Official Chinese Data May Obscure Labor Market Woes

January 18, 2022

Official data from the Chinese government shows that the unemployment rate was stable in 2021, ending the year standing at 5.1%. However, issues with how the official unemployment survey categorizes workers, ongoing quarantines in regions of the country, and anecdotal data about hiring suggest that the actual unemployment rate may be much higher.

Bloomberg provides an overview of the problems with China’s official survey-based data and the reasons that economists believe the nation’s labor market may be under more stress than official data suggests.

The first is in how the survey collects data information on the country’s 180 million migrant workers who reside in rural areas but spend most of the year working in cities. Workers who leave the city are no longer included in China’s urban unemployment survey. Prior to the pandemic, the number of migrant workers has increased by 2-3 million per year. Official data shows no growth in the migrant worker population since the pandemic began. Retail data from regions where migrants reside has been stronger than expected, while sales in the regions where migrants work have been lower, suggesting more migrant workers are staying home, and these unemployed workers are not being counted in official data.

Furthermore, the nation’s zero covid policy has seen entire regions put under strict quarantine, often for weeks at a time. The official labor survey defines unemployed workers as those who have actively looked for a job in the last three months and would be able to start a new job within two weeks. The hundreds of thousands under lockdown would not be able to begin work within two weeks and are thus not counted as unemployed.

There is also anecdotal evidence that increased automation has reduced demand for manufacturing workers, and the average number of workers at the nation’s largest industrial companies has fallen from 7,419 in November 2020 to 7,398 in November 2021. The government’s crackdown on industries like real estate and for-profit tutoring has also led to massive layoffs, with one of the top tutoring companies revealing recently that it has laid off 60,000 workers last year. Weak domestic sales and ongoing pandemic-related disruptions have also hurt the nation’s service industry, which accounts for 47% of all employment.


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