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Source: www.asiaecon.org |

LABOR MARKET CONDITIONS IN CHINA


As the global economy continues to slow down, workers worldwide are adjusting to the changing market conditions. In China, millions of workers are losing their jobs and being forced to migrate from their homes.


As the global economy continues to slow down, workers worldwide are adjusting to the changing market conditions. In China, millions of workers are losing their jobs and being forced to migrate from their homes.

In the Chinese toy exporting industry alone, over 1,000 companies had closed its doors in 2008. Earlier this week, India announced that it will be installing a temporary ban on all Chinese toy imports. If the new policy stands, it will hurt an industry with over 2 million people by roughly $330 million.  

China’s agricultural sector, which represents 10.5% of China’s GDP, is being hit equally as hard. Millions of workers have already lost their jobs as a result of the dwindling demand for agricultural products. Additionally, China is currently experiencing a drought emergency. China’s Premier, Wen Jiabao, ordered the immediate allocation of 400 million yuan ($60 thousand) to assist the ailing industry.

China’s massive labor market has helped create the second largest economy in the world. It’s GDP of $7.8 trillion represents the total sales of all the final goods and services in the country. Although this may seem extremely impressive, it does not take into consideration that China has such as large population. The U.S. economy generates $48,000 for every U.S. citizen. In China, however, their economy only generates $6,100 for each Chinese citizen.  Even though China has the second largest economy in the world, they are not necessarily economically prosperous. 

Another misleading aspect of the information that was given is that it does account for the dispersion of unemployment throughout the country. As thousands of companies are shutting down in the rural areas of China, millions of workers are being forced to pick up jobs that are much further away from their homes.  Roughly 20 million workers are migrating from the rural areas of China to the major cities. The Chinese Government estimated that 15% of those who migrated have returned home, although there are thousands more who cannot afford to travel back to the countryside. 

One of China’s greatest concerns is the number of graduating students who will be entering the job market at the end of the year and for years to come. A record of 5.6 million students graduated last year and an additional 500,000 are expected to graduate in 2009. Chinese officials have said that the government will help these students by subsidizing companies that hire them, as well as issuing loans to graduates who wish to start their own business. 

Despite the economically harsh times, China’s stated unemployment rate has only increased by 20 bps to 4.2% (as opposed to the 7.6% unemployment rate in the U.S.). What is even more impressive is that China’s participation rate of 60.73% represents one of the largest in the world. Because of the nominal minimum wages that China has, more people are able to work, but for a only fraction of those who have jobs in countries with more strict minimum wage laws, leaving the workers in the job market with insufficient wages and increasing labor competition.

Source: Asiaecon.org
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Source: www.asiaecon.org |


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