China is at a crossroads. It has to choose between rapid economic growth and rapid job creation, for employment, or the lack of it, is now at the center of the deepening global economic crises.
The International Labor Organization's latest data show 51 million jobs could be lost across the world by the end of this year, with the average unemployment rate rising to 6.1 percent. The figures show the jobless rate in the US in February was 8.1 percent, a 25-year high. In Britain and France, the net employment growth was forecast to fall to minus 2 percent in the first quarter. It would be Britain's lowest in 15 years and France's first negative growth in 20 years.
In China, the employment market has become more complicated because the country faces huge pressure from a new development cycle and the acceleration in its industrial and economic structural transformation. Official statistics show more than 17.63 million non-agricultural jobs have been lost since the later half of last year, with 6.64 million people laid off in the services sector and 9.69 million in the manufacturing industry.
The registered urban unemployment rate in the country was 4.2 percent last year. But the figure is actually higher because a large number of unemployed migrant workers were not taken into consideration. More than 25 million migrant workers are seeking employment (or re-employment) and 7 million graduates are expected to enter the already saturated job market this year. This should give an indication of the magnitude of the problem the country is facing.
Primary industries absorb a large part of the country's labor force at present, with the secondary and tertiary sectors unable to create as many jobs as expected. Besides, the labor transfer from the primary to secondary and tertiary sectors has been slow, and the services sector has not played its expected role in expanding the country's job market. In 2007, for instance, the services industry accounted for only 40 percent of the country's GDP compared with the world average of 60 percent - not to speak of some developed economies where it is as high as 80 percent. In fact, China's services sector has seen a gradual decline in its employment-generating capacity because of the lack of high-end industries to bolster its booming development.
Furthermore, because of the long-existing contradiction in structural employment, there still exists surplus labor in the country's low-end industries. This structural contradiction in the employment market was a problem even before the global financial crisis came to light. For instance, a large number of medium- and small-sized labor-intensive units in the Pearl River and Yangtze River delta areas, especially in Dongguan and Shenzhen, began a campaign in 2006-07 to reduce their number of employees, mostly less skilled migrant workers, because of rising production costs. These migrant workers, along with their counterparts in other fields, were among the first victims of the country's efforts to upgrade industrial production.
China felt the jobless crisis much before other economies because of its imbalanced education structure, one of the main reasons why laborers have failed to meet the demands of the developing market. That should make China accord top priority to resolving its ever-aggravating employment crisis because stable employment can help a country's human capital play out its maximum role in promoting economic development. Hence, it is imperative that China develops a long-term national strategy on issues closely related with people's livelihood and social stability. And for that, it has to shift its decades-long focus from economic growth to employment growth.
For long, employment generation in China has fallen behind its rapid economic growth rate. For instance, its average annual economic growth rate increased from 8.6 percent during the 9th Five-Year Plan period (1996-2000)) to 9.5 percent during the 10th plan period, but the newly added number of employed fell from 8.04 million to 7.48 million.
The setting up of an employment-centric economic development strategy means the country will move toward an economy that is driven by employment, not investment. That would not only effectively ensure a good interaction between economic and employment growths, but would also help shift its employment structure from the traditional to modern. For this purpose, China should try to develop its manufacturing and services sectors, which would help increase employment and tap the potential of its huge population.
The author is a researcher in economics with the State Information Center
(China Daily 03/19/2009 page8)