20 February 2019
The surveyed urban unemployment rate does not include the rural population, migrant workers and fresh graduates. Photo: Reuters
The surveyed urban unemployment rate does not include the rural population, migrant workers and fresh graduates. Photo: Reuters

China turns to new job indicator

China’s surveyed unemployment rate in 31 large and medium-sized cities stood at 5.17 percent at the end of March, a slight decline from a month earlier, the National Development and Reform Commission announced at a news conference last week.

It was not the first time the government released such data. In August last year, the NDRC said in a statement posted on its website that the country’s surveyed unemployment rate was 5 percent in the first half of 2013. A month later, Premier Li Keqiang cited the figure in his article published on the Financial Times ahead of his visit to Europe.

For decades, China has used the registered urban unemployment rate to monitor its labor market. But the indicator does not quite accurately reflect the situation because it does not include those jobless people who don’t register with the authorities. It also does not include the rural population, migrant workers and fresh graduates.

This inaccuracy can be seen by the little fluctuation in the registered unemployment rate, which always hovered around 4 percent, betraying how people feel about the job market. In 2009, a year when massive layoffs were common, the rate stood at only 4.3 percent.

To solve that problem, authorities have been working on the surveyed rate since the late 1990s. The figure was based on surveys of labor-age population. They were first conducted in a small number of selected cities and among selected labor groups. Previously, the result was sent to selected government departments for their reference in designing policies, but was not announced to the public. According to insiders, the rate stood at 6.02 percent in 2003, came down to about 5 percent from 2005 to 2007, but climbed back to 6 percent in 2008 and 2009 before stabilizing at 5 percent in the following years.

Now that the figure is made public, it shows a few points.

First, unemployment figures are a decisive indicator policymakers look at in designing their policies. They are keen to maintain a certain level of economic growth mainly because of employment concerns. They are afraid insufficient employment will pose a threat to social stability. One of the latest proof of the thinking was Li’s recent visit to Chongqing, where he told ordinary workers at a port that “what concerns me most is employment”.

Second, policymakers are increasingly putting the registered urban employment rate in the back burner. With the statistics agency gradually improving the calculation of the surveyed rate, which is commonly used internationally to gauge the job market, policymakers are now using this indicator. The indicator is updated monthly and covers at least 31 cities.

It is expected the surveyed rate will replace the registered rate as the major job indicator in a few years. This represents remarkable progress in China’s measurement of the labor market. The methodological change shows that policymakers, instead of hiding the real picture, are willing to face reality and make it public.

Third, the surveyed rate still fails to reflect the full picture of China’s job market, as some old problems persist. The rural population is not included, migrant workers are not covered, and most likely fresh graduates are not part of the the survey either.

In this sense, the surveyed rate is just the tip of the iceberg, reflecting only a small part of the picture. Also, the figure, which is supposed to monitor urban employment, cannot fully tell the situation in cities. The survey base is limited to 31 large and medium-sized cities. Smaller cities, where unemployment rate could be higher due to fewer job opportunities and a larger number of unskilled urban population, should also be included.

Last but not least, if the latest surveyed rate is to be believed, the Chinese job market is tougher this year. The surveyed jobless rate climbed to 5.17 percent by the end of March from 5 percent in the first half of last year. Meanwhile, the registered unemployment rate stood at 4.08 percent by the end of March, remaining flat compared with the level of last year. Clearly, the surveyed rate has turned out to be more accurate.

– Contact the writer at [email protected]


The writer is an economic commentator. He writes mostly on business issues in Greater China.

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