China official says 20 million migrants lost jobs

BEIJING (Reuters) - About 20 million Chinese rural migrants have lost jobs as the nation’s economic growth has faltered, a senior official said on Monday, promising policies to boost incomes and a softer approach to potential unrest.

Chen Xiwen, director of the Office of the Central Rural Work Leading Group, told a news conference that a recent survey showed 15.3 percent of the 130 million migrants moving from villages to cities and factories had returned jobless to the countryside.

Adding this year’s 6 to 7 million new entrants into the rural labor market, Chen added, China will this year have about 25 million jobless and potentially restive rural unemployed.

For the ruling Communist Party, which has yoked its authority to decades of rapid growth, these new rural jobless -- amounting to more than Australia’s total population of 21 million -- are a worry, especially if migrant workers find their farmland has been taken for development.

“There’s a considerable number of rural migrants who are unemployed. After they return to villages, what about their incomes? How will they live? That’s a new factor concerning social stability this year,” said Chen.

“Protecting employment and protecting people’s welfare is protecting rural social stability.”

Chen, who advises national leaders, was speaking a day after the government issued its first big policy document for 2009, which as in past years was devoted to rural development.

That document laid out policies intended to shore up farm incomes, generate jobs for rural unemployed, and extend welfare and healthcare spending in villages.

Chen’s estimate of migrant worker unemployment was about double an official projection reported by a Chinese magazine early last month.

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Yiping Huang, chief Asia economist for Citigroup, said even that number could double if government stimulus plans fail to offset slowed exports and general gloom.

“It is a big number coming from an official source but a lot of people are expecting even bigger numbers,” Huang said of Chen’s estimate.

“These are pretty difficult to check reliably, but people are talking about 30 or 40 million eventually.”

China has about 750 million people in its countryside -- more than the combined populations of the United States and European Union -- and their incomes and willingness to spend will be crucial to government efforts to boost domestic consumption.

Spending plans to extend the electricity grid, upgrade roads and infrastructure, subsidize domestic appliance purchases, and extend rural access to healthcare and schooling will help boost rural incomes and spending, Chen said.

Farmers will also be helped by policies to lift minimum purchase prices for grains and expand government and commercial reserves of foods, he added.

But some economists are not sure the current stimulus efforts are enough. China’s economic growth slumped to an annual 6.8 percent in the last quarter, dragging down the pace of expansion for all of 2008 to a seven-year low of 9.0 percent.

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“Our assessment is that growth will be there but the job market will weaken. Basically, it’s very difficult to provide that many jobs using the fiscal stimulus measures,” said Huang from Citibank.

“Building infrastructure provides some jobs for migrant workers but it’s not necessarily the most labor-intensive activity.”


The rising joblessness is also a political threat.

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China sees many thousands of protests and riots every year -- too small to threaten the ruling Party but enough to worry and distract officials -- and state media reports have said the number could grow, stoked by rising rural unemployment.

Factory closures in the far southern province of Guangdong, home to many of the country’s exporters, sparked protests and bitter confrontations last year.

“Chen’s number (of rural unemployed) sounds about right, but could end up being on the conservative side,” said Jian Hui, a labor activist in Guangdong who keeps a close eye on factory closures there.

Many migrant workers there have been told by bosses to take extended vacations after the Lunar New Year holiday, which officially ended on the weekend.

“Some migrant workers have gone home and will decide in a few weeks or even half a year whether it’s worth coming out to look for work,” Jian said by telephone. “Others have stayed here, because they’re afraid of losing the jobs they have.”

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Chen said local officials have been told to handle “mass incidents,” such as protests and riots, with care.

“As soon as sudden incidents occur, leading officials at every level must go to the frontline to explain to and persuade the public,” he said.

“In principle, police power cannot be applied.”

Additional reporting by Simon Rabinovitch; Editing by Ken Wills and Jerry Norton.