A hire power

China's jobs market in need of serious work

Jobs drive China's economy, rather than GDP. The latter is a lagging indicator, for both politicians and real people. The 9.7 million new urban posts added in the year to August are a worthy achievement. But to ensure stability and prosperity, the labour market needs to be better as well as bigger.

When China creates new jobs, what it's mostly doing is repurposing old ones. While 13 million new roles were created in cities in 2013, the country overall added only 2.7 million. The rest come from people moving to urban centres from the countryside, or in some cases, being told that their home is now part of a city.

The other big shift is into services. Jobs like street cleaning and tax consultancy are more labour-intensive than capital-heavy industry. But the official numbers mislead. The services sector appeared to add 19 million jobs in 2013 - as much as the previous three years put together. That doesn't fit with only mildly positive monthly manager surveys. Reclassification of some roles, like agricultural services, may have boosted the numbers. The challenge is to add not just new jobs but desirable ones. Poor social mobility makes that difficult. Under China's "hukou" system, benefits like access to education and the right to buy a house or a car are tied to a worker's place of registration, typically their birthplace. Even a graduate with two degrees from a second-tier city may find those qualifications don't score enough "points" to move their registration to Shanghai.

Scrapping the system would improve labour mobility, but would threaten the relatively powerful residents of China's biggest cities. The same is true for reforms that would shrink the government and state-owned enterprises, discharging millions of entitled workers into the part of the market where jobs are already in shorter supply. That suggests friction in the jobs market might be the biggest brake on wider reform.

Mandarins in Beijing talk a lot about jobs. But as demographic changes cause the working-age population to shrink, good jobs are what really counts. That's harder to capture in a single number, but is the only way China can keep up its end of the social bargain.