With or without the global financial crisis, China is on the threshold of a new wave of unemployment. This second wave will mainly be the result of the closures of labor-intensive manufacturing operations tied to the overseas market.
Some jobs will be cut because of the dwindling orders from North America and Western Europe, when consumers are bracing for a long cycle of recovery following their loss of assets in the current financial tsunami.
Other jobs, as it has begun to happen since the turn of the year, will migrate to places where cheaper wages can hold and the rights issue tends to attract less notice from the international critics. The world is flat, as they have said, but there is still difference between the center of attention and the peripheries.
How did China manage to solve its first unemployment crisis amid its reform of State-owned enterprises (SOE) in the 1990s? A question that few people asked back then has now been revisited by the nation's business press.
Altogether 30 million men and women, many in their middle age and supposedly hard to learn new skills, were discharged by SOEs. The problem peaked in 1998. Between 2003 and 2005, some 20 million unemployed workers reportedly took re-employment training and then some 16 million have entered new jobs.
The social cost, of course, was huge and cannot be duly reflected by just a few dry figures. In terms of quality of life, family relations, and in the children's development, lots of precious things might have been lost even if the parents could get back their jobs.
But in comparison, the current unemployment wave will pose a greater challenge. The jobless workers in the 1990s were mainly victims of the domestic change - namely the SOE reform. They were mostly from some of the old and less competitive trades in large cities, such as mining, textile, and machine-building industries.
Moreover, all SOEs had unions. And all SOE unions have their national system called the All-China Federation of Trade Unions. They have played a useful role in protecting the workers' welfare.
The jobless workers in the 2000s are coming from factories producing for global buyers, based in the small coastal cities where many facilities were built in the boom time, from karaoke bars to golf courts, and where little public service is available.
Some of them having been fishing villages and paddy farms just two decades ago, those cities usually have little experience in dealing with business cycles, let alone a massive wave of unemployment.
The factories there, with investments to meet the boom cycle in the West and its seemingly insatiable consumer power, are never prepared for weathering difficult times. Some factories were intended to be cash cows with which the investors never cared about re-investment.
The most deplorable difference, however, lies in the workers. Very few of the workers of export-oriented factories earn as much protection from the unions as their peers did in the SOEs. Even worse, the workers there may not even get included in the employment surveys by the labor authorities.
The latest unemployment data from the Ministry of Human Resources and Social Security, released yesterday, showed no difference from the end of last year, while there are at least nine months apart in the real world, and massive factory closures and layoffs have been reported from the coastal provinces where the export-oriented factories are clustered.
China's urban unemployment rate, according to the ministry, stands at 4 percent at the end of September, the same as in late 2007.
The reality, however, is much more alarming. Industrialists from Hong Kong predicted that of the 70,000 Hong Kong-invested companies in the Pearl River Delta, one quarter of them may be gone before the end of the year.
There is little point for officials to settle with the data drawn from obsolete methods. What sensible people should do at this point is to show enough seriousness in helping the increasing number of unemployed workers.
(China Daily October 28, 2008)