In the year of 2009, the biggest problem China has to face is the drastic increase in unemployment. The unemployed people, especially the unemployed migrant workers, may bring great negative effect upon China’s social stability.

The financial crisis has not seen its end. It has swept nearly every corner of the world. In China, the financial crisis has forced thousands of labor-intensive enterprises to go bankrupt in China. At the same time, hundreds of thousands of migrant workers lose their jobs or have to “enjoy” the so-called long vacation.

The latest official data shows that there are 130 million peasants who go to cities for work in China (they are called migrant workers or pinyin mingong). About 20 million of them have lost their jobs and gone back to their hometowns. From the Chinese Spring Festival to May or June 2009, the number of unemployed migrant workers will increase. Simultaneously, the unemployment rate in urban areas has reached 9.4% and 6.1 million graduates will join in the army of “looking for jobs”. The situation is really serious.

It is generally believed that the biggest problem of China’s economy in 2009 is the drastic increasing number of the unemployed people. The unemployed people, especially the unemployed migrant workers, may mean harm not only to the economic development, but also to the social stability. This is what the government mostly cares. 

20 Million Migrant Workers Return Home

On February 2, Chen Xiwen, head of the office of the Central Rural Work Leading Group of CPC gave out a message in a press conference held by the State Council, saying: “about 15.3% of the 130 million migrant workers lose their jobs found no new jobs because of the financial crisis in China. The definite number is close to 20 million.”

Chen Xiwen’s data is based on a sampling investigation made by the Ministry of Agriculture (MOA). At the beginning of January 2009, the MOA made a sampling investigation in the 150 villages of 15 provinces where a larger number of migrant workers come from. The result showed that the number of migrant workers returning to hometowns took 38.5% of the total quantity. About 60.4% of the returning migrant workers went home to enjoy their Spring Festival and went back to work after a seven-day or longer holiday. The other 39.6% are the ones with no jobs available after the holiday.

However, the number of the unemployed migrant workers, who choose to stay in the city with the hope of looking for a new job, is not included in the total quantity. But still, the number is also much higher than the previous one, which means the financial crisis has impacted the migrant workers’ employment rather severely.

In the past, the migrant workers usually chose to go back home two or three days ahead of the Spring Festival (usually in January or February). However, some migrant workers had to go back home in November 2008, nearly three months ahead of summit the passenger transport around the Spring Festival. According to the unofficial data, there were about 13 million migrant workers going back home earlier and most of them were jobless.

The Ministry of Human Resource and Social Security (MHRSS) finished the Latest Survey Report of the Impact of Financial Crisis on Employment in December 2008, which showed that till the end of November there were 4.85 million migrant workers returning home earlier in Sichuan, Hebei, Anhui and the other seven provinces, taking 5.4% of the people who left their hometowns for jobs in the cities in September. Then, according to the data from the National Bureau of Statistics, about 5% to7% of the migrant workers from Sichuan, Henan, Anhui, Hubei and Hunan went home earlier.

On February 1, Chinese Premier Wen Jiabao, when interviewed by Financial Times, said that there were 12 million unemployed migrant workers in China.

Some experts think that the publication of such a huge number is good for China’s government in diplomacy. Most media from the western countries believe that China’s government can envisage this situation by making the data open to the public. It also shows that the government has confidence and determination to beat  it.

However, the situation is deteriorating. Data shows that the economic growth rate of China has decreased to 6.8% in the fourth quarter of 2008, which is the lowest in 7 years. January 2009 is the sixth straight month in which the output of China’s manufacturing industry decreased. The circumstance shows that it is not quite easy to handle the unemployment.

A report from the MOA shows that many migrant workers go back to the cities for new jobs after the Spring Festival which will certainly make the employment contradiction more acute. Due to the financial crisis, the number of enterprises’ order forms keeps decreasing. The enterprises may face their toughest period from the Spring Festival to this May or June. It is also the toughest period for the migrant workers to look for new jobs.

The Voice of America quoted Liu Kaiming, head of the Guangdong Institute of Contemporary Observation, saying that the customers of the export-oriented enterprises in China’s coastal areas are from Europe, Japan and the USA. The order forms from Europe and the USA are usually given in January and February and the ones from Japan are given in March. Therefore, February and March are crucial for many enterprises. If the enterprises get many fewer order forms or even no order forms, many workers will lose their jobs. And the workers who lost their jobs before can not find new ones.

The urban unemployment rate in China 2008 was 4.2% (unemployed migrant workers excluded). However, according to a report issued by the Chinese Academy of Social Science in December 2008, if the unemployed migrant workers were put into consideration, the unemployment rate of China in 2008 was 9.4% and the rate in 2009 would reach 11%.

The Most Serious Problem

Some researchers in the western countries think that the actual unemployment rate in China has already passed 10%, or even 20%. This is a shocking number. It is very dangerous for most countries if the unemployment rate is above 10%, because large-scale demonstration and unrest are very likely to happen.

US Qiaobao reported that millions of migrant workers had great difficulties in finding new jobs in the cities. Perhaps they have to go back to their hometowns to farm. But some of them have lost their farming land and some of them can not get used to the country life. Those migrant workers who can not find a legal way of surviving in cities and countries are really a hidden “bomb” for the social stability of China.

According to the overseas media’s analysis, the unemployed migrant workers cause more problems and stress for the social development compared with unemployed urban residence, whose basic life can be guaranteed by the welfare system. The migrant workers have no labor insurance, no unemployment subsidies and no substitutive income. The poverty, boringness and mental stress brought about by unemployment, as well as some bad traditions formed in the countryside, make the contradictions and unrest easier to emerge.

Liaowang Weekly under Xinhua News Agency published an article on January 6, saying that the collective protest movements will happen more and more frequently in China this year. Due to the salary disputes and the recent unemployment wave, the collective movements will be more and more frequent in China, especially in the coastal developed areas. In October 2008, the number of labor dispute cases in China was twice of a year ago.

According to the previous investigation, there are about 80 million migrant workers in the coastal areas of China. If some of them loose their jobs and can not find new ones, the stress over urban public service system and social security is much bigger.

In order to deal with such a serious problem, the government has already taken many measures, which mainly focus on the agricultural land acquisition, environment protection, migrants’ relocation and disposal of collective assets. The government emphasizes that the problems shall be tackled through friendly talk and negotiation. “Principally, no police forces will be used if possible.”

It is not hard to understand the anxiety and worries of China’s government. As of November 17, 2008, the government began to register the migrant workers who lost their jobs after working in a place for more than half a year. Nevertheless, the best solution to this problem is to keep the economic growth rate from falling and to provide enough working opportunities. From last November, China’s government put a stop for the plan of heightening the lowest wage and reduced the interest rate substantially. In November 2008, the government issued a four-trillion-yuan economic stimulus package.

Solutions Expected

In Chen Xiwen’s opinion, how is the situation of migrant workers’ employment like in the first half of 2009 depends on when the impact of financial crisis fades away and how the policies of supporting employment are implemented. In his opinion, the huge number of unemployed migrant workers is attributed to China’s economic growth pattern which depends on the foreign demand too much. Meanwhile, the stagnant urbanization and reform to residence registration system also have close relation with this problem.

When Premier Wen visited the Great Britain, he gave a talk about how to solve the problem of unemployed migrant workers. He said: “China has to attach importance to the labor-intensive industries in a very long period, because this is the capital resource of industrial upgrade and technological innovation. The government must attach great importance to the migrant workers.”

Before the Chinese Spring Festival, President Hu Jintao asked for “enlarging the space for the employment of migrant workers” and “supporting the enterprises in retaining migrant workers”. On December 20, 2008, the State Council of China issued six policies which are targeted at migrant workers’ employment, carving-out, training and social service.

On February 1, the State Council published the No.1 Document of the CPC on “promoting agricultural development and increasing farmers’ income”. This shows China still focuses on the problems of agriculture, rural areas and farmers. The document for the first time requires “the local governments of different places with certain conditions to list the migrant workers who may lose their jobs into the service coverage  of the related employment supporting policies.” This means the 6-year-old “positive employment policy”, which previously only covered the laid-off workers of the state-owned enterprises and some collectively-owned enterprises, now can help the unemployed migrant workers.

On February 5, the legislative department of China began to ask for the opinions on the Ways of Migrant Workers’ Participating in Basic Pension Insurance Program from the public. The main aim is to tackle  the difficulties of putting on insurance, charging fees and insurance transferring for the migrant workers. On February 10, the State Council published the note of “solving the employment problem in current economic situation”, which required more positive employment policies. The enterprises which will lay off more than 20 people will represent the cases and reasons to relevant government departments.

The report from Qiaobao said that presently China’s economy was in the general situation of economic structure shift and periodic adjustment. There are two facts which are hard to change: the first one is that the total supply of labor force outnumbers the total demand; the second one is that the surplus low-quality labor forces. This means the structural unemployment situation will last for quite a while.

In China, the process of urbanization finally determines the migrant workers’ fate. The period in which the countryside supported the industrialization and urban development has been gone. Now it is time for the cities to help the development of the countryside. The government has already taken many measures to fight against the unemployment problem. How efficient will these measures be? We will see about it.