Lei Xiangping

    lagon235@163.com

    SINCE many State-owned companies are afflicted with debt and production overcapacity, supply side reform has been introduced to revitalize State-owned companies. However, supply side reform means cutting old-fashioned jobs and eliminating outdated production, which has revived the fear of massive layoffs of millions of people seen during the 1990s.

    Over half of the 80,000 steel workers at Wuhan Steel Group, one of China’s biggest steel corporations, will have to leave their positions this year. Longmay Mining Holding Co., the biggest State-owned firm in Heilongjiang Province, cut jobs for nearly 22,500 coal workers and transferred them to other sectors.

    Before the annual sessions of the national legislature and political advisory body, a.k.a. the Two Sessions, the second wave of massive layoffs became a buzzword, and economic analysts predicted that supply side reform in industries like steel and coal, which will result in 1.8 million unemployed people according to official data, had actually raised the curtain on a new round of massive layoffs.

    However, since the Chinese economy is much stronger than before and the Central Government, prior to the launch of supply side reform, has woven a comprehensive safety net for workers, massive layoffs won’t happen again in China.

    The so-called second wave of massive layoffs harkens back to the first wave of layoffs, when lots of workers in the 1990s either chose to resign or were forced into unemployment because of the privatization of their firms, which used to cover almost all of their lifetime expenses. The scourge brought by the first wave of layoffs, with lots of unemployed people still living a hard life, remains fresh in many people’s memories and is regarded by some as the cost of economic reform.

    Nevertheless, different from two decades ago when many jobs were cut ruthlessly, supply side reform won’t reach its purpose by throwing away “redundant” workers. Instead, the government has introduced a comprehensive contingency plan to prevent massive layoffs from recurring.

    For one thing, the government is trying to create more jobs by transforming the economic structure, introducing new jobs and developing the third industry. Again, take Wuhan Steel Group for example. None of its workers will be thrown away. Those close to retirement age can choose to retire with a decent pension while those who wish to stay can receive another position within the company or through a government agency.

    For people who lose their jobs but can’t find another one quickly, the government has allocated a special finance fund to subsidize them and offer them useful employment information. Premier Li Keqiang reiterated explicitly in the Government Work Report this year that the Central Government will appropriate 100 billion yuan (US$15.46 billion) to subsidize workers who are laid off due to the clearing of “zombie” companies, which are debt-laden, feeble in market competition but have easy access to governmental subsidies and bank loans.

    This contingency plan will try to minimize the number of layoffs, reduce economic losses by the jobless group and soothe their psychological pain. Backed by the plan, Xu Shaoshi, director of the National Development and Reform Commission, declared in a press briefing during the Two Sessions that a second wave of layoffs won’t happen.

    Li and Xu’s remarks show the government’s confidence and determination in preventing a second wave of layoffs.

    The clear messages also show the government’s unwavering pursuit of social equity and justice. The Central Government firmly believes economic development fruits should be commonly shared by the people.

    Twenty years ago, China needed to increase the efficiency of State-owned companies while the ongoing supply side reform will improve State-owned companies. By introducing a comprehensive contingency plan, the government has the ability to prevent large-scale layoffs. Local governments and State firms should follow the Central Government’s guidelines and ensure the interests of workers during supply side reform.

    (The author is a News Desk editor with China Radio International.)