Socialist Action /August 2002
Unemployment Growing in China
By ZHANG KAI
HONG KONG-Since China embarked on the road for capitalism, enterprises
with profit-making as their main concern have been laying off workers for
cost-effectiveness. With China entering into global competition after accession
to WTO, readjustments, bankruptcies and mergings of enterprises will accelerate;
the post Sept. 11 impact on China's exports also added to the severity of
the problems.
Faced with such critical situations, the Chinese authorities have been
compelled to announce that the number of unemployed workers is increasing.
However, the figures that were announced were quite discrepant.
On the one hand, Zeng Peiyan, the director of the State Planning Commission,
reported in early March 2002 to a National People's Congress meeting that
the registered unemployment rate for cities and towns was around 3.6%, the
total number of unemployed and stepped-down workers from state-owned enterprises
was around 12 million (with the former being around 6.85 million, and the
latter around 5.15 million people).
According to the estimate of the authorities, by the end of 2002, the
total for the above two categories would amount to around 14 million. Of
this figure, the registered unemployment rate for cities and towns would
rise to around 4.5%. An estimated 2 million people would join the ranks
of the unemployed in the year 2002 alone.1
On the other hand, "China's labor and social security situation"
(hereafter referred to as the White Paper) issued by the News Bureau of
the State Council on April 29 this year, said, "From 1998 to 2001,
the aggregate number of stepped-down workers from state-owned enterprises
in China totaled 25.5 million, of which 16.8 million managed to have rearranged
employment."
This would mean that 8.7 million are still in the "stepped-down"
condition. This is discrepant with the 5.15 million figure that Zeng Peiyan
reported to the National People's Congress two months ago.
Wang Dongjin, deputy chief of the Labor and Social Security Department,
when the above White Paper was announced, openly acknowledged that China
was facing a severe condition of employment, and the number that newly joined
the labor force was at an unpredicted peak.
In the coming few years, 12 to 13 million will enter the labor market
per year. Even if China retains its current 7% economic growth per year,
only 8 million jobs will be created. This means the annual newly added unemployed
will be 4 to 5 million. By the end of 2005, a new unemployed force of 20
million will appear.
The Green Paper "Report on China's Population and Labor Problems,"
recently published by the Chinese Academy of Social Sciences, pointed out
the impact of China's accession to the WTO on China's employment situation:
in the short term, urban unemployment will increase by 3 to 4 million, and
the unemployment rate will rise by 2%. The impact on agriculture will be
most severe, and it is estimated that employment will decrease by 10 million,2
though many reports predicted that in the long run, accession to WTO will
create 2 to 3 million jobs.
Official figures indicate that registered urban unemployment has risen
from 3% at the beginning of the year to 3.7% at the end of March. According
to the Population Study Institute of the Chinese Academy of Social Sciences,
the actual urban unemployment rate would be between 5% and 6%.3 Quite a
number of scholars estimated it was as high as 20%.
With the situation deteriorating, the Chinese authorities realize that
something must be done to resolve the livelihood difficulties of the "stepped-down"
or unemployed workers, or else there would be massive unrest-such as the
strikes and protests that happened in March this year.
The Labor Science Research Institute (under the Labor and Social Security
Department) published a paper entitled "Flexible employment: an important
path to resolve re-employment."4 It proposed various categories of
"flexible employment", such as micro enterprises, family workshops,
temporary, casual, odd or seasonal jobs, contract labor, hourly work, part-time
employment, sales, or self-employment.
However, after listing all sorts of possibilities, the paper went on
to detail the difficulties and problems, which include the following: 1)
Micro enterprises or the self-employed find it very hard to get loans, tax
concessions, or information support; 2) the existing social security system
is very discrepant with the requirements for promoting flexible employment,
and workers are generally without social insurance; 3) the rights of workers
under flexible employment schemes are not protected, for example their wages
are below the legally defined minimum wages, delay in payment of wages,
overtime work and lack of safety are serious, and dismissal by employers
is random.
Officially, the White Paper attempts to shirk the government's responsibility
and says that "the government implements the employment policy of 'laborer-autonomous
employment, market-adjusted employment, and government-facilitated employment,'
encourages laborers to find jobs through fair competition, supports the
management to have autonomy on the quantity and quality of their employees,
and takes various measures to promote a market-oriented labor system."
Surely, such a policy does not favor the employees. Currently, stepped-down
workers from state-owned enterprises are entitled to a basic livelihood
allowance (which is lower than the minimum wages) for three years, and if
they have not found new employment, will be entitled to two more years of
a lower allowance. If they still have not found a job, they will receive
the same treatment as the urban poor, and take a very low allowance from
the government.
With large sections of the working class being condemned to unemployment,
and their housing, medicine, and pension schemes being removed by the market
reforms, there are more protests of workers in defense of their rights.
The worsening social contradictions are spurring a deeper crisis in the
rule of the Communist Party of China. n
1 Wen Hui Pao, 5 March 2002.
2 Sing Tao Daily, 24 May 2002.
3 Sing Tao Daily, 5 June 2002.
4 People's Daily, 23 May 2002.
From the Hong Kong Fourth Internationalist journal, October Review,
Vol.29, Issue 2, June 30, 2002.
Socialist Action /August 2002 |