SME rescue efforts boost employment

Nation has plans to create up to 10m jobs a year

KYOTO, Japan - Struggling companies are getting more support from the Chinese government to keep and create jobs, a senior labor official said.

China intends to create 9 million to 10 million jobs a year, but experts say the worsening situation faced by small and medium-sized enterprises (SMEs) in coastal regions complicating the effort.

To ease the problem, the nation will introduce more active fiscal and financial policies to help SMEs to survive, and thus sustain employment and create jobs, said Wang Yadong, deputy director of employment promotion department at the Ministry of Human Resources and Social Security, on Monday.

"More forceful tax breaks and social security subsidies, as well as easier financing channels for SMEs will be created soon," said Wang, who attended the International Labour Organization's (ILO) regional meeting in Kyoto.

Many export-oriented companies in coastal areas have seen orders dwindle because of the weak markets in the United States and Europe and the sovereign debt crises in the eurozone. Some have gone bankrupt, leading to job losses.

China's more than 40 million SMEs account for about 80 percent of workers in urban areas.

In October, the nation's export growth stood at 15.9 percent, the lowest year-on-year rise in eight months, according to government figures.

"Many SMEs in coastal areas such as Zhejiang and Guangdong provinces are in trouble. They desperately need funding to survive," said Chen Lantong, vice-president of the China Enterprise Confederation.

Because of the cash shortage, about 72,000 SMEs in Wenzhou, East China's Zhejiang province, closed this year, putting a large number of people out of work, Xinhua News Agency reported.

"We consider job creation a priority in economic and social policies," Wang said. "We will enable many workers to keep their jobs as we help SMEs address their problems. By doing so, we will even create more jobs."

Wang said the ministry also plans to increase training programs for workers and provide easy access to small loans to those who start their own businesses, which would further boost employment.

The State Council enacted a series of policies in October to support the development of SMEs. The government has asked financial institutions to provide SMEs with more financing options and forbade them from tacking on additional fees for SMEs. It has asked banks to be more tolerant of bad loans to small enterprises, and it has granted those enterprises lengthier periods of tax breaks.

SMEs' difficulties threaten the stability of labor relations in the struggling companies, experts said.

Labor disputes can easily arise when enterprises are fighting to stay open - they might reduce wages or even their work force, said Wang Liming, a Geneva-based ILO expert.

"In companies whose workers are already comparatively highly paid, a temporary wage reduction is feasible. In companies whose workers have modest salaries, a temporary freeze on pay increases could be adopted to avoid layoffs," Wang said.

But those measures should be taken only after negotiations between employers and employees, he said.

Jiang Guangping, secretary of the secretariat of the All-China Federation of Trade Unions, China's top trade union organization, said his organization will push for negotiations between companies and their employees to discuss the difficulties and ways to address them.

"In this time when many export-oriented SMEs are in trouble, unions should play a bigger role in boosting the development of enterprises and the protection of workers' legitimate rights," he said.

The organization released an action plan in 2008 outlining unions' mission to ask enterprises to maintain jobs and salary levels.

China Daily