Distinguished Director-General Mr. Somavia,
Distinguished ministers,
Ladies and Gentlemen,

    Today, we meet together to explore and discuss the employment promotion policies and strategies for working people under the backdrop of globalization and restructuring. In China there is an old saying, “is it not delightful to have friends coming from distant quarters?” I am very delighted to welcome our domestic and foreign guests to Beijing. It gives us great pleasure to have this opportunity to explore sound employment policies with our colleagues from all over the world. On this occasion, on behalf of the Ministry of Labour and Social Security, I would like to express our warm welcome for the presence of all the delegates, and express our heart-felt appreciation for his Excellency, Mr. Somavia, who actively advocated and participated in the organization of this Forum, and also the officials from the International Labour Organization.

    China is the biggest developing country in the world, and it is also the most populous country. Employment promotion has always been an economic and social issue that the Chinese government is most concerned with, and puts among its top agenda. Since its reform and opening-up, the Chinese government has always regarded employment promotion as a strategic task for national economic and social development, and considered job creation as one of the main objectives in its macro-control and adjustment policies. The government has been pressing ahead for expanding domestic demand and sustaining a rapid growth of national economy with a proactive fiscal policy and a prudent monetary policy. The government has achieved a sustainable, rapid and healthy development of the economy, increasing the driving momentum of economic growth for job creation.

1. China has scored remarkable achievement in its employment work while adhering to reform, opening-up and restructuring

    In the 1990s, China established its reform objective of the socialist market economy. Since then, employment experienced significant change in the transition from the old to the new system. A series of profound and historic changes have taken place, which can be summed up in the following five aspects.

(1) Employment size continues to expand and employment structure is further improved. Based on the national circumstances of a big population with abundant labour resources, the Chinese government has always maintained a macro economic policy oriented towards employment promotion. No effort is spared for vigorously developing the economy; and job opportunities are created through economic development. From 1990 to 2003, the population of employment in China grew from 650 million to 740 million, with an increase by almost 100 million. Unemployment rate has been under effective control. For most of the years, urban registered unemployment rate levelled around 3%. It was 4.3% at the end of 2003. While faced with a prominent contradiction of labour demand and supply, and with challenges from economic restructuring in the process of economic globalization, China has succeeded in maintaining a relatively stable employment situation, which creates favourable conditions for deepening economic reform, and has made important contribution to promoting sustainable and stable social and economic development.

    As a developing country, China has a large population working in the first sector, namely agriculture, and is now encountered with the challenge to transfer labour from agriculture to non-agricultural industries. Along with promoting economic development, the Chinese government actively engages in employment structure adjustment, developing labour-intensive enterprises with comparative advantages and market potentials, in particular service enterprises and small and medium-sized enterprises that create large quantities of jobs, developing flexible and diversified employment patterns, which lead to improved employment structure. The weight of employment in the tertiary sector, namely service sector, went up from 18.5% in 1990 to 28.6% in 2002, corresponding to an increase of 91.1 million jobs. In this process, the population employed in the first sector has declined by 20.4 million, down to 50% from 60% in 1990 in the employment ratio.

(2) Reemployment programmes have been implemented to promote reemployment for laid-off workers. With accelerating state enterprise reform and economic restructuring, redundancy problem accumulated for a long period in state enterprises became ever increasingly prominent, and a large quantity of surplus workers had been laid off from enterprises. In order to guarantee the basic livelihood of laid-off workers, the Chinese government put in place three protection lines: basic life allowances for laid-off workers from state enterprises, unemployment insurance and minimum life guarantee for urban inhabitants. Meanwhile, given that a large proportion of the laid-off workers from state enterprises were rather old in age, not well-educated and possessed single vocational skill, consequently having great difficulties in finding jobs, reemployment training programmes have been launched for laid-off workers, and “reemployment assistance” activities have been undertaken targeted to people with difficulty in getting jobs. In recent years, implementation of these policies and measures has led to new jobs for laid-off and unemployed people in reality. From 1998 to the end of 2003, an accumulative 28 million people have been laid off from state enterprises across the country, two thirds of them have found new jobs, and the remaining people are either appropriately placed through retirement or other means, or are involving in preparation activities in training and retraining.

(3) Market oriented employment mechanism has been set up and improved to promote public employment services, and development of education and training. In the transition from demand economy to socialist market economy, the Chinese government has always underscored the essential adjustment function of labour market for employment, establishing and continually improving market oriented employment mechanism. At present, a new employment mechanism has been set up in its preliminary form, with the working people taking initiative in seeking jobs, the market adjusting employment and the government promoting employment. It has already started to exert essential function in labour resource allocation.

    In the process of establishing and improving labour market, the Chinese government has strengthened building public employment services, providing to the public such employment services of commonweal nature like job referral, vocational guidance, employment training, publication of job vacancies and job seeking information, community job creation services. By the end of 2002, employment agencies of various kinds across the country amounted to 26,000, of which 18,000 were public employment agencies, accounting for 70%. In recent years, public employment agencies provide 20 million person times services per year, among which, 10 million job referrals lead to people succeeding in getting jobs or new jobs.

    In order to improve educational qualification and skill level of the working people, the Chinese government has turned to various means to develop actively all kinds of education programmes, putting in place a system that values both educational certificates and vocational qualifications. Through the programmes of expanding universal coverage of the 9-year compulsory education, vigorously developing secondary and tertiary education, and vocational and technical training, the education and skill levels of the working people have been greatly improved. A working system in its preliminary form has been set up in China, composing of pre-job training, on-the-job training and reemployment training. Vocational qualification system began to be set up in the early 1990s and witnessed rapid development. More than 80% of the new entrants in urban areas have attended senior high school or above, or participated in vocational skill training, 45 million people have been awarded with relevant vocational qualifications. A better qualified labour force provides strong guarantee for the economic growth.

    Last year, China formulated and implemented the strategy “making the nation strong through human development”. To meet the requirements from economic and social development, China has intensified human capacity building programmes, speeding up nurturing of all types of personnel, optimizing human resource allocation, and promoting rational migration of the people. At present, the Chinese government has initiated the implementation of the plan “Producing 500,000 New Supervisor Technicians in 3 Years”, the goal of which is: from 2004 to 2006, producing 500,000 supervisor technicians and senior supervisor technicians in manufacturing, service industries and other occupations with high technical contents, meanwhile, bringing along training and producing millions of other technicians at senior and medium levels.

(4) Coordinating urban and rural employment and promoting rational and orderly migration of rural labour force.The Chinese government attaches great importance to employment of rural labour force, and regards employment promotion for rural labour force, in particular working in non-agricultural sectors, as an important means to increase farmers’ income, and narrow the gap between urban and rural areas. The government speeds up the urbanization process, making endeavour to explore new approach to coordinate urban and rural employment, and putting in place a basic policy composed of two aspects. On the one hand, promoting rural workers to find jobs in their place of origin. Making full use of the advantage of local resources in rural areas, actively adjusting agriculture and rural economic structure, developing high efficiency agriculture and labour-intensive agriculture, developing non-agricultural products in rural areas, providing guidance for the linkage between developing village and township enterprises and construction of small towns, so as to promote rural labour force to work in their own localities. On the other hand, promoting migration for employment of people from rural areas to developed regions, big and medium-sized cities. Intensifying information network construction and enhancing job intermediary services, conducting prior migration training for rural labour force, organizing and orienting rural workers into orderly cross-region migration for employment. In the past two decades, more than 200 million surplus labour in rural areas in China have successfully transferred to non-agricultural sectors. An urbanization mode in its preliminary form suited to China’s national circumstances has been identified. At present, 130 million people are working in village and township enterprises, nearly 100 million rural people are working in cities and developed regions.

(5) Ensuring women’s right to employment and assisting disabled people in finding work. The Chinese government always attaches great importance to women’s right to participate in employment. The state has enacted and implemented laws and regulations on protecting women’s rights and interests, and promulgated specific provisions regarding guarantee of women’s employment right. The state protects that women enjoy labour rights on equal terms with men. The government actively undertakes vocational and skill training for women, tapping and expanding industries and jobs suitable for women, creating job opportunities for women and putting in place equal remuneration for equal work between men and women. The figure of women employment in urban and rural areas in China increased from 230 million in 1990 to 330 million in 2002. At present, women employment accounts for more than 45% of the total. Women have become an important force in social and economic development, and have made huge contribution to the construction of China’s modernizations.

    In order to help disabled people to participate in employment, China adopts the principle of combining concentrated employment and quota associated scattered employment, and encourages and supports them in looking for work on their own.The government encourages developing welfare enterprises through tax relief and other incentive policies to create more jobs for people with disabilities. Meanwhile, the government puts in place quota associated employment policy for disabled people, requesting all employers to allocate a certain percentage of their jobs to people with disabilities. At the end of 2002, the figure of employed disabled people in urban areas amounted to 3.7 million, in rural areas, 17 million. The employment rate of disabled people was 83%.

2. China is facing and will continue to face arduous employment challenge at present and for a certain period to come

    At present, employment presents a severe challenge for China. The contradiction between the demand for full employment of the working people, and an oversized labour force, mismatching of qualifications with market demand continues to be outstanding, leading to an arduous task of employment and reemployment.

    Examining from labour demand and supply. In the several years to come, the supply from new entrants will rise to its peak; combined with the existing laid-off and unemployed people, the number of job seekers in urban areas stands at 24 million each year. If economic growth maintains at 7%, under current economic structure, only 8 million new jobs are created each year. There is a huge gap between demand and supply.

    Examining from labour structure. On the one hand, a large quantity of workers become laid off from traditional industries, and many people have difficulty in getting new jobs; on the other hand, newly emerging industries, sectors and technical occupations that required highly competent personnel are faced with shortage of supply. In particular, at the early stage of China’s entry into the WTO, the imbalance between labour supply and demand in different regions and different sectors further deteriorates, and mismatching of workers’ skills and job demand becomes more problematic.

    Examining from distribution of labour in urban and rural areas. China has 150 million of surplus labour in rural areas at present. In the future, with economic restructuring in rural areas, the magnitude of transfer of rural labour force to non-agricultural sectors, and their migration to cities will continue to rise. The urban employment challenge and challenge of transfer of rural surplus labour emerge simultaneously, imposing more difficulty to employment and reemployment work.

    Examining from unemployed people and new entrants to the labour market. Urban registered unemployed people rose from 5.7 million at the end of 1998 to 8 million at the end of 2003, the corresponding urban registered unemployment rate in that period went up from 3.1% to 4.3%. The need for first job from new entrants and the need for new jobs from laid-off and unemployed people are blended together, giving rise to more challenge to employment and reemployment work.

    The impact of some contingencies upon employment has to be considered as well. In the first half of 2003, SARS epidemic occurred in China, affecting significantly people working in service industries like tourism, commodity trade, restaurant and catering, transportation, and community services. It generated new difficulties for laid-off and unemployed people to find jobs, and affected rural labour’s migration for employment and employment of college graduates. SARS epidemic raises the issue of response to contingencies and emergencies, and calls for establishment of unemployment warning mechanism, improving the government’s capacity of responding to crisis in employment administration.

3. Implementing active employment policies and vigorously promoting employment and reemployment of the working people

    To deal with the severe employment situation in the coming years, after a comprehensive review of its previous work in employment and reemployment, and with full reference to success practices in foreign countries, the Chinese government formulated and promulgated in 2002 a framework of its active employment policy system, which was further improved in 2003. The main elements are composed of the following 5 aspects:

(1) Macro economic policy oriented toward increasing the driving momentum of economic growth upon employment: including continuing to implement a proactive fiscal policy and a prudent monetary policy, to sustain a rapid growth of national economy; encouraging developing small and medium-sized enterprises, service sector, non-state firms, and labour-intensive industries; developing flexible employment forms, improving employment flexibility and creating more job opportunities.

(2) Support policy prioritizing reemployment promotion for laid-off and unemployed people. For laid-off and unemployed people setting up self and individually owned business, taxes and fees are waived, and small credit loans are provided. For service enterprises recruiting laid-off and unemployed people, taxes and fees are reduced and social security subsidies are granted. For economic entities set up by big and medium-sized state enterprises for the purpose of relocating their redundant employees after splitting their principal and auxiliary businesses, corporate income tax will not be levied. Reemployment assistance is provided to over-50 men and over-40 women laid-off and unemployed workers who are able to work, are willing to work, but have difficulty in finding work; and social security subsidies and job subsidies will be granted.

(3) Labour market policy oriented toward rational matching between labour force and labour demand: including free job referrals and free reemployment training for laid-off and unemployed people; ‘one-stop employment service’ at all public employment agencies, covering registration for job-seeking, vocational guidance, job referral, application for training, and linking up social insurance schemes; one-stop services concerning business registration, taxation handling, and serving as agent regarding labour and social insurance affairs for laid-off and unemployed people who become self-employed and set up their own businesses; developing labour market information network and dissemination system, delivering timely and convenient employment information services.

(4) Macro control policy oriented toward reducing unemployment and maintaining social stability. The closure, bankruptcy and restructuring of state firms will be coordinated according to a general design, and carried out step by step. The force upon closure and bankruptcy will be tuned appropriately. Large scale redundancy of enterprises will be under rational guidance and sound regulation. The government and enterprise will make joint efforts to look for jobs for the people from the closed and bankrupt enterprises. For downsizing in well-functioning enterprises, the government should provide guidance and regulation, preventing oversize of unemployed people, and unemployment condensing in a certain period. Meanwhile, the government encourages the big and medium-sized state enterprises to relocate their redundant workers through splitting up the principal and auxiliary businesses, and restructuring the auxiliary businesses. For enterprises relocating redundant workers in auxiliary businesses, tax and fee relief support will be provided. It should be avoided to produce a large quantity of unemployed people in the process of enterprise restructuring. The government continues improving unemployment insurance system, making full use of the active role of unemployment insurance in guaranteeing basic livelihood of unemployed people and promoting their reemployment, helping unemployed people return to the labour market sooner and get new jobs.

(5) Social security policy oriented toward guaranteeing basic livelihood of laid-off and unemployed people as well as actively promoting reemployment: including improving the approach to link up the social insurance schemes for laid-off and unemployed people, and delivering good performance in the continuation services.

    These active policies are being improved continually in their implementation since their launch in 2002. Their feature of targeting to specific groups and being highly operable has been further highlighted. All central departments involving in policy decision strengthen our coordination and consistency, and local governments undertake work in an innovative manner based on local conditions. Meanwhile, all quarters in society are mobilized to make joint efforts.

    In 2003, the implementation of active labour policy scored remarkable achievement. We overcame the difficulty caused by the SARS epidemic upon the employment and reemployment work. In the whole year, in urban areas, 8.59 million new entrants found their jobs, 4.4 million laid-off and unemployed people found new jobs through assistance programmes, among whom, 1.2 million were people in old age with difficulty. Our performance in these three aspects has all exceeded the targets set at the beginning of the year. At the end of the year, urban registered unemployment rate across the whole country was 4.3%, lower than the target ceiling of 4.5% set for the year.

    Ladies and Gentlemen, friends: regarding employment and reemployment promotion, despite that China has gained some good experiences, we are still faced with many calling for research and resolution. In this connection, we need to learn from successes and good practices in other countries. It is my hope that friends from all over the world will continue to care about China’s employment work, and provide us with more and better suggestions.

    In conclusion, I propose, after this forum, we reach a Common Understanding of China Employment Forum, 2004. The Common Understanding may cover the following aspects: first, underscoring the importance of employment. It is our conviction that employment constitutes the root of people’s life; it is also the key for sustainable economic development and raised standard of living. Second, laying down explicitly the important obligations of the government concerning job creation. The government should prioritize employment generation in its agenda of social and economic development, ensuring that all citizens are entitled to their basic right to employment, eliminating poverty and realizing social justice through generating employment and securing rights at work. Third, promoting coordinated development of employment promotion and economic progress. Through social and economic policies with clearly defined objectives, employment generation will be achieved in economic growth and restructuring. Meanwhile, vocational skill of the working people has to be improved, and labour market should be allowed to play its full role in enhancing workers’ employability and working competence.