Laid off workers need good care as govt cuts overcapacity
Earlier this year, the Chinese government announced a major redundancy plan targeting the coal and steel sectors, which are notably floundering amid overcapacity woes. This is part of China’s mega project to revitalize its downward economy by stripping off negative assets and redistributing State funds and social wealth into promising industries.
Some 1.8 million workers will be laid off and relocated to other industries. The scale of the reduction accounts for 15 percent of the 12 million workforce in the two sectors. In 2016, about 800,000 coal miners and steel makers are scheduled to face the changeover, which, as the end of the year approaches, has posed a great challenge for the authorities.
The central government has made the appropriate arrangements. The key is how local government will implement them to realize a smooth transition. Whether the Chinese economy can shift successfully depends on whether the laid off employees can be well taken care of – finding new jobs for them or giving them basic social welfare assurance. It also concerns the sustainability of the China model.
The challenge, as some media reported after observing the process for several months, is that although the majority of the targeted coal mines and steel corporations have been shut down, the lives of many laid off workers are still up in the air. The problem results from a variety of reasons: loss- making mines and steel factories can’t afford the enormous costs of pensions and relocation and local governments can’t offer a helping hand because of the decline in tax revenue from the coal and steel industries. In addition, lack of skills makes these committed workers unqualified for other jobs.
The central government has allocated a considerable sum of money, amounting to 100 billion yuan ($ 14.8 billion) to relocate workers and alleviate pressure from these enterprises, workers and local authorities, but the high and unbalanced threshold to apply for the cash has discouraged many of them from taking a share.
Many Western media and economists have expressed concerns that China might face a second wave of layoffs, after the first in the 1990s saw millions become unemployed amid the comprehensive and bitter reform of State- owned enterprises.
It will be challenging to equip these laid off workers with new skills in the short- term, but central and local governments are more financially capable than last time and the services sector can provide more job opportunities for them.
The livelihoods of the large number of redundant workers is of massive significance to society because it can directly trigger social instability. Governments must be fully aware of the urgency and importance of the relocation work, which at least must guarantee a basic livelihood for these people. China is run by a “big government,” which cannot be absent from this crucial undertaking.