Employment Posts Major Policy Challenge to China

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Last updated at: (Beijing Time) Wednesday, June 05, 2002

Employment Posts Major Policy Challenge to China

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

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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 the past March, the registered unemployment rate in urban areas rose to 3.7 per cent from 3 per cent at the beginning of the year.

But according to estimates of the Population Research Center of the Chinese Academy of Social Sciences (CASS), the actual unemployment rate reaches between 5-6 per cent. There are also 150 million surplus and idle labors in rural areas.

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

Professor Li Jingwen, a noted CASS economist, said the Chinese government should make employment the top priority of its economic policy in the coming years, adding that the government should adopt as powerful measures to increase employment as it did to combat inflationary and deflationary trends over the past decade.

Li Xinxin, an economist with the Central Policy Research Office, said 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 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 a relatively-rapid economic growth.

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

This year, the Chinese 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 coiner of most economic policies in China, is composing a strategy for expanding the service industry and increasing employment.

Wang Yang, vice-minister in charge of the SDPC, said that all-out efforts should be made to boost the service industry, particularly community services and traditional service businesses, which would be turned into one of the largest job creators in China in the 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.

Economists predict that the service industry will be the biggest winner with China's WTO entry.

They tip that in the coming years, the service industry is likely to absorb several million labor annually if the government gives proper policy and legal support to the sector.

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

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