In China, 80 million may have lost their jobs. 9 million more will soon compete for jobs, too

The full scale of how many people lost their jobs in this country is hard to catch. Data from Beijing is notoriously opaque, and the official unemployment rate – which only tracks the unemployment rate in urban areas – has barely moved beyond 4% to just over 5% over the years.

But even official calculations have begun to register spikes. Unemployment in March was 5.9%, only slightly from the 6.2% record reported a month earlier. That would represent more than 27 million people out of work, according to CNN Business calculations using government data.

An unprecedented problem

However, the Beijing data do not include people in rural communities or a large number of 290 million migrant workers who work in construction, manufacturing and other important but underpaid activities. If the migrants are included, as many as 80 million people can get out of work by the end of March, according to an article co-authored last month by Zhang Bin, an economist at the Chinese Academy of Social Sciences, a think tank run by the government.

Other experts say that the number 80 million is probably closer to reality. It’s also far more disturbing – it means that almost 10% of people in China who are supposed to be employed actually lose their jobs, according to economists at Société Générale.

“Covid-19 shocks to the labor market are unprecedented in scale, length and nature,” Wei Yao and Michelle Lam wrote in a research report last week.

The Ministry of Commerce did not respond to requests from CNN Business to comment on this story. Speaking last month, a spokesman for the Chinese National Statistics Bureau admitted that the labor market was under a lot of pressure, but he insisted that overall employment was “stable.”

“Although coronavirus has a severe impact [on jobs]”There are no large-scale layoffs in this country,” Mao Shengyong told a news conference.

The Chinese government has never been honest about its economic woes. But the latest message from officials has explained that unemployment is huge problem.

Pushing the economy – and preventing the unemployment rate from spiraling out of control – has only become increasingly critical in recent months. In April, the Communist Party Politburo, its main ruling body, told all government officials to prioritize job security and social stability above anything else, according to the state news agency Xinhua.

Getting people back to work is important in part because authorities worry that a wave of unemployment can cause social unrest, creating massive political headaches, according to Lam, professor at the Chinese University in Hong Kong.

“Beijing’s biggest concern is not GDP growth, but employment,” he said.

‘I feel miserable’

Job seekers are not optimistic that the situation will improve soon. Wang, a technology worker from Beijing, said life seems to be hard for everyone today.

“I feel sad, but I can’t do anything,” he said. “I don’t think anyone can.”

Wang said the current environment was in stark contrast to when he graduated from college in 2015. Beijing at the time offered subsidies and other forms of financial support to beginners, which encouraged entrepreneurs to create millions of new companies. That year’s unemployment rate was around 5%.

Even before the coronavirus outbreak, Wang said the offer dried up. The technology startups where he worked in 2018 and 2019 ran out of money when Beijing tightened regulations on how they could get investment.

But now he says finding work is almost impossible. He and his friends have begun to lower their expectations, and some of them are not even sure if they can stay in Beijing.

“There were signs last year [of mass unemployment], but this year has gotten worse, “Wang said.” I don’t know when things will get better … I’ll just wait. “

There is evidence that it is increasingly difficult to find work. Job vacancies dropped by 28% in the first three months of 2020 compared to the fourth quarter of last year, according to a recent survey by the China Labor Research Institute and Zhaopin.com, one of the largest workplaces in China. Meanwhile, competition is getting tougher: The number of job seekers jumped by almost 9% in the first quarter, the survey showed.

And companies in the Chinese service sector – which account for nearly half of all jobs in the country – reduce workers at record levels in April, according to survey data released Thursday by media group Caixin and research firm Markit.

“I feel that the job market is shrinking rapidly,” said Yi Feng, 32, who lost his job in March at a logistics company in Shanghai. Yi asked CNN Business to use an alias for him, which he chose, adding that he was afraid to speak openly about the problem would be the same as burning a bridge with a potential employer. “It’s very difficult to find work now, because most companies have frozen their recruitment since the end of March.”

The entry of job seekers

The landscape may become increasingly difficult in the coming weeks. Beijing expects around 8.7 million people to graduate from colleges and universities this year, creating more competition for work.

“Towards my graduation, I had thoughts of becoming a journalist. But this year it was really too difficult,” said Andrea Yao, a 22-year-old senior at the Chinese Communication University in Beijing. He said he should have interviewed a newspaper in Wuxi last month, but could not leave because he could not get the “health code” needed to enter the city.

Yao told CNN Business that he contacted 61 companies about work, but only five asked for a resume. Many companies want candidates who already have experience.

Recently, “when I took the subway to [an internship]”I suddenly felt an explosion of anxiety in my heart when I thought about the fact that I hadn’t finished work,” he said.

Others say coronavirus has disrupted their plans. Li Cuiyu, who graduated from Beijing-based Chinese Agricultural University with a master’s degree, said he wanted to become a civil servant so he could get a much coveted “hukou”, or household registration permit, in the Chinese capital. But the annual exams required for the work were postponed because of the plague.

While Li is considering other options – he has been looking for work in a foreign company in Beijing, for example – that is also not easy.

“There are not many recruitment advertisements out there, and some foreign companies have already laid off staff,” he said.

Help from above

But the authorities still have a tough task ahead of them because they are trying to help others who have lost their jobs.

“A particular concern is that the safety net does not capture the most vulnerable,” wrote Mark Williams, Asia’s chief economist for Capital Economics, in a recent research note.

All employers in China are legally required to provide unemployment insurance. But less than half of the urban workforce was covered by the program at the end of last year, according to data from the Ministry of Human Resources and Social Security. And experts, including economists at Société Générale, have noted that this program is not equipped to deal with a massive surge in unemployment.

The government seems to have acknowledged this problem, Williams added, because it had recently promised to help those without access to insurance.

But other experts have pointed out that there are other challenges facing Beijing when trying to push its citizens back to work.

Some experts say that policy makers in China must put more effort into ensuring that people can meet their basic daily needs. Economist Société Générale, for example, says “a more direct but bold step” is to give cash directly to low-income households, to avoid the need for unemployment insurance programs.

Even Zhang, economist for the state think tank, submitted a similar proposal. He said the government’s response to the economic impact of the virus – which amounts to tens of billions of dollars in financial aid and stimulus – must include giving cash to the poor.