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Business / Economy

Top economic planner dismisses massive job loss fears

By Zheng Yangpeng (China Daily) Updated: 2016-02-04 08:07

China's top economic planner has dismissed fears that efforts to shed overcapacity will generate massive layoffs, and said parallels should not be drawn with the late 1990s when 21 million workers lost their jobs.

"The situation now is quite different from that in the late 1990s when loss-making State-owned enterprises underwent mergers and acquisitions," Xu Shaoshi, minister of the National Development and Reform Commission, told a news conference on Wednesday. "Even in the iron and steel industry, private companies make up half of the sector."

Workers in the private sector could more easily move jobs, Xu said, responding to concerns that the events of 17 years ago could replay this year, a worry shared by local governments that have been asked to slash capacity.

According to Xinhua News Agency, the iron and steel industry-which employs 4.2 million workers and accounts for 4.5 percent of employment in industrial enterprises-will shed 400,000 jobs as it works to solve its overcapacity problems.

In an earlier report from China International Capital Corp, it was estimated that overcapacity reduction in the five worst-affected industries-coal, steel, electrolytic aluminum, cement and glass-would cost 3 million jobs.

This was based on the assumption that 30 percent of the 10 million-strong workforce in these industries would face the ax.

China has promised to spend 100 billion yuan ($15.25 billion) a year for up to five years to address overcapacity in sectors such as steel and coal, while local governments will contribute another 100 billion yuan, Economic Information Daily reported.

The coal industry alone will get around 140 billion yuan, and 1.8 million employees in the sector will be relocated, while 360 million metric tons of outdated production capacity will be removed, the report said.

Xu said despite the economic slowdown, China had created 13.1 million new jobs last year, exceeding the 10 million target set in early 2015. The registered urban unemployment rate stood at 4.05 percent last year, falling within the official target of less than 4.5 percent.

Meanwhile, the surveyed jobless rate, another job indicator, was 5.1 percent, according to the National Bureau of Statistics.

A Nomura report said the still-expanding service sector should be able to accommodate some laborers from industries with overcapacity, but the government needs to make sure that laid-off workers get sufficient training to be re-employed in new positions.

"We expect the government to use special fiscal funds to pay for a more concerted effort to look after those affected," it said.

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