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China Strives To Avoid Large Layoffs In Financial Crisis

Release time : 2015-06-15 12:53:59
Iron worker Cheng Tianfeng did not know how long he had to stay at home because of the company's heavy losses, but one thing was for sure: he did not lose his job. The export-dependent Rizhao Iron and Steel Co. Ltd suffered a loss of hundreds of millions yuan each month as iron and steel prices dropped sharply because of shrinking demand in the wake of the global financial crisis. "The market has been falling since August. We have had to cut 476 workers and let another 1,840 wait at home," said Du Shanghua, the company's board chairman. "Otherwise, the entire company would not survive." According to the contract Cheng signed with the company, he would receive subsidy of several hundred yuan every month. He and his co-workers would return to the jobs once the market got better. There was mounting alarm about job losses after economic growth slowed in the last quarter to nine percent, down from 11.9 percent last year. More medium and small-sized enterprises had to reduce production or go bankrupt because of lack of capital, rising salaries and rising prices of raw material prices as well as decreasing demand. With its growths largely driven by exports for the past decade, China saw its November exports decline year on year by 2.2 percent, the first drop in seven years. The slowed economic growth rate, estimated at eight to nine percent annually, would affect the employment rate compared with China's previous double-digit growth rate, according to the Chinese Academy of Social Sciences (CASS), China's leading academic institution. A toy company in southern Guangdong Province went bankrupt last month, leaving workforce of more than 7,000 employers jobless. About 300,000 migrant workers from the central Hubei Province returned home from the developed eastern provinces in mid-November. In previous years, they would not go home until January for the Spring Festival family-gathering. More than one million college graduates would not find jobs by the end of this year and the pressure would increase as nearly 6.5 million more will enter the job market next year, according to CASS. To protect jobs and social stability, the central government recently signed off on a 4-trillion-yuan stimulus plan and took wide-ranging measures to provide more jobs and made a pledge to maintain stable, healthy growth next year through domestic demand expansion and economic restructuring. Part of the funding for the stimulus plan had already been announced before the plan was unveiled. Governments in the provinces of Shandong, Hubei, Jilin, Jiangsu, Shaanxi and Hainan had taken measures to urge factories to avoid large layoffs. Officials said if the job-cuts reach a certain quota, the enterprises must apply to the local personnel department. "As the slowed economic growth has affected employment, we will encourage people to start enterprises themselves. Small and medium-sized enterprises will get more support in their development," said Li Boping, deputy head of Shandong Provincial Labor and Social Security Department. "More jobs would be created in these ways." The People's Bank of China, the central bank, was specifically tasked with creating a "suitably relaxed monetary policy" capable of advancing economic growth". "We will use all monetary tools to flexibly adjust the supply and demand for capital and adopt stronger measures to support the development of small and medium-sized enterprises," the bank said in a statement posted on its website. Cheng said he was fully aware of his company's difficulties and was willing to stay at home for a period. "I believe the company's new chance will come one day."