Top Chinese leaders have urged all areas of China to make the issue of unemployment one of their top priorities, warning that failure to tackle the problem could lead to social instability and damage the country's modernization drive.

At a meeting here over the weekend, Chinese President Hu Jintao and Premier Wen Jiabao said that China faces a grave employment situation, urging all localities to fully understand the importance and urgency of the issue and take concrete measures to solve it.

Analysts here said that the move not only reflected the government's increasing concern over re-employment, but also indicated a shift of policy from more emphasis on economic growth to putting economic growth and employment on an equal footing.

Since China started its reform and opening-up in the late 1970s, the country's planned economy has given way to market-oriented reform, which has increased both the efficiency of state-owned enterprises and the number of laidoff workers from these enterprises.

Meanwhile, a large number of surplus laborers in rural areas swarmed to cities to hunt for jobs, further exacerbating the already tense urban labor market.

Official statistics show that some 10 million job hunters will enter the labor market this year, in addition to over 6 million laidoff workers and 8 million registered unemployed people nationwide.

The situation is expected to remain tough as labor supply will continue to exceed demand for the next few years.

"It's interesting to note that the unemployment issue came with the high economic growth in the past years," said Zheng Gongcheng, professor of the School of Labor Relations and Human Resources under the Beijing-based People's University of China.

In the 1980s, one percentage point GDP growth would provide jobs for 1.3 million people, but the figure dropped to 900,000 in the 1990s and then to 800,000 at present.

"This indicated that job opportunities will not emerge simply with economic growth," he said.

Zheng cited Zhongguancun in Beijing, the so-called Silicon Valley of China, as an example, saying that the district is a major contributor to Beijing's GDP growth, but it absorbs a limited number of labor force.

"The move by the Chinese government to make the re-employment issue more prominent fully reflects its new development concept and also indicates the issue has been given an equally important role in the country's development," said Zheng.

At the meeting, Wen Jiabao called for great efforts to develop labor-intensive industries, the tertiary industry and the non- public economic sector, which he said are major sources for employment.

"This also reflects a change of idea of the government," Zheng said, noting that the country has long sought high economic growth through the high-tech industry.
The high-tech industry should not be developed at the cost of the industries that can absorb huge jobless people as China has a 1.3 billion population, he said.

Zheng's point of view was echoed by Lu Xueyi, president of the China Sociology Society, who said that bigger efforts should be made to develop the tertiary industry, or the service sector, which absorbed 70 percent of the country's new labor force over the past five years.

"Greater potential for employment still lies in the sector," he said, noting that this could be achieved through quickening the pace of urbanization.

To meet this year's employment challenge, the government has set an annual goal of creating 8 million job opportunities to ease the labor market tension.

Both government officials and economic experts here are optimistic about achieving the goal, saying that the rapid economic growth in the first six months of this year has laid a solid foundation for it.

In the first half of this year, China realized a GDP growth rate of 8.2 percent despite the SARS impact and the yearly target of 7-percent economic growth is expected to be fulfilled by the end of the year.

Meanwhile, the service sector is recovering rapidly and increasing its ability to absorb more workforce now that SARS has been contained.

"So long as effective measures are taken to boost the labor- intensive industries, the tertiary industry and the non-public economic sector, both the two set targets, will be fully achieved, " said Zheng.