China: Consumption risks under stable unemployment – Standard Chartered
Standard Chartered economists Hunter Chan and Shuang Ding highlight that China’s urban surveyed unemployment rate has remained in a 5.0-5.4% range over the past three years, yet broader labour underutilisation has risen.
Standard Chartered analysts Hunter Chan and Shuang Ding have highlighted that despite China's urban unemployment rate staying stable in a 5.0-5.4% range for the past three years, underlying labor underutilisation has increased. They predict a 7.1% underutilisation rate for 2024, attributing it to unstable jobs, income, and limited social protection negatively impacting household consumption growth.
Even with the urban unemployment rate remaining low, weak consumer confidence, soft consumption growth, and high youth unemployment indicate that the headline figure might not fully reflect labor market challenges, especially the surge in discouraged workers and underemployment. The broader labor underutilisation rate, encompassing unemployed and discouraged individuals, could hit 7.1% in 2024.
While gig workers, numbered at 280 million by 2025, are classified as employed, they typically face lower income stability, weaker labor protections, and insufficient social security compared to traditional employment, which could dampen their consumption behavior. Improving labor protections and social security for these flexible workers might help curb precautionary savings, while vocational training and reskilling support could mitigate the impact of economic transformation and advancements in AI.
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