SARS Challenges China's Employment Goals

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Last updated at: (Beijing Time) Saturday, May 24, 2003

SARS Challenges China's Employment Goals

China is facing new challenges keeping employment plans on track in the wake of the severe acute respiratory syndrome (SARS) outbreak.

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China is facing new challenges keeping employment plans on track in the wake of the severe acute respiratory syndrome (SARS) outbreak.

The epidemic has caused problems for the service industry and other labor-intensive industries, as unemployment reaches 4.1 percent in urban areas in the first quarter, up 0.4 percent from the same period last year.

But Zheng Dongliang, an economist with the Ministry of Labor and Social Security said urban unemployment could be kept to within the upper limit of 4.5 percent set by the government.

The World Bank and Asian Development Bank have forecast China's GDP growth will still exceed seven percent, which should enable the country to meet its employment targets, say economists.

Zheng Gongcheng, an expert on employment with the People's University of China, said no large staff cuts had occurred in urban areas and many companies had allowed staff to take holidays rather than make cuts.

Industries affected by SARS will rebound when the epidemic ends,which will help employment, experts say.

The Chinese government has taken emergency counter-measures, shoring up affected enterprises and seeking new employment channels.

China is implementing the most extensive tax exemption system since the founding of New China in 1949 in a bid to support industries affected by SARS.

Airlines, the catering industry, hotels and taxi companies will benefit from the exemptions.

South China's Guangdong Province, the first area hit by SARS, publicized tax exemption policies which are expected to shave 900 million yuan from tax revenue. Other areas, such as Shanghai, Beijing, Shanxi Province and Henan Province, have followed suit with similar tax policies.

The measures will help medium and small enterprises continue to absorb labor, said Wu Shengwen, director of the Guangdong provincial local tax administration. China's medium and small companies provide jobs for 75 percent of people in urban areas.

The effects of SARS are "two faces of a coin", says Long Yongtu,Secretary-General of the Bo'ao Forum for Asia (BFA). Long said that while some of the service industry was hit by SARS, other sectors were experiencing fast growth.

The telecommunications and medical industries are in need of labor, as are shopping websites, restaurants with delivery services and express delivery companies.

China's economic hub Shanghai is capitalizing on the situation,employing 15,000 laid-off workers in the public hygiene and environments fields. Liaoning, northeast China's important industrial base, plans to provide 100,000 jobs for laid-off workers.

Export trade and foreign investment have not been hindered much by SARS in providing job opportunities. Shanghai's 30,000 joint ventures have maintained normal operations and some added investment.

In Shenzhen, one of China's five special economic zones, some joint ventures plan to enlarge production and employ new workers, including Fujicom and Toshiba.

Jin Bosheng, an investment expert with the Ministry of Commerce,said that although SARS had caused the postponement of some of investment conferences and business trips, it didn't change China's investment environment and investment plans for overseas business.

Jin Renqing, Minister of Finance, said China is introducing measures to speed up export tax reimbursement to encourage export and promote employment.

From the end of May, the Chinese government will implement a new set of preferential policies on re-employment for laid-off workers, including tax exemptions and small-sum loans. China also forbids any enterprise to fire employees randomly in SARS-hit areas.

The main reason for China's employment problem lies in its labor structure with large numbers of staff lacking adequate education.

The impact of SARS on employment will be temporary, said Yang Yiyong, vice Secretary-General of the China National Society of Labor Science.

Facing an austere employment situation, China will take measures to achieve this year's employment goal, including increasing social security and improving employment services, said Zheng Silin, Minister of Labor and Social Security.

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