Panel guests:

Zheng Gongcheng, Director of the Center for Chinese Social Security Studies, Renmin University

Liu Xiahui, Director of the Office of Economic Growth Theory at the Institute of Economics, Chinese Academy of Social Sciences

Wang Zhiyong, Assistant Research Fellow at the Institute of Population and Labor Economics, Chinese Academy of Social Sciences

High growth, low employment: not accurate

Question: What do you think about this concerning phenomenon of rapid economic growth and low employment growth rates?

Zheng: I think it's more accurate to describe the current pattern with 'two highs against two lows'. Just 27 years after China embarked on its program of reform and opening-up, it has created and maintained a miracle of continuous high economic growth. However, in the 1990s the impact on employment growth rates and peoples' income began to decline.

Liu: I personally believe it's not accurate to say that economic growth is high but employment is low. China's GDP has stabilized at around 10 percent in recent years while employment rates have only increased by 4 per cent, a statistic that is not particularly optimistic. It is more correct to say that employment is lagging behind economic growth.

Employment is a social issue

Question: Is there a relationship between economic growth and employment?

Liu: It's better not to look at the relationship between economic growth and employment too literally. Economic growth and job market expansion do not necessarily happen concurrently. The relationship between the economy and employment, as explained in the 1960s by US economist Kalemli-Ozcan, applies to the US and doesn't fit China. China should have its own records, which should not be compared with those of other countries. Besides, the proportion may vary in different stages of development.

Employment is more of a social issue than a simple economic question. Job expansion, of course, is related to economic conditions, but they do not mirror each other. The current employment problem in China is related to inefficient economic diversification. However, I think the more serious question lies in structure. Industrial development is unbalanced, education lags behind market needs and workers lack vocational skills, areas in which the government can do a lot. I am optimistic that when these problems are resolved, overall employment will reach a new high, bringing economic and employment growth closer into line.

Jobs easier to find for highly skilled workers

Question: What signals slow employment growth?

Liu: Firstly, increases in employment rates are not proportionate to GDP growth; secondly, the registered urban unemployment rate has been lingering around 4 percent, the 'control line' promised by the government; thirdly, there is a huge demand for jobs. Statistics from the National Development and Reform Commission predicted that some 25 million people would need jobs in 2005, but actual needs and realized employment were not so high.

The job market is not difficult for everyone to break in to, though. People who are highly skilled or have or managerial expertise find it much easier to get a job, and with much better terms.

Local authorities have wrong outlook on employment

Question: What caused high economic growth and low employment?

Liu: I believe there are two major reasons -- the structure of the economy and worker supply. The economy has been boosted by secondary industries in recent years, the bulk of which are state-owned and large enterprises. However, these companies have a limited number of jobs available, while small and medium-sized enterprises, that contribute less to GDP, can absorb a large number of workers. However, they also face heavy competition, and the pressure restricts their contribution to employment.

Zheng: I think another important reason is the outlook on development. Many local authorities pay much more attention to GDP than employment, and wrongly believe that industrialization and cheap labor will promote employment. In the long term, this not only restricts people's purchasing power but has a negative impact on industrial structure and production.

Wang: Another reason is that many people are employed in unconventional ways that cannot be measured. They are not included in statistics so the unemployment rate remains superficially high.

Chronic disadvantages of the phenomenon

Question: What social problems will arise from high economic growth and low employment growth?

Liu: If the current situation goes on unchecked, there will be grave side-effects. There will be a huge wastage of human resources. If a person fails to obtain employment when he or she comes of working age, it will be a great loss to the individual and society at large. Society will also suffer because of the thousands of college graduates who cannot find a suitable job. Society's views on higher education will be negatively affected if college students cannot find jobs after graduation. Social contradictions also pose a threat to the harmony and stability of society. If there is a stark contrast in availability of employment for skilled and unskilled workers, the division in society will be aggravated; the poor will be poorer and the rich will be richer. Furthermore, masses of jobless people pose a threat to society.

Zheng: The gap between economic and employment growth will certainly have an adverse effect as far as China, which has an excessive surplus of labor, is concerned. If this situation worsens or even remains unchanged, the number of jobless is bound to grow. The status of workers will fall even further, pushing up poverty rates and widening the gap between rich and poor.

Efforts should be made to curb the economic growth rate and raise employment rates

Question: How can high economic growth translate into high employment?

Liu: This is an issue governments struggle with globally -- how to coordinate the problem of employment while readjusting the economic structure. China should focus on the following points. Firstly, the structural shift should not happen too quickly. Secondly, some aspects of economic transformation should be hastened. The government should relax and give more support to the tertiary industry to create more job opportunities. Thirdly, opportunities for free or cheap technical training should be provided to unskilled workers. Meanwhile, government departments should provide more accessible information resources for employment and optimize the use of China's enormous human resources.

Zheng: I think ideas for overall development should be aimed at containing the economic growth rate and propping up low employment rates. Only when the GDP growth rate is held back can the government, at various levels, make changes to reduce unemployment. Only when the GDP is contained, will possibilities for both urban and rural residents arise. As more people get jobs, consumption and production will grow, pushing employment rates even higher.

Wang: It is important that the government begins improving the job market, so that the supply and demand of human resources is more rational. The Residence Permit system should be reformed to promote the employment of college graduates. At present it is hard for college students to get jobs, and one of the major practical reasons for this is the restrictions imposed by the residence permit system. Efforts should be made to provide training for workers who have lost their jobs to widen their skill-set and to improve the overall quality of human resources.

By People's Daily Online