[Documents menu] Documents menu

China has work cut out on jobs front

Asia Times, 6 June 2002

BEIJING - China is under greater pressure to readjust its employment policy as the economy loses pace and unemployment mounts.

Official statistics showed that by the end of March, the registered unemployment rate in urban areas rose to 3.7 percent from 3 percent at the beginning of the year. But according to estimates of the Population Research Center of the Chinese Academy of Social Sciences, the actual unemployment rate reached between 5-6 percent. There are also 150 million surplus and idle laborers in rural areas.

As China restructures its traditional industries after entering the World Trade Organization (WTO), the country is expected to face growing pressure from unemployment in the next few years.

Professor Li Jingwen, an economist with the Chinese Academy of Social Sciences, said the government should make employment the top priority of its economic policy in the coming years. The government should adopt measures to increase employment, which it has done to combat inflationary and deflationary trends over the past decade, he noted.

Li Xinxin, an economist with the Central Policy Research Office, said that during 1996-2000, with every percentage point of economic growth, the number of employed people in urban areas grew by about 520,000 in China. She said that in order to reach the goal of increasing employment by 40 million in the next five years, the government should expand employment through various measures in addition to maintaining economic growth.

Meanwhile, Hu Jinglin, a Ministry of Finance official, said that government should define independent policy goals for increasing employment when drafting economic strategies.

This year, the government has given top priority to raising people's incomes in its efforts to stimulate domestic demand. It has decided to accelerate the development of labor-intensive industries, the service industry, small and medium-sized businesses and community services and to provide employment assistance to disadvantaged groups.

The National People's Congress (NPC), China's legislature, is drafting the law for encouraging small and medium-sized businesses and amending the law on partnerships. The new laws are designed to accelerate the growth of small businesses that provide a large number of jobs.

The State Development Planning Commission (SDPC), the economic-policy-setting department of the Chinese government, is composing a strategy for expanding the service industry and increasing employment. Wang Yang, vice minister in charge of the SDPC, said the maximum effort should be made to boost the service industry, particularly community services and traditional service businesses, which could turn into one of China's largest job creators in future.

Official statistics showed that during 1991-2000, the service industry created 77.4 million new jobs, equivalent to the new labor force total of 72.4 million in the period plus 5 million workers relocated from other industries. Chinese economists predict that the service industry will be the biggest winner after China's WTO entry. They tip that in the coming years, the service industry is likely to absorb several million job seekers annually if the government gives proper policy and legal support to the sector.

According to prestigious economist Wang Huijiong, employment should become a major criterion for judging the success of economic policy and restructuring by government departments at various levels in the future.

(Asia Pulse/XIC)