Spectre of 50m job losses looms in China
John Garnaut
The Age..Australian
January 19, 2009
THE economic crisis is set to hit workers harder in China than any other major economy, with a leading scholar predicting 50 million Chinese people could be out of work this year.
Tsinghua University's Professor Yu Qiao said the Government's huge stimulus effort would cushion GDP growth but would not sufficiently address the mass unemployment problem, with potentially grave social consequences.
"It's expected that 40 to 50 million or more migrant workers may lose their jobs in urban areas if the global economy keeps shrinking this year," wrote the economics professor in a new paper, which does not count tens of millions of urban residents who may also lose their jobs.
The findings imply a huge, if temporary, reversal of the urbanisation that has underpinned China's recent growth.
Professor Yu's study focuses on rural migrants because he believes they present the greatest threat to national stability.
"Jobless migrant workers on this mass scale implies a severe political and social problem," he said. "Any minor mishandling may trigger a strong backlash and could even result in social turbulence."
China has no timely and reliable unemployment data series and authorities are anxiously waiting to see how many workers fail to return to urban work after the Chinese New Year holiday which begins next week.
Even the more conservative estimates imply a much higher proportion of workers will lose their jobs in China than is expected in the US, which lost 2.6 million jobs last year.
A preliminary survey by the State Council's Development Research Centre estimated that 20 million migrant workers had lost their jobs by late November.
Modelling work under way by Professors Cai Fang and Wang Dewang at the Chinese Academy of Social Sciences shows a 10 per cent decline in exports could cut non-agricultural employment by 11.2 million, or 2.7 per cent.
"If exports decreased by 20 per cent, the job loss will be doubled," said Professor Wang, head of the academy's Social Security Research Division.
Exports fell 2.8 per cent in the year to December, but the "year-to" method of reporting masks a far greater fall within the year.
Migrant worker remittances support hundreds of millions of rural relatives and help mitigate China's rising rural-urban wealth gap.
The Ministry of Agriculture reported on Friday that the average urban income was 3.4 times the average rural income last year, up from 3.3 last year and exceeding 10,000 yuan ($A2177) for the first time.
The income gap ratio is almost certainly the largest since the Communist revolution of 1949.
China's manufacturing industry employed 42.5 million migrant workers and 33.5 million urban residents, according to the 2006 agricultural survey and the 2007 statistical yearbook. Like many economists, Professor Yu is sharply critical of the Government's stimulus package which favours special-interest groups in capital-intensive construction rather than services industries that would deliver more jobs, income and utility to households.
Citigroup has said that more than three-quarters of the Government's 4 trillion yuan stimulus package and almost all of the 25 trillion yuan in proposed provincial spending (as recorded on provincial government websites) is earmarked for construction projects.
The construction sector appears to have been smashed at least as badly as manufacturing in the current downturn.
Professor Yu said the Government's stimulus policies would give only a short-term boost to construction because the build-up of excess supply was already so large that demand would be weak for years to come.
"A 30-40 per cent cut in the construction industry means more than 10 million migrant workers would lose their jobs," he said.
China's construction sector employs 28.7 million migrant workers and 9.9 million urban residents. The agricultural census revealed that 132 million workers migrated to other townships in 2006.
John Garnaut
The Age..Australian
January 19, 2009
THE economic crisis is set to hit workers harder in China than any other major economy, with a leading scholar predicting 50 million Chinese people could be out of work this year.
Tsinghua University's Professor Yu Qiao said the Government's huge stimulus effort would cushion GDP growth but would not sufficiently address the mass unemployment problem, with potentially grave social consequences.
"It's expected that 40 to 50 million or more migrant workers may lose their jobs in urban areas if the global economy keeps shrinking this year," wrote the economics professor in a new paper, which does not count tens of millions of urban residents who may also lose their jobs.
The findings imply a huge, if temporary, reversal of the urbanisation that has underpinned China's recent growth.
Professor Yu's study focuses on rural migrants because he believes they present the greatest threat to national stability.
"Jobless migrant workers on this mass scale implies a severe political and social problem," he said. "Any minor mishandling may trigger a strong backlash and could even result in social turbulence."
China has no timely and reliable unemployment data series and authorities are anxiously waiting to see how many workers fail to return to urban work after the Chinese New Year holiday which begins next week.
Even the more conservative estimates imply a much higher proportion of workers will lose their jobs in China than is expected in the US, which lost 2.6 million jobs last year.
A preliminary survey by the State Council's Development Research Centre estimated that 20 million migrant workers had lost their jobs by late November.
Modelling work under way by Professors Cai Fang and Wang Dewang at the Chinese Academy of Social Sciences shows a 10 per cent decline in exports could cut non-agricultural employment by 11.2 million, or 2.7 per cent.
"If exports decreased by 20 per cent, the job loss will be doubled," said Professor Wang, head of the academy's Social Security Research Division.
Exports fell 2.8 per cent in the year to December, but the "year-to" method of reporting masks a far greater fall within the year.
Migrant worker remittances support hundreds of millions of rural relatives and help mitigate China's rising rural-urban wealth gap.
The Ministry of Agriculture reported on Friday that the average urban income was 3.4 times the average rural income last year, up from 3.3 last year and exceeding 10,000 yuan ($A2177) for the first time.
The income gap ratio is almost certainly the largest since the Communist revolution of 1949.
China's manufacturing industry employed 42.5 million migrant workers and 33.5 million urban residents, according to the 2006 agricultural survey and the 2007 statistical yearbook. Like many economists, Professor Yu is sharply critical of the Government's stimulus package which favours special-interest groups in capital-intensive construction rather than services industries that would deliver more jobs, income and utility to households.
Citigroup has said that more than three-quarters of the Government's 4 trillion yuan stimulus package and almost all of the 25 trillion yuan in proposed provincial spending (as recorded on provincial government websites) is earmarked for construction projects.
The construction sector appears to have been smashed at least as badly as manufacturing in the current downturn.
Professor Yu said the Government's stimulus policies would give only a short-term boost to construction because the build-up of excess supply was already so large that demand would be weak for years to come.
"A 30-40 per cent cut in the construction industry means more than 10 million migrant workers would lose their jobs," he said.
China's construction sector employs 28.7 million migrant workers and 9.9 million urban residents. The agricultural census revealed that 132 million workers migrated to other townships in 2006.
