Behind stable jobs data, China grapples with hidden unemployment

Beijing

CRACKS are starting to show in China's labour market as struggling industrial firms leave millions of workers in flux.

While official jobless numbers haven't budged, the underemployment rate has jumped to more than 5 per cent from near zero in 2010, according to Bai Peiwei, an economics professor at Xiamen University.

Prof Bai estimates the rate may be 10 per cent in industries with excess capacity, such as unprofitable steel mills and coal mines that have slashed pay, reduced shifts and required unpaid leave.

Many state-owned firms battling overcapacity favour putting workers in a holding pattern to avoid mass lay-offs that risk fuelling social …