Job Creation and Economic Growth in China

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

Employment expansion needs to be a priority
Xiao Ming
2004-04-30 06:58

Chinese citizens have long been proud of the country's robust economic
development over the past few decades. It has enabled people to enjoy a
better life and permitted the country to have a stronger voice on the
world stage.

With the government focusing its attention on economic progress, the
recent prosperity has cultivated a popular belief that no problems will
turn out to be true barricades as long as our economic locomotive keeps
roaring ahead.

But economic growth is not a cure-all. At least not for the problem of
unemployment.

At Wednesday's opening of the China Employment Forum, co-sponsored by
the International Labour Organization and China's Ministry of Labour and
Social Security, Zhu Zhixin, vice-minister of the National Development
and Reform Commission (NDRC), pointed out that economic growth doesn't
have much influence on employment creation in China.

"Every unit growth of gross domestic product (GDP) translated into about
2.4 million new jobs in the 1980s. But now it only creates 1 million new
positions. The employment elasticity is dropping," Zhu said.

Expanding employment is a basic goal of building the xiaokang, or
well-off, society in an all-round way. It is a basic way to increase
people's income and better their lives.

Economic development certainly has played an important role in promoting
employment in China. The country's annual GDP growth averaged 9.4 per
cent over the past 25 years. The total employed population also
increased from 401.52 million in 1978 to 744.32 million in 2003.

But just as Zhu said, the economy is growing weak when it comes to
creating jobs.

A major reason for this phenomenon is that China's economic growth is
changing from the past extensive model to an intensive one.

The urban registered unemployment rate stood at 4.3 per cent in the
first quarter of this year, keeping the same level as 2003, according to
the Ministry of Labour and Social Security. But it did not cover
laid-off workers at State-owned enterprises and collective enterprises
because these people still maintained labour relations with the
enterprises and their basic livelihood is still guaranteed by their
employers. And it excluded rural labourers still looking for jobs in
cities. Thus the actual unemployment rate would be higher.

Economic growth is expected to bring about 8 million new vacancies this
year, but the current employment situation is still grave.

Counting existing unemployed labourers and newly-added labourers, about
24 million urban residents are getting into the job market this year. As
well, about 150 million rural surplus labourers will contribute to the
country's employment pressure.

And such pressure tends to last for quite a long time, requiring
constant attention from the authorities.

Thus restructuring of industries is needed to promote employment to a
maximum extent.

Training should be provided to improve labourers' education level and
skills.

Obstacles to increasing employment, such as the rural-urban separation
system and the rigid household residence registration system, should be
reshuffled.

Instead of taking promotion of GDP growth as the No 1 job, top priority
should be given to expanding employment.

(China Daily 04/30/2004 page6)