China must act fast to avert the disaster of mass unemployment amid the coronavirus onslaught

Anecdotal evidence suggests more jobs are being lost than is being captured in official data. Without forceful, timely policy support to protect the livelihood of its teeming workers, including 170 million rural migrants, China’s fragile economic recovery won’t go far

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Men wait in an employment agency for a car to take them to their new jobs, in Shanghai on April 28. Photo: AFP

Published: 8:00pm, 6 May 2020Updated: 10:26pm, 6 May 2020

Despite having recovered from its trough, the Chinese economy is not in a safe place yet. Not only is the global economy about to fall off a cliff, which will send shock waves back to China, the domestic labour market is also showing signs of cracks.

Labour market weakness could be a key source of second-order effects of the pandemic and is therefore worth monitoring to gauge the eventual shape of the economic recovery.

However, the lack of good-quality and time-series data has hindered our ability to assess labour market conditions in China. For example, the well-known surveyed unemployment rate only dates back to 2014, and started with a measure for 31 cities. The measure for all cities, which started in 2016, showed a peculiar decline in its latest reading, for March, to 5.9 per cent from 6.2 per cent, despite anecdotal evidence pointing to a worsening of labour market conditions.

Based on our assessment of work resumption, an estimated 70-80 million people either lost their jobs or were unable to work due to production shutdowns by the end of March.

Most of the unemployed – about 50-60 million – were in consumer-related sectors, such as restaurants, catering, hospitality, wholesale and retail, which together account for about a quarter of all employment in China. The remaining 20 million were in construction, industrial and traditional manufacturing sectors, with a faster return to work there helping to limit job losses.