BOFIT Viikkokatsaus / BOFIT Weekly Review 2019/03
With the slowdown in economic growth, the employment situation appears to be weakening. While official unemployment figures consistently show urban unemployment just below 5 %, other information suggest the employment situation has deteriorated substantially since summer.
China’s official purchasing managers’ indices (PMI), which are based on company surveys, and their sub-indices concerning employment show that the employment situation in both the manufacturing and service sectors deteriorated substantially during the autumn. Readings for both sub-indices are now around 48. Indeed, only in the construction sector the employment sub-index is still above 50. The last time the employment situation in the manufacturing and service sectors was this weak was in 2016, when China’s actual economic growth is estimated to be much lower than official figures suggested.
The deteriorating employment situation is further evidenced by official promises of extraordinary efforts to support employment. China’s official news agency Xinhua reports that the government is considering cuts in social security contributions and reimbursing corporations that refrain from laying off workers. Securing employment was declared a top priority of 2019 at the Central Economic Work Conference held in Beijing in December. Media reports claim conference participants also agreed to lower this year’s GDP target from last year’s “about 6.5 %” to a range of 6-6.5 %.