09-10-2004, 05:15 AM
<b>China</b>
<b>No right to work</b>
<b>China's official figures hugely understate a growing problem. But there is some good news as well</b>
âWE ARE a socialist country,â China's prime minister, Wen Jiabao, said to loud applause last weekend at a conference on the re-employment of laid-off workers. âIf we don't solve the employment problem, the lives of the masses will not improve.â Mr Wen has declared unemployment to be a top priority for his administration. Most people agree that urban unemployment is growing, but a statistical quagmire of the government's making renders it difficult to assess how bad the problem really is.
Mr Wen's concerns about the problem appear to indicate that it is much worse than official figures suggest. Last year the government put the urban unemployment rate at 4.3%, which in most other countries would be regarded as close to full employment (see chart). The official target this year is to keep it under 4.7%. Officials do not seem worried about achieving this. But everyone knows the figure has little to do with reality.
It was only ten years ago that Chinese officials plucked up the courage to start using the word âunemploymentââa phenomenon previously regarded by the Communist Party as the preserve of exploitative capitalist countries. And none too soon. Over the past ten years, bloated state-owned enterprises and âcollectivesâ (most of them in effect also state-owned) have shed much of their excess labour. Many have been simply closed. Between 1998 and 2002, such closures resulted in job losses for a staggering 24m workers, or about 10% of the urban labour force, by government reckoning.
The closures continue. Official newspapers reported this month that more big layoffs are imminent at some of the country's state-owned commercial banks, which have already shed some 250,000 staff and closed 45,000 offices since the late 1990s. The government says some 2,500 state-owned mines and large enterprises with a total staff of 5.1m are due to be shut in the coming four years.
So what is the real unemployment rate? The government's number only includes those who are officially registered as unemployed. It does not include those who have been laid off from state-owned enterprises but who still get a basic stipend for three years after losing their jobs. Taking them into account, and adjusting for other distortions, many Chinese analysts put the figure at around 8-10% in urban areas. A survey of five large cities conducted by academics at the University of Michigan and the Chinese Academy of Social Sciences found unemployment rose overall from 7.2% to 12.9% between 1996 and 2001.
Regional variations are considerable. By the government's very conservative calculations, Beijing's unemployment rate was 1.4% last year, compared with more than 6% in some cities of the north-east which have heavy concentrations of state-owned industries. The gap between the official estimate and reality is particularly evident in such areas, which have been plagued in recent years by frequent, albeit orderly, and mostly small, demonstrations by laid-off workers and retired employees. The unemployment rates in places like mining towns, dependent on just a few industries, are probably as high as 40%.
All this is unsettling to a government which still likes to call itself socialist (though many Chinese joke that America has a better claim to the description), which is struggling to buttress its legitimacy in the eyes of a cynical public, and which has an ingrained aversion to unrest. What Dorothy Solinger of the University of California at Irvine calls the government's âvery efficient system of repressionâ helps keep high unemployment from triggering serious unrest. But in some areas at least, unemployment estimates may imply that the problem is more serious than it really is.
For one thing, the official figures cover only those who are registered urban residents. But in some big cities, 20-30% of the population is made up of migrant workers from the countryside, most of whom are not classified as city-dwellers. Migrant workers have very low unemployment rates, because if they cannot find work, they return to the countryside. A report published in 2002 said that some unofficial estimates putting unemployment at around 7% that year would have to be revised to 5% if the labour force were taken to include both registered residents and migrants. The migrants' numbers are also certainly higher than official figures show, although in recent weeks unusual labour shortages have been reported in some southern industrial areas, apparently because some migrants feel they are better off staying in the countryside where incomes are showing signs of recovery.
Another distortion is the high level of hidden employment. Some analysts believe that as much as 60% of laid-off workers (those not yet formally labelled as unemployed by the government but who supposedly have no work) are in fact employed informally.
Assessing the size of China's burgeoning private sector has always been a headache for official statisticians. Armies of census-takers are now in training for the national census of the economy due to be held at the end of the year. It will be the country's first. The survey is sure to find that private-sector employment is much higher than currently reported.
And what of the countryside? China ignores rural areas when calculating unemployment figures in the belief that, since villagers enjoy land-use rights, they can make a living. Even so, 150m or so rural-dwellers have little or nothing to do and in the coming years may move to urban areas. This vast reservoir will add to urban employment pressures just as China faces a baby-boom surge in the labour force and, thanks to heavy investment in capital-intensive production, diminishing employment gains from growth. âSocialistâ China will have its work cut out.
Cheers
<b>No right to work</b>
<b>China's official figures hugely understate a growing problem. But there is some good news as well</b>
âWE ARE a socialist country,â China's prime minister, Wen Jiabao, said to loud applause last weekend at a conference on the re-employment of laid-off workers. âIf we don't solve the employment problem, the lives of the masses will not improve.â Mr Wen has declared unemployment to be a top priority for his administration. Most people agree that urban unemployment is growing, but a statistical quagmire of the government's making renders it difficult to assess how bad the problem really is.
Mr Wen's concerns about the problem appear to indicate that it is much worse than official figures suggest. Last year the government put the urban unemployment rate at 4.3%, which in most other countries would be regarded as close to full employment (see chart). The official target this year is to keep it under 4.7%. Officials do not seem worried about achieving this. But everyone knows the figure has little to do with reality.
It was only ten years ago that Chinese officials plucked up the courage to start using the word âunemploymentââa phenomenon previously regarded by the Communist Party as the preserve of exploitative capitalist countries. And none too soon. Over the past ten years, bloated state-owned enterprises and âcollectivesâ (most of them in effect also state-owned) have shed much of their excess labour. Many have been simply closed. Between 1998 and 2002, such closures resulted in job losses for a staggering 24m workers, or about 10% of the urban labour force, by government reckoning.
The closures continue. Official newspapers reported this month that more big layoffs are imminent at some of the country's state-owned commercial banks, which have already shed some 250,000 staff and closed 45,000 offices since the late 1990s. The government says some 2,500 state-owned mines and large enterprises with a total staff of 5.1m are due to be shut in the coming four years.
So what is the real unemployment rate? The government's number only includes those who are officially registered as unemployed. It does not include those who have been laid off from state-owned enterprises but who still get a basic stipend for three years after losing their jobs. Taking them into account, and adjusting for other distortions, many Chinese analysts put the figure at around 8-10% in urban areas. A survey of five large cities conducted by academics at the University of Michigan and the Chinese Academy of Social Sciences found unemployment rose overall from 7.2% to 12.9% between 1996 and 2001.
Regional variations are considerable. By the government's very conservative calculations, Beijing's unemployment rate was 1.4% last year, compared with more than 6% in some cities of the north-east which have heavy concentrations of state-owned industries. The gap between the official estimate and reality is particularly evident in such areas, which have been plagued in recent years by frequent, albeit orderly, and mostly small, demonstrations by laid-off workers and retired employees. The unemployment rates in places like mining towns, dependent on just a few industries, are probably as high as 40%.
All this is unsettling to a government which still likes to call itself socialist (though many Chinese joke that America has a better claim to the description), which is struggling to buttress its legitimacy in the eyes of a cynical public, and which has an ingrained aversion to unrest. What Dorothy Solinger of the University of California at Irvine calls the government's âvery efficient system of repressionâ helps keep high unemployment from triggering serious unrest. But in some areas at least, unemployment estimates may imply that the problem is more serious than it really is.
For one thing, the official figures cover only those who are registered urban residents. But in some big cities, 20-30% of the population is made up of migrant workers from the countryside, most of whom are not classified as city-dwellers. Migrant workers have very low unemployment rates, because if they cannot find work, they return to the countryside. A report published in 2002 said that some unofficial estimates putting unemployment at around 7% that year would have to be revised to 5% if the labour force were taken to include both registered residents and migrants. The migrants' numbers are also certainly higher than official figures show, although in recent weeks unusual labour shortages have been reported in some southern industrial areas, apparently because some migrants feel they are better off staying in the countryside where incomes are showing signs of recovery.
Another distortion is the high level of hidden employment. Some analysts believe that as much as 60% of laid-off workers (those not yet formally labelled as unemployed by the government but who supposedly have no work) are in fact employed informally.
Assessing the size of China's burgeoning private sector has always been a headache for official statisticians. Armies of census-takers are now in training for the national census of the economy due to be held at the end of the year. It will be the country's first. The survey is sure to find that private-sector employment is much higher than currently reported.
And what of the countryside? China ignores rural areas when calculating unemployment figures in the belief that, since villagers enjoy land-use rights, they can make a living. Even so, 150m or so rural-dwellers have little or nothing to do and in the coming years may move to urban areas. This vast reservoir will add to urban employment pressures just as China faces a baby-boom surge in the labour force and, thanks to heavy investment in capital-intensive production, diminishing employment gains from growth. âSocialistâ China will have its work cut out.
Cheers