Chinese Government Prepares to Sack Millions of Workers
By John Ward and Peter Symonds
Global Research
March 03, 2016
In the lead-up to the National People’s Congress (NPC) starting on Saturday, the Chinese government has announced massive layoffs in state-owned enterprises in coal and steel. Further sackings in other basic industries are being foreshadowed in moves that will result in millions of workers losing their jobs and heightened political and social tensions.
The Chinese Communist Party (CCP) leadership has delayed taking steps to deal with huge overcapacities in heavy industry and so-called zombie companies—state-owned enterprises (SOEs) kept on life support via low-interest bank loans—for fear of triggering widespread social unrest. However, amid a slowing economy and concerns about mounting debt, the regime has signalled a swathe of sackings.
Premier Li Keqiang told top economic advisers in December: “We must summon our determination and set to work. For those ‘zombie enterprises’ with absolute overcapacity, we must ruthlessly bring down the knife.” Li will present his yearly work report to the NPC which will also deliberate on the 13th Five-Year Plan that sets the economic guidelines for the government.
On Monday, the employment and welfare minister Yin Weimin announced that capacity in the coal and steel industries would be drastically reduced with 1.8 million workers losing their jobs—1.3 million coal miners and 500,000 steel workers. The figure was a sharp increase from just a few days before when industry minister Miao Wei declared that one million jobs would go in coal and steel.
A Reuters report on Tuesday based on unnamed government sources indicated that the government is planning to slash capacity in as many as seven sectors, including cement, glassmaking and ship building leading to around six million jobs being destroyed in the next three years.
The emergence of huge overcapacities in China’s basic industries is intimately bound up with the continuing worldwide economic slump that has followed the 2008-09 global financial crisis. The CCP leadership reacted to the collapse of exports and the loss of 20 million jobs with massive stimulus packages and a flood of cheap credit that fuelled a speculative property bubble.
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