Spectre of joblessness puts focus on Beijing as it sets new 5-year plan

– World news selected by Gazette editors for Phuket’s international community

BEIJING: Job destruction from a slowing Chinese economy and reform of bloated state enterprises will put pressure on policymakers to come up with measures to create employment as Beijing finalizes its plan for China’s development over the next five years.

The release of the 13th Five-Year Plan will coincide with the start of the annual meeting of parliament on March 5 where thousands of delegates will gather in Beijing.

Premier Li Keqiang is expected to announce China’s economic goals – including the government’s gross domestic product target for 2016 – in his yearly work report.

The world’s second-largest economy grew 6.9 percent last year, the slowest in more than two decades, and analysts see a further cooling to around 6.5 percent this year. Some China watchers believe real growth is already much weaker than official data suggests.

China’s central bank on Monday injected another $100 billion worth of long-term cash into the economy to cushion the pain from expected job layoffs and bankruptcies in some industries.

If China follows through on its promises and starts to cut its industrial overcapacity, workers in provinces such as Shanxi, Hebei and the “rustbelt” region in the northeast are likely to bear the brunt of the pain.

China expects to lay off 1.8 million workers in the coal and steel industries, the government said on Monday, without giving a timeframe. Beijing has said it will allocate 100 billion yuan ($15 billion) over two years to relocate workers laid off in sectors including steel.

Duan Tinglin, from the northeastern industrial powerhouse of Heilongjiang, has been coming to Beijing every winter to look for work. This year’s job hunt is much harder than in previous years, said the 39-year-old unemployed migrant.

“To find a job that is really fit for someone is quite difficult,” said Duan. “Why? Because I’m just an average laborers, and in the capital, supply exceeds demand for your average laborers.”

Chinese factories shed jobs at the fastest rate in seven years in February as weaker orders forced them to downsize and cut costs, according to a private business survey by Caixin and Markit on Tuesday.

STABILITY

China says its urban jobless rate has remained largely stable in recent years. It was at 4.05 percent at the end of 2015, despite the slowing economy.

Many economists believe the real jobless rate is far higher, but note several factors have been working to keep the headline figure down, including China’s one-child policy, which has led to a steady drop in the population of working-age adults.

Analysts also say local officials have been keen to claim they are still keeping people employed, pressuring companies to refrain from cutting staff in the name of social stability, even if they have to idle workers on half-pay or deferred pay.

Still, the government admits China’s investment-fed model of growth has reached its boundaries, and it has put sharp reductions in industrial overcapacity and high debt levels at the top of its agenda. Beijing has also vowed to shut perennially loss-making “zombie” firms.

The tricky part is to do all that without risking massive layoffs that could trigger widespread social unrest.

MIGRANT WORKERS

Unemployment is an important issue for the Communist party, whose economic policies have increased the material well-being of a generation of people unaccustomed to the poverty and deprivation their parents and grandparents faced.

In the factory town of Changping in Guangdong province, scores of migrant workers were returning to work on production lines after the long Lunar New Year break.

“A lot of factories are closing, and it’s not so easy to find a job now that is stable,” said Yin Jun, a 23-year-old from Sichuan province.

“Workers are important too. The government should pressure them (factory bosses) to pay wages on time and not cheat us.”

The government has urged migrant workers – totaling more than 200 million – and China’s large number of college graduates to be self-employed. That includes starting their businesses in smaller cities or rural areas.

“The employment of migrant workers, growth is around zero which means employment didn’t increase in 2015,” said Ernan Cui, a Beijing-based analyst at Gavekal Dragonomics.

“We don’t see any structural changes that could lead to better news for low-end workers. They’re just falling down with the rest of the economy.”

Unlike manufacturing, the services sector has been steady job creator and fits into Beijing’s goal of having consumption drive a larger share of economic growth, but workers cannot easily move from one sector to another without retraining.

“Most service sector jobs are in retail and catering, working in restaurants,” Cui said. “For those two sectors, new job creation has been growing extremely fast in recent years.”

“But we can’t tell whether a person who loses a job in a coal mine will be able to find a job in a restaurant.”

— Phuket Gazette Editors