While the Covid-19 pandemic has slowed in China its impact to the economy and job market could be far reaching.
The pandemic delivered a heavy blow to a Chinese economy that was already struggling to manage downward pressures and a weakening job market. Economists widely project that the economy is contracting in the first quarter, dragging projected 2020 GDP growth down to 4% or even lower. Based on 2018 and 2019 data, every 1 percentage point of GDP growth affects more than 2 million jobs.
China’s official urban employment rate jumped to a record 6.2% in February from 5.3% in January. During the first two months of 2020, 1.08 million new jobs were added in China’s urban areas, down 660,000 from the same period last year.
The February surge in unemployment reflects massive business suspensions and workforce cuts, according to Zhang Yi, a senior official at the National Bureau of Statistics. Industries including retail, catering, accommodations, transportation, logistics and entertainment have experienced the biggest job losses, Zhang said.
At two cabinet meetings in March, Premier Li Keqiang repeatedly called for efforts to stabilize the job market.
Compounding the challenge is that the structure of China’s job market has changed profoundly since the 2008 financial crisis. The number of migrant workers, who are mainly employed in construction and manufacturing, has declined sharply over the past 10 years as the older generation retired. In 2019, 2.4 million new migrant workers entered the job market, down from 10 million each year a decade ago.
Consequently, policymakers can’t just flip a switch to spur hiring in labor-intensive sectors such as property and infrastructure as they could a dozen years ago.