BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/23
The findings of employee surveys also comport with business surveys. For example, the People’s Bank of China’s quarterly survey of bank depositors notes that the employment expectations of depositors have weakened since last autumn.
The expectations of continued slowdown in the Chinese economy, lower corporate profitability and higher wage costs (a driver of increased production automation and the shifting of labour-intense production to countries with cheaper labour costs) are just a few of the many factors shaping company hiring prospects. In coming years, many jobs will vanish as production is planned to be reduced in sectors plagued with overcapacity, certain state-owned enterprises are restructured and the number of people serving in China’s military is reduced.
The quality of Chinese official labour market statistics has room for improvement, not to mention how actual unemployment or labour supply and demand are assessed. Survey-based figures indicate overall employment trends but fail to specify e.g. in the number of workers on payroll. It is particularly disconcerting from the government’s standpoint that firms in the service sector are increasingly reluctant to hire new personnel. A cornerstone assumption of economic restructuring policies is that service sector will take up much of the slack as workers are forced out of downsized heavy industry and other branches.
Official figures show that China’s registered unemployment rate has hovered around 4 % for over a decade. Many people have little incentive to seek assistance or report themselves as unemployed, however. Another official unemployment survey, which the government only started to publish in 2013, looks at urban unemployment rates in 31 major cities. By this alternative measure, unemployment has remained at just over 5 % over the past three years. As official data only include the urban residents, there is virtually no information on unemployment and underemployment in rural areas or concerning internal migrants (i.e. the most flexible and mobile participants in the Chinese labour market). At the beginning of June, the consulting firm Fathom said overall unemployment in China’s economy could reach 12 % this year, up from 10 % in 2015 and around 5 % in 2013. Unemployment is a delicate subject for China’s leadership.