The untold story of China's rural employment

Exploring village residents' lives amidst China's employment challenge

China’s surveyed urban unemployment rate stood at 5.2 percent in June and the country aims to add 12 million jobs in cities this year and keep the surveyed urban jobless rate at around 5.5 percent. However, those figures primarily shed light on urban employment, leaving the nuances of rural employment in the shadows.

Today's article delves into the often-underestimated realm of rural employment in China, illuminating its significance and intricate ties to urban employment trends. The article is from 秦朔朋友圈 [Qin Shuo's Moments], which is a new media and professional service brand founded by the renowned Chinese media personality and financial observer, Qin Shuo.

Qin's content focuses on the fields of economics, finance, and business. Key areas of interest include global and Chinese financial and business hotspots, entrepreneurial spirit, innovation and creative invention, and exploration of business civilization.

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Part 1 Counter-depopulation

Recently, I went back to my hometown. Unlike previous years, I found that many villagers were staying at home and gathering at the village entrance to chat in the early morning and evening, making it quite lively. It seemed like the long-standing issue of rural depopulation was beginning to improve.

However, that was not the case.

After analyzing the situation, there are several reasons for the apparent changes:

Firstly, over the years, the development of local county-level industrial parks has increased their appeal to the younger population. Compared to traditional migrant work in other regions, young people prefer local employment. This is because a unified national labor market has essentially formed, and the income for the same type of labor, whether working in coastal areas or in their hometown, is more or less the same. Therefore, many young people choose to return to their hometowns for employment.

Secondly, there is an issue of an aging population. A large number of people born in the 1960s (known as the "60s generation") are now over 55 years old and find it difficult to secure stable jobs in formal enterprises. In the past, they could find work in coastal areas like Wenzhou, Zhejiang Province and Fujian Province (many of them worked there for more than ten years). However, as the employment situation in these coastal areas deteriorates, many middle-aged and elderly individuals have no choice but to return to their hometowns.

Thirdly, there is a problem with the overall employment situation in recent years. "Stable employment" opportunities have been shrinking, leading to a significant shift in the workforce towards "flexible employment," and eventually to temporary or gig work. As these temporary jobs become scarcer, more and more people end up staying at home without any work.

Taking a closer look at each household reveals even more issues. By studying one village, one can get a glimpse of the broader picture of the challenges faced by rural areas.

Part 2 Details

My hometown village belongs to what I often refer to as the "majority of 80 percent." Located in the central-western part of east China's Jiangxi Province, it is not a mountainous area, but it is not close to the city either, hence it remains far from urbanization. The village lacks resources and endowments, with an average of just around 1 mu (around 0.16 acre) of land per person. The villagers are neither poor nor wealthy, and their lives are sustainable (they won't naturally die out), but they also lack significant hope for improvement.

The village consists of 36 households with a population of just over 160 people, and they can be roughly divided into the following categories:

1.Urbanized population: These are the families that have moved to the cities, purchased houses, and settled there.

There are seven such households, including myself, accounting for 19 percent of the total. Apart from me, one person A, a fellow born in the 1980s, is working away from home and has settled down by buying a house in Huizhou, Guangdong Province after getting along well with their employer. One of my relatives B, born in the late 1970s, settled in Guangzhou after a path of studying, teaching, attending a military academy, and being assigned a job. Another peer, person C, opened a restaurant in Hangzhou and later made money by trading cryptocurrencies, eventually settling down in Hangzhou.

The other three households are all in nearby counties. Among them, there is a family referred to as "D." The husband used to work as a subcontractor in the construction industry, but due to long-term exposure to unfavorable working conditions, he developed a serious blood disease. The situation has become very difficult for the family, and they may have to return to their rural hometown in the future.

Apart from our seven households, there are three households that moved to the county town during the 1990s. However, they experienced urbanization failures due to reasons such as a lack of professional skills, illness, or the misbehavior of their descendants (like gambling or engaging in gangsters). As a result, they all moved back to their hometowns and are not included in this category.

2.Families with the ability and aspiration for urbanization.

These families have been living relatively well in recent years and can be considered as "rural middle class." With a bit more effort, they have the hope of moving up to the city (county town). There are two households in this category, accounting for 5.5 percent of the total.

One of these households is my cousin, who has been running long-distance passenger transportation services in recent years. He buys a used car and a van, takes orders through WeChat groups, and specializes in trips from the hometown to Guangzhou, Shenzhen, and Dongguan. Each trip can earn him thousands of yuan, and on average, his monthly income can easily reaches seven to eight thousand yuan (about 980 to 1100 U.S. dollars).

The other household is my neighbor, E, who is of the same age as me. He worked in Wenzhou for many years and climbed up from a worker to a managerial position in a shoe factory, entering the local social circle. He has the ability to move to the city, but he chooses to build a four-storey small building at home and leads a comfortable life, not thinking about urbanization.

3.Households that can't see much hope, yet reluctantly continue their lives. They are just getting by, living day to day.

The majority of households belong to this category. In the local county town, housing prices are around 7,000 yuan or more (and even exceeding 10,000 yuan in the new urban areas). A single house easily costs seven to eight hundred thousand yuan or even more. Moreover, most farmers do not have social security or bank credit (some don't even have pay stubs), nor do they have collateral for loans. Consequently, they can only afford to buy a house with full payment. For these people, it is nearly impossible to make a decent living if they move to the city.

Thus, it's not that farmers don't want urbanization, but rather, the majority of Chinese farmers lack the ability to actively urbanize. By urbanization, it is based on standards like owning a house, having social insurance, and settling down, rather than just working in the city or being counted as "permanent residents" who might return to the countryside in the future. If you were to ask the farmers and city dwellers, even if they come to the city to work and make a living, can that be considered urbanization? Therefore, a broad definition of urbanization rate does not hold great practical significance.

It is evident that China's urbanization, in sync with the country's economic slowdown, will inevitably slow down as well. As the rate of urbanization increases, the difficulty will surpass previous levels.

Consequently, a large population will still remain in rural areas, and rural areas will inevitably exist for a long time. Revitalizing the rural areas is a necessary and imperative task.

"Taking a phone and lying down" has become the norm for rural children during their leisure time.

4.Households facing financial hardships.

There are only two households in this category. One is the previously mentioned construction contractor D, who is currently in a precarious situation due to illness. The pressures of city life are significant, and they may consider returning to the countryside.

The other household is the one mentioned earlier, the villager F who moved to the city in the 1990s. This family consists of a widowed mother and her orphaned children. They face difficulties in urban living due to the lack of professional skills and background. Both sons have taken the wrong path, with the elder one engaging in theft and the younger one getting involved in petty crimes and drug addiction. They find it challenging to survive in the city and eventually decide to return to their hometown. Fortunately, their ancestral house is still there, and the villagers are understanding and accepting.

Later, the elder son of this family found work in Wenzhou and get into a fight while drunk, resulting in a fatal head injury. He died in the middle of the night in a rented room in that city. Shortly after, their elderly mother was diagnosed with cancer and passes away. The families of both sons were broken and shattered, leaving only the younger son all alone. As a result, this household is now reduced to just one person who lives aimlessly, taking each day as it comes, living as an unburdened and carefree soul.

As a consequence, the number of people facing hardships in the countryside has become very scarce.

Part 3 Employment

Overall, the villagers who managed to escape countryside (and became urbanized) account for 19 percent of the total. Their employment is included in urban areas. Let's talk about the remaining 80 percent. Their employment situation falls into the following five categories:

1.Rural entrepreneurs

Three households have started their own businesses. One of them is G (born in the 1970s), starting out early and running a modest sawmill away from home. The other two are peers born in the 1980s. Household H owns a chicken farm and grapples to sustain it despite difficulties. Nonetheless, this family is far from success since they still can not afford a home in the city.

I from another household, with the support of C who has settled in Hangzhou as mentioned above, leveraged his managerial experience from the previous shoe factory in Wenzhou and started a shoe material processing plant in his hometown.

I's plant is floundering just like all the shoe factories in coastal areas. The upstream loans are never to come, while the wages of local workers and various expenditures must be paid on time. He got through the past two years by cashing out his credit card. How long can it still work? Nobody knows.

2.Rural individuals

This village lacks an atmosphere of doing business. Individual businesses mainly involve buying vehicles for trucking service, which counts as a professional and technical job in rural areas, equivalent to the middle class in the cities.

Five years ago, truck driver used to be one of the well-paid jobs in villages. Earning more than 10,000 yuan monthly was a piece of cake even employed by others, which is easy for these drivers to buy their own car. Out of all the villagers who were born in the 1970s and 1980s, a dozen have done this job. But driving a truck is highly intensive and risky work that may require seven or eight hours of continuous concentration and involve danger of accident (a youngster once died of it). As a result, few keep on being a truck driver.

A more fundamental reason is the economic shock. Truck drivers may be the most affected and frustrated group in the job market in recent years.

China's strong ability to build vehicles compounded by the flourishing automobile finance and lower threshold of starting business with a car have quickly led to a glut.

What's worse, China's manufacturing and real estate industry have been in predicament with shrinking demands since 2018. That was when the internet logistics platforms took off, improving logistics efficiency while suppressing truck drivers' bargaining power. Drivers thus transformed from working individuals to "platform employees."

There are in total six truck drivers in this village, including the one who has settled in the county town previously. They take up one sixth of all villagers who have a job. Three out of the six are self-employed with their own cars; the rest work for others.

Among the three who bought cars by themselves, one is affiliated with a big logistics company, which can guarantee cooperation with some express companies and stable business. However, various expenses continue to soar including oil prices, highway tolls, premiums, platform fees, and affiliation fees. Meanwhile, freight charges are in decline. The dilemma makes trucking a low margin business teetering on the edge. The other two work as individuals and take orders from Internet platforms on a casual basis. The villagers will rejoice for them if not seeing them around someday, for that means they finally get an order.

Another type of individual business is farming contractor. According to a sample survey, in the locality, the net income for double crop rice per mu is approximately 470 yuan, whereas the figure for single crop rice registers 750 yuan. In the face of high labor and administrative costs, farmers will prefer the single. If measured by the standard 10 hectares (150 mu) of farming land set by the national authoritative department for peasant households, the income totals 112,500 yuan. But the farm work requires at least a couple to manage, so that will make 56,250 yuan for each. The monthly income finally stands at 4,687.5 yuan (only lower due to other costs), which is about the same if they work in city.

Low pay, tough working environment, toil of mind and body—the villagers would naturally find it uneconomical. Fortunately, there are agricultural subsidies to support them. The local policy states that if one has over 50 mu of land, he/she can receive a subsidy of 100-150 yuan for each mu exceeded. Let's say 150 yuan will do, then 150 mu can make 22,500 yuan. An "incentive" is what it is called.

Subsidies for agricultural machinery also play a part. But the amount granted to a farmer varies from one to another. "Nepotism" has the big say. For instance, if you are in some way connected to the power, you can receive the largest sum of subsidy one can get. If not, the lowest. The gap can be as wide as tens of thousands of yuan.

Furthermore, many local governments have been troubled with financial difficulties these days and subsidies do not come easy. Large contractors thus run out of enthusiasm, bringing down the land rent from around 500 yuan previously to 350 yuan now.

In recent years, the majority of land in the village has been contracted out to J. He was willing to only because a distant relative of his served as the director of finance in the county. Subsidy was not a problem. However, at the end of last year, his director relative was arrested, so went his subsidies. He is left in worries this year.

No matter how times change, "nepotism" is always the pass if one wants to start a business and make a living in the countryside.

3.Stable employment

This category primarily involves those working for others. As stated earlier, a unified labor market has taken shape nationwide. Whether working in a coastal city or hometown does not make a big difference now in terms of earnings.

By and large, all local people have been to places like Wenzhou city or Fujian Province, working mainly in shoe, clothing and metal products factories that employ dozens of people. These factories pay wages according to work and allow a random work pace. When orders come in bulk, they work day and night, earning up to nearly ten thousand yuan a month. Otherwise, they can only spend half a month in their tenement, struggling to pay for rent and food.

Orders remain short these years and people working in factories earn much less. Overall, a (typical) worker makes an average of 4,500 yuan every month. Removing rent and living expenses, they can only save about 3,000 at most.

This 3,000 yuan equates to the earnings in hometown shoe factories and clothing factories (basically only directors can earn over 4,000 yuan). After close consideration, many workers with their family left behind would rather go back home. Therefore, migrant workers returning to their home villages has been a trend of late years in China's employment market.

However, the reason why these factories are willing to move to small inland counties is the attraction of local cheap labor and lax employment regulation. They are not that philanthropic to raise wages and pay social insurance for workers. Due to employees' poor sense of belonging and youngsters' impatience for long-term job, the turnover rate is particularly high. Consequently, though small factories in those hometown industrial parks do not see a booming business, they are invariably recruiting workers.

As we can see, a relatively stable employment market is opening its gate to rural prime-working-age labor force. It is just that these jobs are of low quality, which gradually lose appeals for young adults to stay for long.

4."Flexible employment"

Odd jobs, to be more specific. This group mainly comprises middle-aged and elders eliminated from "stable employment".

Apart from a few regions such as Beijing, Shanghai and the southern regions of Jiangsu Province, Chinese farmers are not entitled to social insurance or pensions (local rural insurance only offers more than 100 yuan per month), which means that even after retirement age, they have to work hard to support the rest of their lives. But formal jobs will not hire them. What can they do?

One way is to remain where they have been working to be informally employed. On the one hand, urban jobs are hard enough to find, so we can imagine their situation. On the other, only "nearly permanent residents" who have been in cities for a long time (and will eventually return home) will go for this option.

The other choice is to go back home and take odd jobs around the neighborhood, such as on construction sites, road building, board mills, farmer house building, etc. One is able to earn about 120 yuan a day doing these jobs locally, and 80-100 yuan a day in other villages and townships away from the county. Unfortunately, demands for labor force have reduced drastically over the past few years as investment in real estate and infrastructure shrank.

Notably, supply greatly exceeds demand in China's rural labor market so the local employers are becoming increasingly "selective". Ten years ago, people aged over 55 were dismissed. This year, some companies are even excluding those over 35. Therefore, the number of people half-employed and half-unemployed keeps expanding. More than anything, the biggest "baby boom" in Chinese history during the period of 1962-1975 is now turning into a "retirement boom", only to exacerbate the problem.

The bottom line for "flexible employment" in rural areas is to do processing work such as making hairpins and colored lanterns. Ornamental light strings that we often see are one of the examples—handmade items that require no technical skills. By doing it, one can make 20-30 yuan per day (50-60 yuan if done by both husband and wife) and bring around 1,500 yuan into the household each month.

There is no hope ahead, but it is not a dead end behind. Most villagers aged above 50 are thinking the same, "no matter what, it's no problem earning some one thousand a month, and that's enough to survive"...

It is not uncommon that the middle-aged and elderly in rural areas play cards to kill time.

5.The unemployed

According to government statistics, there are only two people unemployed in the village, excluding those aged over 70.

One is the younger son from the F family who will not work; the other is college student K who has just graduated this year. He attended a vocational school so he could not do postgraduate studies. And it is needless to say what challenges fresh graduates are facing.

Part 4 Conclusion

In conclusion, employment in small villages is not that terrible. After all, data shows that there are only two individuals unemployed. But in terms of job quality, it is certainly not positive:

Firstly, given the sluggish manufacturing industry, the number of "stably employed" workers is dropping, with the labor force constantly moving towards "flexible employment" and then to "odd jobs". Workers are living under great pressure and the whole job market is growing unstable;

Secondly, "flexible employment" market has been shrinking. New opportunities of employment growth are hard to find even for odd jobs;

Thirdly, the rural areas can no longer provide high-quality jobs for those who desire to "work in the city and move up the social ladder", just as the cases for contruction contractor D and the five truck drivers who have not yet moved to the city.

Fourthly, even though it has been years since the adoption of market economy, we still lack a favorable environment for "entrepreneurship" (self-employment included) in the countryside. The business environment has been waiting for improvement for long, and "nepotism" still lies as the determining factor of doing business ...

Ab uno disce omnes. When discussing urban employment, we should not overlook the downward trend for the rural. For example, when various sectors compile statistics and study unemployment problems, they tend to focus on "urban employment data" and "urban unemployed population" and leave out the countryside.

That is to say, we have to be more down-to-earth in stabilizing employment.

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