Monday, February 2, 2009

How Serious is the Unemployment Problem?

Previous official estimates of unemployment among China's migrant workers were about 10 million. Jamil Anderlini writes in today's Financial Times that, "the figure of 20m unemployed migrants is double the previous official figure released by the Ministry of Human Resources and Social Security at the end of December" (emphasis added). He adds:

Government figures show that in recent years 6m to 7m new rural migrant workers a year have poured out of the countryside to fill the factories, construction sites and restaurants of the booming cities, which means the government must actually deal with as many as 27m new jobless in the countryside.

On top of that, a survey by a government think-tank in December estimated 1.5m recent tertiary graduates in China were unable to find work by the end of November and universities and technical colleges are expected to churn out another 6.5m graduates this year.

Underscoring the potential for instability that could result from unemployment, this article in the Sunday Times lists a number of violent incidents that have thus far managed to go unreported by state-owned media in China. While only anecdotal, the suppression of reporting on these types of incidents leaves one to wonder what else is going unreported.

(Which, incidentally, reminds me that there was a time in which China would release statistics on mass incidents. However, it seems that such statistics stopped being reported several years back. The last figure that sticks in my mind is 87,000 in 2005. Did I miss anything?)

On the other hand (I know, I'm starting to sound like an economist), while the recent statistics sound scary, these 27 million migrants are not all returning to the same village. There are nearly a million villages in China, so the returned migrants are pretty well dispersed. If local authorities were able to effectively handle 87,000 incidents in 2005, there seems little reason to believe they cannot reasonably handle a little more.

The authorities are probably much more concerned about the 1.5 million or so unemployed college graduates who are waiting around for their years of studying to pay off. They tend to be more geographically concentrated than migrant workers, and better at spontaneous organization (though just as prone to factional infighting as the country's leaders, as was demonstrated about 20 years ago).

UPDATE: Victor Shih posted this piece today on RGE Monitor in which he combines unemployment figures of returned migrants, students and urban unemployed. Nationwide, the total is nearly 37 million.

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