Unemployment crisis in the wake of urbanization

On The 2013 National Migrant Workers Monitoring Survey, released by National Bureau of Statistics (NBS) of China on May 12, reported a total of 269 million migrant workers in China at the end of 2013. How to define migrant workers? According to NBS’s survey covering, migrant workers are labor forces whose household registered in the rural area and engage in the non-farm jobs outside their home towns for six months or more.

With the fast development of China’s urbanization at the end of 1990s, the composition of migrant workers had the drastic changes, particularly the most obvious change in the birth stages. The NBS’s survey showed 125.3 million, or 46.6% of migrant workers were born after 1980. Among them, most people haven’t engaged in any agricultural work and are quite young for their initial urban start-up, much younger than the older migrant workers at 35.9 years old for their initial urban start-up. Besides, a third of the new generation of rural migrant workers has received a senior high school education or higher, up 19.2 percentage points from the older generation. And most importantly, 55% of the younger migrant workers now work at major and medium-size cities above the prefectural level, 26% more than that of the older generation.

As it is, it is inappropriate to call persons born in rural area after 1980s but working in urban area as “migrant workers”. These new generation workers with rural household registration have the same education as their urban peers, work in the same city, use the cell phones of the same style and surf the same Internet, thus having almost no difference from their urban peers except for their rural household registration. They were born and brought up in the rural areas, yet most of them cannot get back for a living in hometown and they don’t have the capacity to engage in farming, which means that with the deepening of urbanization in China, most urban resident population with the rural household registration will find it impossible to get back to the rural area, even though they still have their own farming land or homestead.

So here comes a problem: cities these migrant workers live don’t welcome them. In big cities like Beijing and Shanghai, governments there even made the clear requirement to strictly control the resident population with the rural household registration to phase out the migrant workers in the low-end industries by banning group rentals, handling the residence permit and raising the living cost, etc. The younger migrant workers prefer the large and medium-size cities above the prefectural level with stronger demand for settling down in urban areas. In such cities, there are strict controls for obtaining the Hukou, and only a few people can settle down in a limited way such as talent introduction policies, purchasing real properties or obtaining higher education degree. For these new generation workers, they can’t go back for farming nor settle in cities under the constraints from the current policies.

The reality and the misplaced policy pose a greater risk. In case of a future unemployment tide, what's to be done with migrant workers of the new generation? China has not suffered massive unemployment for several decades: Since China’s accession to the WTO in 2001, China has kept the GDP growth around 10%. And with much faster growth of its export, many labor-intensive sectors were stimulated for great development and attracted millions and millions of people for each year. Up to now, the newly employed population reaches 16 million each year, most of 10 million workers (including more than 6 million college graduates) coming from rural areas. Yet, China can not maintain such a strong momentum for the full employment, and it is inevitable that there will be the large unemployment in China.

At the end of 1990s, China suffered a large number of layoffs from state-owned enterprises reforms, which are many younger people not familiar with today. At the end of 1997, the urban population reached 370 million and the urban employees reached 202 million, including more than 100 million working in state-owned enterprises. By September 1998, the layoffs from state-owned enterprises reached 7.16 million. Within the coming 7 years, the number of layoffs from state-owned enterprises totaled nearly 30 million.

Now, there are 267 million migrant workers in urban areas and the number of migrant workers of the new generation is more than that of the employees in the state-owned enterprises in that period, and the migrant workers mainly work in the manufacturing and building sectors, having attracted 61.4% migrant workers, so the number of the unemployed population brought about by the economic cycle is likely to be far more than the total number of the employees in the state-owned enterprises in that period.

It is wrong to think that a migrant worker with the homestead can get back to the rural area for farming in face of the approaching unemployment tide. Urbanization is an irreversible process, so the great number of migrant workers can’t be absorbed in the rural areas when China is faced with the economic downturn and the imminent unemployment tide, particularly with the greater differences in lifestyle and infrastructures between the rural and urban areas.

Different from the layoffs from the state-owned enterprises in that period, the younger migrant workers have poor social capitals in cities and will find it rather difficult to get anywhere. With the popularization of the internet and cell phones and other communication tools, they, on the one hand, are apt to accept the ideas of justice and equality, but on the other hand, they are easy to get involved in the mass disturbance, posing great danger to the society. In solving their unemployment crisis, the decision-makers are faced with the greater challenges. The urban government officials are supposed to eliminate their discriminations toward the resident population with the rural household registration, but the immediate priority is to reform the statistical method for calculating the urban unemployment rate and build the modern sampling survey for unemployment rate by casting aside the registered unemployment rate.

Published on Southern Metropolitan Daily |  2014-5-15