China labour ministry sees pressure ahead on employment

Planning to make job creation for recent graduates a priority
||Last Updated: 07/26/2013

BEIJING (Reuters) — There will be a lot pressure on employment in China in coming months, the labour ministry said, highlighting a major challenge facing Beijing as it tries to wean the economy off its export dependency without disrupting social stability.

China's leaders are forging ahead with plans to turn the economy into one led by domestic consumption and demand from a traditional focus on manufacturing and exports, raising the possibility of job losses as traditional industries restructure.

The government is trying to tackle overcapacity in some industries and is looking to a developing services industry to absorb surplus workers, a transition the labour ministry acknowledged could be painful.

"China faces quite heavy employment tasks in the following months and the pressure over employment will be very big," Yin Chengji, spokesman for the Ministry of Human Resources and Social Security, told a media briefing.

"The service industry plays an important role in absorbing labour, especially for those emerging services industry and network services."

Failure to keep Chinese in jobs could threaten the social stability and economic prosperity that the Communist Party says justifies its one-party rule. Premier Li Keqiang has talked about the government safeguarding the lower limits of growth and employment, although he has not specified what the limits are.

"If the job market appears in an obvious bad trend, we will probably take some targeted measures to resolve employment problems," Yin said, though he did not give details.

On July 24, the government scrapped some taxes for small business, which state radio said employed "tens of million of workers", as well as offering measures to help exporters.

China added 7.25 million jobs in the first half of this year, slightly higher than the number created in the same period a year earlier, the ministry said last week.

However, a recent flash HSBC/Markit Purchasing Managers' Index survey showed China's job market weakened further in July as the employment sub-index slid to the lowest level in more than four years.

Economic growth slowed to 7.5 per cent in the second quarter, and economists say China's leaders believe annual growth of seven per cent is needed to create enough jobs to maintain social stability, although the top leaders have never specified a figure.

The ministry said employment in the second quarter was generally stable, and that it was making a priority of creating job opportunities for graduates.

It added that the unemployment rate in the second quarter was 4.1 per cent, the same as in the first quarter.

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