The Economist Asia Edition - June 09, 2018

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The EconomistJune 9th 2018 Finance and economics 65

A


MERICA’S unemployment statistics at-
tract close attention, even from presi-
dents. Early on June 1st President Donald
Trump tweeted that he was looking for-
ward to the latest figure (3.8%), released
that morning. China’s unemployment
numbers, by contrast, attract mostly ridi-
cule. They have barely budged since 2011
despite theupheavals of the period.
Many China-watchers therefore hoped
that a new measure of unemployment,
dating from 2016but publishedmonthly
since April, would be more revealing. Un-
like the older statistic, which counts only
those registered as jobless at local labour
offices, the new measure draws on a sur-
vey of the labour force, collected by trained
enumerators and beamed directly to Beij-
ing beyond the grasp of local officials. It
now covers 120,000 households across ur-
ban China (on top of a longer-running sur-
vey of 31 cities), providing, in theory, a rep-
resentative snapshot of the biggest
unemployed population in the world.
To no one’s surprise, the new number is
well below the government’s target of 5.5%.
And unlike America’s figure, it also seems
boringly stable (see chart). That has led
many to dismiss it as propaganda. But such
a judgment may be too hasty. If China’s un-
employment figures do not behave like
America’s, that may be because Asian un-
employment bears little resemblance to its
Western counterpart.
In many developing countries, unem-
ployment is low simply because few peo-
ple can afford it. Jobless benefits are patchy.
In their absence, most people have to eke
out a living to survive. Unemployment is,
in effect, a “luxury good”, notes Ajit Ghose
of India’s Institute for Human Develop-
ment, a research organisation.
Even when they are available, benefits
may not be worth the bother. In Thailand,
for example, payments last six months and
range from 1,650 baht per month ($52) to
15,000. To be eligible, a Thai worker must
register with thesocial-security office. But
only one in three does so, according to
Warn Lekfuangfu, an economist at Chula-
longkorn University. Many remain outside
the formal economy, where they are de-
nied benefits but also spared taxes.
What do they do instead? A laid-off fac-
tory worker might lend a hand on the fam-
ily farm, become a casual day labourer, or
sell trinkets on the street. “There’s a pletho-
ra of low-wage jobs” in the region, points
out Sara Elder of the International Labour

Organisation (ILO) in Bangkok. At her hus-
band’s gym, ten people wait to help him
with the climbing wall. In France, he
would have to get by with only one.
When Annan Chanthan left his job as a
graphic designer in Bangkok five years ago,
he thought about collecting unemploy-
ment benefits, but never bothered. He now
earns more money selling lottery tickets
next to Hua Lamphong railway station
than he did in his former profession.
In poor countries, unemployment is
paradoxically concentrated among the bet-
ter off and better educated. They can afford
to wait a bit for a job that matches their as-
pirations and qualifications. Their behav-
iour may also explain unemployment’s
curious stability. “Even relatively well-off
people cannot wait indefinitely,” Mr
Ghose points out. Thus when times are
bad, they may settle for a worse job or stop
looking, rather than wait longer, which
would add to the rate of unemployment.

Fulsome employment
The peculiarities of unemployment figures
are not alwaysappreciated by the govern-
ments that publishthem. Some policy-
makers even complain that the statistic is
too low. “They hate the unemployment
rate in Africa; they’re very vocal about it,”
Ms Elder says. For many years, Liberia’s
jobless rate was said to be 85%, an outlan-
dish figure that nonetheless symbolised
the country’s genuine economic distress.
When the government carried out a proper
count in 2010, it discovered that thetrue
rate, strictly defined, was under 3%.
Some governments nudge the measure
upwards. They count people who are not
immediately available to start work or not
actively seeking it. Indonesia, for example,

includes “discouraged workers”, who have
given up looking for a job. Its national
number was 5.4% in 2017, compared with
theILOestimate of4.2%.
Countries seeking higher rates may
soon get their wish. In 2013 the world’s la-
bour statisticians resolved to change the
definition of the labour force, excluding
people, such assubsistence farmers, who
produce goods for their own family’s use.
That does not change the number of unem-
ployed. But it does shrink the labour force.
Thus when the new definition is imple-
mented, an unchanged number of unem-
ployed people will constitute a higher per-
centage of a smaller labour force. In a rural
country like Laos, the effect is dramatic. Its
unemployment rate was 0.7% in 2010 using
the old definition but jumped to 9.6% in
2017, using the new, stricter one.
Ultimately, a low unemployment rate is
evidence only that people are working, not
that they are working well. Work may be
poorly paid, periodic and precarious. In In-
donesia, less than half of those in employ-
ment collect a recognisable wage or salary.
The rest mostly work for themselves or
their families.
Patchy employment is by no means the
preserve of poor countries. It is becoming
more prominent in richer nations also,
notes Mr Ghose. On his last visit to Cam-
bridge University, he learnt that some staff
in the faculty cafeteria did not find out un-
til Friday whether they would be working
the following week. When he was a stu-
dent at Cambridge decades ago, things
were not like that at all, he says. In Britain
and America, the unemployment rate is
now reminiscent of that past age of full em-
ployment. But as Asia demonstrates, full
employment can sometimes be surpris-
ingly threadbare. 7

Joblessness in Asia

The luxury of unemployment


BANGKOK AND HONGKONG
In developing countries, many people cannot afford not to work

Measure forced leisure

Sources: Haver Analytics; Huatai Securities;
China’s National Bureau of Statistics;The Economist

Unemployment rate, %

2014 15 16 17 18

0

1

2

3

4

5

6

Taiwan

Malaysia
Thailand

China (31 big cities)

China
(new series)

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