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Reemployment: A Solemn Scheme in 1998
By Li Ning | No.20 MAY 18-24, 1998

According to a program announced early this year by the State Planning Commission (now reorganized into the State Development Planning Commission), top priority in the goal of the current macro-economic planning policy is to solve the problem of unemployment, caused by the government's massive industrial structural reforms. 

In 1997, urban unemployment stood at 3.1 percent, or 5.89 million workers. This is the highest level since 1982, although it cannot compare with that prevailing in the preceding four years-5.3, 4.9, 3.8 and 3.2 percent. Considering the growing number of laid-off enterprise workers, the rate is expected to rise further, however. 


Unemployed woman workers in Tianjin work as shop assistants after re-employment training (YANG BAOKUN) 

Li Boyong, former minister of labor, told a press conference last March that 11.51 million workers were laid off last year, 7.87 million of them in state-owned enterprises. Some 4.8 million required re-employment. He estimated that another 3.5 million workers would be laid off this year. 

Analyzing the reasons, Li said the principal cause was the employment structure shaped by the long period of a planned economy could not keep abreast of the deepening enterprise reform, technological improvement and economic structural readjustment. Inevitably, in the historical process of economic development, some workers and staff members must be transferred from traditional professions to new production areas and the service sector. Without this process, China will not be able to establish a market economy and a modern enterprise system can not be set up in the state sector. Layoffs and re-employment of workers, with possible transient difficulties for some, can hardly be avoided. 


A job service center set up in Dalian this year receives up to 3,000 job seekers a day (GUO DAYUE) 

Not Recessional Unemployment

Some economists say the reasons were closely related to historical, institutional and structural problems accumulated over decades. The major factors in this regard are: 

With the acceleration of the enterprise restructuring process, a vast number of redundant workers under a system featuring a state of hidden unemployment are discharged. 

In the process of industrial restructuring of the national economy, the number of unemployed workers increases. 

Change in the mode of economic growth from the extensive to intensive method results in the replacement of labor factors by capital and technology factors. 

A switch from a seller s to a buyer's market has created vast over-production, also leading to worker retrenchments. 

Rapid industrialization has resulted in a vast army of surplus rural labor moving to the cities, towns and into non-agricultural industries. 

But at the same time, all these elements have given impetus to the development of the national economy and society. In 1997, although the annual GDP growth rate declined somewhat compared with that of 1996, it still reached 8.8 percent. According to short and midterm projections, the economy will continue to grow at around 8 percent. Such being the case, the social problem of unemployment facing China in the process of reform is one accompanying our advance and development. It is essentially different from recessional unemployment in the periodic process of ordinary growth. 

Re-employment Project

Governments at all levels are seeking every way possible to provide laid-off workers with re-employment opportunities. Experience has shown that the basic way is through further economic development, deepening reform and devoting major efforts to implementing a re-employment project. 

Since the mid-1990s, more than a million workers have lost their jobs in Jiangsu Province. In 1995, the province started a re-employment project. Labor departments at all levels have vigorously set up a re-employment service system, and all cities and counties have established institutions, that integrate job service centers, re-employment training, unemployment insurance and labor service enterprises. 

As a result, nearly 300,000 laid-off workers have so far received retraining. More than 800,000 unemployed persons have found new jobs. At the end of 1997, the registered unemployment rate in Jiangsu's urban areas was 2.35 percent, lower than the national average. 


Individually operated enterprises help the government to carry Out the re-employment project. The photo shows Song Guomin (fourth left), board chairman of Guomin Beer Co. Ltd., talking with re-employed workers in his company (FENG JIE) 

The smooth transformation of laid-off workers has provided a favorable environment for economic structural readjustment in Jiangsu Province. Over the past three years, 124 enterprises experimenting with a modem enterprise system have managed to handle the re-deployment of more than 100,000 employees, resulting in an increase of 24.2 billion yuan of total assets and average reduction in the assets/liabilities ratio of 10 percentage points. Meanwhile, nearly 400 enterprises have smoothly arranged merger or bankruptcy, more than 100 strong enterprises have completed recombination of their assets and checked and revitalized assets and stocks worth 10 billion yuan, injecting fresh vigor for economic development. 

Shanghai has the largest number of industrial workers, and is the city with the largest number of laid-off workers during the state-owned enterprise reform. Over the past few years, more than 900,000 unemployed workers have found new jobs through re-employment service centers. The central government cites Shanghai as a model for all. 

The system is that the re-employment service center and the laid-off workers sign trusteeship contracts. The center gives them basic living expenses, pays off pension, medical and other social insurance fees for them, provides professional training and guidance, and directs and helps them to find new jobs. The trusteeship term is three years, during which the laid-off worker and the employer see if they like each other. Normally, the laid-off workers of state-owned enterprises are not fastidious about their new work posts, because, having had the experience of losing jobs, they treasure the opportunity to work again. Those who exceed the term of trusteeship and yet refuse to take up new jobs are deemed as having no urgent need to seek fresh employment and no difficulty in their daily lives, so that they will separate from the center on expiration of the contract. 


Lu Youmei, a former silk factory worker who was laid-off, now runs a seeding-egg chicken farm that produces up to 500 eggs a day (TAN JIN) 

At present, the situation of re-employment may be described as grim, but stable, and the government is confident of settling the problem. The Ministry of Labor and Social Security has taken a clear-cut stand: Over the next three years, the annual number of redirected and re-employed workers will exceed that year's number of newly laid-off workers. Thus, the strategic readjustment of composition of state-owned enterprise personnel will be basically completed in five years. 

New Employment Concept

Re-employment often requires a change of profession. Many laid-off workers of textile mills and machinery plants, for instance, face great difficulty in finding appropriate jobs by relying on their spinning, lathing, fitting, milling and planing skills. Besides mastering new techniques, they must change their concept about employment. 

To create more re-employment opportunities, the government is now devoting major efforts to developing tertiary industries, particularly commerce, catering trade, tourism, insurance trade, community service trade and household handicraft industry. It requires efforts on the part of industrial workers to become shop employ-ees, family servants, insurance salesmen, small shopkeepers and farmers. 

Pedaling pedicabs. In 1995, some town-run enterprises in Tinglin Town of Jinshan County, Shanghai, were poorly managed, leading to some of their employees being laid off. The local government tried every possible means to solve the unemployment problem. Considering the reality of Tinglin Town, it expended re-employment funds on the purchase of 20 pedicabs and encouraged laid-off workers to provide visitors with convenient transportation. 

But at the beginning, no-one wanted to operate a pedicab, but, to save face, they said they would accept monthly living expenses of 100-200 yuan and stay at home. Officials of the town government patiently helped them to change their ideas. Laid-off workers Li Zuolong from Shanghai Sanhao Dress Manufacture Co. Ltd. and Li Zuoyou from Tinglin Shipping Co.,took the lead in pedaling pedicabs. After working for a month, their incomes were no less than what they had earned before. Hence, all 20 pedicabs soon had masters. After more than two years of development, the number of such pedicabs has increased to over 70. 

Making dumplings. In Hefei City, the provincial capital of Anhui, Du Xiaoyu, 36, led 40 other laid-off workers to establish Jiajie Food Processing Co., Ltd. to produce and sell stuffed dumplings made of glutinous rice flour which have a ready market. In 1997, Jiajie brand dumplings sold well at '97 Guangzhou International Food Fair and won gold awards. 

Being family servants. Fan, 31, was formerly a woman worker in Beijing No. 1 Water Supply and Heating Installation Plant. She began working for the Huang family in October 1997 at a wage of five yuan an hour. Her main job is to take care of a child each afternoon and cook dinner three to four times a week. Fan said, "I'm pleased with this job. I know nothing about technology. The present job doesn't take up much time, so I still have time to look after my home and the wage is enough to support my family. Huang's family is pleased with my work, and the child and I are on very good terms. Therefore, I was happy to sign a new contract with Huang when the old one expired last January." 

Purchasing "four wastes". In 1994, Jinan City of Shandong Province began to publicly auction the use right to "four wastes" (waste or barren hills, waste sloping fields, waste water area and waste beach), and encourage laid-off workers to participate in their management. To date, industrial and mining enterprises, government organizations, institutions and individuals in urban areas of Jinan have undertaken more than 100 farm development projects of various kinds, employing over 1,000 people, more than half of them re-employed people. They have brought 119 "four wastes" with 6,300 ha. under cultivation, built grain lands, cash crop fields and forest and fruit bases of 3,700 ha., creating a total economic income of over 250 million yuan and providing more than 150 million kg of farm products. 

Favorable Policies

Beginning from this year, the re-employment of laid-off workers will receive new supports from the administrative departments for industry and commerce. According to the measures recently taken by the State Administration for Industry and Commerce, re-employed people may enjoy the following favorable policies: 

Individually operated industrial and commercial households and private enterprises must give priority to laid-off workers from state-owned enterprises when they are recruiting. 


The Zhuang Mama Clean Vegetables Service in Shanghai has recruited more than 100 unemployed people. Here one of its members delivers goods to the customer's door (ZHANG PING) 

Relying on certificates or identification cards, laid-off workers may apply for establishment of industrial and commercial households or private enterprises. According to actual conditions, each local authority may reduce or exempt related fees for a specified period. Those who are in difficult conditions will be exempted from management expenses for individually operated industrial and commercial households and market handling costs. 

Encourage and support scientists, technicians and professionals to initiate scientific and technological, productive and export-oriented enterprises. The administrative department for industry and commerce must help applicants to solve actual problems such as the provision of credit, worksites and infrastructure facilities. 

Encourage laid-off workers to engage in business in various markets, Those who have special difficulties may be allowed to deal with temporary businesses in morning and evening markets. 

The administrative department for industry and commerce should direct and support private enterprises and individually operated industrial and commercial households which, when a condition permit, can participate in small state-owned enterprise reform, merging small state-owned enterprises which have stopped production or suffer heavy losses, and giving priority to laid-off workers. 

In Qingdao City of Shandong Province, there is a high-quality product market named Hi sense a With a total investment of 170 million yuan, 60 percent of 900 staffers are re-employed workers. Because of this, Hisense has enjoyed favorable policies for labor service enterprises, and great support from the labor department and banks. At present, its extension project of 4,000 square meters is in the planning stage, which will provide jobs for 100 unemployed workers. From this, some economists hold that the fundamental way out for re-employment doesn't lie in adjustment and arrangements within the trade, but depending on seeking new economic growth points and creating new employment opportunities. 

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