Service sector must be supported so it can create more high-quality jobs

AT A RECENT EXECUTIVE MEETING OF THE STATE COUNCIL, China’s Cabinet, Premier Li Keqiang said that employment will be further promoted during the 13th Five-Year Plan period (2016-20), with the emphasis on a sufficient supply of high-quality jobs. Beijing Youth Daily comments:

Creating more jobs depends on the economic growth of a region and optimization of the industrial structure. For the latter, how competitive enterprises are makes a great difference. Where there are competitive enterprises, there are jobs.

That’s been the case in China for the past several decades. Since reform and opening-up in 1978, the eastern coastal cities have prospered and provided the majority of jobs in the country; in striking contrast, western regions have fallen behind because their enterprises have not been competitive enough.

However, many local governments fail to recognize the relationship between enterprises and jobs. Many leading local officials have overemphasized the role of government investment in major construction projects such as railways, airports, and highways, which propel GDP growth but fail to provide longterm jobs. Worse, some local governments try to collect more money from enterprises by charging them more fees, which actually curbs employment by squeezing the profit margins of companies. It is time these leading local officials changed their way of thinking, otherwise the plan of promoting employment might not be realized.

Besides enterprises, a healthy economic structure is also of key importance to employment. The service sector can provide more jobs than the industrial and the agricultural sectors. More important, the jobs it provides are more environmental friendly, which is a big advantage over the industrial sector.

In developed countries, jobs in the service sector account for 70 to 80 percent of the total. China is now optimizing its industrial structure by cutting industrial overcapacity and promoting the service sector. The central leadership has been laying emphasis on that for years and local governments must on their part respond to that.

In the coming years, a key job of local governments will be to help enterprises providing services grow and unleash the potential of economy. It needs efforts of both the central and local governments to promote employment and the latter must work hard.