Compared with the Layoffs of Thirty Years Ago, Is It Harder Now?
By Tong Chen. Jinling Miaoyin Fang (WeChat public account), October 25, 2026. Translated by Vero Publishing.
In concentration and in the speed at which families were shattered, 1998 was harsher; in duration and in how hard it is for an individual to turn things around, today is harder. Cast off illusions. Are kings and nobles a breed apart?[1]
In 1998, state enterprise reform reached its hardest stretch.
That round was called "cutting staff to raise efficiency, laying off and redeploying workers." In textiles, coal, machinery and the defense industry, whole factories were closed, suspended, merged or converted.
The official figures run like this:
From 1998 to the end of 2001, a cumulative 25.5 million workers were laid off from state-owned enterprises nationwide, of whom more than 17 million found new jobs.
Extend the period to 2003, and the State Council Information Office's white paper China's Employment Situation and Policies (2004) puts the cumulative number of laid-off state enterprise workers at 28.18 million. Go further back, and from 1995 to 2002 state and collective enterprises together shed more than 60 million workers.
In those days the layoffs came with lists.
A notice was posted at the factory gate, and hundreds, even thousands of people lost their status at once.
Today's wave has no single list.
It is dispersed: the internet, real estate, private tutoring, foreign trade, manufacturing. One industry after another is ebbing, a few dozen or a few hundred people at a time.
According to the National Bureau of Statistics, the average surveyed urban unemployment rate in 2025 was 5.2 percent, broadly stable. But broken down by age, the pressure is heavily concentrated on the young.
In September 2025, the unemployment rate for 16- to 24-year-olds, excluding students, was 17.7 percent, about 3.4 times the national average. For 25- to 29-year-olds it was 7.2 percent, and for 30- to 59-year-olds only 3.9 percent.
So here is the first difference:
The last wave was one-off, concentrated and visible.
This wave is continuous, dispersed and silent.
[Figure 1: Unemployment rate by age group]
Was there "somewhere to land" back then?
Many people remember only how miserable the layoffs were, and forget a key condition:
At the end of the 1990s, the doors to the outside world were opening.
In December 2001, China formally joined the World Trade Organization.
After WTO entry, factories sprang up like bamboo shoots in the Pearl River Delta and the Yangtze River Delta. Assembly lines needed people, construction sites needed people, restaurants needed people, freight needed people.
Laid-off workers set up stalls, drove taxis, went south to work. They lost a layer of skin, but there was still somewhere to go.
That generation really had just four paths:
Set up a stall, haul goods, go south to the factories, or take odd jobs locally.
Hard, but the roads were open. Now those roads have narrowed.
Look at the water level in a few reservoirs and you will see.
According to the Ministry of Transport, the number of ride-hailing driver licenses issued nationwide rose from 1.5 million in August 2019 to 7.483 million in October 2024, roughly a fourfold increase in five years.
The same goes for food-delivery riders. There are now more than 10 million nationwide; Meituan alone has 7.45 million riders, and Ele.me has more than 4 million active riders.
Workers in new forms of employment, including delivery riders and ride-hailing drivers, now number 84 million nationwide, and by the official count about 200 million people are in flexible employment.
[Figure 2: Number of ride-hailing driver licenses]
The reservoirs are still filling, but the water is already high.
Several cities have issued warnings that the ride-hailing market is saturated, and drivers' daily orders and fares keep falling.
When the last wave jumped ship, there was plenty of room in the sea.
When this wave jumps ship, they find the lifeboats already full.
Was there "another paycheck" at home back then?
What really crushed families in the layoff wave was not losing one job, but that one job had to support a whole household.
In the 1990s, many dual-income families worked in the same factory or the same system.
When the factory stopped, husband and wife were laid off together.
There were elderly parents above, children below, and no savings in between. The China Youth Daily reported at the time that a retired worker from the Changchun Tractor Factory wrote to the city leaders saying that only two in ten laid-off workers could make ends meet, and that some worker couples were living on less than five yuan a day for food.
Social security was thin then too.
The framework of a pension system combining social pooling with individual accounts was only established in 1997.[2] Laid-off workers were caught, layer by layer, by the "two guarantees" and the "three safety lines":[3] basic living allowances, unemployment insurance and the urban minimum living standard.
The net could catch people's meals, but not their medical bills or their children's schooling.
The World Bank and a research group of the State Council's Office for Restructuring the Economic System each estimated the historical shortfall in social security at the time; their estimates converged at around 2 trillion yuan.
What many people remember is the silence of "not a cent coming into the house."
Today's families are structured differently.
Most have two earners and two incomes; if one loses a job, the other still holds the line. Social security coverage is much higher too: basic pension insurance covers more than a billion people. That is the cushion for this wave.
In terms of how fast families shatter, today really is not as harsh as 1998.
Savings and debt
But this wave holds a card the last one did not: debt.
Workers laid off in the 1990s mostly lived in housing allocated by their work units, with no mortgage.
They had no money, but no monthly payment was waiting for them either. Life was tight, but they did not wake up every morning owing someone.
Look at the household leverage ratio and it becomes clear:
In 1996, China's household-sector leverage ratio was only about 3 percent, and even around 1998, at the height of the layoffs, it was in single digits. Families then carried almost no debt.
Now it is different.
According to the National Institution for Finance and Development, the household leverage ratio passed 60 percent in 2020, peaked at 63.5 percent in 2023, and still stood at 60.4 percent in the third quarter of 2025. A mortgage with twenty-odd years still to run, a car loan, consumer loans, the children's tutoring classes: every one of them a fixed outgoing.
[Figure 3: Household-sector leverage ratio]
For the last wave, unemployment meant income stopped. For this wave, it means cash flow runs in reverse.
The last wave's problem was "no money to spend." This wave's problem is "no money coming in, and money still going out."
One pressure is blunt, the other sharp.
A blunt knife grinds you down; a sharp knife bleeds you.
The threshold
There is another very practical difference: age.
Those laid off in the 1990s were mostly around forty, still physically strong, able to work on building sites, drive long-haul trucks or run night-market stalls. What society asked of them was "can you work?" No one looked at their qualifications or asked for their résumé.
Many of those being "optimized" in this wave are thirty-five to forty-five, office workers who can write proposals and make spreadsheets. But the doors the market opens to this age group keep narrowing.
The "under 35" line on job ads cuts off precisely the most experienced people.[4]
Harder still, the young keep pouring in behind them.
According to the Ministry of Education, China had only 830,000 college graduates in 1998. The class of 2025 was expected to reach 12.22 million, about 14.7 times as many in 27 years, and the number has stayed above ten million for several years running.
Last time, physical strength was in demand; this time, experience is marked down.
Last time, the middle-aged were not competing in the same arena as the young. This time, the middle-aged are crammed into the same recruitment apps as more than ten million new graduates each year.
[Figure 4: Number of college graduates]
Which is worse, then?
If you want an answer:
In concentration and in the speed at which families were shattered, 1998 was harsher.
In duration and in how hard it is for an individual to turn things around, today is harder.
The last wave was like a rainstorm. It soaked people to the skin, but when the rain stopped the ground was wet and seeds could still sprout. WTO entry, urbanization and real estate came wave after wave and caught most people again.
This wave is like a long plum-rain season.[5] It is not loud, not violent; it just rains day after day.
By the time you notice, everything in the house has gone damp. There is no clear "day the rain stops," because what is ebbing is not one particular industry but the old growth model itself.
So I would rather not say "which is worse."
I would rather say:
The last wave tested whether a generation could endure hardship.
This wave tests whether a generation can put a new price on itself.
When I was a child, there was an uncle downstairs who fixed bicycles. He was one of those who came out of the factories in those years.
He used to run a machine tool on the shop floor. After he was laid off he set up a bicycle repair stall. Five yuan to patch a tire, air for free. In summer he went bare-chested with a towel around his neck, and smiled at everyone.
When people asked if it was hard, he would wave his hand: "You've got to live, don't you?"
Thirty years on, those words still hold. Only now the people saying them may be driving for a ride-hailing app, may be rewriting their résumés, may be sitting in the back row of a night school.
The times are different, and so is the way it hurts.
But the breath that holds you up is the same breath.
References (as given in the original)
• Sijiaoshou Buluo, "Is This Wave of Unemployment Worse Than the Layoff Wave of Thirty Years Ago?"
• National Bureau of Statistics, "No. 5: Steady Progress in State-Owned Enterprise Reform" (25.5 million cumulative state-enterprise layoffs, 1998 to end of 2001). Link
• People's Daily app, "Back to the 1990s: The Layoff Wave" (28.18 million cumulative state-enterprise layoffs, 1998–2003; more than 60 million shed by state and collective enterprises, 1995–2002). Link
• China Youth Daily, "The Lost Class" (Changchun Tractor Factory survey; estimate of a 2-trillion-yuan social security shortfall). Link
• People.cn, Sinopec chairman Fu Chengyu on the social security shortfall from the last round of state enterprise reform. Link
• National Bureau of Statistics, Wang Pingping, "Employment Remained Generally Stable in 2025" (average surveyed urban unemployment rate of 5.2 percent in 2025). Link
• National Bureau of Statistics, unemployment rates by age group for September (16–24: 17.7 percent; 25–29: 7.2 percent; 30–59: 3.9 percent). Link
Translator's Notes
1. "Are kings and nobles a breed apart?" (宁有种乎). An allusion to the rallying cry of Chen Sheng, leader of the first great peasant uprising against the Qin dynasty in 209 BCE: "Are kings, nobles, generals and ministers born to their station?"
2. "Social pooling combined with individual accounts" (统账结合). The structure of China's basic urban pension system, set up in 1997, which combines a pay-as-you-go pooled fund with individual accounts.
3. The "two guarantees" and "three safety lines" (两个确保、三条保障线). The late-1990s policies guaranteeing basic living allowances for laid-off workers and timely payment of pensions to retirees, backed by three successive layers of support: re-employment-center living allowances, unemployment insurance, and the urban minimum living standard.
4. The "under 35" line. Many Chinese employers, including the civil service, set thirty-five as an upper age limit for hiring, a practice widely criticized as the "age-35 threshold."
5. Plum-rain season (梅雨). The long, humid rainy season of early summer in the Yangtze valley, when everything indoors turns damp and moldy.
The four charts in the original are marked here as placeholders, Figures 1 to 4. They can be inserted when the page is published.
