China's Unemployment Rate Down For The Count
The Age
Monday May 5, 2008
VICE-Premier Zhang Dejiang has warned that China's employment situation is "grave" and that the country desperately needs job creation policies to get its college graduates into work.
Meanwhile, factory bosses all over the country are screaming that they can't find enough workers and their wage bills are going through the roof. Perhaps Zhang refuses to face the fact of China's rapidly tightening labour market because he is a particularly inflexible conservative. In the three years to 1980, when the rest of the country was reversing course towards an open, market-oriented economy, Zhang was studying for his economics degree at Kim Il-sung University in North Korea. More likely, however, an old-style propaganda specialist like Zhang has missed the single greatest success of his own government because he is being badly advised. It's hard to think of economic information that would be more valuable to China and the world right now than a reliable series on Chinese unemployment and wage rates, particularly one that focused on the urban private sector economy. Unfortunately, there's no such thing. China's ever-expanding bureaucracy has left this work to economists such as Cai Fang and Du Yang, at the influential Chinese Academy of Social Sciences, and Oxford University's Albert Park. Their new paper, "Can China Meet Her Employment Challenges?", analyses 2005 mini-census results to show urban unemployment fell from 8.1% to 5.2% between 2001 and 2005 - even as millions of state sector workers were retrenched and tens of millions of new rural migrants poured into the cities. The economists also calculated that these unemployment rates were 3% higher than they would have been if the census had used an unemployment definition that was consistent with international standards. "If one adjusts for the upward bias in the census estimate relative to international norms, the unemployment rate was less than 4%," say the authors. The three economists also show unemployment has fallen just as rapidly among young Chinese as the older age groups and that the wage returns for education are rising - debunking the theory of Vice-Premier Zhang that China is not creating jobs for its hugely expanding population of new college graduates.There are still far too many unemployed people living in China's mega-cities, of course, but the challenge is now in the league of cities like Melbourne or New York rather than what might be expected from a giant country in rapid transition. Arguably, creating adequate work opportunities for rural Chinese is an even greater challenge.Rural employment is particularly difficult to measure because peasants are much more likely to be under-employed on their own plots of land than out of work altogether.
© 2008 The Age