by Dr. Hafiz A. Pasha, UN Assistant Secretary General and UNDP Regional Director for Asia and the Pacific, Harvard University, 13 April 2002
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While China has been successful in reducing the number of its poor by as much as 200 million people over the past two decades, the quantum leap in both rural and urban unemployment after reform threatens to undermine this achievement and create a new class of poor.
Current estimates of the number of surplus rural workers run as high as 150 million. Premier Zhu has said the greatest challenge facing China today is taking care of the g800 millionh rural population. It will be important to keep the employment rate and household income at an acceptable level while Chinafs enterprises compete with their foreign counterparts and Chinafs farm products face a significantly higher inflow of goods from abroad. The country has an unemployment rate of 3.6 percent in 2001, with 6.8 million people out of work. If all unemployed people, especially the surplus rural laborers now in cities, had been counted, last yearfs real unemployment rate would have actually been 7 percent.
There is a need to reduce constraints on private provision of services and to simplify registration and other permits for small private providers. The informal sector, the services sector and labour intensive manufactures are the only real options for the 100 million or so surplus workers in agriculture.
Urban unemployment is rising at an alarming rate. Two thirds of the layoffs come from the SOEs. It is estimated that the layoffs will increase by 4 to 5 million a year. The actual urban unemployment may reach as high as 18 million.
As reported in the press, in the short term, entry into WTO will not improve the countryfs overall employment situation, for the most of the jobless in China are semi-skilled or unskilled laborers. On the contrary, job losses after the WTO entry may top 1 million in 2002, raising the jobless rate by another 1 percent. With strong competition from powerful foreign multinationals, a sharp drop is forecasted in the number of jobs in sectors such as metallurgy, automobiles, machinery, food processing and others. Of deepest concern is the projected loss of 10-13 million jobs in the agricultural sector.
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I have come a across quite a number of urban & rural poverty articles in China recently which are attributing to the impact of economic reform. The result could be more frequent strikes and increasing social disorder in future.
Rather than being organized by a few intellectials or political activists, the protest were about the bread-and-butter issues and had large scale support. The mass workers' protests which took place in spring of 2002 were all economically driven and the organizing was work-place-based.
Do the foreign investors give some thought to the problems of relating hidden risk based on the fact that they are pumping money to China ?
Comments are welcome.
[This message has been edited by Linko (edited 11-11-2002).]
[This message has been edited by Linko (edited 11-11-2002).]
