Unemployment in China's Urban Sector

Paper Summary:

The paper discusses China's market-orientated enterprise reform which has resulted in many employees being laid off. The paper cites several reasons for this growth in unemployment and notes the strain being put on the social security system. It also explains a new employment scheme being initiated by the Shanghai Government to combat the issue.

From the Paper:

"Swift economic development was gone together with rising living standards for the majority of people. In 1992, in the Fourteenth Congress of the Chinese Communist Party, it was determined that China's objective of reform was to construct a "socialist market economy." At the Third Plenum of the Fourteenth Party Congress, it was come to a decision that the existing scheme of state and collective owned enterprises was to be substituted by the "modern enterprise system" based on clarified property right, clearly defined responsibility and authority, separation of enterprises from the government, and scientific management." (He, 1998) The Fifteenth Party Congress in 1997 took a advanced step, deciding that whereas collective owned enterprises and small state owned enterprises were to be privatized, large and medium-sized state owned enterprises were to be reorganized as share holding corporations (He, 1998). In 1980s there was virtually full employment in the urban sector. However, since 1993, urban unemployment has been mounting speedily. By 1997, about 18.5 million workers had been laid off from state owned enterprises and urban collective enterprises, augmenting the real city unemployment rate to as high as about 10 percent (He, 1998)."

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