Why Beijing is working towards jobs data transparency

Chinese Premier Li Keqiang's decision to release the urban unemployment rate collected by the National Bureau of Statistics using internationally acceptable methods is a step towards greater transparency. But China’s jobless rate is something of a mystery.

Though Beijing regularly publishes the unemployment rate -- its economic growth target of 7.5 per cent is closely tied to this figure -- the data fails to accurately capture the true state of the job market. The official rate has been hovering around 4 per cent, even during the global financial crisis when there were many redundancies.

The Chinese government publishes the so-called ‘urban registered unemployment rate' using the number of unemployed city dwellers who are registered with local bureaus of the Ministry of Human Resources and Social Security. The rate was 4.08 during the second quarter of 2014, the same as the first quarter, according to the ministry.

China’s urban registered unemployment rate figure suffers from several weaknesses. It excludes rural workers, migrant workers in city and unregistered unemployed workers. It does not use an internationally acceptable method of conducting surveys at regular intervals to determine the jobless rate. The rate is only published once every three months, making it difficult for people to keep abreast of the trend.

Though China’s National Bureau of Statistics has been conducting regular surveys of unemployed people since 1995, these figures are only available to the country’s top economic policy planner (the National Development and Reform Commission) and some other ministries, according to Caixin media.

The reason that China has been reluctant to publish unemployment rate using an internationally acceptable survey method is due to persistent internal debate over methodology. For example, statisticians have argued about whether to include migrant workers in their sample pool, according to Zheng Chewei, a research fellow from the Institute of Population and Labour Economics at the Chinese Academy of Social Sciences.    

Many analysts and economists suspect China’s unemployment rate is higher than the official figure. At the end of last month, people’s long-held suspicions were confirmed when the National Development Reform Commission inadvertently released the unemployment rate on its website, but it was swiftly deleted.

According to the deleted data, China’s urban unemployment rate was 5.05 per cent during June, considerably higher than the reported average of 4.1 per cent for the last three years. Soon after the leaked data was made public, Chinese premier Li Keqiang said China would publish unemployment rates for big cities at ‘an appropriate time” to better reflect the country’s job market.

Maintaining a stable job market is arguably one of the most important economic objectives for China, which is undergoing painful structural change. Premier Li said the goal of 7.5 per cent was flexible, and the minimum growth rate acceptable to the government must guarantee sufficient employment.

Chinese finance minister Lou Jiwei also emphasised back in March that “it does not matter whether the GDP grows faster than 7.5 per cent or below 7.5 per cent. What it matters is employment,” he said.

In 2014, Beijing needs to find jobs for 10 million new jobseekers in cities as well as for six million people in countryside. Given the country’s structural transformation, the transparency of Beijing’s data has never been more important in ensuring prosperity and future growth.