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China's jobless rate rises to 3.9 percent as workers laid off

An unemployed man stands in front of a fashion advertisement as he waits for work at an outdoor labor market in Zunyi City, Guizhou province, yesterday. PHOTO: REUTERS

China's urban jobless rate rose to 3.9 percent last month from 3.6 percent at the end of last year, and the government said the rate will probably increase by year-end as fired factory workers fail to find new jobs.

As of Sept. 30, 7.52 million urban workers were officially unemployed, with 4.39 million more workers labeled "laid off," according to Qian Xiaoyan, an official with the International Department of the Ministry of Labor and Social Security.

The influx of as many as 150 million rural laborers into China's cities and increased competition from foreign companies after China's admission to the WTO last December may lead to increased joblessness in coming years, analysts said.

"The problem is likely to get worse before it gets better," Lehman Brothers Japan Inc economist Rob Subbaraman said. "Rapid urbanization and the restructuring of state-owned enterprises is adding to unemployment."

The real jobless rate is probably more than 10 percent because the official figure doesn't include many laid-off workers, Subbaraman said. China's state-run companies have fired 26.1 million workers since 1998 in a bid to raise productivity and compete with foreign rivals.

In a report, the ministry said the jobless rate ``will increase further'' this year. The government hopes the rate will stay at or less than its year-end estimate of 4.5 percent.

China's growing unemployment problem has attracted the attention of the country's leaders, who will meet next week to choose new leaders and to chart economic policy for the next five years.

Last month, Chinese President Jiang Zemin described the jobless situation in China as "very grim."

He said the government has to do more to help unemployed workers find jobs and needs to improve welfare benefits such as social security.

Leaders fear millions of jobless workers will take to the streets in anti-government protests, threatening the stability of the Communist government, which has ruled the country for 53 years. In March this year, over 10,000 fired workers in the northeastern cities of Daqing and Lioayang protested for better benefits.

That may prompt officials at November's 16th Communist Party Congress to make it easier for entrepreneurs to set up private companies that employ jobless workers and the 8 million people who enter the urban job market each year.

"The Chinese authorities are now admitting that this is an issue that needs to be dealt with," Subbaraman said. "China needs to develop a non-state sector to absorb excess workers."
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