State-owned enterprises (SOEs) are expected to finish restructuring within the next two or three years, said Minister of Labor and Social Security Zheng Silin at the weekend.

Zheng also announced that laid-off workers from SOEs will be covered by unemployment insurance, instead of being given basic living allowances, by the end of 2005.

At a national conference on social security, he said the scheme change is expected to improve the efficiency of SOEs, some of which are still burdened with surplus workers.

Earlier, Zheng said some 3 million workers may lose their jobs annually until 2006 as overstaffed state firms are streamlined.

"Reemployment will remain a hard nut to crack," said Zheng.

He said the government will close reemployment service agencies by 2005 and that laid-off staffers will then be handled by the insurance security net.

Reemployment agencies were introduced nationwide in 1998 in an interim program to help workers laid-off from money-losing SOEs.

A ministry official named Lu told China Daily that the interim program has played an important role in SOE reform whilst market-oriented social security schemes, such as the unemployment insurance program, have become established.

In the planned economy, SOEs offered lifetime benefits for workers, but since 1998 about 30 million employees have lost their jobs due to amalgamations or bankruptcies as market-oriented reforms were made.

The interim program has offered laid-off workers basic sums for living necessities in line with a three-year contract from reemployment agencies. Workers on the scheme have not been counted as unemployed. After the contract expires, those still not reemployed will be reclassified as jobless.

Lu said the closure of reemployment agencies will lessen the burden on SOEs, which are required to provide basic pay and training for ex-employees in reemployment centers.

Laid-off people will benefit less from the scheme change, Lu said.

Take Beijing, for example, where an average ex-SOE employee can be paid at about 400 yuan (US$48) per month through insurance, while they could get at least 600 yuan (US$72) per month in reemployment centers.

So far, unemployment insurance networks have covered nearly all SOEs and laid-off staffers in seven provinces in eastern China, including Liaoning and Jilin.

"We will extend the scheme to central and western regions this year," said Zheng.

Lu said the unemployment insurance scheme is in line with international practices.

And he said the jobless, who are encouraged to find jobs, can benefit from the scheme for two years at most, and if they are not reemployed after that period, they can apply for minimum living allowances.

Zheng urged government agencies to provide aid and training for jobless people from money-losing SOEs to help them find work.

At the weekend, the ministry announced plans to help 5 million laid-off workers find jobs in 2005 and to keep the urban unemployment rate at around 4.6 per cent.

Zheng said the goal could be achieved if the economy maintains rapid growth and policies favoring reemployment are implemented.

(China Daily December 21, 2004)