BEIJING (Reuters) - China said on Friday that urban employment held up in the first quarter even as economic growth slowed to a 6-year low, but the labor ministry warned that authorities cannot be “blindly optimistic” as the pace of job creation is slowing.
The urban unemployment rate was at 4.05 percent at the end of March, little changed from 4.1 percent at the end of 2014.
The world’s second-largest economy created 3.24 million new jobs in the first quarter, down from 3.44 million during the same period last year, the ministry said.
China’s annual economic growth slowed to a six-year low of 7 percent in the first quarter, hurt by a housing slump and a downturn in investment and manufacturing.
“The pace of urban job creation is slowing as economic growth weakens. Employment indicators tend to lag behind economic growth,” Xin Changxing, Vice Minister of Human Resource and Social Security, told a news conference.
He attributed the resilience in employment to the increased size of the economy, faster expansion of the labor-intensive services sectors, along with the government’s policy to make it easier for people to set up new businesses.
“I‘m confident that we can maintain stable employment as long as the economic performance is kept within a reasonable range. But we cannot be not blindly optimistic,” he said.
In particular, China faces large pressure creating jobs for university graduates this year, Xin said. Nearly 7.5 million graduates will hit the job market, up from around 7 million last year.
Facing slowing economic growth, Chinese authorities have said that avoiding mass unemployment is a crucial policy priority, although the urban jobless rate is widely known to understate the real unemployment figure, a point acknowledged by the government.
The government aims to create at least 10 million new jobs in 2015 and keep the urban jobless rate below 4.5 percent.
China’s cabinet hopes to create more jobs through new policies including giving tax breaks to firms set up by college graduates and the unemployed, state television said on Tuesday.
The urban unemployment rate hovered between 4 percent and 4.5 percent in the last decade, even during the global financial crisis, partly because it does not account for China’s 298 million migrant laborers.
To improve the data, the Chinese government has devised a new jobless rate that is compiled through surveys. The statistics bureau said last week that the survey-based jobless rate hovered around 5.1 percent.
Authorities have rolled out a series of stimulus measures over the last year, including two interest rate cuts since November, to cushion the blow, but have indicated they may be willing to tolerate somewhat cooler growth if the labor market remains resilient.
China should cut interest rates again this year and further reduce the amount of reserves that banks must hold if it wants to expand its economy by its target of around 7 percent, a Reuters poll showed on Friday, in what would be its biggest bout of policy easing since the 2008 global financial crisis. [ECILT/CN]
Editing by Shri Navaratnam & Kim Coghill