The status of migrant workers throughout the country will be considered from Jan 1 next year while calculating the national unemployment rate, the Ministry of Human Resources and Social Security has said.

The new policy will allow unemployed migrant workers to register with local governments to get a job. Some cities have already started experimenting with this policy.

It will also allow migrant workers who have worked in the same city for more than half a year at a stretch to register afresh for unemployment after being laid off. Migrant workers will be registered in a way that would allow them to use their registration and avail of the supportive policies even when employed in other regions.

Registration forms will be issued from Feb 5 to July 5 next year. The updated figures will be submitted to the central government every month, and the national unemployment network is expected to be complete by Jan 5, 2012.

Until this year, the official unemployment rate was calculated only on the basis of urban areas, which many believe did not give an accurate and comprehensive national index.

Zhang Juwei, deputy director of the Institute of Population and Labor Economics, affiliated to the Chinese Academy of Social Sciences, considers the new policy very important because migrant workers are an indispensable part of the country's labor force. Now that migrant workers will be accounted for, the unemployment data will be more accurate and ensure that they get basic welfare, says Zhang, who is one of the leading experts in the study of unemployment rate.

China's rural population is about 720 million. More than 200 million of them have become migrant workers, fueling the country's urbanization and industrialization. They have shifted to cities for jobs, and the wages they earn have become a major source of income for their families. Some of them have settled down in cities, too, but they are not counted as unemployed even if they do not have jobs.

Zhang says that it is difficult to cover the entire rural population, but without the large number of migrant workers being accounted for, the unemployment rate cannot reflect facts.

Yang Yiyong, director of the Institute of Social Development Research, affiliated to the National Development and Reform Commission, says that in principle, all employable but jobless individuals should be part of the official unemployed list.

Accurate and timely assessment of the unemployment rate will be critical for designing appropriate and timely macroeconomic policies and social assistance programs. Therefore, taking migrant workers into account will be the first step toward reforming the unemployment index in China.

After the global financial crisis, many Chinese companies cut their production because of falling demand overseas. It was reported that more than 20 million migrant workers were jobless during the peak of the crisis. In such situations, it is important to count them as unemployed to present the true unemployed figures both for urban and rural areas, and help the government adopt proper policies to tackle the problem.

Yang says it is most important to treat migrant workers on par with urban workers after the new data are published. The government should introduce more supportive employment policies and services based on the new data.

Zhang and Yang both say it is not known what the new unemployment rate will be, though common sense tells us that when more people are counted the number of unemployed will rise. But since the total population as denominator will increase, too, the numerator or the percentage of unemployed may not increase drastically. In fact, it could drop.

That's why many experts agree that the most critical aspect of the whole process is the statistical method used - surveyed unemployment rate or registered jobless rate - to determine the jobless figure. The present method, counting only people registered with local governments as jobless rather than using representative sample surveys, is widely believed to understate the true unemployment rate.

Yang says the surveyed unemployment rate, according to his research, was about 7.1 percent in 2009, while the registered rate was only 4.1 at the end of September this year. Such a difference could lead to wrong economic policies.

The unemployment issue didn't draw Chinese policymakers' attention until the mid-1990s, when for the first time some State-owned enterprises (SOEs) became financially sustainable and the government began diversifying them, telling the inefficient ones to lay off workers or go bankrupt. About 45 million workers were laid off because of the economic restructuring from 1995 to 2002 - 36 million of them from SOEs.

The use of the registered unemployment rate can thus be regarded as the outcome of what happened at the beginning of the economic reform. But now since our market economy has advanced, the country's labor statistics should keep pace with the subsequent changes.

Using sample surveys to determine the unemployment rate can help develop a more open, integrated labor market, and put in place an effective social insurance system. Owing to the traditional perceptions, many Chinese people feel uncomfortable or are even embarrassed to register as laid-off workers. Hence, data can be more representative if sample surveys are used.

The Ministry of Human Resources and Social Security has said that a monitoring system will be set up at the central and local government levels according to data received by local governments every month.

Yang suggests that besides the monitoring system, a third-party unemployment statistics and survey system should also be set up to provide monthly data as part of risk management.

As Sukti Dasgupta, senior specialist in employment and labor market with the International Labor Organization, says, any policy or initiative that widens the coverage and scope of labor market data is welcome.

Certainly, a more reliable source of unemployment data would come from household surveys, as is the norm in most countries. But as the first move by the Ministry of Human Resources and Social Security toward wider coverage to determine the country's unemployment rate is a positive move, and hopefully the 12th Five-Year Plan (2011-2015) will improve it further.

(China Daily 12/16/2010 page9)