Regardless of the rapid growth and severe instabilities in the labor market, China 's unemployment rate has remained questionably stable at around its current level of 4.1% for the last decade or so. Unemployment rate only increased to 4.3% even when an estimated 20 million migrant workers were laid off during the global economic crisis in 2008.
The reason behind this is because the official unemployment figures only includes urban workers who registered themselves as unemployed. Less than two thirds of the urban working population in China are made up by urban workers. The urban workers in China has a better job security than the migrant workers as they are less likely to be retrench in the event of company restructuring or downsizing.
The two main types of unemployment that China is facing are: Structural and frictional unemployment. China’s total amount of labor market is limited which means that workers who are facing structural and frictional employment difficulties need to be taken seriously. China is a rapid growing country which will definitely have readjustments in the industrial industry and thus, new jobs will constantly be created. As new jobs are being created, traditional jobs will slowly disappear and if workers are not up to the new jobs, structural unemployment will start happening. Labor market development in China is still in its early stages and with poor human resource allocation, the workers cannot be redirected to new jobs without frictional unemployment as the readjustments in the industrial industry continues. (Fang,