80 million Chinese may already be out of work. 9 million more will soon be competing for jobs, too

Wang is used to job hunting in China.

The 26-year old tech worker spent the last year jumping from one startup to another in what already felt like a precarious job market. But when he was laid off again in January, this time from a Beijing-based internet company, he never expected things to become as difficult as they are.

Photo taken on April 14, 2020 shows containers at the Lianyungang Port in Lianyungang City, east China's Jiangsu Province.

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Last year “already felt like living in a hell mode,” Wang told CNN Business in a telephone interview. “But 2020 is even worse. The coronavirus is like a head-on blow.”

Wang is not his full name. He asked CNN Business to not use his entire name because he didn’t want friends or family to know the details of his unemployment — a fear echoed by others in China who spoke about losing their jobs. Some also voiced concerns that making their personal predicament public could hurt their chances of finding work.

The pandemic all but shut down China for several weeks this year, wreaking havoc on the world’s second largest economy and forcing millions of people out of work.

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

But even the official tally has started to register a spike. Unemployment in March was 5.9%, just shy of the record 6.2% reported a month earlier. That would represent more than 27 million people out of work, according to a CNN Business calculation using government data.

“China’s unemployment could be seriously understated,” said Willy Lam, an adjunct professor for the Center of China Studies at the Chinese University of Hong Kong. “It’s unusual they are willing to report that bad data. Given the government often massages the figures, the real situation must be worse.”

An ‘unprecedented’ problem

Beijing’s data, after all, does not include people in rural communities or a large number of the 290 million migrant workers who work in construction, manufacturing and other low paying but vital activities. If those migrants are included, as many as 80 million people could have been out of work at 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 80 million figure is likely much closer to reality. It’s also a lot more disturbing — it would mean that nearly 10% of people in China who are supposed to be employed are actually out of work, according to economists at Société Générale.

“The Covid-19 shock to the job market is unprecedented in its scale, length and nature,” wrote Wei Yao and Michelle Lam in a research report last week.

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

“Although the coronavirus has had a severe impact [on jobs], there are no massive layoffs in the country,” Mao Shengyong said at a press conference.

But Beijing is bracing for additional pain in the coming months. A record number of people are graduating from universities this year, which will put more pressure on the job market. And while the economy may still eke out some growth in 2020, its road to a full recovery will likely be a long one.

The Chinese government has never been candid about its economic woes. But recent messaging from officials has made it clear that unemployment is a bigproblem.

Economic growth was already the weakest in decades before the outbreak pushed the country into its first contraction since 1976, when Communist Party leader Mao Zedong’s death ended a decade of social and economic tumult.

Shoring up the economy — and preventing the jobless rate from spiraling out of control — has only gotten more critical in recent months. In April, the Communist Party’s Politburo, its top 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 fear a wave of unemployment could lead to social unrest, creating a massive political headache, according to Lam, the Chinese University of Hong Kong professor.

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

‘I feel miserable’

Job seekers aren’t optimistic that the situation will improve soon. Wang, the tech worker from Beijing, said it seems life is tough for everyone right now.

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

Wang said the current environment contrasts starkly to when he graduated from college in 2015. Beijing at that time was offering subsidies and other forms of financial support to startups, which encouraged entrepreneurs to create millions of new companies. The unemployment rate that year was about 5%.

Even before the coronavirus outbreak, Wang said offers were drying up. The tech startups he worked at in 2018 and 2019 ran out of cash as Beijing tightened regulations on how they could obtain investment.

But now he says finding work is almost impossible. He and his friends have started lowering their expectations, and some of them aren’t even sure whether they can stay in Beijing.

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

There is evidence that it’s gotten tougher to find work. Job vacancies plunged 28% in the first three months of 2020 compared to the fourth quarter of last year, according to a recent survey by the China Institute for Employment Research and Zhaopin.com, one of China’s largest job sites. Competition, meanwhile, was fiercer: The number of job seekers jumped nearly 9% in the first quarter, the survey showed.

Job seekers crowd to the annual job fair on April 13, 2018 in Zhengzhou, Henan Province of China.

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And companies in China’s services sector — which accounts for almost half of all jobs in the country — shed workersat a record rate in April, according to survey data released Thursday by media group Caixin and research firm Markit.

“I feel that the job market is shrinking at a rapid pace,” said Yi Feng, 32, who lost his job in March at a logistics firm in Shanghai. Yi requested that CNN Business use an alias for him, which he chose, adding that he feared talking openly about his troubles would amount to burning bridges with potential employers. “It’s extremely difficult to find a job now, because most companies have frozen their hiring since the end of March.”

An influx of job seekers

The landscape might get even more difficult in the coming weeks. Beijing expects about 8.7 million people will graduate from colleges and universities this year, creating even more competition for work.

“Leading up to my graduation, I had my mind set on becoming a journalist. But this year it is really too hard,” said Andrea Yao, a 22-year-old senior at the Communication University of China in Beijing. She said she was supposed to interview with a newspaper in Wuxi last month, but couldn’t go because she couldn’t obtain the “health code” required to enter the city.

Yao told CNN Business that she reached out to 61 companies about jobs, but only five asked for her resume. Many companies wanted candidates who already had experience.

Recently, “when I was taking the subway to [an internship], I suddenly felt a burst of anxiety through my heart when I thought of the fact that I haven’t settled on a job,” she said.

Others said the coronavirus has disrupted their plans. Li Cuiyu, who is graduating from the Beijing-based China Agriculture University with a master’s degree, said she wanted to become a civil servant so she could obtain a highly coveted “hukou,” or household registration permit, in the Chinese capital. But the annual exam required for that work was postponed because of the outbreak.

While Li is weighing other options — she had been looking for jobs at foreign companies in Beijing, for example — that hasn’t been easy, either.

“There are simply not many recruitment ads out there, and some foreign companies are already laying off staff,” she said.

A job applicant makes a call at an on-site job fair in Wuhan last month. The landscape for job hunters might get even more difficult in the coming weeks as about 8.7 million people graduate from colleges and universities.

Aid from the top

Beijing is aware of the looming wave of new job seekers. The government this week unveiled a plan to help new graduates find jobs as teachers and create other “grassroots level” positions, according to Xinhua. The project also includes a proposal to expand enrollment in postgraduate programs.

But authorities still have a tough task ahead of them as they try to help others who have lost their jobs.

“A particular concern is that the safety net doesn’t catch the most vulnerable,” wrote Mark Williams, chief Asia 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 labor force was covered by that program at the end of last year, according to data from the Ministry of Human Resources and Social Security. And experts, including the economists at Société Générale, have noted that the program is ill-equipped to deal with the massive surge in jobless figures.

The government seems to have recognized these issues, Williams added, since it recently pledged to help those without jobs access insurance.

But other experts have pointed out that there are other challenges facing Beijing as it tries to push its citizens back to work.

A medical worker wearing a mask checks the temperature of workers outside a canteen at the construction site of Bejing Fengtai Railway Station amid the coronavirus outbreak on March 13, 2020 in Beijing, China.

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China is already struggling with mounting debt, which makes it tough to spend more on infrastructure projects that could create more jobs, according to Joseph Cheng, a democracy activist and a retired professor of political science at the City University of Hong Kong. Chinese state media has suggested recently that regional governments could invest $1.1 trillion in roads, airports and other projects, but those funds haven’t actually been set aside yet and it’s not clear whether such targets could be reached.

Several experts have said that policymakers in China should put more effort toward ensuring that people can meet their basic, daily needs. The Société Générale economists, for example, said a “more direct but audacious measure” would be to give cash directly to low income households, so as to circumvent the need for an unemployment insurance program.

Even Zhang, the state think tank economist, floated a similar proposal. He said the government’s response to the economic fallout from the virus — which totals tens of billions of dollars in financial relief and stimulus — should include cash handouts for the poor.