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Growth Pattern Key to Higher Job Creation
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University graduates will not be alone in facing the pressure of finding a job this year.

While 4.13 million students will graduate this summer, China needs to find a total of 25 million jobs to soak up newcomers to the labor market. The bulk of these are rural workers and those who have lost jobs during economic restructuring, according to the National Development and Reform Commission.

Economic growth and natural retirement of workers are expected to provide 11 million jobs. This leaves a gap of 14 million.

It is nothing if not a formidable challenge for policy-makers.

As usual, the commission, an important economic decision-making body, promised to strengthen work on promoting employment this year.

But as demographers point out, China's labor population above 16 years old will remain at about 900 million every year for the next 20 years. The pressure of unemployment is a long-term challenge, and it demands a long-term solution.

An obvious distortion in the job market is that some companies are frustrated in their attempts to recruit workers, as many job hunters have a low education level and lack specific work skills. This is a problem especially for workers over the age of 40 laid off by restructured State-owned enterprises.

In this case, professional training becomes vital to tapping corporate demand and creating new jobs. The government can encourage such career training and subsidize job hunters who struggle to pay training fees.

With the caliber of workers improved, the tension in the job market will be eased. Such public investment will prove more efficient than directly interfering to create jobs. It should become a consistent measure in the coming years.

For the large army of university graduates, their awkward predicament is at least partially attributable to the gap between curriculum and work skills. The higher education system must be reformed to ensure graduates are better suited to the job market.

From a more general perspective, the solution to the problem of unemployment lies in dynamic economic development. World experience shows that economic expansion usually brings jobs. Economists estimate that in China a one percentage increase in gross domestic product (GDP) could create 1 million more jobs.

However, it is wrong to take this for granted. Capital investment can push economic growth, but not necessarily employment growth. It depends on the pattern of economic growth.

Developed economies, in the wake of industrialization, have generally chosen an employment-oriented growth pattern.

China is a developing country with a short history of reform and opening up. It needs to base its development on fast economic growth, an economic expansion-oriented growth pattern. In this process, industrial upgrading ushers in more capital- and technology-intensive investment, and cuts demand for labor.

It is justifiable for China to take such a road so as to enhance its national strength as quickly as possible. But as the problem of unemployment intensifies, China needs to strike a balance between economic and employment expansion.

To make its development more employment-friendly, China needs to accelerate the development of the tertiary industry, which is what developed economies use to tackle unemployment. According to the National Bureau of Statistics (NBS), the tertiary industry, which is more labor-intensive, can create five times the employment provided by the secondary industry.

In 2004, the output of China's tertiary industry accounted for 42 percent of GDP after the NBS adjusted up its GDP statistics. It is still significantly lower than the ratio of developed countries. It is around 75 percent in the United States and 68 percent in Japan.

In this sense, employment is an issue that hinges on long-term economic restructuring in the right direction.

(China Daily February 20, 2006)

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