Will dole queues lengthen after new layoffs?

Source:Global Times Published: 2016-3-9 23:28:01

Illustration: Shen Lan/GT

Editor's Note:

Around 1.8 million jobs in the coal and steel sectors will be shed in an effort to reduce industrial overcapacity, according to Chinese authorities. Some are conjecturing that China may see a wave of massive layoffs in the middle of economic reforms, although Xu Shaoshi, head of the National Development and Reform Commission, denied this possibility. What social impact will the layoffs bring? The Global Times has collected three pieces over this matter.

Losing public support would cripple reform

Since reducing overcapacity was proposed, the public opinion has already forecast the huge impacts it would exert on China's job market. By denying the possibility of a layoff wave, Xu was demonstrating the government's determination and confidence. The facts on the ground determine that the nation will not see such a wave.

Earlier, Premier Li Keqiang has announced a 100 billion yuan ($15.27 billion) fund for unemployment. Economist Li Yining also suggested that more resources should be directed to employees rather than unprofitable enterprises. The government is expected to devote major efforts to developing service industries to increase opportunities for those laid-off to be re-employed, while accelerating its capacity-cutting process.

In addition, the government will offer necessary relief funds and information services to those laid-off workers who cannot find a new job.

Whether these goals can be reached will have pivotal effects on workers' attitudes to the economic reform, on the process of the reform and on the outcomes of the economic restructuring.

If these measures fail to win support from the majority of workers, economic reform and restructuring will falter.

What's more, public opinion will turn sour over the reform process and social development if the masses show little support for reform.

China witnessed a layoff wave in the 1990s when tens of millions of workers from State-owned enterprises lost their jobs. The harm of this has been inked in the memories of those who lost their jobs, and gradually digested by the victims as the price of reform. Even if they were pressured to leave their posts, they had reasons to demand assistance and due compensation.

If China witnesses another wave of layoffs and authorities fail to provide full support for those affected, economic reforms can hardly be implemented.

China's social and economic development is at a crucial stage where huge challenges are accompanying opportunities.

Messages released from the annual sessions of the National People's Congress and the Chinese People's Political Consultative Conference suggest that the government has the determination and confidence to cope with the challenges, for which public support is a fundamental basis.

Beijing Youth Daily

Market economy can absorb more staff

Employment is one of the biggest livelihood issues, but unemployment is the negative side of industrial restructuring.

China expects to lay off some workers in an effort to cut industrial overcapacity. Yet a large-scale wave is unlikely. Employees from State-owned manufacturing enterprises are most likely to be affected by the reduction of overcapacity. However, the service sector has the capacity to absorb more employees. This is why China is witnessing job growth despite economic difficulties.

In market economy, being laid off is not terrifying and does not equal unemployment. The new economy is absorbing a greater number of workers. As the Internet is increasingly directing the new development trend toward services, opportunities are seeing explosive growth.

In present-day society, more people are turning to untraditional occupations, for instance, online shopkeepers, app-ordered car drivers and so forth.

At a State Council executive meeting last month, Premier Li Keqiang said that "manufacturing and services are often mixed" and that "makerspaces can further break professional boundaries between industries and services, which will stimulate new models in the new economy." This means it is outdated to view the layoffs in a traditional way.

The layoff wave in the 1990s affected a large number of workers. They stimulated the market's vitality instead. The economic restructuring this time will involve much fewer employees.

The capacity of the market economy is much greater than that in the 1990s. The laid-off workers will also play a significant role in the redistribution of market factors.

There is no need for a new layoff wave in China. Yet the laid-off staff deserve fair treatment. Social insurance services such as unemployment relief and re-employment training should be guaranteed. More resources can be distributed to staff rather than unprofitable enterprises. Workers can be re-employed after training.

Meanwhile, the laid-off staff, especially those from the State-owned enterprises, need to psychologically adjust to the changes. The stereotypes of unemployment should be abandoned. If resource allocation is returned to the market, a fair and orderly environment can be established for the development of the new economy.

Beijing News

Time to kill off 'zombie' enterprises

Overcapacity is a long-term problem that has been perplexing the Chinese economy for years. In recent years, the Chinese government has attached great importance to addressing the issue. Premier Li Keqiang said in the government work report this year that "We will address the issue of 'zombie enterprises' proactively yet prudently by using measures such as mergers, reorganizations, debt restructurings and bankruptcy liquidations." The central government will also provide 100 billion yuan ($15.4 billion) as part of efforts to help resettle the laid-off workers, according to Li.

Economic growth is prerequisite to realizing the goal of building a moderately prosperous society in all respects over the new five-year period. Given its pivotal significance to economic growth, reducing overcapacity is an urgent task this year.

Personnel relocation is one of the biggest obstacles in reducing overcapacity. Industries with excessive capacity are often labor-intensive, such as coal and steel. Tens of thousands of employees will be involved if one such enterprise is shut down. Failing to properly resettle the workers is one of the key reasons for the existence of "zombie enterprises."

Despite dissenting voices, the public agrees that the wave of layoffs in the 1990s created the conditions for China's economic growth at the beginning of the 21st century. However, overcapacity has now become a big issue complicating China's economy.

The rapid economic growth in the past couple of decades is due in large part to government support. Driven by GDP figures, the government has become accustomed to developing the economy by expanding investments. The market will signal the private enterprises to adjust if they have become unprofitable enterprises with excessive capacities.

However, the State-owned enterprises always fail and even refuse to receive such signals from the market.

Confronted with the tough task of reducing overcapacity, China should learn lessons from the past. Reducing overcapacity should be synchronized to reforms on government functions. The role of the market should also be utilized in the process of China's economic restructuring.


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