As China's economy slows, migrant workers head home

Every summer in Bianqiang village in northwestern China, locals gather for three nights of Chinese opera. There are children's rides, popcorn and spit-roasted chickens. Grandparents watch over their grandchildren.

This summer's event was different though because more young parents were present. In previous years they had left their children in the care of grandparents while they found work in nearby cities and towns. But as China's economy slows, jobs for migrant workers are drying up and they are heading back home.

China's official unemployment rate has been around four per cent for years, despite the rapid slowdown in the economy from double-digit growth to quarter-century lows last year of less than seven per cent.

But the real level of unemployment or underemployment is masked by the fact that the official data does not include China's 277 million migrant workers, such as Zhang Sihu and his wife from Bianqiang in Yulin, a region rich in coal, oil and natural gas in northwestern Shaanxi province.

At the height of China's real estate boom in Yulin a few years ago, they made 10,000 yuan a month, running a canteen for construction workers. That was double the average migrant wage, but the boom is now over.

"It became too difficult to turn a profit last year, so I closed the canteen and went to find work as a cook," said Zhang, who left Bianqiang village 14 years ago.

"But it was difficult finding work, no one was hiring, and when I did find a job, I was let go after a few months. Business wasn't good so the boss is now running the restaurant himself," added Zhang.

Zhang and his wife have now returned to their home village and are back on the family farm with their children and parents, raising 200 head of cattle.

"It's a big problem because migrant workers can't find jobs in the city, but if they stay in their hometowns, their income is very low," a government official at Yulin's bureau of commerce said.

Business surveys, which economists say may be the best monthly measure of the broader labour market, have shown renewed job shedding in both manufacturing and services.

"Migrant workers are a very elastic part of the labour pool that aren't captured anywhere (in official statistics)," said Julia Wang, an economist with HSBC in Hong Kong.

"If you look at what's happened to the migrant worker pool over the past two years, the trend of people going to cities has slowed significantly," added Wang.

State jobs

Government data shows the number of migrant workers rose 0.4 per cent in 2015, the weakest increase since the global financial crisis in 2009. Migrants searching for jobs outside of their home province fell in 2015 for the first time in six years.

It is not only migrant workers losing out. Employees of state-owned enterprises (SOE) and other larger firms are also being hit by stagnant or lower wages, underemployment and less job security.

Reuters reported in March that China was aiming to layoff 5-6 million state workers in the next two to three years.

Wang Mei said she and her husband were working for PetroChina, China's biggest oil-and-gas producer, in Inner Mongolia, but moved home to Suide county in Yulin, after their salaries were slashed.

"The economy isn't doing well, our child is here in Suide, this is where we grew up, so we decided to move back," she said, adding she worked in maintenance and her husband worked in IT at PetroChina.

"I think it was difficult for my husband to decide to quit his job. It's more stable working at a state-owned enterprise but his salary dropped from over 4,000 yuan per month to 2,000 yuan, so he finally decided to quit," she added.

A spokesman for PetroChina said the company was trying to keep salaries of front-line workers stable, but declined to comment on this particular case or recent salary trends for back office staff.

Wang has found temporary work at a local government service office in Suide, while her husband considers his next move.

"Maybe he'll start his own business - an e-commerce store, lots of people are doing that. But I don't want him to blindly become an entrepreneur, that wouldn't be good," she said.

The government is trying to support employment, including by propping up insolvent SOEs, increasing retraining programmes and encouraging people to become entrepreneurs.

"You know how it is - you show up, have a chat, drink some tea, read the newspaper, sit around, don't really do anything," said an employee of a SOE in Yulin, who gave his surname as Liu.

"Two-thirds of people don't do any work at our SOE," the employee added.

Start-up spaces have begun popping up around Yulin, which several government officials said was aimed at encouraging the creation of new businesses to counter the slowdown in economic growth.

Bai Huifang, 25, manages an incubator decked out with bamboo plants, a pool table, and a stage draped in Communist Party paraphernalia. It housed 32 start-ups in 2015 but only one was successfully funded, Bai said.

"A big reason why we're able to survive is because of government funding. And the government is happy we exist because they are grappling with rising unemployment," added Bai.