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Handling job losses

(China Daily)
Updated: 2008-11-21 07:48

By the end of the third quarter, registered unemployment in urban areas stood at 4 per cent. That is not so bad in a time like this.

But the "generally stable" big picture can be misleading, if not deceiving. Even the Ministry of Human Resources and Social Security itself sees the situation as "grim" and uncertain.

The ministry denied reports about large-scale job cuts, and waves of home-bound rural workers laid off from major manufacturing bases. But it confirmed job losses from factories closed, or running significantly under capacity.

There are several reasons to believe the real picture is grimmer.

There is a time lag before we see the full spectrum of the impacts of the international financial crisis. We had not begun to feel the pinch until October. The ministry has predicted "bigger difficulties" in the first quarter of 2009. We only hope its projection of a favorable turn in the second quarter finally becomes true. Since no silver lining is in sight in the bleak West, we can only count on the ambitious government investment projects to create new jobs.

More important, the 4 per cent unemployment rate did not take into account rural laborers. There are about 230 million working-age rural residents in China, 120 million of whom are working away from home. It seems ridiculous to exclude such a huge population from national employment statistics.

But it is reality. The ministry is just beginning to develop a special headcount for rural workers. But the cold fact is workers from rural areas are the foremost victims of the shrinking job market. The hardest-hit businesses are labor-intensive manufacturing factories living on exports. They are the biggest employers of low-cost rural laborers.

Our special vulnerability in the current crisis has accentuated the leadership's emphasis on upgrading industrial structures. And it actually bestows upon us such a golden chance. That explains, and to a great extent justifies, some local governments' policy of no-helping-hand for labor-intensive firms. But it makes sense only when the subsequent job loss is taken care of properly.

The central government's decisions to help the 40-million-job textile industry and postpone implementation of the minimum wages mechanism are great ideas to assuage the pains. Massive job cuts will not only dampen hopes on domestic consumption, but also have the potential to end up becoming a destabilizing factor.

But this should not be forever. Decision-makers must think of the long term while shooting the immediate troubles. It is a good idea to take advantage of the changes in the job market and prepare the less-than-skillful rural workers for the market's demand for better-trained laborers.

The government has made up its mind to put more into rural development. The under-developed countryside deserves better infrastructures. But it can be even more rewarding when the government invests more in training the labor force.

(China Daily 11/21/2008 page8)