China Labour Bulletin is quoted in the following article. Copyright remains with the original publisher
15 July 2013
By Simon Rabinovitch in Shanghai
Clad in board shorts and flip-flops, Xu Wen looks pretty much like any young man on summer break from university. Back from a hot day at the beach, he is chilling outside his local Walmart in outer Shanghai.
But Mr Xu, 22, is no student. And he was not playing in the surf. He was at Jinshan beach behind the controls of a 13-tonne Hitachi excavator, knocking down old buildings to clear the way for construction.
The Chinese economy is slowing and is on track for its weakest year in a more than a decade. But someone forgot to give the memo to Mr Xu. “This is the busiest year in a while. It’s a lot busier than last year,” he says. “I keep getting called to new projects and there’s a lot of pressure to be fast.”
Mr Xu’s busy summer could prove every bit as important as gross domestic product data in shaping the course of Chinese economic policy in the coming months. With China edging down to 7.5 per cent growth in the second quarter and expected to slow further, analysts and investors have started to ask what Beijing’s bottom line is: how low will it let growth go?
Attention has so far centred on the country’s growth target. The government is officially aiming for 7.5 per cent growth this year and some analysts think it will deploy small-scale stimulus measures to keep the economy from falling below that. Others think it is willing to let growth slide to 7 per cent, devoting energy to difficult reforms instead.
Yet the focus on growth alone is misleading. In a speech last week Li Keqiang, China’s premier, said the government would not allow “growth or employment to slip below our bottom line”. Looking at the labour market, the other half of that equation, the picture is still rosy. Cracks are beginning to appear but on the whole jobs are plentiful.
With unemployment figures unreliable in China, the best gauge is a government survey of jobcentres across the country. In the second quarter there were 6.1m jobs available and 5.7m job seekers – 1.07 posts for every person seeking work, down just a touch from the first quarter.
“The labour market is healthy still despite the economic slowdown,” said Capital Economics analysts.
There are some clouds on the horizon. According to manufacturing sector surveys, factories have been shedding jobs for most of this year. Much has been made of whether China will be able to absorb this year’s huge cohort of university graduates, a record 7m. Income growth for urban employees slowed to 6.5 per cent in the first half from 9.6 per cent last year, a sign of slightly softer demand for white-collar workers.
Several protests have highlighted the potential for social instability – the government’s biggest worry – as the economy slows. Earlier this month hundreds of workers gathered to protest about mass lay offs at Rongsheng, one of the biggest shipbuilders, which is struggling under a pile of debt. In late June, workers at a Beijing medical supplies factory, held their US chief hostage for nearly a week, accusing him of not paying wages.
But He Yuancheng, who edits an online newspaper about collective bargaining, says the disputes were only partly caused by the slowing economy. “The new generation of Chinese workers [are] more conscious of their rights and more willing to organise to defend them,” he says.
This could make for a combustible mix if the economy slows as sharply as in 2008, when the global financial crisis erupted and 20m migrant workers lost their jobs virtually overnight.
“What’s different now is that the economies in less developed provinces are providing more employment opportunities themselves for migrant workers. That has softened some of the blow,” says Geoffrey Crothall of the China Labour Bulletin.
But the bigger immediate problem in China may not be job losses but the unmet expectations of young workers dreaming of ever-rising prosperity.
“We’re not getting as many orders as before and my salary is the same as last year,” said Gao Song, a migrant from the poor central province of Anhui working at a furniture factory in Shanghai. “But it will definitely get back to being better. Who isn’t optimistic about their own future?”