In the past eight months of 2026, the unemployment rate for Chinese labor force aged 30 to 59 decreased from 4.3% in March to 3.9% in July and August, much lower than the 18.9% rate among the youth aged 16 to 24 (excluding students). However, a investigation by Da Ji Yuan found that some individuals who had left their original job positions were not counted as unemployed.
There is a category of workers in China who have not terminated their labor relationship, and their social security is still paid by the company, despite having left their original job positions, including those on standby or internal retirement. According to the current statistical rules of the National Bureau of Statistics, they are still classified as employed population and not counted in the unemployment statistics.
Da Ji Yuan reviewed the annual reports of state-owned listed companies such as China First Heavy Industries, Benxi Steel Plate, and Ansteel Group from 2023 to 2025, finding that some companies had significantly reduced their workforce in the span of three years without any redundancy or resettlement costs being recorded.
The method of employee placement was recorded in a typical case published by the Beijing Municipal Human Resources and Social Security Bureau: after a certain institute dissolved an entire department, the employees were given three options – transfer to a company taking over the business, standby, or voluntary resignation. The word “layoff” did not appear in the documents.
According to the definition published by the National Bureau of Statistics, the employed population includes those who worked for at least one hour during the reference week and those who were not working due to reasons such as vacation or temporary shutdown.
Following this statistical rule, leaving the original job position does not equate to being in an unemployed status. If an employee is only on standby, the labor relationship still exists, and they may still be classified as employed population statistically.
Exiting through formal termination of labor contracts would increase the unemployment rate; however, being placed on standby or internal retirement does not affect the unemployment rate.
The data examined by Da Ji Yuan from three companies – China First Heavy Industries, Benxi Steel Plate, and Ansteel Group – were all taken from the annual reports of 2023 to 2025.
China First Heavy Industries recorded a one-time severance pay (accounted as “redundancy benefits”), resulting in a 24.59% increase in management expenses, but the total number of employees did not decrease.
Benxi Steel Plate and Ansteel Group in Liaoning Province reduced their total workforce by 5,161 people over three years, a decrease of 12.49%, without any redundancy or resettlement expenditures reflected in their financial statements.
The source of the data is the “Employee situation” and expense tables in the annual reports of the three companies from 2023 to 2025, all of which are disclosed values.
Enterprise Accounting Standard No. 9 stipulates that when an enterprise commits to pay compensation to laid-off employees, it must be confirmed as “redundancy benefits,” with three applicable situations: economic compensation for terminating labor contracts, incentives for employees accepting reduction, and internal retirement benefits treated under the same rules. Benxi Steel Plate and Ansteel Group did not report any such expenses in the past three years.
Employees who resign voluntarily or are only placed on standby without termination of labor relationships do not incur compensation obligations, nor do corresponding costs appear in the financial books.
The total number of employees at China First Heavy Industries did not decrease, which is related to the statistical method in the annual report. The number of employees listed in the annual reports of listed companies represents the year-end status, indicating how many people remained at the end of the year, without specifying how many left during the year.
The total number of employees is a net figure: while one group is leaving, another is being recruited, so the net figure can remain the same, but those who left still lose their jobs.
The composition of this severance pay was not explained in the annual report. Another account provided a clue. Apart from management expenses, China First Heavy Industries also had another amount that increased by 50.42% in the same period (listed as “Long-term employee compensation payable and unearned”).
Severance pay generated from company liquidation is generally paid at once, while internal retirement benefits are distributed monthly for living expenses and social security payments until the legal retirement age, spanning multiple years. According to accounting standards, the expenses for internally retired personnel are categorized as “severance pay.” From the account distribution, this expenditure aligns with the accounting treatment of internal retirement benefits.
The number of individuals involved was not disclosed in the annual report. Current regulations only require companies to disclose the total amount of this fund without detailing the number of people affected.
In 2025, Benxi Steel Plate reported management expenses of 672 million yuan, a 4.35% decrease year-on-year, with no information provided in the annual report on significant changes. Ansteel Group’s management expenses decreased from 1.339 billion yuan to 1.096 billion yuan, an 18.15% reduction, with no costs related to personnel placement appearing in the financial records of both companies.
The workforce size had been reduced. The year-end employed staff numbers disclosed in the three annual reports of Benxi Steel Plate were 14,342, 13,132, and 12,155, respectively, showing a decrease of 2,187 people over three years. Ansteel Group’s numbers were 26,964, 25,028, and 23,990, respectively, showing a decline of 2,974 people over three years.
The reduction primarily affected individuals with lower educational backgrounds. Among those laid off at Benxi Steel Plate, 83.7% had a degree lower than college level; while at Ansteel Group, the number of employees with a bachelor’s degree or higher remained almost unchanged over three years, with only a 17-person increase, but the number of employees with secondary vocational education reduced by 2,111 people, a 24.0% decrease.
In steel plants, those with a college degree or below mostly worked as front-line operators or maintenance workers. The most substantial reductions at both companies were among production staff – with Benxi Steel Plate reducing 1,855 people and Ansteel Group reducing 1,345 people.
The layoffs were not related to reduced production. Ansteel Group’s iron, steel, and material production decreased by only 0.85%, 1.17%, and 1.07% respectively during the same period.
These two state-owned enterprises, both part of the Ansteel Group located in Benxi and Anshan, Liaoning Province, had been in continuous losses for three years.
Retirement also led to a decrease in the number of employed individuals, which did not require the company to provide compensation. If many of those laid off were approaching retirement age, the blank spaces in the financial records would not indicate any issues.
Benxi Steel Plate’s annual report disclosed the “number of retired employees for whom costs must be borne.” This refers to the total number of retired employees that the company still needs to provide for by the end of the year, rather than the number of individuals who retired that year.
In 2024, Benxi Steel Plate reduced its employed staff by 1,210 people, while the number of retired employees decreased rather than increased, with 739 fewer retirees. At least from the public information disclosed, the individuals who were laid off that year did not transition to retiree status entailing company responsibilities.
Retirement factors could be present but insufficient to explain the entire reduction. The annual report did not provide an explanation on this matter.
During the previous period of massive layoffs in state-owned enterprises, the number of laid-off workers was officially announced year by year: 6.5 million people at the end of 1999, 1.53 million people at the end of 2004, and 610,000 people at the end of 2005. In 2006, the basic living allowance for laid-off workers was “basically integrated” with unemployment insurance, and this indicator was no longer reported. For the past two decades, no organization has documented how many individuals are in a state of having a labor relationship but not being at work.
The amount that can be received during the standby period is outlined in Article 12 of the Interim Measures for Salary Payment, providing principles without specific proportions, which vary by province. Public information indicates that in Jiangsu, Guangdong, and Shenzhen, this payment is no less than 80% of the local minimum wage, while in Beijing, it is 70%. Legally, income can be reduced to 70% or 80% of the minimum wage.
Social security contributions are still made as usual. Despite not terminating the labor relationship, the company is still required to pay for the individuals according to the law, even though they no longer hold a position. Per the statistical methodology of the National Bureau of Statistics, they are still classified as employed.