Mar 05, 2010 04:10 PM

Survey System May Clarify Jobless Picture


(Caixin Online) Among all the official indicators of China's economic well-being, the registered unemployment rate – the jobs figure that fluctuates the least – can be the hardest to trust.
It's also an economic indicator that's received unusually blunt criticism over the past year, which is why officials are rolling out for the public a jobless survey system with a better track record. The survey has been used for years by the government, and the first results are expected to be publicly released next year.

Critics of the current ratings method rose in full force last year after the government, despite the financial crisis, reported an urban registered unemployment rate of 4.3 percent. That figure seemed completely out of sync with what domestic economists were calling "the most difficult economic year for China" in the 21st century.

The registered unemployment rate has hovered around 4 percent since 2002, right through last year's economic crisis. Even during the so-called "overheated" domestic economy of 2007, it held at 4 percent.

This lack of variation through good times and bad has hurt the rating system's credibility. Some officials have called it just plain wrong.

"The registered unemployment rate is not accurate," an official with the Employment Promotion Division at the Ministry of Human Resources and Social Security (MOHRSS) told Caixin. "We know that."

Meanwhile, the unemployment survey system has been under development for the past six years. At present, the Population and Employment Statistics Division of the National Bureau of Statistics is responsible for data, taking samples every second and fourth quarter.

An official from the National Bureau of Statistics told Caixin that semiannual and monthly surveys of unemployment data are currently submitted only for internal use to the National Development and Reform Commission, MOHRSS, and State Council agencies. Data is used to analyze the economy and employment before government officials craft corresponding policies.

The MOHRSS source said, "For government macroeconomic regulation, the registered unemployment rate is not the indicator used for making decisions."

Not all levels of the government are privy to this detailed information. "Since the Bureau of Statistics does not have very close contact with the People's Bank of China, the central bank does not look at this data," an insider said.

The latest survey, which is based on data compiled since 2005, should shed new light on the current jobless picture when it is released in 2011 – the first year of the government's 12th Five Year Plan.

Counted, Uncounted

The unemployment survey and its public release are expected to make it easier to anticipate market trends, helping policymakers. Moreover, more light will be shed on the nation's labor pool, including migrant workers.

A key shortcoming of the urban registered unemployment rate system is that it excludes migrant laborers and other unregistered workers whose actual workplace lies outside their official home regions, as designated by China's household registration, or hukou, system. It also fails to account for anyone unemployed who has not registered with the government.

The unemployment survey, however, takes into account members of the economically active population who qualify as "unemployed." The survey counts workers who have lived in a certain location only six months and does not require an official hukou registration, migrant laborers are included.

Since the current employment situation in China is grim, and the labor market is undergoing rapid change, any improvement in unemployment tracking would be welcome.

"Originally, the indicators for macroeconomic policy for the most part did not take employment into account," said Zhang Libin, director of the Employment and Labor Market Department at the MOHRSS Labor Research Center. "The major factors were economic growth and investment data.

"If you really want to continue giving priority to employment," Zhang said, "the unemployment survey should be investigated."

Zhang said loose ends in the survey unemployment rate still need to be tied up before it's published.

MOHRSS spokesperson Yin Chengji said it's methodology differs dramatically from the registered unemployment rate system. For example, Yin said, the current system and the survey rely on different statistical methods, indicator definitions and scopes of investigation.

Raw data suggests the unemployment survey has found joblessness to be about 1 percentage higher than the urban registered unemployment rate. And the two rating systems generally reflect similar employment trends.

A source told Caixin, however, that the difference can fluctuate greatly when the economy is weak, and less when the economy is doing well. "If the difference between the two is always only one or two percentage points, there would be no need to implement the unemployment survey," the source said.

It's unclear whether survey results during the 12th Five Year Plan period will be reported monthly, quarterly or semi-annually. One source familiar with the survey said he favors quarterly reporting, calling it most suitable for China.

"Monthly would be very difficult, and the high frequency of data collection might influence the quality of the report," the source said. "On the other hand, conducting the survey only twice a year might not be enough to recognize changes in the economic situation."

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