Labor test for policymakers
Updated: 2012-07-26 13:21
The assuring job figures released by the labor ministry on Wednesday testify to China's improving ability to create jobs even in times of economic slowdown.
In the first six months of this year, China generated 6.94 million jobs in urban areas, accounting for 77 percent of the annual target, says the Ministry of Human Resources and Social Security. But the urban unemployment rate remained unchanged during the period.
Considering the economy's condition which grew 7.6 percent in the second quarter year-on-year - the lowest quarterly growth since the second quarter of 2009 - the job data become even more comfortable. They indicate the Chinese economy has become more accommodating for labor, which is especially important for the most populous country.
But it does not mean policymakers can relax for a while. Despite the projected economic recovery in the second half, there are signs that the labor market remains tight in the short term.
Economists estimate that China's ratio of job vacancies to job applicants fell to 1.05 in the second quarter from 1.08 in the first, although it remained above the break-even point of 1 for the seventh consecutive quarter.
Moreover, media reports from Jiangsu and Zhejiang provinces, two traditional hubs of labor absorption, show that a large number of migrant workers have quit their jobs and returned to their rural homes. Economic downturn had affected the labor market similarly during the global financial crisis four years ago.
On the other hand, China's upcoming economic restructuring and demographic changes are set to add pressure on the labor market next year.
China has decided to give more importance to the quality of economic growth and is prepared to accept lower growth rates. Coupled with lingering global economic uncertainties caused by the ongoing eurozone financial woes, it means the job market will not improve much at least in the next one or two years.
China's demographic structure may add to the trouble in the coming decade. The aging trend has become ever more apparent and the number of young workers available is on the decline.
It would be a real task for policymakers to cope with labor supply shocks when the economic cycle is not in their favor.