AS China’s economy slows toward its weakest growth in a quarter of a century, policymakers have comforted themselves that unemployment remains low, and with it the risk of social unrest.

    Indeed, the jobless rate has become China’s key indicator, with the Central Government saying it does not matter if economic growth falls short of a 7.5 percent target this year, as now seems possible, as long as employment holds up.

    Analysts do see some risks building, with reports of provincial resistance to consolidation in employment-heavy manufacturing industries, and workers being kept on the payrolls of inefficient “zombie” firms, but don’t see a crisis for now.

    The official urban unemployment rate was 4.07 percent at the end of September, barely changed from 4.08 percent three months earlier, but even the government thinks that understates joblessness and is busy testing a wider survey-based measure.

    “Despite sluggish growth and continued credit market woes, the labor market remains remarkably stable — with hiring steady, the job outlook stable and profit margins rising at their fastest pace in a year,” said Leland Miller, president of China Beige Book International, citing the result of the research firm’s third-quarter private survey.

    Chinese media are short on the stories of mass lay-offs, padlocked factories and worker riots that were headline fodder in 2009 as the global financial crisis led to a collapse in export orders.

    And while both the government and HSBC/Markit Purchasing Managers Indices (PMI) show manufacturing employment contracting in 2014, wages have risen.

    “High growth in wages is not consistent with rising unemployment,” said Michael Pettis, a professor at Peking University’s Guanghua School of Management.

    Anecdotally, many company executives complain of difficulty finding workers.

    “We have to add jobs,” Jazy Zhang, CFO at Shanghai-based videogame maker Giant Interactive Group, told Reuters, adding that even enhanced labor protection laws making it harder to get rid of underperforming workers had not discouraged them.

    “We are in the talent business. We have to pick our battles.”

    She said her company, which employs more than 1,500 people, has raised average wages by 12-15 percent annually in recent years and expected to maintain that pace in the near future.

    Giant’s experience reflects, in part, the attempt to shift the world’s second-largest economy toward higher-value services and away from its traditional growth engines such as manufacturing.(SD-Agencies)