Redefining Unemployment Statistics

January 13th, 2011 | Beijing Review

Rural migrant workers are counted in China’s official urban unemployment rate

Rural migrant workers are a major work force in Chinese cities. Their employment is usually temporary and sensitive to economic fluctuations. They were not included in official urban unemployment statistics, but that has changed.

Starting in January 2011, rural migrant workers are counted in unemployment statistics.

At the end of November 2010, the Ministry of Human Resources and Social Security (MHRSS) issued a circular on establishing a national employment information monitoring system. Local employment service agencies are required to collect and submit monthly report on labor force information, such as basic personal data, household registration status, address changes, as well as employment and unemployment status, via an Internet platform.

Long-awaited reform

Unemployment will be a long-term and big economic and social problem in China, said Zhou Tianyong, a professor at the Party School of the Central Committee of the Communist Party of China.

China is under huge employment pressure. In 2009, an estimated 30 million unemployed rural migrant workers, and more than 9 million college graduates needed jobs, Zhou said.

In addition, China’s ongoing urbanization process will move a large number of rural surplus laborers into cities in the next three decades, Zhou said.

Due to factors such as the colossal size and high mobility of the labor force, China’s current unemployment situation is more difficult to size up than before, said Hui Shuangmin, a researcher at the Economics Department of the Chinese Academy of Governance.

In recent years, unemployment rates released by different organizations in China often do not match up.

For example, on December 16, 2008, the Chinese Academy of Social Sciences (CASS) published its annual Blue Book on China’s Society, saying China’s urban unemployment rate reached 9.4 percent in the year. In March 2009, MHRSS announced China’s urban unemployment rate in 2008 was 4.2 percent.

Some scholars estimate China’s unemployment rate in 2009 was 14.2 percent or even a staggering 33 percent.

The discrepancies arise from different statistical methods, said Zhang Chewei, Deputy Director of the Institute of Population and Labor Economics of CASS.

CASS’s unemployment data were obtained from surveys, whereas the official unemployment rate released by MHRSS is the registered urban unemployment rate, Zhang said.

China has had a registration system for jobless people since the early 1980s. At that time, China was under a planned economic system when jobs were assigned by the government.

As China has shifted from a planned economy to a market economy, the government no longer assigns jobs. In 1994, the index “job waiting rate” was changed to “urban registered unemployment rate.” People without jobs need to register with labor authorities to claim unemployment insurance.

The registered unemployment rate only covers unemployed urban residents who have registered with labor authorities. People with flexible employment such as the self-employed and rural migrant workers are not taken into account.

Before 2003, laid-off workers were not included in the registered unemployment rate either, said Cai Fang, Director of the Institute of Population and Labor Economics under CASS.

For years, China’s registered unemployment has hovered around 4 percent. But statistics reported by labor authorities alone are not enough for assessing the real employment situation, said Zhang.

The registered unemployment rate can be a misleading indicator of China’s employment situation, said Yang Yiyong, Director of the Institute of Sociology of the National Development and Reform Commission. In 2007, for example, the surveyed rate suggested the situation was dire, whereas the registered rate did not, he said.

This indicator makes China’s unemployment rate appear lower than many other countries in the world; it prevents government leaders from feeling the pressure the public is subject to and misleads the government in setting price controls and employment promotion policies, Zhou said.

“In whatever sense, we should thoroughly reform this unemployment indicator,” Zhou said.

New measurement

With the launch of a new national employment information monitoring system, experts are calling for replacing the existing official registered unemployment rate with a surveyed employment rate.

When comparing different unemployment statistics, the International Labor Organization (ILO) said labor force sample surveys are “the most preferred method of unemployment rate calculation” since they give the most comprehensive results and enable calculation of unemployment by different groups. This method is the most internationally comparable.

Currently, many countries in the European Union and the Organization for Economic Cooperation and Development (OECD) report surveyed unemployment rates largely according to the ILO’s definition.

Director Yang suggests setting up an independent monthly unemployment survey system and stepping up the monitoring of job losses.

Timely monitoring of the unemployment rate helps people manage employment risks, Yang said.

At a national conference on statistics held in early 2010, it was said that unemployment surveys will officially be conducted in 2010-15. So far, the National Bureau of Statistics has been tight-lipped on the latest progress.

An unnamed MHRSS official suggested in the future, data reported by employment service agencies should be combined with data reported by employers and data collected via sample surveys of employers and the labor force.

“The surveys should cover various groups including the self-employed and rural migrant workers,” the official said.

Including rural migrant workers in unemployment statistics may raise or lower the urban unemployment rate, said Cai.

How much they can affect the rural unemployment rate depends on their ratio in the rural labor force and the economic situation, Cai said.

In good years, as rural migrant workers are willing to accept any kind of job, their unemployment rate is very low. During economic downturns, they are often the first to lose jobs, Cai added.

Greater supports

The national employment information monitoring system is set up at national, provincial and municipal levels, according to the MHRSS circular. Employment information will be submitted from the bottom up.

An Employment and Unemployment Registration Certificate will also be issued starting in 2011, to replace similar employment status certificates issued earlier, such as the Reemployment Preference Certificate.

Compared with previously issued similar certificates, the new certificate bears more information, and contains a national standard code. With this certificate, job seekers looking for work in other regions are entitled to the government’s employment support incentives.

The Ministry of Finance and MHRSS stipulated in newly released employment preferential tax policies that employment and unemployment registration certificate holders who meet certain conditions can, within three years, deduct a maximum of 8,000 yuan ($1,194) each year for each household from their taxable income when paying business tax, urban maintenance and construction tax, education surplus tax and personal income tax for that year.

For taxpayers whose taxable income in that year is less than the deduction limit, the deduction limit should equal their taxable income.

The employers hiring holders of employment and unemployment certificates can also apply for preferential tax status for recruitment by presenting the certificates of their employees.

Previously, such preferential self-employment tax policies covered only laid-off workers in cities and a small number of urban groups in extreme hardship. Now it will be extended to all who have been unemployed for more than half a year and registered with public employment service agencies.

The new policies cover laid-off workers, college graduates, rural migrant workers, hard-to-employ people and families with no member working, as well as any labor-aged member of urban households entitled to a minimum living stipend who has registered as unemployed.


China Labor Force and Employment Data

By the end of 2009 China’s total population had reached 1.33474 billion (excluding that of the Hong Kong and Macao Special Administrative Regions and Taiwan Province), which contains a labor force of 1.06969 billion persons, 112.67 million more than in 2000; the number of employees had reached 779.95 million, of whom 311.2 million were urban employees, increasing 59.1 million and 79.69 million, respectively, compared with the year 2000.

With China’s economic development and industrial structure adjustment, the proportion of those employed in primary industry has dropped significantly while that in tertiary industry has risen greatly. In 2009 the proportion of employment in primary, secondary and tertiary industries changed to 38.1 percent, 27.8 percent and 34.1 percent, from 50 percent, 22.5 percent and 27.5 percent, respectively, in 2000.

By the end of 2009 there had been over 10,000 public employment and human resources service institutions at or above the county or district level nationwide, and 37,000 service centers at the sub-district, town or township level, covering 97 percent of the country’s sub-districts and 89 percent of its towns and townships.

The government has improved its functions in public employment and human resources service, providing free services such as policy information, release of supply and demand information of the market, information about job vacancies, vocational guidance, employment assistance and entrepreneurship training, and providing such services as social security management, archive management, examination and certification, and specialized services.

(Source: White Paper on China’s Human Resources, issued by the State Council Information Office in September 2010 in Beijing)

Category: Featured Articles, Labour