Unemployment has become a ticking time bomb inside China’s corridors of power.
Premier Li Keqiang has made creating and safeguarding jobs the top priority for Beijing’s policy-makers after a State Council executive meeting earlier this week.
Along with his big boss President Xi Jinping, he has every right to be concerned as pressure mounts on the world’s second-largest economy.
A byproduct from an uneven post-pandemic recovery has been rising youth unemployment or those aged between 16 and 24.
In July, the figure hovered above 16% from 15.4% in June, according to data released by the National Bureau of Statistics.
“[We must] strengthen employment assistance for key groups such as college graduates, migrant workers, and people in need,” Li said as reported by the official Chinese government website.
- Unemployment in the category for 16-to-24-year-olds was 16.2% in July.
- That was nearly 1% up on June’s number.
- The youth jobless rate was also more than three times higher than the overall unemployment figure of 5.1% in July.
- But migrant workers were not included in the statistics.
- The data reflects a dip in China’s economy after factory activity and retail sales slowed.
- Sporadic outbreaks of new cases of Covid-19 have triggered flash lockdowns across the country since the end of June.
- Massive flooding in crucial economic regions such as Henan has also cut growth.
- Ballooning local government debt linked to state-owned conglomerates is another problem lurking in the shadows.
What was said: “Fiscal and monetary policies have to be strengthened to support employment in labor-intensive industries, [as well as] online and offline service industries,” the State Council, or China’s cabinet, said.
Reaction to the news: “Going forward, the government will need to take action as guided by the Politburo meeting, step up employment services to college graduates, make it easier for migrant workers to go out to work, and better protect the rights of workers employed by the gig economy,” Bruce Pang, of China Renaissance Securities Hong Kong, said as reported by the South China Morning Post.
School is out: A record 9.09 million students will graduate this year, putting pressure on the labor market as economic growth slows.
Delve deeper: Big Tech has been a breeding ground for discontent with millions of low-paid gig economy workers suffering sweatshop conditions. Most of these migrants are not even paid the minimum wage and have zero health cover as reported by China Factor.
Big picture: White-collar workers in the technology sector are also disillusioned with the 996 culture. Many are expected to work from 9 am to 9 pm, six days a week.
China Factor comment: The scourge of unemployment has become a major risk for the ruling Communist Party regime. Addressing the problem is now a top priority for the CCP in maintaining social stability.