China’s economy continues to slump, with a rising number of unemployed individuals. Cities like Beijing and Shenzhen are seeing more and more people receiving notifications from the government, requesting the return of their unemployment benefits. Experts believe that amid the ongoing economic deterioration in China, authorities may resort to more measures to collect funds from the public.
According to a report by the Hong Kong media outlet South China Morning Post, Shenzhen saw over 40,000 new registrations of unemployed individuals in the first quarter of this year, marking a historic high. This represents a 15% increase from the previous quarter and a 40% increase compared to the same period last year.
Registration for unemployment benefits is crucial for eligibility to receive such funds. Public data from Shenzhen’s human resources department shows that in 2021, 125,200 people received unemployment benefits, with an income of 3.485 billion yuan and expenditures of 4.787 billion yuan from the unemployment insurance fund. By the end of the year, the fund had a balance of 10.249 billion yuan.
However, in 2022, the number of individuals receiving unemployment benefits increased to 156,600, with an income of 4.151 billion yuan. Yet, expenditures surged to 12.204 billion yuan, leaving a year-end balance of only 2.129 billion yuan.
In 2023, the number of individuals receiving unemployment benefits skyrocketed to 211,500, a 35% increase from the previous year, highlighting the escalating unemployment situation in this first-tier city. However, the year-end fund balance for 2023 was not disclosed.
An article titled “Unemployment Benefits Getting Tougher” by the WeChat public account “Yue Nv Affairs Agency” stated that since 2022, more and more people in Shenzhen have been receiving messages from the social security system demanding the return of disbursed unemployment benefits. It is estimated that the rapid depletion of the unemployment insurance fund necessitates a crackdown to prevent misuse of funds.
Platforms like Xiaohongshu (RED) and Weibo have seen numerous cases shared by netizens, including those from Shenzhen, who have been asked to return their unemployment benefits.
Recently, a Xiaohongshu user named “The Elder Sister Who Doesn’t Work Overtime” mentioned receiving a message from the social security bureau in Shenzhen, requesting her to return the unemployment benefits she had received, suggesting a crackdown on improper claims to stabilize the fund.
Furthermore, cases of individuals being required to return unemployment benefits have been reported in other regions, including Beijing. Data released by the Beijing Municipal Bureau of Statistics on July 17th indicated that the average urban unemployment rate in the first half of the year was 4.1%. In June, the urban unemployment rate stood at 4.0%, representing a 0.1 percentage point increase from the previous month.
A Beijing blogger named “Nana” shared her experience on March 14, revealing that she had received unemployment benefits due to being laid off by her company. However, she unexpectedly received a message from the social security bureau stating that her benefits were obtained unlawfully and demanding repayment.
She mentioned that she had been receiving benefits since April of the previous year for a total of 10 months, amounting to over 20,000 yuan. “Today, I had to return all the over 20,000 yuan. It seems like the government is running out of funds. Many people I found on Douyin said they were asked to return unemployment benefits, fearing it would affect their credit if they refuse.”
Another blogger in Beijing, “The Social Security Expert Big Cat,” stated that many individuals have been instructed to return their received unemployment insurance funds, with some having to repay close to 25,000 yuan. Failure to comply within the specified period may lead to legal actions and inclusion on the list of unemployed individuals.
She pointed out the dilemma faced by those currently unemployed and struggling to produce the required sum, suggesting cooperation with local social security departments for verification and resolution.
A netizen from Hefei named “Xiao Mei” was also asked to return over 20,000 yuan in unemployment benefits.
A senior Chinese economist, Lin Haobo, from the Pan Xien Macro Economic Advisory Company in London, emphasized that Shenzhen experienced a second consecutive cut in annual income in 2023, reflecting not only a decline in the city’s economic vitality but also diminishing government tax revenues.
Lin Haobo highlighted that if a first-tier city like Shenzhen sees a rise in unemployment rates, it might indicate a period of economic downturn. He explained that unemployment rates typically lag behind, reflecting economic conditions roughly 6 to 12 months ago, suggesting that the economy may have deteriorated earlier. Consequently, the unemployment rate is likely to continue rising.
Lin Haobo also suggested that despite the amount Shenzhen’s government could retrieve from reclaiming unemployment benefits being relatively small, if the overall economic situation continues to worsen, more aggressive measures may be employed to collect funds from the public.
Mengjun Liu, the director of the First Research Institute at the Institute of Economics, Chinese Academy of Economics and Social Research in Taipei, expressed that Shenzhen, as a technological hub in China, has been impacted by the US-China tech war and supply chain disruptions. The outflow of foreign investment that could have brought substantial tax revenues and created a large employment base led to reduced tax income and increased unemployment, causing the city’s unemployment insurance funds to become increasingly insufficient.
Liu Mengjun commented, “Shenzhen is truly an indicative city. If a city like Shenzhen is facing these issues, second and third-tier cities may be even worse off.”