The Malaysian Insider

BEIJING, Nov 20 - China is racing to avoid a massive unemployment crisis and deal with mounting social unrest across the country over jobs.

Social security officials yesterday declared that stabilising employment was a top priority, as they revealed a recent spike in the number of jobless.

Describing the jobs situation as grim, Human Resources and Social Security Minister Yin Weimin told reporters it could worsen from the impact of the unfolding global financial crisis. With company bankruptcies and a slowdown in production creating stresses in labour relations, he said, dealing with labour strife was now his ministry's top concern.

Weeks after unveiling an eye-popping 4 trillion yuan (US$586 billion) economic stimulus plan, China is now turning its attention to managing the more intractable social fallout from the downturn - growing discontent fuelled by rising unemployment.

New measures aimed at easing labour disputes and job losses rolled out in recent days, coupled with calls from top security officials for the appropriate handling of protests, all point to the fact that maintaining social stability has become one of Beijing's most pressing tasks at hand.

The policies range from setting up a fast-track system to nip labour disputes in the bud, providing financial aid to firms to help them retain workers, improving job search services for rural workers and clearing a backlog of sensitive court cases.

'The root cause of unhappiness is unemployment. Without a job it is hard to survive in China because of weak social protection,' said Professor Hu Xingdou, an expert in economics and China issues with the Beijing Institute of Technology.

"If leaders want to defuse tensions, they must solve the job problem," Prof Hu said.

The government, however, has its work cut out to create more jobs when economists are predicting that demand for labour will further weaken with the deepening crisis next year.

Social Security Vice-Minister Zhang Xiaojian revealed yesterday that demand for workers in 84 cities across China in the third quarter of this year had fallen 5.5 per cent - the first third-quarter drop in "many years".

China's official urban unemployment rate was currently about 4 per cent, but could hit 4.5 per cent by the year-end. Next year, the rate could climb even higher, Zhang said.

Yin identified last month as the month when "employment in China began to show the impact of changes in the international economic situation".

Up to then, he said, the "employment situation was basically stable".

Looking at next year, he said the first quarter would be "more difficult" but offered a silver lining - a turnaround in the second quarter when the effects of China's massive stimulus package kick in. The plan aims to boost domestic consumption by spending on large infrastructure and social welfare projects such as roads and low-cost housing.

Even before the current crisis, China's 24 million urban job-seekers outnumbered new jobs two to one. With even fewer jobs next year, the fierce competition among the country's university graduates, for instance, is set to intensify. The number of graduates will rise to 6.1 million next year, up from 5.59 million this year, said Zhang.

Rising unemployment among China's 230 million rural labourers - about half of whom toil far from their hometowns - is also a major problem. The authorities are concerned that they could be the biggest source of unrest.

China's official jobless rate does not take into account these unregistered, highly mobile migrant workers. It would be much higher if they were included.

Unemployment was most severe in China's southern manufacturing and export hub where thousands of labour-intensive firms which employ migrant labour have collapsed due to weakening external demand, said  Yin. Already, there have been isolated protests by workers over unpaid wages at shuttered factories.

But of increasing concern for the Chinese Communist Party is the widening scale of unrest and scope of issues that are fuelling public dissatisfaction.

In recent weeks, taxi drivers upset over falling incomes have staged strikes in at least three Chinese cities, including Chongqing. Earlier this week, a two-day protest over home demolitions in Gansu province left more than 70 injured.

Yin yesterday denied that there were currently any "large-scale retrenchments" or mass movement of jobless migrant workers back to their hometowns, but acknowledged that the "situation was still developing". - The Straits Times