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Wednesday 7 January 2009
670,000 Small Firms Shut; Jobless Rate Doubled
Grim economic conditions forced more than 670,000 of the mainland’s small firms out of business, and real unemployment was more than double the official rate last year, according to leading economic analysts.
Grim economic conditions forced more than 670,000 of the mainland’s small firms out of business, and real unemployment was more than double the official rate last year, according to leading economic analysts.
Economists also warned that widespread unemployment caused by the financial crisis could cause social unrest and that the government’s 4 trillion-yuan (HK$4.56 trillion) stimulus plan to ensure enough jobs for excess workers might not boost employment as much as expected, Xinhua reported yesterday.
According to the China Economic Weekly, State Council adviser Chen Quansheng said the closure of the 670,000 small firms had cost the country 6.7 million jobs and the total number of layoffs for the year exceeded the official tally of 8.3 million.
He warned that the real jobless rate was worse than the official data because only registered individuals were included in the tally.
The weekly also quoted Chinese Academy of Social Sciences researcher Zhang Chewei as saying that the huge number of layoffs brought by the global downturn was “unexpected and much more severe than initial estimates”. The institute put the country’s rising urban jobless rate at an unprecedented 9.4 per cent, double the Ministry of Human Resources and Social Security’s publicised rate.
But analysts warned that the jobless rate could jump to 11 per cent early this year if, as expected, millions of migrant workers did not have jobs to return to after the Lunar New Year.
If the estimate is accurate, the central government will need to find jobs for at least 33 million jobless migrant workers, fresh graduates and young people entering the job market - one-third more than the number that authorities are aiming to create just to maintain social stability.
But regional authorities have described the crisis as “minimal”, drawing criticism that they are not responding quickly enough or are trying to cover up the extent of the financial downturn.
In late November, Guangdong authorities claimed that few firms were failing and dismissed earlier estimates that more than 50,000 factories had shut down. At the same time, Shenzhen officials insisted that the extent of labour-intensive factory closures and job losses in the city was “minimal”.
Liu Huanquan, director general of the province’s Small and Medium Enterprise Bureau, said only 7,148 companies had closed in the first nine months of last year, and most of the failures were among inefficiently equipped small operations with poor technology.
According to the governor of Guangdong, Huang Huahua , only 710,000 migrant workers left the province between September and November, just a fraction of the 10 million jobless migrants Beijing said had headed home.
Shenzhen mayor Xu Zongheng said only 682 companies had shut down and about 50,000 factory workers had been laid off in the last 10 months of last year.
But commentators accused the officials of having their heads in the sand and said that responding too late to the economic crisis could cause further losses.
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670,000 Small Firms Shut; Jobless Rate Doubled
Fiona Tam
6 January 2009
Grim economic conditions forced more than 670,000 of the mainland’s small firms out of business, and real unemployment was more than double the official rate last year, according to leading economic analysts.
Economists also warned that widespread unemployment caused by the financial crisis could cause social unrest and that the government’s 4 trillion-yuan (HK$4.56 trillion) stimulus plan to ensure enough jobs for excess workers might not boost employment as much as expected, Xinhua reported yesterday.
According to the China Economic Weekly, State Council adviser Chen Quansheng said the closure of the 670,000 small firms had cost the country 6.7 million jobs and the total number of layoffs for the year exceeded the official tally of 8.3 million.
He warned that the real jobless rate was worse than the official data because only registered individuals were included in the tally.
The weekly also quoted Chinese Academy of Social Sciences researcher Zhang Chewei as saying that the huge number of layoffs brought by the global downturn was “unexpected and much more severe than initial estimates”. The institute put the country’s rising urban jobless rate at an unprecedented 9.4 per cent, double the Ministry of Human Resources and Social Security’s publicised rate.
But analysts warned that the jobless rate could jump to 11 per cent early this year if, as expected, millions of migrant workers did not have jobs to return to after the Lunar New Year.
If the estimate is accurate, the central government will need to find jobs for at least 33 million jobless migrant workers, fresh graduates and young people entering the job market - one-third more than the number that authorities are aiming to create just to maintain social stability.
But regional authorities have described the crisis as “minimal”, drawing criticism that they are not responding quickly enough or are trying to cover up the extent of the financial downturn.
In late November, Guangdong authorities claimed that few firms were failing and dismissed earlier estimates that more than 50,000 factories had shut down. At the same time, Shenzhen officials insisted that the extent of labour-intensive factory closures and job losses in the city was “minimal”.
Liu Huanquan, director general of the province’s Small and Medium Enterprise Bureau, said only 7,148 companies had closed in the first nine months of last year, and most of the failures were among inefficiently equipped small operations with poor technology.
According to the governor of Guangdong, Huang Huahua , only 710,000 migrant workers left the province between September and November, just a fraction of the 10 million jobless migrants Beijing said had headed home.
Shenzhen mayor Xu Zongheng said only 682 companies had shut down and about 50,000 factory workers had been laid off in the last 10 months of last year.
But commentators accused the officials of having their heads in the sand and said that responding too late to the economic crisis could cause further losses.
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