China jobs: How much employment pressure is the world’s second-largest economy facing?

INTERNATIONAL DESK: While China’s recovery this year has been largely driven by consumption, the prolonged downturn in the property market and fragile business confidence is expected to further weigh on employment prospects.

What does official data say about China’s job market?
China’s surveyed urban unemployment rate stood at 5 per cent in October, unchanged from September.

This year, the rate had peaked at 5.6 per cent in February, but it has now fallen to its lowest level since November 2021.

It had risen as high as 6.1 per cent in April 2022 after strict coronavirus lockdowns and control measures had affected many regions, including in the international hub of Shanghai.

China’s jobless rate for 16 to 24 age group, meanwhile, had climbed to an all-time high of 21.3 per cent in June before the National Bureau of Statistics (NBS) stopped releasing the data from July, citing the need for labour-force survey statistics to be “further improved and optimised”.

NBS spokeswoman Liu Aihua said in October that the job market for college graduates was expected to improve, but declined to provide a specific timetable for resuming the release of the youth unemployment data.

Has China’s job market really improved?
Despite NBS figures showing signs of improvement, other indicators have suggested that the pressure on the job market remains.

The employment subindex within China’s official manufacturing purchasing managers’ index (PMI) stood within contractionary range at 48 per cent in October, marking a decrease of 0.1 percentage point from September.
A similar month-on-month contraction was also observed in October’s employment subindex within the Caixin/S&P Global manufacturing PMI, which surveys around 650 private and state-owned manufacturers.

The single indicator of urban unemployment rate is likely to have underestimated the employment pressure we face
Xu Qiyuan

Surveys compiled by China’s central bank, as well as the NBS, have demonstrated weak confidence from the public, according to Xu Qiyuan, a senior research fellow at the Chinese Academy of Social Sciences.

“Judging from the current employment situation, the single indicator of urban unemployment rate is likely to have underestimated the employment pressure we face,” Xu said in an op-ed published by Yicai Media Group in October.

The employment sentiment index within the central bank’s second-quarter survey of 20,000 residential households in 50 cities fell to 48.7 per cent from 52.3 per cent in the first three months of the year.

Within the survey, 44.5 per cent of respondents reported “so-so” on job hunting, and 43.7 per cent reported difficulties or uncertainty.

The People’s Bank of China (PBOC) has yet to release the third-quarter survey results.

A smaller sample collected by the Hebei provincial branch of PBOC, released at the end of October, also reflected weak confidence in the job market.

The employment sentiment index in the third-quarter survey of 800 depositors fell by 4.2 percentage points from the previous quarter to 38.5 per cent. Almost 46 per cent of respondents reported “so-so” on job hunting.

What are the limitations of China’s official job data?
There have always been questions over the reliability on China’s job market data, particularly its ability to assess employment conditions.

In 2018, the government introduced the urban surveyed unemployment rate, which covers migrant workers in cities and people with urban household registration living in rural areas.
But it still does not include rural migrant workers who have returned to the countryside after losing or quitting their jobs in cities and towns.

Migrant workers who helped power China’s economic miracle face bleak future
There have always been questions over the reliability of China’s job market data, particularly its ability to assess employment conditions.

Unemployment rose significantly during the coronavirus pandemic, but the official jobless data remained relatively unaffected.

According to the NBS, a person is unemployed if they do not have a job, but are actively looking for work and could start immediately.

A person is considered employed as long as they have undertaken more than one hour of paid work in a week, including those who receive wages while on holiday or have been made redundant.

Zhang Dandan, an associate professor of economics at Peking University’s National School of Development, estimated that the youth jobless rate might have hit 46.5 per cent in March, in an op-ed published in Caixin magazine. Her estimates included those that might not be seeking to work.

“There is also a considerable part of the young labour force that chooses to withdraw from the labour market, and this group cannot be ignored,” said Zhang.

“When the job market conditions are not good, a large number of labourers will choose to wait and see, or temporarily withdraw from the labour market.”

What about China’s 11.5 million college graduates?
A record 11.58 million university students graduated in China this year.
According to a survey conducted between March and April and published in May by recruiting services provider Zhaopin, more than 50 per cent of college students said they had already received job offers, up from 46.7 per cent last year.

However, those who had delayed employment rose by 18.9 per cent from 15.9 per cent, leading to concerns over the long term prospects within China’s labour market. (SCMP)