Local government to absorb employees through mergers, restructuring

Up to 150,000 steel workers will be laid off in China's largest steel producing province, Hebei, as part of the country's determination to reduce over-capacity and upgrade industries, provincial authorities said.

But they added that all the affected workers will be properly resettled, and no one has been left jobless.

Song Limin, Deputy Chief of Hebei's Development and Reform Commission, told a press conference in Handan, North China's Hebei on Thursday that 100,000 would need to be resettled in the next five years.

"In the process of industry transformation and upgrading, all affected workers have been properly taken care of, through reassignments or transfers to other companies," Song said.

Amid the international economic slowdown, China is going through a painful period of economy restructuring, including reducing excess lower-end industrial capacity. As a result, more than a million workers may need to be laid off nationwide, Premier Li Keqiang's said in March.

According to a report released by the Hebei government on Thursday, during the 12th Five-Year Plan (2011-15), the province cut the capacity of the iron industry by 34 million tons, 41 million tons in the steel industry, 138 million tons in the cement industry, while reducing the use of coal by 27 million tons.

"In the Handan Iron &Steel Group, employment and production are relatively stable, and the employees have mainly been reshuffled, such as being transferred from major positions to minor ones like logistics or services, or on rotation in different positions," Cao Ziyu, a member of the Standing Committee of the CPC Handan Committee, and Executive Vice Mayor of Handan, said Thursday.

Meanwhile, the Handan government announced that the city will reduce the capacity of the iron industry by 16.14 million tons and the steel industry by 12.04 million tons.

The Beijing Youth Daily reported in March that according to Hebei Governor Zhang Qingwei, 60 percent of steel companies would be closed or merged by 2020.

"In Handan, the number of steel companies has been reduced from 35 in 2012 to 22 by the end of 2015," Cao said.

Cutting overcapacity in sectors like coal and steel is part of the country's supply-side structural reform and high on the government agenda, the Xinhua News Agency reported.

According to the Ministry of Human Resources and Social Security, in the process of cutting excess capacity in the steel and coal industries, 1.8 million workers will be reassigned and resettled, people.com.cn reported in March.

Reassignment problems

In February, the State Council issued a guideline that no new coal mines will be approved before 2019 and that the country will shut down 500 million tons of capacity and consolidate another 500 million tons in fewer but more efficient mine operators in the next three to five years.

Song said some of the steel workers would be transferred to non-skilled support positions, and some will be trained and transferred to a tertiary industry. He added instead of liquidating the companies, the government will absorb the employees through mergers and restructuring.

A manager of a local company, Handan Shexian Jinyu Cement, who preferred to be called by his surname Hao, told the Global Times that his company has taken in some workers from small bankrupt companies, mainly the skilled ones, but will also hire some security people and canteen staff.

"Some workers who are close to retirement talk about early retirement and unemployment," said a skilled worker who has worked for 20 years in Han-Steel, adding that he receives a monthly salary of 3,000 yuan ($463), 400 to 500 yuan less than before.

"Reassigning workers in their 40s or 50s is a problem, as it would be hard for them to learn new skills," said Feng Liguo, an expert at the Beijing-based China Enterprise Confederation.

Another major issue is the high cost of re-educating, reassigning and re-employing workers, and the process would be slow, Lin Boqiang, an energy expert at Xiamen University told the Global Times.

The Hebei Daily reported that 830 companies have provided 1.53 billion yuan to subsidize 920,000 workers.

After all, the government should take measures to stimulate the market, increase the need of the products of those companies, so that they can make profits and better solve the problem resettling workers, Lin said.