In China, 80 million may already be out of work. Another 9 million will soon be competing for work too

Small businesses suffer despite lifting lockdown in Wuhan

Wang is not his full name. He asked CNN Business not to use his full name because he didn’t want his friends or family to know the details of his unemployment – a fear echoed by others in China talking about losing their jobs. Some also expressed concern that making their personal situation public could harm their chances of finding work.

It is difficult to capture the full scale of how many people have lost their jobs in the country. Beijing’s data is notoriously opaque and the official unemployment rate – which tracks only jobless numbers in urban areas – has barely gone from 4% to just over 5% for years.

But even the official count has started to peak. Unemployment in March was 5.9%, slightly less than the 6.2% record reported a month earlier. This would represent over 27 million jobless people, according to a CNN Business calculation that uses government data.

“Chinese unemployment could be seriously underestimated,” said Willy Lam, contract professor at the Center of China Studies of the Chinese University of Hong Kong. “It is unusual for them to be willing to report those negative data. Given that the government often massages the figures, the real situation must be worse.”

An “unprecedented” problem

Beijing’s data, after all, does not include people in rural communities or a large number of 290 million migrant workers who work in construction, manufacturing and other low-cost but viable activities. If those migrants were included, up to 80 million people could have been out of work at the end of March, according to an article written last month by Zhang Bin, an economist from the Chinese Academy of Social Sciences, a government-run think tank.

Other experts say that the 80 million figure is probably much closer to reality. It’s also far more disturbing – it would mean that nearly 10% of the people in China who should be employed are actually out of work, according to the economists of the Société Générale.

“Covid-19’s shock in the job market is unprecedented in size, length and nature,” wrote Wei Yao and Michelle Lam in a research report from last week.

The Ministry of Commerce did not respond to a request from CNN Business for comment on this story. Speaking last month, a spokesman for China’s National Bureau of Statistics acknowledged that the job market was under a lot of pressure, but insisted that overall employment was “stable”.

“Although coronavirus has had a serious impact [on jobs], there are no mass layoffs in the country, “Mao Shengyong said in a press conference.

But Beijing is preparing for further pain in the coming months. A record number of people are graduating this year, which will put more pressure on the job market. And while the economy it could still generate some growth in 2020, its road to full recovery is likely to be long.

The Chinese government has never been sincere about its economic problems. But recent messages sent by officials have made it clear that unemployment is a big problem problem.

Economic growth was already the weakest of the last decades before the outbreak it pushed the country into its first contraction since 1976, when the death of the Communist Party leader Mao Zedong ended a decade of social and economic turmoil.

Supporting the economy – and keeping the unemployment rate from falling out of control – has become more critical in recent months. In April, the Communist Party’s Politburo, its supreme body, told all government officials to prioritize job security and social stability over anything else, according to the Xinhua state news agency.

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Getting people back to work is important in part because the authorities fear that a wave of unemployment could lead to social unrest, creating a severe political headache, according to Lam, a professor at the Chinese University of Hong Kong.

“Beijing’s main concern is not GDP growth, but employment,” he said.

‘I feel miserable’

Job seekers are not optimistic that the situation will improve soon. Wang, the Beijing coach, said that life is tough for everyone right now.

“I feel miserable, but I can’t help it,” he said. “I don’t think anyone can.”

Wang said the current environment is in stark contrast to when he graduated in 2015. Beijing at the time offered subsidies and other forms of financial support to startups, which encouraged entrepreneurs to create millions of new businesses. The unemployment rate in that year was around 5%.

Even before the coronavirus epidemic, Wang said the offers were drying up. The technology startups he worked in in 2018 and 2019 ran out of cash while Beijing tightened regulations on how to get investments.

But now he says that finding work is almost impossible. He and his friends have started to lower their expectations, and some of them aren’t even sure if they can stay in Beijing.

“There were already signs last year [of mass unemployment], but this year is getting worse, “said Wang.” I don’t know when things will get better … I’ll wait. “

There is evidence that it has become more difficult to find work. Job vacancies plummeted 28% in the first three months of 2020 compared to the fourth quarter of last year, according to a recent survey by the China Institute for Employment Research and Zhaopin.com, one of the largest Chinese job sites. Competition, meanwhile, has been more intense: the number of jobseekers increased by nearly 9% in the first quarter, according to the survey.

And the service sector companies in China – which account for almost half of all jobs in the country – have quit workers at a record pace in April, according to survey data released Thursday by the media group Caixin and research firm Markit.

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“I think the job market is rapidly shrinking,” said Yi Feng, 32, who lost his job in March to a logistics company in Shanghai. Yi asked CNN Business to use an alias for him, which he chose, adding that he feared that talking openly about his problems would amount to burning bridges with potential employers. “It is now extremely difficult to find a job, because most companies have frozen hiring since the end of March.”

An influx of people looking for work

The landscape could become even more difficult in the coming weeks. Beijing expects around 8.7 million people to graduate from colleges and universities this year, creating even more competition for the job.

“Before I graduated, I had decided to become a journalist. But this year is really too difficult,” said Andrea Yao, a 22-year-old senior at the Communication University of China in Beijing. He said he should have interviewed a newspaper in Wuxi last month, but he couldn’t go because he couldn’t get the “health code” needed to enter the city.

Yao told CNN Business that she contacted 61 companies for business reasons, but only five asked her to resume work. Many companies wanted candidates who already had experience.

Recently “when I was taking the subway to [an internship]Suddenly I felt an explosion of anxiety in my heart when I thought about the fact that I hadn’t settled for a job, “he said.

Others claimed that the coronavirus stopped their plans. Li Cuiyu, who is graduating from Beijing Agriculture China with a master’s degree, said he wanted to become a civil servant to obtain a “hukou”, a highly coveted family registration permit in the Chinese capital. But the annual exam required for that job has been postponed due to the epidemic.

While Li is considering other options – for example, he had been looking for work at foreign companies in Beijing – it was not easy.

“There simply aren’t many recruiting ads out there, and some foreign companies are already laying off staff,” he said.

A job candidate makes a call to an on-site job fair in Wuhan last month. The landscape for job hunters could become even more difficult in the coming weeks when around 8.7 million people graduate from colleges and universities.

Help from above

Beijing is aware of the impending wave of new job seekers. This week the government unveiled a plan to help recent graduates find jobs as teachers and create other “grassroots” positions, according to Xinhua. The project also includes a proposal to expand enrollments for postgraduate programs.

But the authorities still have a difficult task ahead of them as they try to help others who have lost their jobs.

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“A particular concern is that the safety net does not catch the most vulnerable,” Mark Williams, Asia’s chief economist for Capital Economics, wrote in a recent research note.

All employers in China are required by law to provide unemployment insurance. But less than half of the urban workforce was covered by that program at the end of last year, according to data from the Ministry of Human Resources and Social Security. And experts, including the economists of the Société Générale, have noted that the program is not equipped to cope with the massive increase in jobless figures.

It appears that the government has recognized these problems, Williams added, since it recently committed itself to helping those who are unemployed to access insurance.

But other experts have pointed out that there are other challenges that Beijing faces while trying to push its citizens back to work.

China is trying to revive its economy without risking more lives. The world is watching
China is already struggling growing debtwhich makes it difficult to spend more on infrastructure projects that could create more jobs, according to Joseph Cheng, a democracy activist and retired professor of political science at City University in Hong Kong. Chinese state media recently suggested that regional governments could invest $ 1.1 trillion in roads, airports and other projects, but those funds have not yet been effectively set aside and it is unclear whether these goals can be achieved.

Numerous experts have said that policymakers in China should make greater efforts to ensure that people can meet their basic daily needs. Société Générale economists, for example, said that a “more direct but daring measure” would be to give money directly to low-income families, in order to circumvent the need for an unemployment insurance program.

Even Zhang, the state think tank economist, made a similar proposal. He said the government’s response to the economic fallout from the virus – which amounts to tens of billions of dollars in financial aid and stimulus – should include cash handouts for the poor.

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