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Farmer-Workers in the Chinese Economy
Farmer-Worker: a person leaving the farm and working in a Chinese city
Groups of them have caught the attention of global media and economic observers as the economy of world's factory walks into a stage of growth deceleration. The central government officials commented yesterday on this phenomenon after the employment stats were released. Yin Weimin, Minister of Human Resources and Social Security (MOHRSS), admitted that some of the factory workers are invisibly unemployed - on holiday (not in Hainan, I guess) or waiting for new job orders. In Oct, the official growth rate of newly added jobs started to decrease for the first time all year. Mr. Yin expects the situation will worsen. Nevertheless the ministry expects the overall unemployment rate for urban registered workers should be around 4% in 2008 and slightly higher in 2009.
However, we all know this official unemployment rate is a far less useful metric than walking to a few Chinese train stations and counting heads and gunny bags. The farmer-workers aren't calculated in the official unemployment figures. A good historical reference for this arrangement is due to the implicit dualism about 'social class of famer-workers' in this China Academy of Social Science paper. The official number of Chinese farmer workers is around 230 million (about 18% of the total population). Roughly 120 million of them are working in non home cities. Unfortunately, China doesn't have a reliable method to track the unemployment status of this group of people that are neither farmers nor workers, and therefore, the overall employment numbers are suspect.
Famer-Workers, built the 'bird nest', wipe the desks of AAA office buildings in Shanghai or Beijing, were seen en masse at bus and train stations during last year's Snowstorm, and crowd the trains almost everyday. They don't have city identification cards or Hukou (Citizenship), and therefore receive none of the health care or social security benefits granted city residents. That said, they are an interesting barometer of Chinese economy. A simple news search on the search engines (Baidu or Google) results in large amounts of local Chinese press reporting the earlier than usual homeward migration of worker-farmers at the train stations (Spring Festival is still 2 months away).
Apparently, the plight of the farmer-worker is worsening, due to an unprecedented mixture of structural unemployment and cyclical unemployment. In recent years, the industrial upgrading of China's eastern, coastal regions and the inland movement of manufacturing has slowed the outbound stream farmer-workers as more and more labor intensive jobs appeared in home regions. However, the sustainability of the 2 key economic growth drivers: exports and heavy industry investment (especially the real estate) are losing their momentum. The government hopes to offset this slowdown with the countercyclical effect of a big ticket fiscal stimulus package.
The current environment causes pain that stretches beyond the farmer-workers. Others, including the 6 million recent university grads, employees of big 4 accounting firms, etc, are feeling the squeeze. But we also should harness our some of the relentless pessimism about the economic outlook. Global investors argue that China is one of the best places to do business and invest. The lives of Chinese farmer-workers, who essentially have kept this country's economy running for decades, have always been admirable for their spirit to endure the adversity for a better tomorrow. I hope these large groups of farmer-workers are able to find new jobs on new project sites somewhere in the country. Or else......
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Chenhao Zhang follows macroeconomic development and investment deals in China.
