China faces daunting task on job front

Xinhua, China's State news agency reported last year that a  National Development and Reform Commission (NDRC) study says that China needs to create 25 million new jobs each year - equivalent to the combined population of Australia and New Zealand.

The report says that this is the country's worst employment crisis ever, as the children of baby boomers flood the job market seeking their first jobs. Their parents were born in the early 1960s, and they themselves in the late 1980s.

China can generate only an estimated 11 million new jobs this year, according to the NDRC. And at no time this decade did they exceed 10 million a year. This means that despite a record number of employment openings about 11 million jobs have to be found for about 14 million people more.

Guo Yue, a researcher with the Institute for Labour Studies under the Ministry of Labour and Social Security (MOLASS), told China Daily: "The government is racking its brains to create jobs as it braces for a real tough year."

An even greater challenge is that the crisis will continue for more than just one year, said Du Yang, a researcher at the Institute of Population and Labour Economics of the Chinese Academy of Social Sciences.

The mismatch between job supply and demand will continue till 2010, or the end of China's 11th Five-Year Plan (2006-10), Du forecast. He agreed that since there is no control over demand, "the only way is to enlarge supply, or to create as many jobs as possible."

The most effective way to create new jobs, he pointed out, is to create a conducive business environment for small- and medium-sized enterprises, especially labour-intensive operations.

Demographers point out, China's labour population above 16 years old will remain at about 900 million every year for the next 20 years. The pressure of unemployment is a long-term challenge, and it demands a long-term solution.

Of the 25 million people who need urban jobs, according to the NDRC, 9 million will be those joining the job market, 3 million will be former rural residents who have recently moved to cities, and the remaining 13 million are workers let go or about to be retrenched by their employers, mainly as a result of the continuous restructuring of State-owned enterprises.

Of the 9 million newcomers, 4.1 million will be graduates, more than at any time in China's history, and an increase of 750,000 over last year.

An analysis in China Daily says that to make its development more employment-friendly, China needs to accelerate the development of the service sector, which is what developed economies use to tackle unemployment. According to the National Bureau of Statistics (NBS), the tertiary industry, which is more labour-intensive, can create five times the employment provided by industry.

In 2004, the output of China's service sector accounted for 42 per cent of GDP after the NBS adjusted up its GDP statistics. It is still significantly lower than the ratio of developed countries. It is around 75 per cent in the United States and 68 per cent in Japan.

In this sense, employment is an issue that hinges on long-term economic restructuring in the right direction.