During the 2008 financial crisis, more than 20 million people in China were laid off, with the official unemployment rate reaching a peak of 4.7% in 2009. Since then, official unemployment in China has remained steady, hovering around 4.6% until 2015 and reaching a decade low of nearly 4.2% in 2018.
China has been able to maintain relatively low numbers in unemployment through an increase in investment in its social policies. Since the 2008 financial crisis, its jobless claims program funding nearly tripled to $82.37 billion. In 2016, China also signed an agreement with the International Labor Organization through the Decent Work Country Program, pledging to focus on generating a better social protection system and increasing the “quantity and quality of employment,” among other objectives, through the end of 2020. However, COVID-19 has interfered with these plans.
Impact of COVID-19 on Unemployment
China has over 84,000 confirmed cases of COVID-19 with more than 4,600 reported deaths as of May 14, 2020. Since its first case in December of 2019, China has taken drastic measures to reduce the spread of the virus. This lead to a 6.8% drop in its GDP from January to March. Many business were also forced to close. While some industries have now reopened, China’s economy is still far from operating at full capacity and has been left with a grudging consumer base.
There was an estimated increase in unemployment in China by three million people as the rate increased from 5.2% in December 2019 to 5.9% in March 2020. However, there was no increase in the number of unemployed receiving benefits. To make matters worse, this is only what has been officially reported and does not include rural migrant workers. Including migrant workers would change the recent peak in unemployment from roughly 6% to nearly 20%.
Additionally, millions have been working without a contract, working without paying into their unemployment insurance or have not worked long enough to collect, leaving them without access to unemployment insurance. Those who do receive an unemployment check are being sent less than minimum wage each month, leaving many unable to pay rent.
Responses to Unemployment in China
The Chinese government recognizes the extreme troubles millions of its citizens are experiencing. They have mandated government officials to “prioritize job security and social stability above anything else.” Already China has been supporting small businesses through an increase in lending, as well as providing subsidies and tax breaks. Additionally, the government has given 67,000 jobless migrants a one-time payment with an additional 2.8 million more people receiving unemployment benefits (averaging $571 per person) and another 5.78 million people receiving subsidies to combat inflation. Those unable to receive unemployment insurance do have the opportunity to apply for financial assistance depending on their income.
As of early May, close to nine million college and university graduates are expected to enter the workforce, further adding to the workforce competition. In response, the Ministry of Education in China has announced plans to help alleviate the additional pressure from graduates entering the workforce. Over the summer, the Ministry of Education looks to create more opportunities for graduate education and teacher positions, as well as to encourage “small, medium-sized and micro enterprises to recruit more college graduates.”
As COVID-19 continues to be a significant problem around the world, it is essential that countries address the poverty and unemployment that the pandemic exacerbates. Moving forward, China and other nations must continue to create policies and programs designed to protect the impoverished.