Joblessness in China soars from virus fight, threatens poverty goal

Beijing

ALTHOUGH China is claiming success in its battle against the coronavirus, millions have lost their jobs in the economic fallout, throwing into jeopardy an ambitious target to eradicate poverty this year.

Beijing has been working to fire up the economy again after bringing it to a near standstill to curb the spread of Covid-19, but many firms have had a bumpy restart and workers are bearing the brunt of the pain.

Despite being a country of skyscrapers and high-tech innovations, China still has millions of people on meagre incomes. About 5.5 million rural Chinese live in poverty, defined by the government as surviving on less than 2,300 yuan (S$462) a year.

A slowing economy puts pressure on a key Communist Party goal to become a "moderately prosperous society" by the end of 2020, an ambition in place long before the virus emerged.

It also threatens a long-held tacit agreement between people and party that freedoms can be sacrificed in return for economic progress, an understanding that largely forms the basis of the authoritarian government's legitimacy in the absence of elections.

China has little in the way of social security benefits and workers who lose their jobs have an inadequate safety net, meaning mass unemployment often brings a fear of unrest. Official statistics show jobless numbers have soared, with roughly five million more people out of work between December and February.

Data firm Caixin said its services purchasing managers' index, a key indicator of activity in the services sector, showed companies cut staff at the quickest pace on record in March.

Hu Fangdi, 23, lost her job as a salesperson at an airport retail store two weeks ago and has had no luck finding a new role. "No one was buying things during the outbreak and the company laid us off," she told AFP.

With much of the rest of the world still locked in all-consuming battles against the virus, the pandemic is expected to heavily weigh on demand for Chinese goods.

Analysts at financial services firm Nomura said the nation could lose around 18 million jobs in the export sector - nearly a third of the industry's workforce.

This growing unemployment will be a major blow to consumption - a key driver of China's growth, said Louis Kuijs of Oxford Economics. Some firms have taken dramatic measures to stay solvent, including paying just a minimal living allowance.

And Beijing authorities have allowed companies to waive some social security payments, including contributions to pension, unemployment and work injury funds - measures that could further hit vulnerable workers.

Job losses also raise the likelihood of laid-off migrant workers returning to poorer rural areas and slipping into poverty.

To compensate, authorities are easing stringent regulations governing the lives of rural migrants working in urban areas, allowing them greater access to the property market, healthcare and education in some smaller cities.AFP