China Says Migrants Are Employed Again

By ANDREW BATSON

BEIJING -- China's government said most rural migrant workers have found new jobs after mass layoffs last year, indicating the effects of its stimulus are filtering into the job market. But the downturn is still being felt in weaker growth of household incomes, which could hold back consumer spending.

Less than 3% of migrant workers who have returned to cities in recent months are still looking for jobs, said Wang Yadong, a deputy director-general at China's labor ministry. He said 95% of migrant workers preferred to seek work in cities this year rather than go back to farming. He declined to give more detailed figures, and didn't explain how the estimates were made. Mr. Wang's report is the first official update since February on the migrant job situation.

Itinerant rural workers are the backbone of China's manufacturing and construction industries, with tens of millions crossing the country every year for work. Officials previously estimated that 18 million to 23 million of them -- about 13% to 15% of the migrant-worker population -- had lost their jobs as of January.

Since then, China's economy has pulled back from the brink, thanks to a huge expansion of government investment and lending from state banks. "Our economic stimulus plan has had a clear impact on employment," said Liu Yuanchun, an economist at Renmin University in Beijing.

He noted that while the job market is performing better than many expected a few months ago, the picture is cloudy because government figures aren't reliable. "The actual number of migrant workers who have returned to the cities and found jobs may not be as high as the official figures say," he said.

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Yet there are other scattered signs of an improving job market. Recent purchasing managers' index surveys indicate many manufacturers added jobs in May and June. And the government's revenue from income taxes rose 2% in the second quarter, according to economist Stephen Green of Standard Chartered, which also suggests payrolls are expanding.

The International Monetary Fund says businesses such as consumer-durables manufacturing and infrastructure construction are absorbing the laid-off workers.

Mr. Wang said the government's estimate of the total migrant worker population had increased by about 10 million since the end of 2008, to 150 million people in June. That figure could be evidence that job opportunities are still drawing more people off the farm this year.

He said the government will continue measures to boost employment, as three million recent college graduates have yet to find a job. "China's employment situation is still very serious," Mr. Wang said. "There are still a lot of companies whose businesses are in trouble, and the risk of job losses is still high."

New jobs for migrants this year may not be as good as those they had before. Some scholars report that migrant workers have often had to accept lower wages to find new work in recent months. The southern city of Shenzhen, long a magnet for migrant workers, recognized this trend by cutting its average wage guideline for this year by 3.8%, to 2,750 yuan ($402) a month.

Official measures of income and consumption are still rising this year, although at a slower rate. The government's survey of rural households shows average income from migrant work grew 7.7% in the first half of 2009, down sharply from 19.6% growth in the same period last year.

Yet a central-bank survey in May found urban households' satisfaction with their income was at its lowest level since 1999. Mr. Liu, the Renmin University economist, said official income figures don't include commissions or bonuses, which are likely to be down sharply. "Many people feel their incomes are declining, and their expectations for future income are not so great, so they are cutting back on their daily consumption," he said.

Write to Andrew Batson at andrew.batson@wsj.com