Productivity gains could increase unemployment

Charles Wolf, a Rand Corp senior economic adviser, told the South China Morning Post that mainland unemployment was closer to 23%, not 4.5% as officially stated, and warned that pressure to raise productivity while maintaining high economic growth would compromise Beijing's efforts to reduce unemployment. Wolf said while sustaining high growth and generating more jobs were normally compatible objectives, China had to raise technological, managerial and educational levels, which would lead to increased productivity but also to lower rates of job creation. Whereas China used to create one million more jobs for every one-point GDP increase, Wolf said that 1% increase now produced only 700,000 to 800,000 new jobs. From 1998 to 2002, when GDP grew an average 7.8%, and labor productivity an average 6.7%, he said employment rose only 1%.