Unemployment in China is worsening

By Zhang Kai, October Review (Hong Kong), Vol.22 issue 4, 31 October 1995

Unemployment in China is worsening. In September and October, a number of articles in Workers' Daily discussed this problem. An article by Liu Guanxue and Lu Shihai, both from the Office of the Ministry of Labour, entitled The current state of employment in China and the strategic changes to employment policies, pointed out that employment in China faced pressures from three areas: 1. an annual addition of 3-4 million labour in urban areas; 2. a 100 million surplus labour from the countryside looking for urban employment; 3. over 20 million redundant labour from state-owned factories waiting for transfer. The total 1994 figure was that 12.13 million people in cities and towns required new job arrangements.

An article by Xu Zhenghui from the Job Security Branch of the National Federation of Labour, entitled Strategic thinking on how to alleviate employment contradictions in China, pointed out that in the coming few years, new labour in urban and rural regions will be increasing at a rate of 10 million a year. In the period of the Ninth Five Year Plan (1996-2000), the natural growth of labour and the transfer of labour from agricultural sectors will amount to 35 million; labour from redundancy and factory bankruptcy will amount to 10 million, and so the supply of labour will be 50 million. However, the estimated demand for labour in this period will only be 30 million.

The worry expressed by the articles is that the existence of large numbers of unemployed will exert severe pressures on the social security system, and will cause social instability.

The situation in state-owned factories is particularly worrying. An internal study by the State Economic Restructuring Commission revealed that over 44% of state-owned factories are now running on a deficit. Debts among factories amount to over RMB700 billion. A survey by the State Statistical Bureau on the situation in 13 provincial capitals revealed that redundant workers amount to 15-30% of all workers, and retired workers in general are equivalent to 20% of the total number of workers. (In some factories, retired workers equal 50% or even 100% of the workers.) This puts a great pressure on factories in terms of pensions.

In face of the financial difficulties, some state-owned factories are laying off large numbers of workers. The textile industries are a conspicuous example. In Shanghai, by the end of the Ninth FYP, productivity will be reduced from the original 2.14 million spindles to 1.8 million spindles, and textile workers will fall from the current 0.55 million to 0.25 million. In the next FYP, 55% of Shanghai's textile workers will be made redundant, and the remaining 45% will carry out 85% of the current work. In Tianjin, already, 370,000 persons have been laid off.