Unemployment

Unemployment

According to O’Sullivan & Sheffrin unemployment is measured by those who are seeking a job it does not take into account a variety of factors and this can lead to a false percent of the people who are actually unemployed (Sullivan, A & Sheffrin, S,2006,p.446). In China the unemployment rate appears low because the government only includes a select part of the labor force, when in fact the number is very high with no end in sight (No right to work, 2005).

The Chinese Economy

In the 1950’s the Chinese economy was controlled by the government. In 1979 some changes were made in the economy in attempt to revise and develop the economic conditions in China. The government gave up some control and encouraged foreign investments. There growth was great and happened at a fast pace. In 2005 their GDP was 10.2 percent and the country had revenue of “$2,234.3 billion” annually even thought these numbers seem impressive China has a population of “1.32 billion” and is considered a low income country.

The economy grew at a fast rate but because the pace was so fast financial planners were unable to keep up with the demand and this lead to an unbalanced development and caused problems for the economy. The demand was high and the companies were unable to keep up with it this lead to larger companies and a huge work force. In 2005 Chinas labor force was “776 million people”. Eventually the demand slowed and came to an equilibrium thus causing the closing of many businesses and the layoff of thousands of workers. In 2005 the government reported an unemployment rate if “4.3 %”( China, 2007). According to the article No Right to Work this figure would normally be considered “full employment” but the figure does not reflect the actual number and the emerging problem (No right to work, 2005).

Many state owned business had more employees than they needed and was experiencing diminishing returns and to decrease the effects businesses started laying people off %”( China, 2007). The closing of business lead to the layoff of “24 million” workers this represented “10%” of the “urban labor force” and the closing of business continue along with more people loosing there jobs. According to the article No Right to Work several state owned banks and 45,000 offices have closed over the past ten years leaving “250,000” people with out jobs and the government announced the closing of state mines and business that employ “5.1 million people” (No right to work, 2005). The loss of jobs caused a ripple effect to near by communities that had