China is taking a new approach to its jobless rate, but is it enough?
Beijing has started releasing monthly data based on surveys, as other countries do. It may be an improvement, but some say the rate is still ‘implausibly low’
China finally began releasing monthly jobless figures this week based on surveys, after decades of obscuring the real employment situation of the world’s second biggest economy.
The launch of the new measure by the National Bureau of Statistics on Tuesday – it was 5.1 per cent at the end of March – was welcomed by China watchers, who say it is a better indicator than the quarterly “urban registered jobless rate” that covered only those willing to go through the paperwork required to register.
Those quarterly numbers have barely changed over time, and are essentially meaningless when it comes to gauging the true employment picture in China.
This was laid bare when exporters in the coastal areas were hit by the global financial crisis in 2008, and some 20 million migrant workers found themselves out of a job. The registered jobless rate stayed much the same because it does not include the country’s 270 million migrant workers.
Feng Shuaizhang, dean of the Institute for Economic and Social Research at Jinan University in Guangzhou, said the new measure was a big step forward because it uses international standards and covers all urban residents aged over 16 – including migrant workers who have lived in cities for more than six months.
Feng has criticised the registered jobless figures as inaccurate, saying three years ago that China’s real unemployment rate from the 2002 to 2009 period could have been as high as 11 per cent, rather than the official 4 per cent.
This week he said the new data series was more reliable than the country’s GDP figures.
“Since the figures are derived from the household survey run by the national authorities, the data is free from intervention by local governments and it’s comparable across different areas,” Feng said.
Arthur Kroeber, co-founder and research head of Gavekal Dragonomics, said the broad-based jobless rate was “an improvement” on the previous one.
The quality of Chinese economic data has been an issue of debate for decades, with independent economists questioning the figures and Beijing defending their reliability. But few indicators have drawn as much criticism as the registered jobless rate – which was 3.9 per cent at the end of last year.
Premier Li Keqiang announced the new survey-based measure when he delivered the government work report to the legislature in March, saying it aimed to be honest about the country’s real job situation.
It is a big step for Beijing to be frank about unemployment – it pained the ruling Communist Party to even admit there were people out of work in the late 1980s and early 1990s, when millions of Chinese lost their jobs. Until 1994, when the labour ministry started to put out some numbers, Beijing had argued that unemployment was a product of capitalism, and that people without work in China were merely “between jobs”. But the ministry has for decades under-reported the jobless rate because its performance is partly measured by it.
China was one of just eight countries reporting registered jobless numbers at the end of last year, compared to 76 nations releasing numbers based on surveys, according to the International Labour Organisation.
Those registered jobless figures look particularly irrelevant when compared to the US labour department’s weekly release of “initial claims for state unemployment benefits” – one of the most widely watched indicators for investors and pundits to gauge the health of the US economy and policy directions. Until now, few economists have bothered to watch China’s official unemployment rate.
“I didn’t even knew I could register as unemployed,” said Cao Tianyu, a fresh graduate in the northeastern city of Tianjin who has been looking for work for the past 18 months.
Jobless Chinese like Cao are not encouraged to sign up for unemployment benefits, at least not for long. The government is strict about benefits, and the meagre monthly payment – in Beijing it is just 1,400 yuan (HK$1,750) – can be received for a maximum of two years.
The statistics bureau began carrying out nationwide labour force surveys on a semi-annual basis in 2005. When the millions of migrant workers lost their jobs in 2009, those surveys became monthly in 31 major cities, and the more frequent polling was rolled out nationwide in 2016.
Statistics bureau chief Ning Jizhe said in a statement that the new data series would be a “comprehensive, accurate and timely” measure of China’s jobless situation. He added that China’s survey-based jobless rate was lower compared to “not only rich countries but also other developing countries”.
But not everyone is convinced that Beijing’s new unemployment rate will provide the full picture.
Kroeber at Gavekal said it did not adequately measure underemployment, such as high-skill workers in low-skill jobs and people in part-time work who would rather be employed full-time. He also said state intervention would still be a factor – Li said in his report that Beijing wanted to keep the rate under 5.5 per cent this year.
Ernan Cui, another economist with Gavekal, wrote in a research note on Friday that the new numbers were still hard to believe.
“The new data does indeed convey a bit more information about the state of the labour market. But it still falls short of data produced by other major economies, being implausibly low and stable in a way that suggests political manipulation of the jobless figures has not ended,” Cui wrote.