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Creating jobs is Chinese leaders' chief concern

Publication Date : 30-03-2014

 

 On a rainy afternoon last month, a 25-year-old woman suddenly stripped down to her underwear and dumped her clothes into a rubbish bin on a major street in the western Chinese city of Xi'an, driven to insanity by her repeated failure to find work.

Her breakdown, which was reported by more than a dozen newspapers including the Chinese state media, reflects the unprecedented job pressures this year as a record number of young graduates seek employment in an economy that faces not only slowing growth but also restructuring pains.

Maintaining stability in the job market - as well as in Chinese society - has become so paramount that Premier Li Keqiang has called for 10 million new urban jobs to be created this year.

This is the first time since the global financial crisis in 2008 that China has raised its annual target for job creation to this level after keeping it at 9 million over the past five years, according to Renmin University professor Zheng Gongcheng.

It is also the first time that the top leadership has elevated the importance of job creation over growth in gross domestic product (GDP).

"Premier Li has downplayed China's GDP growth target to emphasise that while growth will be maintained at a decent level, the labour market is really his primary concern," said Capital Economics analyst Julian Evans-Pritchard.

This year, job pressures could be as great - or even more - than during the 2008 crisis, say some analysts. A record 7.27 million high school graduates - 270,000 more than last year - are entering the job market, while more older Chinese will start retiring later, said Beijing Technology and Business University's Professor Yi Fang.

Beijing has pledged to gradually push back the retirement age, which is now 60 for men and 50 for women - a controversial move that prompted one of China's richest men, drinks tycoon Zong Qinghou, to warn earlier this month that it would "increase job pressures for China's youth".

There will also be more rural residents seeking work in the cities as part of Li's urbanisation drive to house 60 per cent of the 1.3 billion population by 2020, up from about 54 per cent today.

All told, some 15 million people will enter the job market for the first time this year.

Combined with currently unemployed workers, the number of job seekers this year is about 25 million, state media have reported.

Still, hand-wringing over an immediate risk of a job crisis is hardly warranted.

Finance Minister Lou Jiwei assured a press conference this month that the world's No. 2 economy should not face problems exceeding its job creation target this year.
Last year, China bettered its 9 million goal by a wide margin, creating 13.1 million jobs as its economy expanded 7.7 per cent.

So why has the top leadership still chosen to give its job target such prominence this year?

Unlike the 2008 financial crisis when external shocks threatened China's exporters and growth, the pressure to generate more jobs comes from within, as the new leadership imposes more economic reforms that could slow economic growth in the short term, noted Evans-Pritchard.

Moody's Analytics economist Alaistair Chan pointed out that announcing a higher job target is "a way of reassuring the public that the restructuring in certain sectors with over-capacity such as steel refining will not lead to widespread unemployment".

In his annual work report released during key parliamentary meetings earlier this month, Li pledged to create jobs for people displaced by restructuring, while ensuring that "households with no employed members will have at least one person working" this year.

And by making jobs the top priority, Beijing can cure local governments of their fixation on GDP growth.

This could mean local officials' performance will be appraised more on the number of job opportunities they create this year, than the value of investment projects they start, say analysts.

Some provinces have already rushed to unveil job growth packages, with eastern Shandong province pledging last week to "help (job seekers) find jobs within two working days", provide technical skills training for 1 million people and create 2.2 million new urban and rural jobs.

This push has boosted the confidence of job seekers like Allen Fang, 22, who will graduate in June with a degree in international politics from Beijing Language and Culture University.

He hopes to start at 4,500 yuan (US$724) a month at "a relatively large company which offers good career prospects". Average starting pay for college graduates typically range from 2,000 yuan to 3,000 yuan in bigger cities.

So far, he has not received any offers even though he has sent in 15 resumes over the past month.

"My classmates who started their job search earlier have landed jobs, so I'm hoping that this year's prospects are brighter than last year's. Perhaps Premier Li's job policies will make a difference."

Kenneth Zhang, 29, who runs a software start-up with a staff of 10 in Beijing, is not as optimistic.

"Setting job policies and targets is the easy part," he said, noting that he does not intend to hire any new employees this year because "wages are rising too fast".

"Actually creating jobs that fit China's economic restructuring needs and the demands of more picky Chinese youth is going to be more challenging than ever."

*US$1 = 6.21 yuan

 

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