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LABOUR-CHINA: Mass Unemployment Looms

BEIJING, Jan 8 2009 (IPS) - Twenty years after the Chinese communist party deployed tanks to crush protests by disgruntled students on Tiananmen square, the country is facing the same volatile mix of rising unemployment and economic gloom that sparked the 1989 mass pro-democracy marches.

Now, as then, unsettling discontent is simmering among university graduates pouring out of academia and unable to find jobs.

Fearful of pockets of social discontent growing in the cities, Chinese leaders are now offering students their tuition fees back if they accept jobs in the country’s remote and underdeveloped areas.

“Faced with the spreading international financial crisis, our country’s employment situation is extremely grim,” Premier Wen Jiabao told the State Council, or cabinet, in an emergency meeting convened to discuss the job market this week.

“We must make the employment of higher education graduates a priority,” he was quoted as saying on the government’s official website (www.gov.cn).

Striving to make China a more innovative country the government has, in recent years, promoted an expansion of higher education and attracted more students. Some 6.1 million university graduates are going to enter the labour market in 2009 – about a half million more than last year – but their job prospects are looking increasingly dim.

More than 30 percent of the 5.6 million university graduates last year had failed to find a job as of August 2008, said the latest “Blue Book of Chinese Society”, an annual publication from the Chinese Academy of Social Sciences (CASS) that gauges the public mood.

The academy researchers found that the unemployment rate in urban areas was 9.4 percent. China does not publish reliable data on unemployment and few economists believe the official jobless rate of four percent takes into account factors such as mobile migrant labour and the urban poor.

Chinese leaders now face potential discontent not only among university graduates who fail to find jobs but also among parents who have invested their life-savings into educating their children.

“We never thought that it was a question of finding a job,” shares travel agent Wang Juanyi, whose daughter will start looking for a job this summer. “We were always made to believe that if we could afford all the extra lessons for our child, she would be able to get into a top university and this would land her a good job with a company. But now with companies throwing people out of their jobs we are not so sure.”

Some graduates have flocked to richer cities like Guangzhou in southern China, applying for jobs as nannies and domestic helpers, the state media reported. There have been 500 or 600 people applying every month, with the majority of them university students, the Guangzhou Daily, a provincial newspaper said earlier.

To counter the backlash from angry parents and students, the government announced this week that college graduates who take up jobs in poorer central and western regions of the country will be entitled to a full refund of their tuition fees.

“The refund offer shows the government’s determination to stabilise job market,” Chen Guangjin, a labour expert with CASS was quoted by the China Daily.

One of China’s more outspoken periodicals has also warned that the country may face social unrest in 2009 as unemployment rises because of the global financial crisis. The Outlook magazine, published by the official Xinhua News agency, said slowing economic growth may provoke anger in particular among migrant workers and university graduates.

The global financial crisis has caused the closure of 670,000 small and medium-size enterprises in China, many of them labour-intensive firms based in the manufacturing hubs of the coastal regions. The Ministry of Human Resources and Social Security estimated that more than 10 million migrant workers had lost their jobs, according to the magazine.

“We’re entering the peak of mass incidents,” Huang Huo, Xinhua’s bureau chief in the southwestern metropolis of Chongqing told the magazine. “In 2009, Chinese society may face more conflicts and clashes that will test even more the governing capabilities of all levels of the Party and the government”.

The 1989 massacre of unarmed students and civilians in and around the capital’s landmark square remains a blotch on the communist leadership’s image that no amount of public relations works has been able to repair.

The demonstrations in the spring of 1989 started as protests against the economic downturn and the inflation but snowballed to demands for democracy and political change. And although the drama was played out in Beijing, millions more in cities across the country mounted the largest political protests to grip China.

Now, as it did in the aftermath of the crackdown, the ruling party is attempting to rescue the economy by pumping vast amounts of money into infrastructure projects like roads, railways, airports and low-rent housing that have the potential to lift growth. In November Beijing announced a stimulus package of 4 trillion yuan (585 billion US dollars) to stave off the effects of the global economic decline.

But the World Bank says Beijing’s planned fiscal and monetary measures will be insufficient to restart growth unless accompanied by broader social welfare spending, which China neglected during its last round of infrastructure splurging.

The Chinese economy has expanded at double-digit rates since 2003, peaking at 11.9 percent in 2007. But this year the economy grew nine percent in the three months from July to September, threatening the expansion to which the communist party has linked the credibility of its one-party rule.

Conventional wisdom holds that China must maintain at least 8 percent of GDP growth to keep the unemployment rate manageable and to prevent social unrest. But predictions for 2009 are not rosy.

Goldman Sachs forecasts China’s growth will slow to six percent this year, while Moody’s Investors Service warns it could fall as low as five percent.