China's Employment Situation and Policies (2004)

(April 2004)


  I. Basic Employment Situation

  II. Proactive Employment Policy

  III. Improving the Quality of the Workforce

  IV. Employment of Rural Workforce

  V. Employment of Women, Youth and Disabled People

  VI. Employment Prospects for the Early Part of the 21st Century



  Employment has a vital bearing on the people's livelihood. It is the fundamental prerequisite and basic approach for people to improve their lives.

  China has a population of nearly 1.3 billion, and is the most populous country in the world. To solve the employment issue in China is a strenuous, arduous and pressing task.

  In view of the fundamental interests of its people, the Chinese Government attaches great importance to the issue of employment. Based on the "Constitution of the People's Republic of China," the "Labor Law of the People's Republic of China," and other laws and regulations, the Chinese Government has protected the laborers' right to employment, and adopted various policies and measures to actively promote employment and steadily meet their needs for employment.

  Proceeding from the national conditions, the Chinese Government has explored and drawn on international experiences in its practice, and formulated and implemented a number of proactive employment policies. Currently, China has established a market-oriented employment mechanism; solved, by and large, the problem of surplus enterprise personnel arising over the years under the planned economy; and, in the course of economic development and economic restructuring, expanded the employment scope continuously. As a result, the employment structure has gradually been optimized; the avenues for employment have been steadily broadened; the forms of employment have become more flexible; and the employment situation has been maintained basically stable.

  On the principles of mutual respect, equality and mutual benefit, the Chinese Government has actively participated in international labor-related affairs. China has ratified the "Convention on the Minimum Age for Admission to Employment," the "Convention on Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labor," the "Convention Concerning Equal Remuneration for Men and Women Workers for Work of Equal Value," the "Employment Policy Convention," and other international labor-related conventions. In the field of labor and employment, China has carried out remarkably effective exchanges and cooperation with the International Labor Organization, the United Nations Development Program, the World Bank, the Asian Development Bank, and a number of other international organizations and many countries.


I. Basic Employment Situation

  In China, there is a large working-age population, while the average educational level of the people is relatively low, resulting in a very prominent problem of unemployment. This is primarily manifested in the co-existence of the contradiction of the total volume of workforce supply and demand and the contradiction of employment structure, in the simultaneous appearance of increasing pressure on urban employment and acceleration of the shift of surplus rural laborers to non-agricultural sectors, and in the intertwining of the employment problem for new entrants to the workforce and that of the reemployment for laid-off workers.

  Population and Workforce

  In 2003, the total population of China reached 1.292 billion (excluding Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan Province). The population over the age of 16 was 998.89 million, of which the urban population was 423.75 million and the rural population 575.14 million; the economically active population was 760.75 million and the workforce participation rate was 76.2 percent. Among the population over the age of 16, the population with junior middle school education level and above took up 61.7 percent, and that with junior college education level and above, 6.6 percent. Among the population of technical workers, those of the elementary grade took up 61.5 percent, those of the intermediate grade, 35 percent, and those of the advanced grade, 3.5 percent.

  Total Employment

  In 2003, the total urban and rural employed population reached 744.32 million (see Chart 1), of which the urban employed population was 256.39 million, accounting for 34.4 percent (see Chart 2), and the rural employed population was 487.93 million, accounting for 65.6 percent. From 1990 to 2003, the employed population increased by 96.83 million, an average increase of 7.45 million per annum.

  Employment Structure

  As far as the employment structure is concerned, from 1990 to 2003 the proportion of those employed in tertiary industry rose steadily from 18.5 percent to 29.3 percent, with the number of employees reaching 218.09 million; the proportion of those employed in secondary industry remained at around 21.6 percent, with the number of employees reaching 160.77 million; and the proportion of those employed in primary industry dropped from 60.1 percent to 49.1 percent, with the employees numbering 365.46 million (see Chart 3). In terms of employment structure by urban and rural areas, from 1990 to 2003, the ratio of the employed in rural areas dropped from 73.7 percent to 65.6 percent. In terms of employment structure by different economic sectors, from 1990 to 2003, the number of employees in state-owned entities decreased by 34.7 million, down to 68.76 million; the number of those employed by urban individual and private economic entities increased by 35.96 million, to reach 42.67 million, representing 46.5 percent of the newly employed in the urban areas in the same period. New forms of employment mushroomed, such as jobs in foreign-invested firms and economic entities of diverse forms, part-time jobs, temporary jobs, seasonal jobs, work on an hourly basis and jobs with flexible working hours, and became important avenues for the expansion of employment.

Chart 3

  Unemployment Rate

  In recent years, as the employment pressure has been continuously increasing, the Chinese Government has adopted many measures to curb the sharp rise of urban unemployment. By the end of 2003, the registered unemployment rate in the urban areas was 4.3 percent, and the number of registered jobless urbanites was eight million (see Chart 4).

  In 2004, the Chinese Government has plans to find employment or reemployment for nine million people, and reemployment for five million laid-off persons, of whom the number of those who have difficulties finding a new job is one million. The registered unemployment rate in the urban areas is planned to be controlled at around 4.7 percent.

  Income of Urban and Rural Residents

  As the economy develops and job opportunities increase, the income of urban and rural residents keeps rising. From 1990 to 2003, the disposable income per capita of urban residents rose from 1,510 yuan to 8,472 yuan, an increase of 460 percent or a rise of 160 percent in real terms; and the net income per capita of rural residents increased from 686 yuan to 2,622 yuan, an increase of 280 percent, or a rise of 77 percent in real terms (see Chart 5).


II. Proactive Employment Policy

  China exercises a proactive employment policy, and has established the employment principle of "workers finding their own jobs, employment through market regulation and employment promoted by the government." The Chinese Government has persisted in promoting employment by way of developing the economy, adjusting the economic structure, deepening reform, coordinating urban and rural economic development, and improving the social security system. It has adopted various effective measures and done everything possible to increase job opportunities, expand the scope of employment, and keep the unemployment rate within a socially tolerable range.

  Developing the Economy, Adjusting the Structure and Actively Creating Job Opportunities

  - Expanding employment through developing the economy. The Chinese Government has always regarded promoting employment as a strategic task for socio-economic development. It takes controlling unemployment rate and increasing job opportunities one of its principal macro control targets and incorporates it in its plan for economic and social development. It adheres to the principle of expanding domestic demand, exercises a proactive fiscal policy and a stable monetary policy, maintains a steady and fairly rapid development of the national economy, actively adjusts the economic structure and enhances the motive power of economic growth in driving employment.

  - Expanding the capacity of employment by developing tertiary industry. The Chinese Government takes persistently the development of the service industry as a major orientation for the expansion of employment and encourages the development of community services, catering, commercial and trade circulation, tourism, etc., for the purpose of creating more job opportunities in these industries. In 2002, the Chinese Government enacted the policy to support the increase of job opportunities by vigorously developing tertiary industry, broadening employment avenues in the traditional service sector and striving to develop tourism, with the emphasis on creating posts for the public good in neighborhoods and communities and assisting the reemployment or employment of laid-off and unemployed persons and those who have difficulties finding jobs.

  - Encouraging the development of an economy with diverse forms of ownership, and broadening avenues for employment. The Chinese Government has paid great attention to exploiting its advantage in labor resources, and actively developed labor-intensive industries and enterprises that have relative advantages and whose products enjoy market demands, particularly private and self-employed businesses and medium and small enterprises with big employment capacity. These industries, businesses and enterprises have accounted for about 80 percent of the new employment in urban areas. In August 2002, China promulgated the "Medium and Small Enterprises Promotion Law," which has further standardized and pushed forward the development of medium and small enterprises.

  - Developing flexible and diverse forms and increasing avenues of employment. The Chinese Government encourages laborers to seek employment through flexible and diverse forms, and actively develops labor-dispatch organizations and employment bases to provide services and assistance for flexible employment. The government has put in place a medical insurance policy for part-time employees and temporary workers and enacted regulations in respect of labor relations, wage payment, social insurance, etc., to promote and protect the legitimate rights and interests of those who obtained jobs in a flexible manner.

  Improving the Public Employment Service System, and Fostering and Developing the Labor Market

  - Establishing a market-oriented employment mechanism. The Chinese Government actively fosters and develops the labor market and has gradually established the enterprises' status as the major employers and the laborers' status as the major