Tuesday, June 2, 2020

China little prepared for mass unemployment

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Sitting on a self-service bicycle in front of a recruiting center, Li Jie, in his thirties, stripped of his forehead by the afternoon in the sun, scrolls through the job offers on his smartphone. For a month and a half, he has found nothing and begins to despair. Father of a 3-year-old child, he has no more money to send to his wife and son, who remained in his home village in the poor province of Anhui. In Shanghai for two years, he has been doing odd jobs, more or less poorly paid: caretaker, handler, worker on construction sites. But in recent months, nothing.

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"Many of us are looking and there are not many offers", sums up another young man, who also hangs around the center and prefers to remain anonymous. He traveled 2,000 km from his province of Jilin, in northeast China, on the border with North Korea, to try his luck in Shanghai. "There is even less work there and wages are lower", he justifies. "I have friends who already have nothing and are sleeping outside", sighs, for his part, Li Jie.

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After about a month of confinement, and a few more weeks for businesses to resume their normal activities, the Chinese economy is suffering. In the first quarter, production fell 6.8% from 2019, according to official figures. Consumption is struggling to recover. If economists expect a gradual recovery in activity, the spread of the epidemic around the world, which is causing world demand to fall, has dashed hopes for a "V" curve, that is, that is, a rapid return to normal. As a result, unemployment explodes. According to the Ministry of Human Resources, the unemployment rate would be 5.9% in March, against 5.2% in December 2019, only 3 million more unemployed to reach 26 million.

Time bomb

A figure greatly underestimated, according to various independent studies. In total, 70 million people may have lost their jobs, an unemployment rate of 20.5%, according to a report released on April 24 by Zhongtai Securities, a financial firm. A time bomb in a country where unemployment insurance is malfunctioning and where the legitimacy of the Communist Party is based on the promise of continuous enrichment of the population. In the late 1990s, in the aftermath of the Asian crisis, mass layoffs had led to major social movements and crime had increased sharply. But growth had quickly returned and with it jobs.

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