Unemployment cover payouts skyrocket

China’s unemployment insurance payouts have hit a record high in June, adding to signs of a struggling labour market as the economy has been badly hit by COVID-19 outbreaks and a property crisis.

Payments by China’s unemployment insurance fund jumped 256.6 percent in June from a year earlier to CNY37.19 billion (USD5.42 billion), according to Reuters’ calculations based on data from the Ministry of Human Resources and Social Security. That was the highest since the data series began in January 2013.

The surge in the payouts resulted in a deficit of CNY22.74 billion in the fund in June, widening from a 4CNY.91 billion deficit in May and contrasting with monthly surpluses from January to April.

China’s unemployment insurance fund is pooled from employers, employees and government subsidies, and the spending offers help with the basic needs of the jobless.

The economy was impacted by strict COVID-19 curbs this year, which disrupted supply chains and hurt job-creating small businesses.