Flexible job scene

The gig economy is emerging as a new prop to stabilize China's labor market in 2022, given the downward pressures and record number of job seekers

China's labor market has recovered greatly together with the economy, thanks to regular pandemic prevention and control. However, difficulties remain on the road to achieving the pre-pandemic goal of full employment, as proposed by the central government.

Amid the pandemic, the changing trend of the unemployment rate is consistent with the general rule. Significant fluctuations in the unemployment rate in recent years show how closely employment is linked to economic growth in a market-oriented environment.

However, the unemployment rate is still not sensitive enough to reflect the actual situation, and the problems of getting accurate statistics of the unemployment rate and unemployment relief policies remain to be addressed.

The transfer of rural labor is also a key variable linking macro-economic fluctuation and the labor market. Affected by the COVID-19 pandemic in 2020, China's economic growth slowed down by a large margin. As a result, the number of migrant workers dropped by 5.2 million, the largest ever decline since the launch of reform and opening-up policy in 1978. Following the economic recovery in 2021, the number of migrant workers increased 6.9 million, showing that rural labor transfer still plays a key role in absorbing shocks from the volatility of economic growth.

Although the number of new migrant workers rebounded sharply last year, the two-year average growth of transferred rural labor during the pandemic is still below the pre-pandemic average level, showing that the labor market and employment have not fully resumed. The proportion of migrant workers leaving their hometowns to work dropped significantly last year, affecting farmers' incomes.

In 2021, new urban jobs recovered remarkably. However, the two-year average growth has not returned to the pre-pandemic level of 2012 to 2018.

While China's employment and economic recovery have seen notable progress, full resumption is not yet achieved because of shrinking demand, supply shocks and weakening expectations for the Chinese economy, according to the Central Economic Work Conference at the end of last year. The impacts of the pandemic are still lingering.

Despite the contraction of domestic demand, external demand are strong. China's net exports contributed 27.4 percent and 21 percent to economic growth in 2020 and 2021, respectively. In contrast to contributing negatively to economic growth, in the decade before 2019, net exports contributed 22.4 percent to the GDP growth on average over the past two years. Therefore, the downward pressure on China's economy can be attributed to sluggish internal demand, including investment and consumption. Without the strong growth of external demand, the aggregate demand growth will face even bigger downward pressure.

This year, the number of college graduates is expected to increase significantly, surpassing 10 million for the first time to reach 10.76 million, which is 1.67 million more than the year before. A total of 4-5 million secondary school graduates, hundreds of thousands of veterans and middle school graduates will enter the labor market, raising the number of new job seekers to a record high.

The task of stabilizing economic growth in 2022 is arduous given the downward pressure on the domestic economy, which will affect job creation and enhance pressure on the job market. The goal of full employment in 2022 will be hard to achieve, while promising prospects also exist. Since the number of newborns increased greatly in 1962, a large number of male employees who reach 60, the retirement age for Chinese male workers, will retire this year, helping alleviate the employment pressure. Overall, China's job market sees great pressure this year, for which proactive macro and structural policies for promoting employment should be adopted.

Flexible employment is a major trend in the new era. Over the past decade, the total number of jobs in China has increased from 720 million to 760 million, up by 40 million. The proportion of the labor force in the agricultural sector has dropped, with 70 to 80 million people transferring to other industries. Although the number of jobs in the manufacturing industry has reduced by 30 million from the peak in 2014, other sectors in the secondary industry can create tens of millions of jobs. The number of people employed in the service industry has also increased from 270 million to 360 million, growing by more than 90 million.

Flexible employment bolstered by the gig economy has expanded rapidly. The number of people in the gig economy has jumped from less than 50 million in 2003 to more than 200 million. The sector has driven the transformation of employment.

The strong momentum of gig employment and flexible employment is driven by China's economic development and technological progress, as well as changes in the attitudes of young-generation job seekers.

The rapid progress of urbanization and the expansion of large cities, especially megacities, have driven the gig economy, posing great demands for social services for convenience. In large cities, people can get access to opportunities of flexible employment in niche markets, which can proliferate in a large labor market.

The boom of internet-based technology and online payments has backed up the gig economy. Before the internet prevailed, traditional flexible jobs mainly included self-employed workers, such as street vendors, and part-time housekeeping workers. In recent years, online platforms have provided a great number of new flexible jobs, which further developed during the COVID-19 pandemic.

More working-age young people have received more education compared with the older generations and are inclined to choose gig jobs. They can bear risks from frictional unemployment, and have higher preferences for flexible employment with more freedom and options, which have driven flexible employment.

The author is a professor of economics at the National School of Development at Peking University. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn