China's job market has changed little over the first six months of the year. The number of newly employed people is at least 60 percent of what was expected for the whole year: 9 million.

The stability of the labor market does not sound inspiring. The growth of the economy �C at a rate of more than 10 percent �C apparently does not correspond to a high rate of employment. Why not?

A high employment rate depends on economic growth. The job market, although it does not seem encouraging, has been hard-won and is largely the result of rapid economic growth. In 2004, China's GDP rose by 9.5 percent, which marked a new boom period. Prior to this, the job market had experienced difficult times with the unemployment rate up by 0.1 percent for several quarters in urban areas. Then there was a slight improvement in both employment and re-employment. Unemployment would be far higher if the economy was not growing so fast.

However, it is also true that the economic boom has not boosted employment rates, and the job market is not elastic enough. The government's most pressing task is to improve the elasticity of employment.

Employment elasticity refers to the ratio of new employment against economic growth. A single percentage point of growth in China's GDP generated at least 2 million new jobs in the 1980s but only 800,000 in the 1990s.

Greater capital in an economy normally leads to a reduction in labor elasticity in the long term. But employment elasticity can be adjusted and is subject to economic structure and labor costs.

Employment elasticity is high when labor-intensive sectors, including small and medium-sized enterprises and the service industry, play a bigger role than capital in the national economy. The structure of the economy is largely determined by government policy. Emerging industries have flourished following China's economic structural overhaul. As a result, new technologies and capital are playing an increasingly bigger role while conventional industries are creating less new jobs. That is why employment elasticity has been down.

The government's efforts to encourage employment, re-employment and rural labor transfer to urban areas have made a difference. However, the situation is still serious. New strategies must be implemented urgently to ensure economic growth also boosts the job market. This could be done by optimizing the industrial mix, ownership and corporate structure.

The government should take responsibility. In a market economy, there are often economic incentives for a business to operate with less staff. The government is not supposed to interfere too much in business activities, but it is supposed to create a fair work environment.

Employment rates must be increased, and soon. This matter should be on the high agenda in investment invitation, economic structure, and even urban management.

By People's Daily Online