Covid undermines Beijing’s pledge to reduce inequality
Low-income earners at risk of slipping back into poverty as economic woes hit job opportunities
For two decades before the coronavirus pandemic upended the economy, Zhang Chuan earned an enviable income for a migrant worker.
The 45-year-old left rural Anhui province in 2001 and worked as a vegetable delivery man in the northeast for eight years, before starting an appliance refitting business in Shenzhen.
Four years ago, he more than doubled his monthly earnings thanks to an application called Idlefish, on which he began reselling second-hand furniture.
“I was earning around 3,000 yuan [HK$3,325] per month, but after selling second-hand appliances, I could earn up to 10,000 yuan per month before the outbreak,” Zhang said.
Today, Zhang earns almost no income at all. He has watched his customer base dwindle to a trickle over the course of the pandemic, and picking up casual work is not as easy as it used to be.
“There used to be daily jobs all over Shenzhen, but now I simply can’t get work any more,” he said, adding he planned to stick around until April before returning home to work on a farm.
China’s sluggish economy and strict zero-Covid policy have hit low-income earners such as Zhang hard, leaving them vulnerable to slipping back into poverty while undermining Beijing’s pledge to cut inequality and grow the middle class.
Before the first Covid-19 outbreak in 2020, the wages of China’s high, middle and lowincome earners were growing at roughly the same level, about 8 per cent per year, according to the
China Macroeconomy Forum. But afterwards, low-income households watched their growth rate fall by 8 percentage points to near-zero, while the rate of decline among high and middle-income groups was less than 4 percentage points. Since then, middle and high-income earners have seen their wages rebound. China’s poorest workers have not.
“The pandemic has severely interrupted the incremental improvement in rural income distribution we’ve seen since 2016,” said Zou Jingxian, a professor at Renmin University of China.
According to Zou, the pandemic has hit the service sector hardest, where there is a high concentration of low-skilled, low-wage workers. But China’s powerhouse manufacturing and construction sectors have not been immune to disruptions, either.
Ding Shi Song, a 50-year-old steelworker who has drifted from city to city after leaving the countryside 30 years ago, has felt the downturn keenly.
“There was less work after the pandemic and I have struggled to find any jobs. Some new construction sites were closed and the steel couldn’t be brought in due to the lockdowns,” Ding said.
Ding and his wife are still owed 35,000 yuan for work they completed last year. But even after seeking help from the Labour Department and police, they have not been paid.
“The money is usually settled at the end of the year; we are only paid a living wage each month, about 3,000 yuan,” Ding said. “Being angry is no help because the money is in their hands. If we get into trouble, it will be even harder to retrieve.”
Fed up and with few other options, Ding is preparing to return to the countryside.
Mao Yufei, an associate researcher at the China Institute for Employment Research, said low-income groups often have low human capital too. “Most of them are less educated and lacking in employment skills, especially digital skills, plus some of them work in contact-type jobs such as domestic services, making them more vulnerable to the pandemic,” he said.
Current pandemic policy had taken a disproportionate toll on the poor, but they faced a low risk of returning to poverty because the country had a relatively robust social security system, Mao said.
“But we still need to address the problem in terms of improving human capital and significantly strengthen skills training for these low-income groups,” he said.
Low-income households saw their wage growth rate fall by this many percentage points to near-zero after the Covid-19 outbreak in 2020