Wall Street Journal: China’s Jobs Picture Not As Rosy As It Looks

China Labour Bulletin is quoted in the following article. Copyright remains with the original publisher

October 29, 2014

China’s Premier, Li Keqiang, has said repeatedly how happy he is with the strength of the country’s job market, despite a slowing economy. That’s the main reason he sees little need to ease policy aggressively to spur growth, he says.

Officials attribute low unemployment to a drop in the working-age population, along with the development of the service sector, which is more labor-intensive than manufacturing.

But a deeper look into the government’s jobs data shows that the current employment situation is more worrisome than it appears. Across China’s cities, 10.82 million new jobs were created over the first nine months of the year, up 1.5% from the same period of 2013, according to official data released on Friday. That’s slowest rise in five years.

Migrant workers are normally the first to take the brunt of an economic slowdown, since more than one fifth of them work in the construction sector, which is highly sensitive to economic cycles. Employers also tend fire migrant workers first if business is bad rather than laying off urbanites with permanent resident status, economists have said.

“Over the past few years, especially after 2009, the government stepped up investment in infrastructure and property market. That has created many job opportunities for migrant workers,” said Li Shi, an economics professor at Beijing Normal University. “But now a sluggish property market has affected migrant workers.”

The global financial crisis cut China’s economic growth from double-digit rates to 6.6% in early 2009, and left some 200 million migrant laborers facing unemployment and a fraying safety net.

The government responded with a four trillion yuan ($650 billion) stimulus package that helped China rebound rapidly from the global downturn, but also resulted in a series of problems such as industrial overcapacity and environmental pollution.

This time around the economic situation is less dire, and the reaction has been more restrained. Since economic growth started to falter earlier this year, policy makers have contented themselves with a series of targeted easing measures like accelerated spending on infrastructure and special lending programs from the central bank. They have also brought in measures to spur mortgage lending and reduce financing costs and tax burdens for small firms.

A major drag on economic growth this year has been a weak property market. The average price of new homes in 70 Chinese cities fell year-over-year in September for the first time in nearly two years.

It is difficult to gauge the impact on employment, since neither recent official nor private data are available. Most surveys are only made on an annual basis.

A recent spike in the number of strikes and labor disputes recorded by the China Labour Bulletin may reflect strains in the labor market due to the downturn in construction. The Hong Kong-based labor group said in a statement earlier this month that it recorded a total of 372 incidents in the third quarter this year, more than double the same period of last year.Earlier this year, workers at some factories in southeastern Guangdong province walked off their job in a dispute over social-insurance payments.

For Mr. Li of Beijing Normal University, this points to another worry: even migrant workers with jobs can be vulnerable to exploitation.

“I’m not worried about migrant workers not being able to find jobs as long as the economy still grows,” he said. “What worries me is whether they are been treated in a decent way at work.”

– Liyan Qi.

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