
What’s it like to be unemployed in China? That’s a question that a near-record high number of people faced last month, amid the Covid-induced lockdowns across parts of China.
Beijing has responded to the country’s economic slowdown with a package of relief measures. But few of those policies are designed to provide direct aid to individuals and households. Narrow eligibility requirements and meager payments mean that few among China’s unemployed are adequately protected by the country’s social safety net.
The tension between China’s promise of prosperity to its people, and the Chinese government’s inadequate support for those who fail to achieve it, has long persisted. This week, The Wire focuses on one aspect of China’s social security system — unemployment insurance: who it covers, how it compares to the rest of the world, and what it means for China’s economic prosperity.
WHO GETS UNEMPLOYMENT?
To qualify for unemployment benefits in China, the first thing you need to have is a record of prior employment. That requirement isn’t unusual: the U.S. and U.K. also impose work requirements, usually spanning at least one year. Unemployment insurance premiums are covered by both employees and their employers, who contribute between one and three percent of the employee’s salary. Both must have paid their premiums for at least a year for the employee to be eligible for unemployment insurance upon losing their job.
Such narrow eligibility requirements leave big gaps in who is covered by the state while job seeking. Most of China’s migrant workers, which number around 290 million, are left out. “A lot of migrant workers lack formal labor contracts with their employers,” says Aidan Chau, a researcher at China Labour Bulletin, a Hong Kong-based labor advocacy group. “Many employers also simply don’t pay their insurance contributions — so those [employees] are also ineligible.”
Also excluded are recent college graduates, whose numbers are steadily increasing — a record 11 million students will graduate from college this spring, just as entry-level positions are becoming harder to come by. Youth unemployment, for those aged 16 to 24, stood at 18.2 percent in April, and may creep higher still, come graduation season.
Unemployment Insurance in… | China | United States | United Kingdom |
---|---|---|---|
Required: Prior Employment | Yes | Yes | Yes |
Required: Involuntary Unemployment | Yes | Yes | No (After 3 months) |
Required: Seeking Employment | Yes | Yes | Yes |
Duration of Benefits | Depends on length of employment <5 years = 12 months 5-10 years = 18 months 10+ years = 24 months | Most states: 26 weeks (With extended benefits in states with high unemployment) | 6 months (Depending on National Insurance contributions) |
Who contributes? How much? (as % of wage) | Employers: ~2% Employees: ~1% | Most states: Just employers (~1-5%) Employers + Employees in: AL, NJ, PA | National Insurance contribution*: Employers: ~15% Employees: ~13% |
Additional pandemic support | • Limited municipal consumption vouchers • Small subsidy to eligible migrant workers | • Pandemic Unemployment Assistance • CARES Act: stimulus checks | • Universal Credit |
*Note: The U.K.’s National Insurance contributions count to several benefits programs in addition to unemployment insurance, including State Pensions, Maternity Allowances and Bereavement Support Payments.
Amid pandemic-induced economic downturns elsewhere, other governments have provided direct assistance to groups that ordinarily miss out. Many U.S. gig workers and college grads were able to apply for unemployment insurance after Congress expanded eligibility to cover independent contractors and the self-employed in the spring of 2020. It also authorized the IRS to issue three rounds of stimulus checks to millions of adults. Canada, Australia and Ireland have also introduced new benefits for the unemployed in the past two years.
China has provided few equivalent direct assistance programs to people put out of work due to Covid. During the height of the unemployment wave in early 2020, when potentially as many as 80 million people were out of work (exact figures are hard to pinpoint, as China’s official unemployment figures are widely believed to understate the actual numbers), just 2.4 million people were claiming unemployment insurance. For comparison, 23 million Americans claimed unemployment insurance in April 2020.
PALTRY SUPPORT

What do workers who qualify for financial assistance actually get? Not very much. Monthly unemployment insurance payouts (on average around 1,500 RMB, or $225), are lower than China’s already paltry minimum wage. That amount “isn’t going to cover all expenses like food or rent,” says China Labour Bulletin’s Chau. “Workers will probably need to use their savings or find a job to make ends meet.”
Ineligible workers do have one more fallback option, an unconditional central government-run cash transfer program for the most destitute, known as dibao. But dibao payouts are even smaller, around 600 RMB ($90) per month on average, and primarily oriented towards those who are unable to work. Those funds also serve a secondary purpose: as a tool of social control, according to recent research by Jennifer Pan, a professor of communication at Stanford University. Pan found that local administrators frequently appropriate limited dibao funds for “targeted populations,” people identified as potential threats to the Communist Party. Because the program requires beneficiaries to self-report on their activities, dibao has become a tool for public security officials to surveil and maintain political order.
For many migrant workers, the countryside remains the provider of last resort. Short on work and deprived of benefits, many simply choose to head home to tend to family and the land. But China’s roving lockdowns have made cross-country travel harder, confining many migrants to cities even as they run out of work and exhaust their savings. Throngs of people including students and migrant workers could be seen lining up at train and bus stations in Shanghai last month following the city’s reopening.

The economic slowdown has led Beijing to introduce new measures to jumpstart the economy, but few of those programs directly benefit consumers. Most of the 33 measures announced last month instead prioritize boosting investment, consistent with a long time trend by Beijing of putting investment stimulus ahead of consumption and welfare spending.
A $225 per-person subsidy announced last month for companies that formally hire 2022 graduates is designed to boost youth employment, but observers have questioned whether the meager amount — worth less than a month’s minimum wage — is enough to encourage employers to sign on. Many employers, bearing the uncertainty of flash lockdowns, may be reluctant to take on full-time hires.
In that sense, perhaps the biggest obstacle to China’s financial recovery is the uncertainty about how long its Covid-induced shutdowns will continue. Much of the developed world has ended its pandemic assistance programs, as it transitions to living with Covid. But in pursuing zero Covid at all costs, China’s financial burden drags on.

Eliot Chen is a Toronto-based staff writer at The Wire. Previously, he was a researcher at the Center for Strategic and International Studies’ Human Rights Initiative and MacroPolo. @eliotcxchen