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Who are the unemployed?
By Michelle Chen

SHANGHAI - Who is unemployed and how many people are unemployed in China, a nation of 1.3 billion? Who is being counted and who is being excluded depends on whom you're talking to, and often how badly the counters want to keep the rate down.

The official figure is 4.2 percent, but the World Bank says it is closer to 10 percent nationwide - more than 20 million out of a workforce of more than 200 million. Officially, the urban labor force is around 248 million.

The government says it hopes to keep it just under 4.7 percent. But that official rate only counts those officially registered as unemployed. The official statistics probably disguise the truth about the impact of massive layoffs as Beijing goes about economic restructuring and closing inefficient enterprises.

When trying to calculate the number of laid-off workers, outside analysts reject China's official figures and estimate the real urban unemployment rate to be around 10 percent, and about 12 percent in particularly hard-hit cities such as Shenyang in the northeast, Wuhan in the south, and Shanghai on the coast. China also acknowledges some high numbers: the China Urban Labor Survey conducted by the Chinese Academy of Social Sciences uncovered 12 percent unemployment among respondents in a sampling of major cities.

An October 2003 World Bank report, using 2002 census data and surveys, identifies 10 provinces and cities with unemployment rates over 10 percent, including Liaoning province with 17.68 percent, followed by Helongjiang 15.43 percent, Tianjin 13.96 percent, Hainan 13.42 percent, Jilin 13.88 percent, Qinghai 12.30 percent, Shanghai 11.99 percent, Inner Mongolia 11.35 percent, and Chongqing at 10.76 percent.

In 1999, the government counted 5.75 million unemployed, but if laid-off workers were included, the number jumped to 9.37 million.

20 million drop out of the workforce
The Labor Ministry said that in 2002 the total urban workforce, including towns, was 247.8 million. China also acknowledges that about 20 million have dropped out of the labor force, discouraged, the World Bank fears, by grim employment prospects for older laborers with few skills.

The narrow official definition of unemployment leaves out millions of people who are out of work, by a common-sense definition. A good place to start is to ask who is out of work and needs a job but is not counted in the official unemployment figures. These are the main categories:
  • Xia gang, or "off-post" workers, not registered as unemployed and still contractually tied to their work-units, possibly receiving short-term very limited benefits.
  • Surplus, unpaid but not officially laid off workers at state-owned enterprises (SOEs), technically hired but economically expendable.
  • Laid-off workers still contractually tied to their work units.
  • Migrant agricultural and rural workers who move to cities, an estimated 94 million of them, or more.
  • Surplus rural workers.
  • Workers who disappear into the informal economy.

    Defining who exactly is unemployed remains one of the basic challenges facing the government and social scientists in trying to analyze rising unemployment and devise sustainable policy solutions. Determining the scope of the problem depends on the source of information and considerable confusion surrounds the dimensions and severity of mass layoffs.

    Even many of those eligible to be counted among the unemployed choose not to go through the trouble of registering: A meager unemployment stipend of 240 yuan (about US$30) per month on average - calculated according to the whim of the local government, and not one's previous earnings or social needs - provides little incentive for going through the bureaucratic process.

    At the same time, many of the "officially unemployed" try to have it both ways, picking up unemployment benefits while working on the side. Though the true rate of "hidden employment" is impossible to gauge, researchers estimate that around two-thirds of laid-off urban workers collect wages from informal jobs.

    One of the main factors behind the growth of the unemployment rate is a statistical one: the government's recent efforts to integrate xia gang workers into a new, basic unemployment benefits system has decreased the xia gang rate while expanding the unemployed category. The Ministry of Labor and Social Security has proclaimed that the government aims to "solve the problem of xia gang by 2005". This might, however, simply mean that on paper, xia gang will vanish into the nebulous ranks of the urban unemployed.

    While integrating the two categories will be a major advance in implementing unemployment policies, the lack of coordination among different agencies and across regions still poses an obstacle to a truly integrated approach to restructuring the economy. For now, the Chinese will continue to deal with finding, keeping and losing work the way they've always done it: unofficially.

    Michelle Chen is an American Fulbright researcher based in Shanghai.

    (Copyright 2004 Asia Times Online Co, Ltd. All rights reserved. Please contact for information on our sales and syndication policies.)

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