08/24/2022, 19.41
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Beijing: record unemployment, spending on welfare up 256% in one year

Nearly 5.5 billion euros in June: the highest figure since  January 2013. In July, the youth unemployment figure was close to 20 percent. Goldman Sachs lowers its forecast for GDP growth in 2022 to 3 percent. 

Beijing (AsiaNews) - Spending on unemployment benefits in China reached a record high last June, in further confirmation of a labor market in dire straits and of anew unstable general economic situation, as Prime Minister Li Kequang himself recently admitted. The instability is principally due to lingering restrictions under Beijing's "zero-Covid" policy and because of the crisis in the real estate and mortgage sectors.

Unemployment insurance fund payments in the country rose 256.6 percent in June compared with the same period a year earlier, with a total allocation of 37.19 billion yuan (nearly 5.5 billion euros). The calculation is compiled by Reuters, which relied on data provided by the Ministry of Human Resources and Social Security, This is the highest total figure since January 2013.

The sharp increase in payments resulted in a deficit for the fund of 22.74 billion yuan (about 3.3 billion euros) in June; in May the figure was 4.91 billion yuan (720 million euros), while surpluses were recorded in January and April 2022. The unemployment insurance fund is a fund in which employers, employees and is a valuable aid to support the unemployed to meet basic needs in the absence of work. 

The strict policy of containing the new coronavirus by hard lockdowns and blanket testing imposed by the Chinese leadership, which is increasingly difficult to sustain with the much more transmissible Omicron variant, has disrupted supply chains. Among those most affected are small and medium-sized enterprises, among the most important sectors in job creation and as drivers of the economy.

The youth unemployment rate rose to a record high of 19.9 percent in July, although the figure for urban areas appears to be falling to 5.4 percent. In an effort to boost employment, especially among younger segments of the population, the government in May proposed subsidies of up to 1,500 yuan to enterprises that hire recent graduates. Beijing aims to keep the urban unemployment rate below 5.5 percent 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 percent of the annual target.

Goldman Sachs lowered its forecast for Chinese GDP growth in 2022 to 3 percent, down from the initial 3.3 percent. Citi also revised the figures to 3.5 percent from the 3.9 percent projected last week. "In the near term, China may still experience pressures in the labor market," comments Bruce Pang, chief economist at Jones Lang Lasalle, "given slower GDP growth creating fewer jobs. This is coupled with lower "domestic and foreign" demand, "struggling" small and medium-sized enterprises, and "for years" a surplus in college graduates compared to market needs. Hence the "policy priority," he concludes, of "supporting domestic demand to boost employment." 

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