China yesterday said that it expects to lay off 1.8 million workers in the coal and steel industries, or about 15 percent of the workforce, as part of efforts to reduce industrial overcapacity, but no time frame was given.
It was the first time China has given figures that underline the magnitude of its task in dealing with slowing growth and bloated state enterprises.
Chinese Minister of Human Resources and Social Security Yin Weimin (尹蔚民) told a news conference that 1.3 million workers in the coal sector could lose jobs, in addition to 500,000 from the steel sector.
Photo: Reuters
China’s coal and steel sectors employ about 12 million workers, according to data published by China’s National Bureau of Statistics.
“This involves the resettlement of a total of 1.8 million workers. This task will be very difficult, but we are still very confident,” Yin said.
For China’s stability-obsessed government, keeping a lid on unemployment and any possible unrest that might follow has been a top priority.
Beijing is to allocate 100 billion yuan (US$15.28 billion) over two years to relocate workers laid off as a result of China’s efforts to curb overcapacity, officials said.
Chinese Vice Minister of Finance Zhu Guangyao (朱光耀) quoted Chinese Premier Li Keqiang (李克強) as telling US Treasury Secretary Jack Lew on Monday that the fund would mainly focus on the steel and coal sectors.
The number of layoffs was reasonable based on the government’s capacity closure targets, said Jiang Feitao (江飛濤), an industry researcher with the China Academy of Social Sciences, a top government think tank.
He said the funds being made available would be used only after the enterprises go bankrupt and settle their debts, adding that local governments would also be responsible for dealing with those debts.
“It is difficult to predict a time frame, but it will not be a quick process,” he said. “There are many issues to be dealt with, including how to pay debt as well as layoffs.”
The world’s second-largest economy grew 6.9 percent last year, the weakest in 25 years, and the government aims to achieve economic growth of 6.5 to 7 percent this year.
“The economy faces relatively big downward pressures and some firms face difficulties in production and operation, which would lead to insufficient employment,” Yin said, adding that increasing graduates this year would also add pressure in the job market.
Despite of economic downturn, there have been no reports of mass layoffs as occurred during the global financial crisis, when over 28 million workers were laid off between 1998 and 2003.
The survey-based jobless rate published by the National Bureau of Statistics stayed at about 5.01 percent at the end of last year.
Officials have said that the services sector has created more jobs to help absorb laid-off workers from the manufacturing sector.
Last year, the contribution from the services sector to GDP climbed to 50.5 percent, surpassing 50 percent for the first time.
The registered urban jobless rate published by China’s Ministry of Human Resources and Social Security was at 4.05 percent at the end of last year.
However, many economists believe the few official employment readings in China underestimate the number of jobless.
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