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China's Unemployment Dilemma Is Exaggerated: Reuters

| Jun 24, 2016 10:56 PM EDT

China's working population is the problem and not unemployment, says Reuters.

China’s unemployment problem may be overblown as some economists believe that other industries can still handle laidoff workers from the government’s drive against overcapacity.

A report from Reuters pointed out the possible exaggeration of the country's dilemma on unemployment, citing the situation of some former steel firm workers who were able to find new jobs quickly.

In fact, the outlet noted that the country may be facing a possible shortage of laborers to match the unpredictable demands in the manufacturing industry, as well as the declining size of China's working-age population.

Unemployment Worries in China

Earlier this month, Bloomberg reported that there may be hidden details on the actual unemployment situation in China.

According to the report, the country's underemployment indicator has increased to 12.9 percent, three times of the record posted in 2012.

This statistics from Fathom Consulting highlights the degree of slack that the employment in China is experiencing at the time when the mass layoffs have yet to occur.

"The degree of slack has surged in recent years," the London-based analytics firm explained. "China has a substantial hidden unemployment problem, in our view, and that explains why the authorities have come under so much pressure to restart the old growth engines."

Fathom further noted that the country has problems with social instability brought about by insecure jobs, something that legislators should be aware of.

Reality

However, a more recent article from Reuters deems the data from Bloomberg far from the actual reality the laborers who were laid off is currently experiencing.

In fact, the outlet believes that China should be looking at a problem of shortage of workers instead of the surplus of them, considering the lingering drop of the size of their working-age population, a consequence of the long-standing one-child policy.

According to the report, workers who were laid off were only seeking jobs in other provinces where they can find more secure employment.

Furthermore, some economists believe that if the workers have lower expectations in jobs in terms of pay, then finding a new one would be easy.

"The core issue is: What kind of job can they find and what kind of pay can they get for a new job?" Gavekal Dragonomics economist Cui Ernan told Reuters. "If they lower their expectations for their pay or for the role that they are working in, then it's not that hard for them to find a job."

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