Lockdown in China leaves millions of people out of work

After more than a month in confinement, Zeng Jialin was finally able to return to the Shanghai auto parts factory where he worked. He was about to be released from a quarantine center after recovering from Covid, and was desperate to make up for the many days of salary he had lost. But on Tuesday, when he was supposed to be released, someone in the crowded isolation facility tested positive again. Zeng, 48, was ordered to wait another 14 days.

“I have three kids, in college, high school and elementary school. The pressure is enormous,” he said in a telephone interview. Much of their $30 a day salary supported them. “I also owe the bank money, so I’m very anxious.”

As China battles its worst coronavirus outbreaks, its uncompromising determination to eliminate infections has left millions of people unable to work. Strict lockdowns, hitting city after city, forced factories and businesses to close, sometimes for weeks, including in some of the country’s most important economic centers.

Two groups have been particularly hard hit: migrant workers – the roughly 280 million people who move from rural areas to cities to work in sectors such as manufacturing and construction – and recent graduates. Some 11 million college students, a record, are expected to graduate this year.

China’s campaign against the virus has had economic repercussions around the world, crippling global supply chains and slowing imports. But the employment problems may particularly worry Chinese leaders, who have long derived much of their political authority from promises of economic prosperity. As the lockdowns hampered people’s ability to pay rent and buy food, many have grown increasingly frustrated with official Covid zero policies. Sometimes dissatisfaction erupted into rare public protests.

China’s second-highest official, Li Keqiang, recently announced that the government would take the unusual step of distributing livelihood aid to unemployed migrant workers and subsidizing companies that hire young people.

“The new round of Covid outbreaks has hit employment hard,” Li said on April 27.

It is difficult to judge the true scale of the problem. Officially, urban unemployment, the government’s main indicator, grew by just 0.3% between February and March, even as lockdowns brought economic engines to a halt in Shenzhen and Shanghai.

But official unemployment figures are widely considered to be below the realm of reality. They do not include many migrant workers and only count people as unemployed if they can start work within two weeks. That would exclude people under prolonged lockdowns or the growing number of young people who put off looking for a job.

The new government support measures suggest the problem is more serious than officials let on, said Stephen Roach, former president of Morgan Stanley Asia, now a senior fellow at Yale University’s Jackson Institute for Global Affairs. The government also increased payments to unemployed migrant workers before the global financial crisis in 2008.

“The announcement itself is a clue that potentially there is something much bigger going on in this contingent part of the job market,” Roach said. “This could be China’s biggest challenge since 2008 to 2009.”

China’s migrant workers, while forming the backbone of the country’s economy, have always managed to subsist precariously. They earn meager wages and have almost no labor protections or benefits, circumstances made worse by the pandemic.

Workers often live in company dormitories or cheap temporary accommodation, but when factories close many can no longer pay rent or are stuck in their workplaces, according to Chinese news and social media posts. Some slept under bridges or in telephone booths.

The couriers, some of the few workers allowed to continue working, had to choose between giving up their income and risking being locked out of the house. Others took on high-risk jobs building or outfitting quarantine centers, only to be infected.
Shanghai officials acknowledged that the number of homeless people increased during the lockdown. Local and central authorities have pledged support, but many questions remain.

When Premier Li announced the expanded unemployment benefits, he did not specify how much money would be provided. (The state-run Xinhua news agency said the government has allocated about $9.3 billion this year to aid the unemployed.) It is also unclear how workers will receive the money. Although China has unemployment insurance, many migrant workers are ineligible or do not know how to apply for it.

Zeng, a worker at the auto parts factory, said he was unaware of Li’s statements and had never heard of unemployment benefits. He had hoped to be employed after being released from quarantine, but knew he might have to return home to Guizhou Province.

“I’ll see if the factory reopens. If it opens, I’ll go there,” he said. “If not, there’s nothing I can do.”
Still, any political risk to Beijing is likely to remain small, said Aidan Chau, a researcher at the China Labor Bulletin, a Hong Kong-based advocacy group. The migrant worker problem, while acute, is likely to subside as lockdowns ease. The government has also pledged to invest in infrastructure projects to generate more construction jobs. And migrant workers in general have little political power and can be silenced by local authorities if they complain.

Perhaps the most intractable problem is white collar employment. Shanghai’s resistance to the lockdown was fueled in part by its large population of educated residents, who are more used to speaking out, even in the country’s highly controlled environment. In late March, residents of a middle-class community gathered outside and chanted, “We want to eat! We want to work!”

Of particular concern are the country’s growing ranks of university graduates. Policymakers have been concerned for years about how to ensure an adequate supply of jobs for them. But the shortage has become especially dire this year.

As the lockdowns hit small and medium-sized businesses, the government has also embarked on a broad regulatory crackdown in sectors such as technology, real estate and education — sectors that were once highly desirable for young people. There were mass layoffs.
There were just 0.71 vacancies available for each fresh graduate candidate in the first quarter of this year, the lowest number since data became available in 2019, according to a report by Renmin University in Beijing and employment website Zhaopin.

Even the stages are hard to find. To increase his chances of getting one this semester, Xu Yixing, a vocational college student in Shanghai, offered to work without pay but was still turned down for his top choices. A pharmaceutical company ended up hiring him, but let him go when Shanghai was locked down.

Xu, who studies computer applications and advertising, said he wasn’t too anxious about the competition. It was the pandemic that worried him.

“With the epidemic, it just depends on fate,” he said. “It doesn’t matter how well you work.”

Translated by Luiz Roberto M. Gonçalves