The Party turns its attention to the labor market
China’s top brass is concerned about the labor market.
On Wednesday, the Party Central Committee and State Council published guidelines to increase high-quality employment.
ICYDK: Youth unemployment hit a new high in August, rising to 18.8% compared to 17.1% in July.
- Overall unemployment hit a six-month high, ticking up to 5.3% from 5.2% the previous month.
The guidelines contain 24 measures to improve job creation and retention, with the following having practical implications for MNCs:
First, supporting businesses to hire – including through tax incentives and social security rebates.
Second, defining employment conditions as a critical KPI for government officials.
Third, earmarking funding for provinces with weak labor markets to generate job opportunities.
- The guidelines don't specify whether the funding will come from central coffers or cash-strapped local governments.
Get smart: Policies jointly issued by the Central Committee and State Council are the most authoritative in China, reflecting unified directives from both the Party and the government.
- With officials now under serious pressure to improve employment conditions, MNCs can expect significant policy measures to support workforce growth.
Get smarter: Businesses aren’t hiring because domestic consumption is in the gutter.
- Effectively addressing China’s unemployment challenges requires significant fiscal stimulus to get the economy out of its funk.
The upshot: The guidelines will help at the margins but aren’t a silver bullet for China’s weak labor market.