China Says Jobs The Priority For Economic Policy

Employers will not be prevented from dismissing workers, but the directive laid out rules that are aimed at regulating layoffs.

China must push job creation as an even higher priority in setting economic policy, the government said on Tuesday, laying down rules for employers and officials to discourage potentially volatile sackings.

The directive from China's State Council, or cabinet, was issued on the government website (www.gov.cn), and is Beijing's latest step in a campaign against faltering growth, rising joblessness, and signs of growing discontent.

Job shifts will still be dominated by the labour market, but the document suggests the government will take a bigger role in containing job losses and pushing projects to boost employment.

"Truly make employment work even more prominent and important, and strive to stabilise the employment situation," said the directive, which was dated Feb. 3.

"In implementing macroeconomic and structural economic adjustment and making settings for major industries and projects, priority consideration must go to the impact on expanding employment."

China's economic growth slumped to an annual 6.8 percent in the last quarter, dragging down the pace of expansion for all of 2008 to a seven-year low of 9.0 percent.

Officially, the urban unemployment rate is about 4 percent. But that figure excludes migrant workers and farmers, and many economists say the real jobless rate is at least twice as high.

The ruling Communist Party is most worried about jobs for a torrent of rural migrant workers leaving farms and the 6 million university and college students who will graduate later this year.

About 20 million rural migrants have lost their jobs as the nation's economic growth has slowed, a senior official said early this month. That number could expand.

One in five businesses in Guangdong province, the far southern export zone, may soon lay off more workers, an official survey showed, according to a local newspaper on Monday.

"Comprehensively encouraging employment growth and stabilising employment is extremely significant for protecting social stability and maintaining steady, relatively fast economic development," said the directive.

REGULATING LAYOFFS

Employers will not be prevented from dismissing workers, but the directive laid out rules that are aimed at regulating layoffs.

Before cutting staff in businesses, employers must give 30 days' notice to state-run unions or all employees if they are going to cut 20 or more workers or 10 percent or more of the total workforce. They must also submit a dismissal plan to local social security authorities.

But the rules do not describe any penalties if employers fail to take these steps.

Assessments of local officials must also consider their performance in creating jobs and "controlling unemployment," said the directive.

Officials have said that the government's economic stimulus spending will help tame the swelling unemployment. But some economists are not sure the stimulus efforts are enough. More may be announced in coming months.

The directive says government investment must focus on the projects likely to generate the most jobs, and project proposals must specify employment projections.