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Social Security Reform Assists Laid-off Workers
Sources say that 515,000 workers in Liaoning Province, home to the largest number of state-owned enterprises in China's provinces, have left struggling state businesses in 2001 and another 500,000 will make the same choice this year.

"I would rather leave my former work unit if it's in financial difficulties and take the benefit and preferential reemployment conditions the government gives the unemployed," said a laid-off worker who used to work for a bankrupt State-owned enterprise in Shenyang, capital of Northeast China's Liaoning Province.

The moves are part of a government plan to reform China's fledgling social security system after the industrial province was chosen for a pilot reform programme in July.

Chinese workers used to be reluctant or even afraid to leave their State-owned employers, long considered a stable source of work and income.

Even when many State-owned firms failed to make a profit and started cutting payrolls or even sacking workers, laid-off workers still preferred to hang on to their job contracts that existed in name only for their sense of security.

However, Liaoning's ongoing reforms focus on establishing a comprehensive social security system that guarantees basic living for the unemployed and retired workers and largely eases the laid-offs' worries about the future.

"Building a social security system and sustainable economic development are critical for laid-off workers to make a basic living and seek reemployment chances," said Liu Kegu, vice-governor of Liaoning Province.

Statistics show that compensation paid to Liaoning's unemployed workers and social security investment in the province totalled 3.23 billion yuan (US$390 million) and 21.47 billion yuan (US$2.59 billion) respectively in 2001.

By the end of last year, some 6.57 million workers in Liaoning had been insured against unemployment and 203,000 people were receiving relevant insurance payments. Both figures topped those for the rest of China at that time.

Local government not only strives to help the unemployed maintain basic living standards but also helps them find new jobs.

More than 1 million unemployed workers in Liaoning enter the job market in 2002. Those who have no job contract with their former employers are now undergoing unemployment registration with local government departments for such assistance as free professional training and re-employment tax breaks.

According to provincial social security official Xu Xiaoqing, the local government will buy certain job vacancies for older unemployed workers who find reemployment extremely difficult and see that businesses pay social insurance due for the laid-off workers.

The Liaoning provincial government plans to help 700,000 unemployed workers find new jobs in 2002, after a similar drive led to the reemployment of 828,000 people last year.

More than 70 per cent of those reemployed in 2001 chose service industries and the trend is expected to continue.

According to observers, the fact that Liaoning's industrial growth rate lags behind that of the service industry is largely because of the unsatisfactory performance by State-owned enterprises and a reemployment surge in the service industry.

Liaoning Governor Bo Xilai said that completely severing unemployed workers from inefficient businesses will help reduce the enterprises' operational costs and sharpen their corporate competitive edge.

Statistics show that Liaoning Province's gross domestic product grwoth rate increased to 9 per cent last year, higher than the national average and thanks largely to the social security reforms.

The province's unemployment rate reached 4.9 per cent last year, 1.3 per cent higher than the national figure, and is expected to rise more in 2002. However, social stability will not be affected thanks to successful government efforts in helping reemployment, according to a local official, who cites a 6 per cent unemployment rate as acceptable during a period of social security reform.

(China Daily June 18, 2002)

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