Along with GDP, no other Chinese economic figure is viewed as suspiciously as the official unemployment rate, which hasn’t moved from 4% in years despite stock market upheavals, real estate boomlets and busts, and a dramatically slowing economy.
Now a London-based researcher has estimated that the country’s true employment problem at triple the official figure.
Fathom Consulting compiles what it calls China’s underemployment rate, including workers working less than full-time at steel plants and coal mills that have dramatically slowed output, according to Bloomberg. Fathom says its underemployment rate measures joblessness at 12.9% in China, triple its reading in 2012.
Fears of surging unemployment in China have been around for a while. Last year economists expected the number to jump amid layoffs in China’s struggling state-owned energy and mining sector. But for a host of reasons, including the fact local governments want to keep bankrupt companies alive for the social stability employment provides, layoffs didn’t come. Companies cut hours and wage growth declined, but mass layoffs were avoided.
The issue of less than full-employment in China isn’t just important to the Chinese economy. Excess output from China’s steel and aluminum industries—big employers—is flooding world markets, and Treasury Secretary Jack Lew is pressing China on that issue during this week’s bilaterial economic talks between the U.S. and China.
The London researcher could be overestimating things, however. Last year, Fathom also guessed the Chinese economy grew by only 2%, compared to the official 6.9% figure. While other economists don’t believe the official number, many other estimates were around 4% or 5%.
Still, it’s clear China’s unemployment rate is a lot higher than the official 4%. And that must have officials worried.