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China’s falling unemployment rate masks underemployment | Business and Economic News

China’s unemployment rate has steadily declined since the peak of the pandemic last year, although underemployment of graduates and shortage of skilled manufacturing workers indicate potential problems in the labor market.

Official data last week showed that the urban unemployment rate fell to a two-year low of 5% in May, but the unemployment rate for 16-24 years old (including school and university graduates) was more than double the 13.8%.

Anecdotal reports indicate that there is a mismatch between jobs and skills in the economy, which may prevent the unemployment rate from falling further. Part of the reason is that China’s economic growth has been uneven since the pandemic, and the service industry (more suitable for graduate jobs) has recovered more slowly than the manufacturing industry.

“Exports and investment, including heavy industry and real estate, are driving a rebound, but this demand has not created a job type suitable for many graduates today,” said Sean Roach, chief economist for Asia Pacific, Standard & Poor’s Global Ratings.

For most of this year, structural problems have persisted. According to a survey of 90,000 companies released by the National Bureau of Statistics of China in mid-April, about 44% of industrial companies said that hiring workers is their biggest obstacle, the highest level in recent years.

The National Bureau of Statistics said last week that about 14 million people are expected to enter the urban labor market this year, of which 9.09 million are graduates. China’s annual goal is to add more than 11 million urban jobs.

“The difficulty of fresh graduates in finding jobs and the difficulty in recruiting enterprises exist at the same time,” said Fu Linghui, a spokesman for the National Bureau of Statistics of China, last week.

Blue collar job

The pandemic has forced many manufacturing workers, especially immigrants, to enter the service industry. However, analysts also pointed to several long-term factors that are consuming the number of blue-collar workers: manufacturing jobs are not attractive to young workers, wages are generally low, and job skills training are lacking.

S&P’s Roach said: “Since the COVID-19 pandemic, the rebalancing from investment to consumption, manufacturing to services has been stagnant, but the economy needs to be restored to start creating cities with sufficiently high salaries for new job market entrants. Job position.”

The United States is also facing labor shortages and millions of unemployed people who cannot find jobs. Federal Reserve Chairman Jerome Powell listed skills gaps, parenting obligations, and lingering fears of the virus as possible reasons for this dichotomy.

The Chinese government is currently strengthening vocational skills training to alleviate structural problems in employment, which was discussed by Premier Li Keqiang at a meeting earlier this month. The authorities also vowed to expand employment opportunities for university graduates, provide better career counseling services, and promote the exchange of information between job seekers and employers.

“The overall employment pressure still exists,” said Fu of the National Bureau of Statistics. “Next, we must maintain the necessary support for economic recovery, promote the creation of new jobs, implement the employment priority policy, and expand employment” for key labor groups.

Beijing has set a goal of using government subsidies to train more than 50 million people by the end of this year, including migrant workers, high school graduates, vacation workers and veterans. According to the plan, by the end of 2021, skilled workers should account for more than 25% of the total labor force.

The McKinsey Global Institute stated in a report released in January that as the workforce shrinks and ages, China’s next phase of growth will require improved skills and innovation-driven productivity. It is estimated that by 2030, approximately 220 million workers (30% of the workforce) may need to switch to higher-skilled jobs.

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