China Expects to Layoff 1.8 Million Coal, Steel Industry Workers

In efforts to reduce industrial overcapacity, China plans on reducing it’s coal & steel sector workers by 15 percent.

China expects to lay off 1.8 million or about 15 percent of the workforce in the coal and steel industries, as part of efforts to reduce industrial overcapacity, but no timeframe was given.

This is the first time that China has given figures that underline the magnitude of the tasks in dealing with slowing growth and bloated state enterprises.

Yin Weimin, the minister for human resources and social security, told a news conference that 1.3 million workers in the coal sector and 5,00,000 from the steel sector could lose their jobs.

China’s coal and steel sectors employ about 12 million workers, according to data published by the National Bureau of Statistics.

Yin Weimin, the minister for Human Resources and Social Security said, “This involves the resettlement of a total of 1.8 million workers. This task will be very difficult, but we are still very confident”.

The central government will allocate 100 billion yuan ($15.27 billion) over two years to relocate workers laid off as a result of China’s efforts to curb overcapacity, officials said last week.

China’s vice finance minister Zhu Guangyao quoted Premier Li Keqiang as telling US Treasury Secretary Jack Lew on Monday that the fund would mainly focus on the steel and coal sectors.

Downward Pressure

The world’s second-largest economy grew 6.9 percent in 2015, the weakest in 25 years, and the government aims to achieve economic growth of 6.5-7 percent in 2016.

The economy faces relatively big downward pressures and some firms face difficulties in production and operation, which would lead to insufficient employment. 

Yin Weimin, Minister, Human Resources and Social Security

Yin added that increasing graduates this year would also add pressure to the job market.

Despite the economic downturn, there have been no reports of mass lay offs that were seen during the global financial crisis, when over 28 million workers were laid off between 1998-2003.

The survey-based jobless rate published by the National Bureau of Statistics stayed at around 5.01 percent at the end of last year.

Officials have said that the services sector has created more jobs to help absorb laid-off workers from the manufacturing sector.