record unemployment, spending on subsidies increased 256% in one year

In June almost 5,500 million euros were disbursed. It is the highest figure since the survey began in January 2013. In July, the figure for youth unemployment was close to 20%. Goldman Sachs lowered its GDP growth forecast for 2022 to 3%.

Beijing () – Unemployment benefits in China reached a record level in June, confirming once again that the labor market is in serious difficulty and that the economic situation in general, as Prime Minister Li Kequang himself recently admitted , is not solid, due to the continuity of the restrictions imposed by the “zero-Covid” policy maintained by Beijing and the crisis in the real estate and mortgage sectors.

Payments from the unemployment insurance fund in the country of the dragon increased by 256.6% in June compared to the same period of the previous year, with a total allocation of 37.19 billion yuan (almost 5.5 billion euros). The calculation is made by Reuters on the basis of data provided by the Ministry of Human Resources and Social Security. It is the highest overall figure since the survey began in January 2013.

The sharp increase in payments led to a deficit for the fund of 22.74 billion yuan (about 3.3 billion euros) in June; in May the value was 4,910 million yuan (720 million euros), while in January and April 2022 there was a surplus. The Unemployment Insurance Fund is a fund in which employers and employees participate, and is a valuable help for the unemployed to cover their basic needs when there is no work.

The rigid policy of containment of the new coronavirus with strict lockdowns and continuous widespread tests that the Chinese government has imposed is increasingly difficult to sustain with the Omicron variant, much more transmissible, and has interrupted supply chains. Among the most affected sectors are small and medium-sized enterprises, which is one of the most important in job creation and as a motor of the economy.

The youth unemployment rate reached a record level of 19.9% ​​in July, although the figure in urban areas appears to drop to 5.4%. To revive employment, especially in the younger segments of the population, the government in May proposed subsidies of up to 1,500 yuan to companies that hire new graduates. Beijing aims to keep the urban unemployment rate below 5.5% and create more than 11 million new jobs in major cities this year. In the first seven months of 2022, 7.83 million new urban jobs were created, reaching 71.2% of the annual goal.

Goldman Sachs lowered China’s GDP growth forecast for 2022 to 3%, from 3.3% initially. Citi also revised its numbers from 3.9% to 3.5% forecast last week. “In the short term, China may still experience pressures in the labor market – comments Bruce Pang, chief economist at Jones Lang Lasalle – considering that the slower growth of GDP creates fewer jobs”. To this is added a lower “national and foreign” demand, small and medium-sized companies “in difficulties” and a number of graduates higher than the demand for years. That is why it is “a political priority,” he concludes, “to support domestic demand to boost employment.”