By Wu Jiao (China Daily)
Updated: 2008-01-22 07:30

The national urban and township unemployment rate was reduced to 4 percent last year, thanks to the creation of more than 12 million jobs and despite more people entering the workforce, a top labor official said yesterday.

The number of jobs created exceeded the target of 9 million set at the beginning of last year, Zhai Yanli, vice-minister of Labor and Social Security, said at a press conference.

Zhai said that by the end of the year, 99.9 percent of the country's 869,000 former "zero employment" families had succeeded in finding work for at least one member.

Last year saw the total urban and township unemployment rate fall by 0.1 percentage points for the third year in a row.

During the period of economic restructuring in the late 1990s, the rate rose to a high of 6 percent.

Zhai attributed the decline to the country's economic growth and measures to stabilize employment. He said the rate will be held within 4.5 percent this year.

Every year for the past decade, China has posted double-digit GDP growth. Between 1978 and 2006, the number of urban and township jobs rose from 95.14 million to 283.1 million.

But the country continues to face employment pressure, with 10 million people entering the workforce every year between now and 2010, according to official figures.

At the same time, the move away from labor-intensive industries in line with efforts to upgrade the economy and improve productivity will also mean fewer jobs being created in those industries, Chen Liangwen, an economics researcher at Peking University, said.

Research by the Chinese Academy of Social Sciences has suggested the government look to create more jobs in the country's tertiary, or service, industries.

While these already account for about 39 percent of the country's total jobs, the ratio in many developed countries is between 50 and 60 percent.

Zhai also said the ministry is mulling over a new salary regulation, to guarantee steady pay rises.

"The regulation has been drafted and is now soliciting advice. It will be submitted to the State Council for deliberation after certain legislative procedures," he said.

Labor experts have said the new regulation, together with the newly implemented Labor Contract Law, have helped China enter a new era of employer-employee relations by offering more protection for workers.

Wen Yueran, an expert in labor relations from Beijing's Renmin University of China, said low salaries were a major factor in accelerating China's economic growth over the past two decades.

The country's total wage payments fell to 41.4 percent of GDP in 2005, compared with 53.4 percent in 1990, according to figures from the National Bureau of Statistics.

Workers will need some hefty pay rises if China is to increase its wages-to-GDP ratio to the 55 percent level of most developed countries, Wen told the 21 Century Business Herald.

Low wages and slow pay increases have had a negative impact on society and cooled consumption, Chen said.

Steady and rational pay rises will help stimulate domestic consumption, which fell to a record low of 51.1 percent of GDP in 2006, Chen said.