With the increasing downward pressure on the economy, it is reasonable for the central bank to comprehensively reduce the reserve requirement and the Political Bureau meeting in December. Although the direction of policy easing is clear, the question is how much easing will be in the future? We believe that the core lies in the transmission of this round of economic downturn to employment. In fact, since the "six stabilities" was proposed at the Politburo meeting in July 2018, employment has always been the main focus of the government's economic work; The "six guarantees" proposed at the Politburo meeting in April 2020 has strengthened the priority of employment. In other words, as long as there is no problem with employment, the government can moderately increase its tolerance for economic downturn.
So what about the transmission of this round of economic downturn to employment? We believe that only from the indicators of new employment and unemployment rate, we can not fully grasp the whole picture of the employment problem. Combined with the existing employment information and relevant data, the employment pressure has been increasing since the fourth quarter of 2021, and the overall employment index does not reflect the internal structural problems.
First of all, the December Politburo meeting mentioned "ensuring the wage payment of migrant workers", which is the first time since the October 2018 Politburo meeting. We note that the Politburo meeting in October 2018 was held the day before the general secretary's private enterprise Symposium. At a time when Sino US trade frictions and private enterprise defaults reached a climax, migrant workers returned home early in many places. It is precisely to cope with this employment pressure that the government stressed "putting stable employment in a prominent position" at the subsequent central economic work conference. Therefore, after a lapse of three years, the issue of "migrant workers' wages" is raised again. The potential unemployment risk of migrant workers can not be ignored, especially the current construction industry and service industry are being impacted by the cooling of the real estate market and the repeated epidemic situation.
Secondly, according to our calculation, there is still a gap of 4 million migrant workers compared with that before the epidemic. As of September 2021, the number of migrant workers still had a negative growth compared with two years ago, 4 million less than the trend before the epidemic. A considerable number of migrant workers withdrew from the labor market because of the repeated epidemic, and the survey unemployment rate and other indicators did not count these workers who withdrew from the labor market. At present, it is particularly noteworthy whether the 52 million migrant workers in the construction industry will return home with the continuous cooling of the real estate market.
Similarly, in the context of repeated epidemics and stricter industry supervision, the employment prospects of the service industry represented by catering, education and the Internet are not optimistic. In November 2021, the employment sub item of PMI in the official service industry has been hovering at the low level after the epidemic. As most jobs in the service industry have been created by small and medium-sized enterprises, this is consistent with the downturn of labor demand of small and medium-sized enterprises. In terms of cities, even if Shanghai is a first tier city with strong absorption of new jobs, the number of people receiving insurance benefits has continued to rise since 2021.
In addition, the employment problem of the youth population since this year should not be ignored. In October 2021, the unemployment rate of the population aged 15-24 was 14.6%, still 2 percentage points higher than that before the epidemic. Young people are more concentrated in the real estate, education and Internet industries. For example, nearly 14% of people aged 16-24 are engaged in the education industry, and the strict supervision of these industries since 2021 is likely to continue to aggravate the difficulty of job hunting of the young population.
Thus, although the official indicators have not been reflected, the employment worries in this round of economic downturn are becoming prominent. We expect that the economic work in 2022 will again "focus on stabilizing employment". Referring to previous experience, in addition to reducing reserve requirements and accelerating the issuance of special bonds, the intensity of further tax reduction and fee reduction in 2022 is likely to exceed market expectations.
Risk tip: the epidemic spread exceeded expectations, and China's foreign policies exceeded expectations
