Full transcript of the China State Council policy briefing on July 8: The employment situation in China

Employees arrange pills at a workshop owned by Beijing Tong Ren Tang Group Co Ltd, a traditional Chinese medicine maker.[Photo/Xinhua]

GOVCN. Updated: Jul 8,2016 7:06 PM     english.gov.cn. Xi Yanchun: Good morning, ladies and gentlemen. Welcome to the policy briefing of the State Council. Today we are glad to invite Xin Changxing, vice-minister of human resources and social security, to introduce the employment situation in China. Now, Mr Xin, please.

Xin Changxing:

Good morning, ladies and gentlemen. I am very glad to meet you here and make the introduction on the employment situation in China. I also take this opportunity to thank you for your concern about and support for the work of China’s employment.

First I will make a brief introduction on China’s employment in the first half of this year. Several days ago, Premier Li Keqiang mentioned the employment situation in the first half of 2016 while attending the Summer Davos forum and concluded that currently the employment situation in China is generally stable. Premier Li was citing the data for new urban employment opportunities and unemployment rate in May. The new data on urban employment opportunities, released two days ago, also supports the Premier’s statement.

The statement was made based on data from the following two aspects. The first is the regular statistical data or the major indicator – new urban employment opportunities including the registered unemployment rate. The newly added urban employment from January to June is 7.17 million, just under 10,000 less than the same period last year. The registered unemployment rate by the end of the second quarter was 4.05 percent, a little higher than the first quarter, but still at a low level. A survey on urban unemployment rate collected from 31 big cities showed that the rate in May was 5.02 percent, which was revealed at the Davos Forum. In general, the urban unemployment rate in the first half-year remained low, with a declining trend.

The second group of data is from some evidence, such as data on number of potential job seekers for every job vacancy in the labor market of 100 cities and monitoring unemployment. All the data also support the core statistics on employment. Regarding detailed situations, I’d like to answer your questions.

Xi Yanchun:

Thanks, Mr Xin. Now questions, please.

China Radio International:

About 7.65 million college students graduated this year. The number hit a record high. So what is the current employment situation of college graduates? What measures is the government taking to promote college graduate employment? At the same time, what influences would the efforts to reduce overcapacity bring to employment? Thank you.

Xin Changxing:

The first thing I want to talk about is overcapacity reduction. To promote overcapacity reduction in the steel and coal sectors, the State Council set up a joint meeting among ministries. The meeting is headed by the National Development and Reform Commission. The Ministry of Human Resources and Social Security is also a member of the joint meeting. Yesterday, related ministries held a national video conference regarding the capacity reduction work. Resettlement of workers amid efforts to reduce capacity is a key point. At the same time, capacity reduction is significant to promote supply-side structural reform. So from this perspective, worker resettlement is a very important task to be done. Central government and local governments pay great attention to worker resettlement, and a series of related policies have been issued. The video conference yesterday is a further effort to promote such work. Now the worker resettlement work is being carried out. Of course, it’s indeed a tough task to resettle workers of related enterprises amid capacity reduction. According to preliminary estimates, 800,000 workers in the steel and coal industries will be resettled this year, and local governments are working hard on the resettlement. I have been to places such as Hebei and Ningxia for field research and learned the situation of some affected enterprises.

The resettlement work was carried out smoothly in some regions in the first half of the year. For example, Hebei province has been promoting capacity reduction, especially in steel sectors, in recent years. In addition, steel enterprises in Hangzhou, Panzhihua, Chengdu, and Hefei made great progress, and worker resettlement was carried out in an orderly fashion. You might have read related media reports. They summed up 7 or 8 successes in worker resettlement. I think the key to their successes is “solid and careful work”, which means that resettlement work was carried out in a solid and careful manner. For example, at Hangzhou Iron and Steel Group Co, 400 working groups were set up. The groups visited workers’ families and communicated with the workers on such things as employment desires and family status. Based on these communications, they made a resettlement working plan. Finally, the work was carried out smoothly.

Of course, resettlement work is not an easy job, and there are many difficulties and problems. In some large cities, resettlement work is easier as there are many job opportunities. But in some cities that depend on steel and coal, resettlement is a more difficult task, as there are fewer job opportunities. Furthermore, some enterprises affected by capacity reduction will be faced with business difficulties and their workers’ income will be affected. Older workers who have been at steel plants and coal mines will face greater reemployment pressure. So training should be offered to them to help them find new jobs.

Enterprises plays a crucial role in worker resettlement. Along with related departments, we will give guidance to enterprises so that they can carry out solid and careful work regarding worker resettlement. The resettlement will lead to re-employment of some workers. So for the government, several things should be done. First, make sure the social security of re-employed workers will be guaranteed. Second, timely training should be offered to re-employed workers. Third, public-service jobs should be offered to those who find difficulties in finding other jobs. Maybe my speech is too long. But the resettlement work is indeed very important.

As you said, university graduates are the key to employment date. There are 7.65 million university graduates this year, and they are all excellent talent resources for China. The employment issue of university graduates not only concerns employment, but also the nation’s hope for industrial upgrades, talent support for technology progress and innovation entrepreneurship, so we should consider this problem from several aspects.

The Communist Party of China and the government attach great importance to the issue, and they have released support policies and held meetings almost yearly in recent years, and other departments also have been carrying out many tasks on this issue.

Xin Changxing:

I learned from education departments and higher educational institutions that the number of labor contracts signed by graduates this year remains stable compared with last year. Actually, we can summarize all the support measures in many countries to solve employment problems in two ways, first is to create more positions and second is to bring proper people to the proper positions. So what should be done to create positions? It should depend on development, especially structural development. The current medium-to-high development speed still can create a large number of job positions in China. Moreover, we should develop more positions that suit the expectations of graduates. And that should depend on the upgrades of industries and technology progress as new emerging industries and new economy fields have helped create many jobs.

In recent days, the calling card of a post-80s woman became popular in WeChat circle as her card contained many titles, such as freelance writer, media staff, dramatist and business consultation. How can she hold so many titles? With the new business model, she can work in many fields. Innovation and entrepreneurship bring many new economies and create many job positions. We talked about matching people to positions, meaning that we can bring qualified people to the positions they are suited for. The current Internet Plus concept provides conveniences for the matching process, and we have been encouraging bringing Internet Plus to the service industry, creating the “Internet Plus employment service” and “Internet Plus talent service”. At the same time, it is not to say we can help people merely by passing employment messages. Only the person with the right employment concept and ability can fit the position. To do this, we should adjust education structures and models of talent cultivation. All the labor, including university graduates, should improve their professional skills and transfer employment concepts.

July is graduation season, and the Ministry of Human Resources and Social Security has two plans for that. First is promoting the employment of graduates who are still awaiting offers, and second is carrying out the leading plan for entrepreneurship of university graduates. When Premier Li Keqiang inspected the Ministry of Human Resources and Social Security on May 6, he urged us to comprehensively promote the two tasks. In the next step, we will coordinate the two plans. We have set up a catalogue of graduates without job offers, and will provide targeted services to help them find employment and improve their skills through proper training. We will provide entrepreneurship support for those with startup wishes and provide help for those with financial difficulties and those from poor families.

In the second half of this year, we will carry out a series of employment services, including employment month activities at higher education institutions, joint recruitment in large cities and mass entrepreneurship and innovation week in October. We also hope that media friends can help promote the policy of promoting and guidance of employment concepts to lead graduates to rationally think of employment trends, transfer employment concepts, bravely face the job market and find jobs through the market. I am in charge of the employment issue, and the two are my main concerns.

Xin Changxing:

Based on the data I have collected from education branches and colleges, the number of labor contracts signed by graduates from higher educational institutions this year remains stable and is almost at the same level as last year. There are two keys to solving employment issues for every country: one is to create more jobs and the other is to fill job vacancies with suitable candidates. And creating jobs depends on development and structural adjustment. China’s mid-to-high growth will create many jobs. We need to create some jobs suitable for college graduates. This relies on industrial transformation and upgrades, technological advancement and mass entrepreneurship and innovation. New industries and businesses have created many new jobs. Internet Plus has greatly facilitated matching job positions with suitable candidates. We have long been promoting the idea of the Internet Plus employment and talent services.

But it doesn’t necessarily mean job-seekers can find suitable jobs with recruitment information provided online. Thus we need to adjust our education structure and our model in cultivating talents. And workers, including college graduates, need to upgrade their professional capacity and change their employment concept.

The Ministry of Human Resources and Social Security has two plans for the graduation season in July. One is the employment promotion plan for college graduates failing to find jobs. The second is the plan to guide college graduates to start their own businesses. When Premier Li toured our ministry on May 6, he asked us to jointly promote these two plans. We have already set up a real-name information bank for college graduates who have not found jobs. We will offer them targeted services that consider their employment desires and personal circumstances, including helping them to find suitable jobs, improving their skills through training, supporting those who want to start their own businesses and offering help for poor graduates or those with special difficulties. We will arrange a series of employment service activities in the second half of the year, including college graduate employment month, college graduate employment week, joint recruitment by large cities, mass entrepreneurship and innovation week in October. We also hope our media friends will help guide college graduates to take a reasonable look at the employment situation, transform their employment concept, bravely face the market and find jobs. These are the two employment issues I am most concerned about.

China Daily:

Recently, it was reported that China’s official index for unemployment rate doesn’t reflect reality. Is there any defect in the way these statistics are calculated? Could you introduce the real condition of the unemployment rate of the country?

Xin Changxing:

First of all, I need to clarify that the unemployment rate data we released are real without any modification. The index is crucial for judging the situation of employment and overall economy. We are very concerned about it, as every country is.

At present, there are two kinds of index for it, namely the registered urban unemployment rate and the surveyed unemployment rate. The former is calculated by the Ministry of Human Resources and Social Security, based on personal registration of unemployment after job losses. Registered unemployment prevails in most countries of the world. It has the advantage of registering detailed information about those who are unemployed and what their specific situation and their employment wish are. It provides the basis for carrying out employment services. But at the same time, it has the defect of judging the economic situation, because some unemployed people don’t register. Comparatively, the surveyed unemployment rate is more flexible. The index is obtained through sampling surveys carried out by the National Bureau of Statistics, which can effectively predict the employment situation and economic condition. Despite these advantages, registered employment shouldn’t be simply replaced, as it is also functional. As far as I know, the National Bureau of Statistics has been promoting the labor force survey as well as the surveyed unemployment rate.

The scale of the survey is still expanding, from a monthly survey in 31 big cities in 2009 to all cities above prefecture level this year. But the work is still in the starting stage. The National Bureau of Statistics will release information based on certain data accumulation. Otherwise, there will be no monthly or yearly data for comparison. We are actively advancing it, and the surveyed unemployment rate will be released when conditions permit.

Xin Changxing:

As to doubts about the authenticity of the unemployment rate, I think the reason lies in the data staying almost the same, without obvious fluctuations. In fact, this is normal and exists in many countries. For example, Japan’s unemployment rate was 3.9 percent in 2007 and 4 percent in 2008, stood between 3.3 percent and 3.6 percent during several months last year, and is staying above 3 percent this year. Also, the Republic of Korea’s average unemployment rate is 3.5 percent, with 3.9 percent the highest and 3.3 percent the lowest. Of course, some countries do have unstable unemployment rates, which are very high in some cases, in the double-digits.

The total number of unemployed people keeps increasing, but why is the unemployment rate relatively steady? The reason lies in an important background situation – China is in the process of urbanization, and over 10 million new jobs can be created every year. In addition, some migrant workers who fail to find satisfactory jobs are returning to their hometowns, where they find jobs or start their own businesses, but the statistics don’t reflect this change.

Another reason has something to do with China’s stable labor market. I surveyed some enterprises and found out that economic pressure does not necessarily end in layoffs. With downward pressure in recent years, some enterprises are facing difficulties in their business operations, but instead of job cuts, they are taking measures to stabilize their employees, such as providing training classes.

China National Radio:

Mr Xin mentioned that currently, the ability of traditional industries such as manufacturing and construction to absorb the employment of migrant workers may decrease. My question is, what has the Ministry of Human Resources and Social Security done to direct migrant workers to new and emerging industries to better improve the quality of their employment? Thank you.

Xin Changxing:

The falling demand for workers in traditional industries such as construction and manufacturing is not a new phenomenon. This phenomenon, as far as I am concerned, does exist, which is part of the industrial transformation and upgrading in China. Transformation and upgrading mean that employment is shifting from some traditional industries to new and high-end ones in the upstream of the industry chain. Despite declines in employment in traditional industries over the years, the employment situation in China has remained stable, including the employment of migrant workers. Our ministry has been observing the employment of the labor force in 500 administrative villages. And the latest statistics show that compared with the same period last year, the number of migrant workers in the second quarter of this year has increased by 3,000, with an increase of 12,000 from the end of last quarter. This at least shows that the employment of migrant workers is relatively stable, with a slight increase. Actually, the added migrant workers went to some new industries. The development of new economy and industries has not only provided employment opportunities and spawned high-end jobs, but also brought new opportunities to traditional sectors, such as express delivery. With the development of the Internet, the market for express delivery has grown bigger, with more employment opportunities. Most of the couriers you see on the streets are migrant workers from rural areas, I think. New industries, such as the Internet, have not only spawned high-end jobs, but also injected new vitality into traditional sectors. In my opinion, express delivery and online retailing are the upgraded versions of some traditional industries.

Xin Changxing:

To direct more migrant workers to new industries, our priority should be providing these workers with information on new employment demands in a timely manner. Then we will offer training programs to improve their skills and knowledge. Those who are more capable will be given opportunities to start their own businesses. Last year, the State Council specially issued a guideline, along with a series of policies, to enable migrant workers to start businesses in their hometowns. We have also actively promoted this initiative in conjunction with related departments. Now online retailing is booming in rural areas. Early last month, I visited a flower market in Qingzhou city, Shandong province. With their geographical advantage, flower retailers in Qingzhou have successfully occupied a big share in the flower market across the country through online retailing. Now we don’t have to go to Yunnan province to buy flowers, since the flowers sold from Shandong are fresher.

We will gradually extend the coverage of social security to migrant workers and regulate the labor relationship, which cannot be accomplished overnight. In my opinion, we should not rush to regulate and restrict the new employment trends of migrant workers. Instead, we should pay attention to new problems arising from these trends, strengthen protection of worker rights and listen to their appeals. And we will strengthen research into this issue.

Guangming Daily

While surveying some manufacturing industries in East China, we found that many of them began replacing human workers with robots. So I would like to ask Mr Xin whether the replacement of the labor force will have an impact on employment. If it will, what action will you take? Also, as we know, the minimum wage has continued to rise. Will this have a negative impact on the competitiveness of China’s manufacturing industries?

Xin Changxing

I have followed the issue of labor force shifts for nearly three years, and I’ve also gone to Gongguan and other coastal cities.

Those enterprises are adopting the robot replacements because they are finding it hard to recruit workers, and the robots are easily adaptable to different jobs. And labor costs are rising. So the use of robots and machines becomes a method to cut the number of workers and raise the level of automation.

In fact, this happens all the time since the first industrial revolution. Every time we made progress in increasing automation, we used machines to replace human workers. This is actually what’s happening now in eastern China.

The concerns are valid. I admit that the current increase of automation in the labor-intensive industry will affect employment and decrease the number of workers. However, the advance of technology will create more jobs than will be reduced. This also explains the worldwide expansion of employment that came after every step in the technological progress. Therefore, I always have an optimistic view of machines’ impact on employment.

After the labor force shifts, enterprises will not worry about workers quitting their jobs. Let me use Shanghai Highly Group Co as an example. It is a compressor manufacturer, and has made great efforts to substitute human workers with machines or robots in recent years. That, of course, led to certain reductions in worker recruitment, but also stabilized the manufacturing process. On the other hand, it improved the working environment for those who remained. They will not have to take on the hardest work anymore, as the hard parts will be done by machines. And they may get a higher salary.

And the problem turns to how to resettle the laid-off workers. The answer is re-employment. New jobs will be created in new fields. At present, if there are 100 people seeking jobs, there will be 105 posts open. And what we need to do is carry out training for the laid-off workers, catering to the new posts. So don’t worry about the problem, for we will pay great attention to the laid-off workers, and take measures to enable their re-employment.

Xin Changxing:

Second question, labor costs are increasing. There are many discussions about this issue, and I have thought a lot about it. I think it needs a reasonable and objective analysis. First, we have to know why in the past few years salaries have increased. What are the reasons for the salary increase. This is because of the change in the labor supply and demand pattern. Journalists here are post-’90s and ’80s. Over more than two decades, from the reform and opening-up to early this century, there has been no change in the salary for migrant workers in labor intensive industries in coastal areas. Migrant workers earn only RMB500-600 yuan per month. Media and academic people called for raising the salary for migrant workers, but in vain. Why? Payment is determined by the supply and demand of labor. When employers can hire workers for a low salary, there won’t be any enterprise that wants to increase the salary. But, from the year 2004, labor supply and demand pattern has changed. What happened in 2003? The labor proportion was reduced to less than 50 percent in the primary industry for the first time in 2003, and has been shrinking since then. In 2015, the proportion of labor in the primary industry accounted for 28.3 percent, while the proportion at the beginning of the reform and opening-up was 70 percent, and 30 percent in the secondary and tertiary industries. But last year, in 2015, the proportion in the secondary and tertiary industries accounted for 71.7 percent, but only 28.3 percent in the primary industry.

With the development of industries and urbanization advancement, many laborers in the agricultural sector of the past are now working in non-agricultural sectors. Now there are few young laborers who stay home in rural areas, not going out for work. What happened in 2003 and 2004? I read in the media for the first time that it was difficult to recruit workers, especially after the spring festival each year. When an enterprise cannot hire workers, it will raise wages. It is an objective necessity to raise salary and labor costs, and we have to face it. In a certain sense, due to this change, we have proposed promoting industrial transformation and upgrading.

Xin Changxing:

You just mentioned that machines may replace humans. I want to say that it is also a factor that can force industrial upgrading.

Currently, China still has advantages in the labor-intensive industry. Compared with developed countries, we have lower labor costs. And compared with countries that have lower labor costs, we have better labor quality, infrastructure, supporting industries and the macro-economic environment, which are also crucial in absorbing investment.

How to fully use our advantage? First, wages should be increased a little slower. In the first half of 2016, six regions in China increased the minimum wage. Last year, 13 regions increased it, and in the years before that, nearly all regions raised it. In addition, the average growth rate in the six regions in the first half this year was 11 percent, which is 2 percent lower than last year. The data shows the deceleration of wage growth.

Second, boosting industrial transformation and upgrading. We should not only focus on the labor-intensive industry, but also maintain our economic growth potential through industrial transformation and upgrading. And the key to that is innovation. Only through innovation can we increase labor productivity and upgrade the economy.

Third, the labor-intensive industry should not be totally abandoned. Generally, the labor-intensive industry migrates from high-labor-cost countries to low-labor-cost countries, as natural as the migration of flying geese. But in China, the path of this industry migration can be changed. Instead of migrating to other countries, some labor-intensive industries can be moved to the less developed central and western China. Therefore, we are able to keep some jobs in this field, benefiting social employment. After all, China still has a large population that is suitable for the labor-intensive industry.

NHK:

First, could you tell us what are the main fields or careers chosen by the 7.17 million newly employed? Second, according to Caixin PMI, to lower costs, enterprises in the manufacturing sector continue to cut employment and intend to be more cautious about new hires. So it may be quite different from what you said, what are your thoughts?

Xin Changxing:

The service industry has been through a major transformation during the industrial structural reform. With job vacancies continuing to decrease in the primary industry and remaining stable in the secondary industry, the additional employment actually fell on the service sector. I didn’t say service industry should take all the credit for over 7 million newly added employment from January to June, since redundancies from overcapacities now occur in every industry. However, statistical data reflect the fact that secondary industry embraced stable employment and the service industry made a major contribution to the newly added employment.

As for your second question, I paid great attention to the data released by Caixin PMI, and the Ministry of Human Resources and Social Security also did surveys of enterprises’ job vacancies each season. From the surveys, we found that the number of job posts dropped with the downward pressure of the Chinese economy. Therefore, it seems contradictory to the conclusions I made from the statistics. The report from Caixin PMI was focused on already existing enterprises, which is consistent with the survey results. However, both the report and survey cannot reflect the expansion of new economic entities, which create demand for employment. According to figures provided by the Administration of Industry and Commerce, daily increases in new market entities and enterprises have surpassed 40,000 and 10,000, respectively, under the spirit of mass entrepreneurship and innovation, bringing numerous employment opportunities. With redundancies in some overcapacity sectors and slowdowns in the employment demand rate in other sectors, the new economic entities have injected new momentum into the job market.

Xi Yanchun:

If anyone has further questions, you can contact the Ministry of Human Resources and Social Security. We also will provide you with more information. That’s all for today’s policy briefing. Thank you all.

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