A state-owned Chinese coal company recently announced layoffs for 100,000 workers over the next three months, the biggest single job cut in China in years. But the layoff, despite its size, is just a snapshot of the emerging problem of joblessness that China faces as the world's second largest economy continues to slow.
Geoffrey Crothall, communications director at the Hong Kong-based China Labor Bulletin said a lot of workers will be laid off across industries and regions.
“We’ve seen similar layoffs in the steel industry and other heavy industries, so I think as the economy slows down in China, particularly the state owned sector struggles to make profits inevitably, we will see more layoffs,” he said.
Last week, state media reported that Longmay Mining Group, a coal company in northeastern China’s Heilongjiang province, which employs about 240,000, was cutting its workforce nearly in half. Longmay’s chairman Wang Zhikui has told state media that the decision to cut the workforce was made to “stop bleeding” the company, which is facing severe debt problems.
Strikes, social strife
As companies have laid off workers, that has led to strikes. In some cases thousands of workers have protested job cuts at steel and other heavy machinery factories in recent months, analysts said.
China’s southern Guangdong Province, a key hub for Chinese exports and manufacturing, has seen widespread layoffs as companies struggle with falling sales and restructuring initiated by the government, said Li Hsiang Hong, a program coordinator at Asia Monitor Resource Center.
“There is a trend of job layoffs and we think the government needs to pay special attention to this issue,” Li said, explaining that thousands of dismissals are taking place in export-oriented industries like toys and textiles in southern China.
The government is transferring some types of manufacturing from big and medium sized cities to smaller towns and in the process, the companies are shedding thousands of workers, Li said.
Part of the shift is aimed at moving polluting industries away from major cities, but it also seeks to relocate industries that have seen social strife and occupational diseases among workers.
“They think that moving all of those factories can also help them to relieve these kinds of growing conflict and problems in the cities,” Li said.
Industry analysts said the slowdown in commodity prices and growing concern about pollution is likely to force other coal companies to go for layoffs in the months to come, analysts said.
“Most industries that are facing layoffs are those that are less competitive or are heavily polluting enterprises such as coal mining and other sunset industries,” said Hu Xingdou, economics professor at the Beijing Institute of Technology.
The Chinese government avoids public discussion of the unemployment problem and state media recently said that new employment continues to grow at a rate higher than the targeted annual growth rate, even as the economy continues to contract.
But more than the numbers, analysts said it is more a question of how layoffs are managed.
China Labor Bulletin’s Geoffrey Crothall said the employment market would continue to suffer from considerable fluctuations.
“It is just a question of what provision will be made for them in that process and what opportunities are available to them for re-employment,” he said. “It is very difficult to make any predictions in that regard.”
Analysts said that as the economy has slowed and exports plunged, companies have also opted for large-scale wage cuts and there are widespread complaints and protests in some cases because workers have not been adequately compensated when they are let go.
Longmay’s chairman Wang Zhikui has said that the cuts for the company will come in the form of layoffs, early retirements and job placement. Analysts said the fast-growing service sector could provide opportunities for many fired younger workers, but older laid off employees may not be able to manage the transition as well.