China Faces Employment Crisis; Recent Graduates, Rural Migrants Among Hardest Hit

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Despite record-shattering economic growth rates and swift industrialization, a major jobs crisis is brewing in mainland China, reports China Economic Weekly. The number of people entering the job market this year is expected to reach 17 million and the labor surplus could reach 14 million, according to an April report by the National Development and Reform Commission (NDRC).

China has experienced only two other major jobs crises in recent decades, in the 1970s and the 1990s. The current increase in job seekers has been attributed to surplus production capacity, increasing trade frictions, and revaluation of the Chinese yuan. The unemployment surge, which affects mainly recent graduates, technical workers, and demobilized soldiers, is expected to peak in September and last for up to two years.

According to the NDRC, an estimated 25 million additional jobs will be needed in China’s urban areas this year to meet the demand from some 9 million new workers, 4.6 million laid-off government workers, 8.4 million registered jobless, and 3 million surplus rural laborers and retired servicemen. At current rates of economic growth and employment, however, NDRC estimates that only about 11 million jobs—the peak number that have been created this past decade—could be generated in urban areas this year. This would result in a surplus labor force of 14 million job seekers, or 1 million more than last year. 

Over the last five years, the two major demographic groups entering the job market have been rural migrants and college graduates. Millions of new graduates now face limited employment options, and the likelihood of being unemployed or being forced to accept low-paid work is expected to only increase. According to China’s Ministry of Education, 4.13 million students will graduate from universities and colleges in 2006, 750,000 more than last year and three times the number in 2001.

China’s overall unemployment rate is projected to hit 4.6 percent in 2006, according to Xinhua News Agency. Worldwide, the International Labour Organization reports that unemployment fell from 6.5 percent in 2003 to 6.3 percent in 2004.