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Jobless rate should be below 5% for stability

By Tan Yingzi (China Daily)
Updated: 2008-12-10 08:01

Social stability could be threatened if the registered urban unemployment rate rises above 5 percent next year, a senior lawmaker warned on Tuesday.

Zheng Gongcheng, a member of the National People's Congress Standing Committee, told China Daily the jobless rate could rise next year from the existing 4 percent because of massive job cuts.

His remarks come as policymakers are holding a three-day Central Economic Work Conference to discuss measures to create new jobs and maintain the existing unemployment rate in the face of the global financial crisis.

"If the government can keep the registered urban jobless rate around 4.5 percent, everything would be okay," said Zheng, who is also a leading scholar in social security at Renmin University of China.

But if the rate - which excludes migrant workers - rises above 5 percent, "it will lead to a series of negative consequences". The number of poor urban residents would increase and living standards in cities would decline, he said.

In such a situation, local governments would be prompted to hire more urban residents, instead of migrant workers, to keep the jobless rate low. It would leave millions of migrant workers without jobs and force them to return to the countryside.

That is the "last thing we want to see", he said, because a drastic increase in the number of jobless migrant workers could pose a threat to social stability.

The job market in the labor-intensive exports sector shrunk in the third quarter of this year because falling demand overseas has forced the closure of many factories.

The job market will reach a two-year low in the first quarter of next year as the global financial crisis takes its toll, according to a survey released on Tuesday.

Conducted by Manpower Inc, a leading global employment services provider, the survey shows the intention of employers in Beijing, Shanghai and Guangzhou to recruit new people is the weakest.

"The global economic downturn and decline in exports have made employers more cautious about hiring new staff," Lucille Wu, managing director of Manpower Greater China, said.

Late last month, Vice-Minister of Human Resources and Social Security Zhang Xiaojian said the government would be able to keep the urban registered unemployment rate below 4.5 percent this year, but the figure could rise in 2009.

The ministry, which said 24 million people would be competing for 12 million jobs next year, has submitted a job stimulus package to the State Council, the country's cabinet, for approval.

The highlight of the package is introduction of a special nationwide vocational training program, especially for laid-off and migrant workers, to help ease the pressure on the job market.

Local governments will provide most of the finance for the package by making full use of special employment and unemployment insurance funds, sources said.

"The unemployment insurance fund has crossed 100 billion yuan ($14.5 billion), and it's high time it is used," Zheng said.

The country has more than 230 million migrant workers, with about half of them working away from their provinces. About 60 to 70 percent of them are below 28 and lack basic agricultural skills, Zheng said.

"The social trend shows more and more surplus laborers will migrate from rural areas to cities and become industrial workers We should not drive them back to the countryside," he said.