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Training the unskilled key to full employment

Category:[world] [Opinion] [Commentary]

China is a big country that abounds in human resources. Nothing new - the country has been under population pressure since the Ming Dynasty (1368-1644).

In the past, the pressure found expression in the contradictions between less land and more people.

Now the strain is manifested in clashes of the labor force with capital and technology. Over the last three decades, China has adopted an efficiency-oriented economic strategy in a bid to catch up with developed countries. As a result, the government tries to replace workers with capital and technology.

However, full employment constitutes the most important basis for the harmonious economic and social development of the country, which has the biggest population of any nation and whose social security system is not yet sound.

Full employment has been put at the top of the government agenda now that the nation is engaged in building a society of harmony.

The country's economic growth model is now undergoing transformation. This transformation is necessarily accompanied by the transformation of the industrial structure and, in turn, rising unemployment.

Now that saving energy and reducing waste-discharge constitute two vitally important factors in transforming China's development model, large numbers of small energy-consuming iron and steel mills, coal-burning thermal power plants and paper mills are expected to be closed.

The elimination of these small enterprises, which absorb a significant portion of the labor force, is bound to increase unemployment.

Last year, the government's employment policy yielded good results. The unemployment rate was only 4.1 per cent and a total of 11.84 million jobs were created.

However, labor still outstripped demand.

In view of this, a still more active employment policy ought to be formulated to promote the harmonious development of the country economically and socially.

First, full employment should enjoy top priority in the government's macroeconomic coordination policy.

Employment ought to be a very important indicator in gauging the performance of government officials and governments at various levels.

In terms of the relationship between economic growth and employment, economic growth should be an independent target instead of an auxiliary factor in the package of economic growth strategies.

Second, input in education needs to be expanded with major changes in education.

The crux of resolving the unemployment problem lies in tapping human resources. Economists have come to the unanimous conclusion that laborers with low skills will be in an increasingly disadvantaged position as knowledge plays an increasingly important part in the economy.

If we fail to raise the quality of the labor force via education and technical training, it will be hard for the labor force to upgrade itself to keep pace with the transformation of industry.

As a result, the narrowing low-end employment market will be packed with low-skill or unskilled job hunters. The employment problem will only worsen.

Statistics show that students from rural areas studying in Beijing universities and colleges made up 30 percent of the total number of students in the 1980s. The ratio dropped to 17 percent in the 1990s. Now it is as low as 15 percent. The decline is chiefly attributed to high tuition.

Taking this into account, basic education in the vast rural areas should be strengthened to facilitate the shift of rural surplus labor to townships and cities.

At the same time, strenuous efforts should be made to develop vocational education as the dominant education track, rather than higher education.

Third, the pace of tax reform needs to be quickened to dramatically reduce the tax burdens on small enterprises.

This will automatically lessen employment pressure.

If, instead, the taxation policy is targeted at financially draining these businesses, the owners may close their businesses.

Fourth, small- and medium-sized monetary institutions should be developed, especially small- and medium-sized regional banks.

These banks are meant to make loans to small- and medium-sized businesses, which combine to employ the majority of the labor force.

In the United States, for instance, the 20 million small- and medium-sized businesses provided 60 percent of the jobs in the service sector and 50 percent in manufacturing.

In Japan, employees in small- and medium-sized businesses account for 78 percent of the total. In the European Union, employment opportunities created by small- and mid-sized businesses make up 70 percent of the total.

Fifth, employment should be promoted in diverse ways through multiple channels.

In the face of increasing employment pressure, the industrial policy should not exclusively tilt toward high-tech sectors. Support should be given to labor-intensive businesses.

In terms of the enterprise size, development loans should be made to small- and medium-sized enterprises, not just to giant enterprises.

In terms of ownership, privately owned businesses should be nurtured and promoted.

Also, the forms of employment should be diversified - odd-time jobs, seasonal jobs and flexible working hours.

Finally, disadvantaged people should get training so that they are prepared for employment when opportunities arise.

The author is a researcher with the State Information Center

(China Daily 06/07/2007 page10)

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