With China actively engaged in trimming overcapacity among some of its legacy industries, a familiar and troubling problem has re-emerged, one we discussed extensively in late 2015 and early 2016 – China needs to find a way to transplant unnecessary workers in legacy, “dirty”industries to new jobs in new sectors. Overnight we got a reminder of just this dilemma faced by Beijing, when China’s labor minister said on Wednesday China needs to reallocate half a million steel and coal workers in 2017 due to capacity cuts in these industries as the world’s second-largest economy tries to combat excess in the bloated industries.
“This year we will continue to cut capacity in coal and steel,” Yin Weimin, the head of China’s Ministry of Human Resources and Social Security, told reporters. “We will need to reallocate jobs to 500,000 workers,” he said, including assigning workers different jobs within the same or a different company, early retirement or encouraging them to become entrepreneurs.
Weimin added that China will introduce a policy this year to encourage the development of new industries, for example internet-related industries, that will create new jobs, he said. In 2016, he said that China reallocated jobs to 726,000 coal and steel workers “without any major problems”, adding that China’s overall employment outlook in 2017 is expected to remain relatively stable, despite the government facing immense pressure to create jobs.
What he did not say is that as we reported last May, China’s part-time workers have been soaring as the reallocation process has accelerated.
Furthermore, there is the question of what all those newly fired workers will end up doing in the coming months. We provided a discussion last July in “What One Million Recently Fired Chinese Coal And Steel Workers Are Doing Now“- the answer: glorified cab drivers. To wit:
If indeed millions of workers have already been fired, then what are these recently laid off workers doing, and why have they not rioted as Beijing, is so terrified they will? We now have an answer: according to South China Morning Post, Didi Chuxing, the ride-hailing company which is China’s equivalent of Uber, is claiming to have given more than a million jobs to former heavy industry workers across China, according to new research from the firm.
Its study shows there are now 3.89 million full-time and part-time drivers from 17 heavy-industry provinces including Heilongjiang, Shanxi and Sichuan who work for the firm’s private car and chauffeur services.
Out of the drivers it employs who used to work in heavy industry, 530,000 came from those that are undergoing massive restructure, including the coal and steel sectors, the report said. It claims the number represents 60.2 per cent of the Chinese government’s one-year re-employment target for heavy industry workers who have been made redundant, and 29.4 per cent of the five-year target.
Cheng Wei, Didi Chuxing’s chief executive, said in a statement that 15 million rides take place on Didi every day.
“As China undergoes sweeping economic restructuring, Didi is in a unique position to help drivers find flexible work opportunities and better livelihoods with the power of technology as we work together to create more sustainable cities,” he said.
In other words, Didi is now a systemically important company, which provides part-time jobs to millions of recently laid off workers who would otherwise be very, very angry (and with to lose they may as well riot) as there are simply are no industries with enough vacant spots to absorb the influx of newly laid of workers. Such is the magic of the “sharing” economy, where anyone who has a car can become a part-time taxi driver, pardon Didi employee.
Questions about infinite demand for taxi drivers aside, perhaps Beijing will be able to pull this vast labor migration off: as Reuters adds, China’s central government allocated more than 100 billion yuan ($14.54 billion) last year to help laid-off coal and steel workers and spent more than 30 billion yuan from the fund last year, Yin said. Additionally, Yin said that China created 13.14 million urban jobs in 2016, but did not specify whether this was a gross or net figure of the number of people at work.
One thing that is certain: do not look to China’s official unemployment rate for clues about the effectiveness of this labor migration: as politically-biased as the local GDP report, China’s urban registered unemployment rate will remain at around 4.5 percent in 2017, Yin told reporters.
Many analysts believe this figure is as fabricated as much of the rest of China’s official data: the country’s official unemployment rate has been around 4% for years, despite the rapid slowdown in the economy from double-digit growth to 6.7 percent in 2016, its slowest pace in 26 years.
via http://ift.tt/2m8lzkK Tyler Durden