In recent years, employment pressures in China have been relieved, while problems in employment structure and quality have become acute. Taking into account demand, opportunities, economy and employment, this year's Government Work Report set the target annual economic growth rate at 7.5 percent for 2014. Since employment is vital to people's livelihood, the government will continue to give it priority this year. It will also adhere to more active employment policies and fix structural problems regarding employment of college students and reemployment of laid-off workers. By deepening reform and improving employment quality, there will be more and better job opportunities in China.

China's great achievements in employment

Employment is vital to people's livelihood. As a developing country with a large population, China considers employment a major problem in economic and social development. For many years, the government has emphasized the enlargement and security of employment to improve people's livelihood. On the one hand, efforts have been made to promote economic growth to create more jobs. On the other hand, due to all kinds of pressure and problems in development, a series of active policies with Chinese characteristics have been implemented, which strongly enhance employment security.

First, the employment situation remains basically stable with a continuous increase in total workforce. Based on long-term overall advantages and active policies, China’s employment situation remains basically stable. The registered unemployment rate has stayed under 4.1 percent in recent years. Second, since the employment pattern has greatly changed, there are less surplus rural workers across the country. The proportion of people engaged in the primary industry has decreased from over 70 percent in the early 1980s to around 30 percent currently, while secondary and tertiary industries offer consistent job growth. Hundreds of millions of rural workers have migrated to cities to work in those two industries because of this trend. Third, employment quality continues to improve. More workers tend to seek jobs in labor markets independently. Wages are rising, and various kinds of social security are benefiting more people. The protection of workers' legitimate rights is being promoted so that labor relations improve.

Ensure stable employment by maintaining moderate economic growth

For quite a long time, China has faced an oversupply of labor. Accordingly, the government had to set a high goal of economic growth to create more jobs.

China's total supply and demand of the labor force has begun to change due to multiple reasons. On the one hand, in terms of labor supply, China's working-age population began to decrease in 2012, and it will keep going down for a long time according to the law of population development. On the other hand, economic growth has been a strong engine for employment. With an enormous economy, even when development slows down slightly or productivity increases -- which may offer more job opportunities than usual -- the moderate growth of the economy will still have a positive effect on employment. This has been proven by the employment situation in the last few years. For example, China's economy has witnessed slower growth rates since 2010, while more jobs have been created.

The changes in labor supply and demand imply that China is able to bear the pressure of a moderate slowdown in economic growth. The country could accelerate the adjustment of economic structure and promote the transformation of economic development.

However, with changes in labor supply and demand, it is still vital for the country to keep moderate and stable economic growth to ensure the stability of employment.

On the one hand, the total supply of the labor force is still large, with a working-age population of 930 million, aged 15 to 59. In many working areas, there aren't enough employees, and many of them change jobs quite often. In addition, the employment of college students, the elderly and unskilled workers, as well as the migration of surplus rural workers and the reemployment of laid-off workers, remains a major problem. This basic fact determines the moderate growth of the economy. Faced with sharp fluctuation, the huge workforce will have a negative influence on total employment.

On the other hand, in terms of China's economic structure and performance, there are strong links between different industries and areas. A sharp fluctuation in a certain area or important industry is likely to have an effect on others as well, which will greatly influence overall employment. The next few years are crucial for China’s structural reform, transformation and economic structure upgrade. It is inevitable for certain industries in certain areas to experience ups and downs. China should work to maintain stable economic growth, especially in investment, exportation and pillar industries, so that reform can be carried out successfully and employment and society remain stable.

In this year's Government Work Report, the economic growth target is 7.5 percent. Compared to the last few years, this target has decreased because the pressure on total employment has been relieved. On the basis of stable employment, this goal is also beneficial for reform and transformation. The moderate decrease helps to carry out stable economic restructuring and development transformation. The adjustment of the economic growth target takes into consideration demand and opportunities, growth and restructuring, and economy and employment.

Place emphasis on employment structure

A long time from now, problems in employment structure will be crucial due to the influence of a long-term imbalanced economy, demographic changes and the transformation of economic development.

There are four main problems. First, as economic pattern upgrades, traditional low-end manufacturing will need less workers, while more of the labor force will be required in service industries. Second, because of the transformation of industries and the increasing cost of living, the labor markets in the Yangtze River Delta, Pearl River Delta and Bohai Sea Coastal Region are likely to shrink. Meanwhile, emerging economies and many medium- and small-sized cities will offer more job opportunities. Third, as higher education is widely received, most new workers will tend to be skilled labor while crude labor will face a shortage. Fourth, the aging labor force cannot meet the growing demands of industries and the human resource market. In the future, a large number of workers need to adjust themselves in different occupations, industries and regions. It will be challenging for laborers who need to make occupational choices. Policies of urbanization and population and the construction of a public service system will meet the challenge as well.

The problems of employment structure need multiple solutions. Most important, solutions should adhere to the requirements from the Central Committee Decision on Major Issues of Deepening Reform made at the Third Plenary Session of the 18th CPC Central Committee so that the market can play a decisive role in the allocation of resources and the government can function better.

First, solutions should trust and rely on the automatic regulation of the market. To give play to this automatic regulation, solutions need to stimulate the market and attach importance to enterprises and employees in industrial development, recruitment, occupational choices, even professional training and education.

The government has four main tasks concerning its responsibilities. First, it should supervise employment and release related information more effectively. Second, occupational education and training should be emphasized. Third, economic and population structure should be further optimized in order to cope with the problems of regional employment patterns. Fourth, necessary policies like the protection of enterprise bankruptcy and work-relief should be carried out, as the number of workers in some areas and industries are likely to decline sharply.

Perfect social policies and improve the quality of employment

The next important task is to further improve employment quality and labor relations, promote employment equality, and protect the rights and interests of laborers. In the Central Committee Decision on Major Issues of Deepening Reform, there are specific requirements.

In terms of employment quality, due to long-term labor surplus, the outstanding problem is that many working people, especially those who work in non-State economic sectors, haven’t established a stable labor relation with their employers. In this case, sometimes their legitimate rights cannot be protected because they are not covered by the social security system. There are gaps in social security between different groups even in formal sectors. Therefore, on the basis of carrying out related social policies, China must practically improve the quality of employment.

First, China needs to promote employment equality. All discrimination and barriers of region, industry, identity and gender must be eliminated according to the Central Committee Decision on Major Issues of Deepening Reform. Second, in the reforms of income distribution and social security, the income gap between different sectors should be narrowed. Third, the reform of the public service system (based on household registration) must be accelerated, so that urban residents and rural migrant workers will live harmoniously. Fourth, labor relations should be further regulated. Employees and employers should have a collective negotiation mechanism in relevant sectors to protect the legitimate rights and interests of employees. Finally, it should offer more assistance to disadvantaged groups in the labor market, enabling them to get jobs or start their own businesses.

Authors: Ge Yanfeng, Li Jianwei, research fellows of Development Research Center of the State Council

Source: March 18, 2014 People’s Daily