%.
In China, from 1981 to 1990, the average annual GDP growth was 9.3%; from 1991 to 2000 - 9.9%, while the average annual increase in the number of employed was 1.03%, i.e. on average, more than 7 million new jobs were added every year. It is estimated that over the next 10 years, the number of jobs will increase by an average of only 6 million each year at 8% GDP growth. Essentially, this is an optimistic forecast.
Impact of regulation of sectoral structure and renewal of technology on employment. Industrialization led to the replacement of manual labor with technology.
However, one cannot conclude that "the greater the contribution of technology and capital to economic growth, the worse the situation in the field of unemployment," based on the advantage of replacing labor with capital and technology. The peculiarities of the "catching-up economy" and the "fragmented labor market" in China led to the fact that "negative factors" became predominant, especially in the second half of the 90s of the XX century, when the labor force was transferred from agriculture to the non-agricultural sphere. But the industry no longer attracts new labor, it is saturated, jobs are being cut. In the service sector, which is characterized by low growth rates, it is difficult to accommodate additional labor force, which is transferred from agriculture and industry.
In fact, in the early 1980s, China already showed a tendency towards a decrease in the coefficient of employment elasticity in relation to economic growth and investment. From 1981 to 1990, the average annual growth rate of GDP was 9.3%, the average annual growth rate of total investment in fixed assets was 18.1%, the average annual growth rate of the employed was 3%, the elasticity of employment in relation to GDP was 0.32, and elasticity of employment in relation to investment - 0.16. From 1991 to 2000, GDP each year increased by an average of 9.9%, the value of total investment in fixed assets each year increased by 22.9% on average, and the number of employees each year increased on average by only 1.03%, elasticity employment in relation to GDP decreased to 0.10, the elasticity of employment in relation to investment decreased to 0.04.
Impact of growth in labor supply on employment. Although at present, the birth rate in China has already decreased to 15.23% (1999), approaching the level of many developed countries of the world, but the total population, including the working-age population, still tends to increase. The population of working age (men - from 16 to 59 years old; women - from 16 to 54 years old) in 1995 amounted to 731 million people, in 2000 - 888 million people, in 2010 it will increase to 910 million people , and in 2016 will reach a maximum value of 950 million people. A decrease in the birth rate in the coming years will affect the decrease in the working-age population only after 2016; only by 2030 will the working-age population correspond to the 2000 level.
In 2003, urban surplus in China will be even higher than in the previous few years. GDP growth in 2003 will amount to 7-8%.
In cities, the number of new jobs will increase by about 4-6 million; in addition, about 3 million places will be vacated in connection with the retirement of workers. Thus, the total number of new jobs will be approximately 7-9 million. However, in 2003 the growth of the urban population who has reached working age will amount to approximately 10 million, i.e. the number of new unemployed in 2003 will be 5-6 million (the number of unemployed at the end of 2002 was 1.29 million). The total number of required jobs will be about 20 million. Ultimately, the surplus labor force in 2003 in China in cities alone will reach 11-13 million.
The main job search channels and preferred professions when looking for a job. In China's former centrally planned economy, urban dwellers were employed primarily by government agencies and businesses. As the economic reform deepened, the channels through which job searches have become more diversified. However, the public employment support network is still imperfect. This is especially true of public support for the employment of the unemployed. China lacks experience and has not established an effective formal public employment support network. When looking for a new job, in most cases, you have to rely on the help of relatives and friends, i.e. to an unofficial social network. According to a sample survey of the unemployed and their families, which was carried out by a group for studying the socio-economic problems of Beijing in June 1999, 50.3% of the unemployed relied on the recommendations of relatives, friends and other structures of unofficial public organizations in the process of finding work; 22.3% applied to professional employment agencies, centers for promoting talented people, advertisements for employers, etc .; 10.8% relied on the recommendations and assistance of previous organizations; 9.9% turned to the administrative committee of the street and the local government network; only 2.3% were looking for work through the Re-Employment Service Center and 4.4% through other channels. This phenomenon does not only exist in Beijing. A survey of the unemployed, conducted by scientists in 4 old districts of Guangzhou in Guangdong province, showed that 47.9% of the unemployed relied on the help of relatives, friends and other unofficial structures in the employment process. Job searches through professional employment agencies, labor markets and advertisements for employers were carried out by 17.2%. 25.4% were looking for work through the former organizations, 9.5% through the street administrative committees and the local self-government network.
The important role that ties with family and friends play in the job search process may be due to the social structure and traditional culture of China, which are based on the family. But the instability of market channels and the absence of a formal employment system during the transition to a market economy can play a decisive role. For most unemployed people, looking for a job through relatives and friends is the cheapest way to find a job.
However, the social network that is formed through connections with relatives and friends is not always effective for all unemployed. According to a survey conducted in Wuhan, the social status of relatives and friends of the unemployed has an obvious positive effect on their use of the social network in their job search. But the role of relatives and friends in the employment process of the unemployed is limited. This role in most cases only increased the chances of the unemployed to get a job. The main factors that influenced the type of work received were, nevertheless, the qualitative indicators of the labor force, i.e. educational level, professional skills, etc.
In terms of preference, most of the unemployed intend to work in the public sector, which has a relatively well-developed social security system; in the private sector, the level of social security is lower. However, almost half of the jobs that the unemployed consider suitable for themselves were transferred to the non-state sector during the reform. According to a sample survey of the unemployed and their families, which was carried out by a group for studying the socio-economic problems of Beijing in June 1999, the proportion of the unemployed who intend to work: 1) in the public sector amounted to 67.6%; 2) in collective enterprises - 12.2%; 3) in the field of individual entrepreneurship - 10%; 4) at enterprises with trilateral investments - 5.4%; 5) in private or individual enterprises - 4.4%. But the real picture of re-employment was as follows: the share of the unemployed who found work in the public sector was 33.1%; in collective enterprises - 15.6%; in individual entrepreneurship - 20.3%; in private or individual enterprises - 18.2%; at enterprises with trilateral investments - 5.7%. 71.4% of the unemployed believed that the most suitable professions for them are a salesman, a waiter, a simple clerk, a cleaner at enterprises, a driver, etc.
The market principle and the principle of social stability. Unemployment is an inevitable consequence of market reform. In order for state-owned enterprises to be able to develop steadily in the face of increasing market competition every day, it is necessary to reduce workers and increase labor efficiency. However, layoffs bring problems not only to employees, but also to society. In the past, state enterprises were responsible for employment and stability in society for a long time. The ongoing transformation of state-owned enterprises in China consists in gradually removing social functions from state-owned enterprises and transferring them to special social security bodies. However, the process is very slow. The analysis of the survey materials showed that, on the one hand, at the enterprise level, when employees are laid off, the market principle has to be observed. At weak enterprises that cannot pay off accounts receivable, in which production has been completely or partially suspended or property reform is underway, the number of laid-off workers is higher. For them, there is very little chance of continuing to work at their former enterprises. Sometimes factories are completely closed and everyone is fired.
On the other hand, within enterprises it is necessary to respect the principle of social stability and continue to take into account the interests of workers. At many enterprises, certain categories of workers were allocated, for which they were not included in the lists for reduction. For example, men over the age of 55 and women over 50, family members of the military, cannot be fired; only one of the working spouses can be laid off, etc. In practice, older employed persons and the sick were generally advised to “retire early” and “retire due to disability”. Great concern was shown for workers with family difficulties or lack of competitiveness in the labor market.
The current state of state-owned enterprises is a key factor in determining the form of dismissal. In state-owned enterprises, where workers are better off, their interests remain cared for. In order to stabilize enterprises and society, such forms of dismissal as "full employment of laid-off workers", "solving the problem of laid-off workers within enterprises", "layoffs with payment of monetary compensation", etc. are preferred. And in enterprises where the financial situation has deteriorated and there are no funds to maintain the welfare of workers, dismissal on the basis of the market principle becomes a necessary measure. In this case, the unemployed who are competitive (young, have professional skills, have extensive connections, etc.) can solve the problem of employment outside the former enterprise.
The potential volume of demand in the Chinese labor market. Based on the indicators that characterize the demand for labor, a tense employment situation can persist for a long period. And this situation must be taken into account.
Among the factors that determine the growth of demand for labor, the first is the indicator of economic growth, the second is the indicator of changes in the socio-economic structure. Based on the indicators of economic growth (based on an average annual GDP growth rate of 7% and an employment elasticity coefficient of 0.13), in the period from 2000 to 2005, about 6.5 million jobs will appear annually, which is not will be satisfied with the additional supply on the labor market, which averages 8 million people per year. On the other hand, based on the indicators of changes in the socio-economic structure, the potential for increasing the demand for labor is still great.
The coefficients of elasticity of employment in individual industries differ significantly. Since the 90s, due to the reduction in the absolute number of workers in agriculture, the coefficient of elasticity of employment in relation to agricultural growth has always been negative; the coefficient of employment elasticity in relation to industrial growth was in the range between 0.12 and 0.16; and the coefficient of employment elasticity in relation to service sector growth averaged 0.75. At present, in China, the share of workers in the service sector is less than 30% (in developing countries - on average about 40%, in India - 55%; in developed countries - on average 70%, in the USA - 80%). If the share of employed in the services sector in China was equal to the average level of developing countries, then this would create about 90 million jobs.
Currently, the share of urban population in China is about 35%, while in other countries this figure is about 60% (and in some countries even more than 80%). The projected increase in the level of urbanization in China to 45% will make it possible to create tens of millions of jobs in cities within five years (2001-2005).
In addition, stimulating the development of non-state enterprises also helps to increase the potential for labor demand. Most non-state enterprises are medium or small. They have diverse employment channels, flexible employment options and relatively low recruitment requirements. These characteristics are especially important for attracting labor force. Over the next few years, more than 95% of China's new job growth will come from the development of the private sector. A special place in this process will belong to such a rapidly developing industry as the information industry.
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2 - Bell D. Hougune shehui de lilin: dui shehui yuytse de yixiang tanso (Entry into the post-industrial era). Beijing: Xinhua Chubanshe, 1996 .; Kijkin J. The End of Work: The Decline of Global Labor Force and the Dawn of the Post-Market Era. New York, Tarcher / Putnam, 1995; Castells. M. The Rise of the Network Society // The Information Age: Economy, Society and Culture. Vol. I. Oxford, Blackwell, 1996.
3 - Liu Jingipap. XXI Shiji Zhongguo renko fazhan chianjing (Prospects for the development of China's population in the 21st century) // 2000 Nian Zhongguo renko fazhan chianjing / Ed. Rui Xin. Beijing: Shehui Quesue Unxian Chubanshe, 2000.
4 - Xia Rong. Zhongguo jue xingshi yizhan yanc-zun (The seriousness of the employment situation in China) // 2000 Nian zhongguo renko fazhan chianjing / Ed. Rui Xin. Beijing: Shehui Quesue Unxian Chubanshe, 2000
5 - Beijing Chenshi Dyaochaduy. Beijingshi xiagang zhigong zhuangkuang yanjiu (Study of the situation of the unemployed in Beijing) // Zhongguo Xinxibao. Beijing, 17.02.1999
6 - Qiu Haixiong, Chen Jianmin, Life Yan. Shehui zhichi jiego de bianhua: tsun yuan dao doyuan (Changing the structure of social support: from one-component to multicomponent) // Shehuisue yanjiu. Beijing, 1998. No. 4
China, like all countries, has been going through difficult times in the economy since 2000. But its official unemployment rate has remained incredibly stable over the past decade. However, there is an opinion in the world that unemployment in China is a unit that cannot be accurately measured.
Urban unemployment registration data for 2018 shows only 4.1%. Such numbers always speak of stability or economic recovery, but the problem is that it has not changed over the past 6 years.
And on top of that, unemployment in China has remained almost unchanged, with the smallest difference since 2001, even during the busiest years of the global financial crisis.
The latest studies conducted in 2018 show a level that is at least 2 times higher. According to the results, unemployment averaged 10.9% between 2002-2009, which is 7% higher than officially registered.
Other research centers show a figure of 8.1 percent, and some defend their data on 20% unemployment, especially among young people in 2018. High percentages are especially relevant among the uneducated segments of the population, while it is easier for people with education not to lose their jobs.
What influences this difference when calculating unemployment percentages? And how accurate the calculations presented by the National Bureau of Statistics of China are. The Bureau conducts a survey of the population in all cities of the country. But the weak point in this calculation is that people who are officially registered in places of permanent residence are being surveyed.
In this case, the rule is triggered, which is imposed by the government: the fight for indicators in the first place. According to it, the workers laid off as a result of the economic downturn are listed as working in enterprises.
Another nuance affecting the indicators is that a large share of the population employed in agriculture is not registered anywhere, since it does not live in one place for a long time, but migrates in season.
There is such a thing as hidden employment. This is when a person loses a permanent job through no fault of his own, but as a result of the suspension of his business.
During a forced vacation, he can move to different regions, temporarily find a job, make a profit without paying. But all this time he will be listed as employed in his old workplace.
Causes of unemployment
There are several main reasons affecting unemployment in the country. One of them is the unstable situation in the agricultural sector, in which most of the people of China are involved. There is a widespread reduction of land and their displacement by industrial zones.
New production reforms affecting state-owned enterprises are also not going smoothly and bring their negative consequences, causing unemployment. Manufacturing turns out to be unprofitable, and the state is forced to issue social security benefits. This is the main problem in northern China.
The most vulnerable segment of the population is the youth. Most of them have neither work skills nor the necessary education. Lack of seniority strongly affects the result when recruiting employees. But the main thing is that, not having time to work for a certain period of time at the enterprise, young people are deprived of the right to receive insurance benefits in case of unemployment.
All employers are obliged to deduct a certain percentage of income to the insurance fund. Contributions to this fund are also made from. He is the guarantor of unemployment benefits.
The amount of benefit that an unemployed person can count on depends on where they live. The amount of the benefit paid varies depending on the provinces and autonomous regions. It depends on the minimum wage in a given region and the size of the living wage.
In case of obtaining unemployment status, a Chinese citizen is entitled to unemployment benefits.
To receive the allowance, you must:
- pay contributions to the insurance fund for at least one year;
- be registered at the labor exchange;
- go through the program for a second time;
- be registered at the place of residence only in urban areas;
- not have the status of incapacitated.
The amount of payments is not tied to the previously received wages and the number of insurance payments. The allowance is assigned in a certain amount and can only be paid for 2 years, if employment is not provided earlier than this period. After that, payments are terminated, even if a job was not provided.
Due to the difficulty of accounting for the unemployment rate, it is not possible to provide everyone in need with benefits. On average, 40 million citizens cannot receive payments because they are not registered as unemployed for one reason or another.
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