Many statistics revealed a worldwide bleak employment situation in 2001. Except for a few, most countries are haunted by a soaring unemployment rate and a slack growth in employment. Such doldrums in the labor market are a consequence of the global economic slowdown and a symptom of economic downturn.

In China, the negative influence of global economic slowdown has also started to surface. The phase-out of re-employment service centers, which provide job services for laid-off workers from state-owned enterprises (SOEs), and massive layoffs following the country's WTO accession, have made the unemployment problem even worse than in previous years. The registered unemployment rate, which was comparatively stable over the past few years, climbed for three straight quarters in urban areas, rising from 3.1 percent at the end of 2000 to 3.4 percent in the third quarter of last year.

Due to the rising unemployment rate both in and outside China, and general concerns about China's post-WTO-entry employment situation, unemployment has once again become a hot issue in the country.

An analysis of the employment trend based on a full estimation of possible problems in the future allows little optimism. In terms of both quantity and structure, the employment problem is to become even more acute and complex in the future.

-An excessively fast growth in labor supply and a comparative insufficiency in demand will further increase employment pressure. During the 10th Five-Year Plan period (2001-05), newly added labor will reach a peak of 46.5 million. This, combined with current laid-off SOE workers and 150 million redundant rural laborers, will constitute an immense employment pressure.

-After WTO entry, more uncertain factors will emerge to cause a new wave of unemployment. In addition, structural contradictions, namely the failure of surplus labor to meet the requirements of available jobs, will become even more serious. Although WTO accession will lead to an employment growth in the long run, it will cause excruciating pain in the initial stage. Some sectors with weak international competitiveness will take a heavy hit and produce more laid-off workers. The sectors that have certain advantages in international competition, such as textile and garment industries, might be able to develop rapidly and create more jobs. Yet these sectors will face a structural unemployment problem, caused by a gap between the quality of available labor and the qualifications for jobs.

-Old, poorly educated and unskilled laid-off workers will be put in an extremely disadvantaged position in the increasingly fierce competition of the job market, and face long-term unemployment.

Facing the new employment situation, we should make employment growth an important goal in coordinated economic and social development. This requires us to undertake more proactive and effective measures to alleviate quantitative and structural contradictions in employment, properly resolve the employment problem of disadvantaged groups and keep the jobless rate under control. Measures include:

-Maintaining a high economic growth rate. Economic growth is the engine driving employment growth, providing the basic solution for the quantitative contradiction in employment. Given this, the expansion of domestic demand and employment should be achieved simultaneously. While an increase in investment and consumer demand will stimulate economic growth and provide a basic guarantee for employment growth, the raised employment rate will drive up consumption levels and expand domestic demand.

-Intensifying the readjustment of the industrial structure, ownership structure and makeup of different-sized enterprises to accentuate the role of economic growth in employment growth. Both the speed and structure of economic development are important in creating jobs. Under a certain economic growth speed, a rational industrial structure will help create more jobs. Given this, while maintaining a comparatively rapid economic growth rate, we should try to develop industries of higher employment flexibility-labor-intensive industries, the service sector and small and medium-sized enterprises of great employing capacity, to raise the overall flexibility of employment growth. Since every percentage point growth in the service sector will add an estimated 1 million jobs, we should make it the focus of our endeavors to boost employment. In the meantime, we should also promote development of small and medium-sized enterprises, which provide 75 percent of urban jobs, and the growth of non-State economy.

-Further developing the labor market and establishing a market-based employment mechanism featuring self-reliance, market readjustment and government support, through the improvement of the employment service system and related government policies. This involves the elimination of various obstacles preventing a free flow of labor, perfection of the social security system, reform of the residence registration system, establishment of a unified and regulated labor market system, improvement of information service in the labor market, and an optimized allocation of human resources through a rational flow of labor. In addition, we should also accelerate the establishment and improvement of the public job service system by intensifying efforts in job training, as well as re-employment training, and encouraging development of job service agencies.

-Introducing alternative employment, such as part-time, temporary and flexi-time jobs. We should encourage the development of human resource service enterprises and non-official employment organizations to organize, administer and provide job services to alternative employment seekers. Corresponding revisions should be made to the labor contract administration system and the social security system to guarantee the rights and interests of alternative employment seekers. In the meantime, we should also instill a new concept of employment in society, to form a favorable environment for the development of alternative employment.

-Gradually establishing a regular employment aid system targeting the most difficult group. While guaranteeing the group's basic subsistence needs, we should also borrow the "relief-to-job" practice from overseas, to help them get employed again. For that purpose, we should create more community jobs that this group of people are capable of, encourage enterprises to recruit long-time jobless people by providing incentives such as tax reduction and salary subsidies, and provide them with free job inquiry, coaching and training.

-Intensifying job training to improve an employee's capability in working, innovation and adapting to job changes. We should implement a labor-reserve and employment entry system, to ensure that all job seekers are sufficiently trained before becoming employed. This will not only improve the young job seeker's chances of employment, but also help readjust the labor supply. In addition, we should also intensify on-the-job training, implement the job qualification certificate system and improve workers' skills and innovation, especially their ability to master new technologies, new materials and new equipment to meet the needs of technical upgrading. We should also implement the "three-year re-employment and training program for 10 million laid-off workers" to improve these people's readiness for re-employment and to adapt to job changes.

-Intensifying development and utilization of rural labor resources. While pushing forward readjustment of the rural employment structure, we should integrate the implementation of the urbanization strategy with the promotion of the transfer of rural surplus labor. We should steadily develop small towns and lift various discriminating policies restricting employment of rural labor in urban areas, thus promoting the free flow of surplus labor and balanced development in urban and rural areas. In addition, we should ensure that the labor flow proceeds in order through necessary regulations, especially the improvement of the information service in the labor market.

(Beijing Review April 10, 2002)