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More Action Required on Jobs
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The government should make more efforts to promote employment, says a signed article in People's Daily. An excerpt follows:

More than 5.4 million new jobs have been created in urban areas in the first six months of 2006, which account for 60 percent of the target set for the year. This roughly equals the situation last year. But such an increase in employment is not quite satisfactory compared with the country's GDP growth, which is estimated to be 10 percent in 2006. Why doesn't rapid economic growth bring about higher employment?

Increased employment mainly depends on economic growth. Frankly speaking, though the current employment situation is not that optimistic, it is already quite an achievement. GDP growth reached 9.5 percent in 2004, which signaled the nation was entering a new round of rapid growth. Before that, the employment situation was bad, with the registered jobless rate increasing by 0.1 percentage point for several consecutive quarters. The employment rate has stabilized since then. In other words, the employment situation could have been worse if the economy had not grown at such a rate.

But it is also a fact that employment elasticity is a bit low. Employment elasticity indicates an increase in employment in response to economic growth. In the 1980s, every 1 percentage point of GDP growth created more than 2 million new jobs, with this number falling to 800,000 in the 1990s. Employment elasticity will decrease in the long term, but it is adjustable. The change mainly depends on factors such as the economic structure and labor costs.

Employment elasticity will be high if the proportions of small and medium-sized enterprises and labor-intensive industries are large. China has restructured its economy in recent years. Technology and capital, instead of labor, are playing bigger roles in new industries. The decline of employment elasticity is therefore unavoidable.

The state has taken many measures in this regard, such as drawing up proactive employment policies, supporting the re-employment of laid-off workers, and promoting the migration of rural surplus labor. But the situation remains grave. More attention should therefore be paid to optimizing the structures of industries to strengthen employment elasticity.

(China Daily July 20, 2006)

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