INTO THE CRUCIBLE.doc

1、INTO THE CRUCIBLEWhy did I quit a leisurely job deemed as an iron rice bowl by many？” wrote a former employee of the Wuhan Iron and Steel （Group） Corp.（WISCO） ， one of the countrys largest steelmakers， on his microblog on May 2. Using the nickname Duomaguo to pen his post， he explained why he chose

2、to quit his job at WISCO several months ago， despite having had an “iron rice bowl”a secure job at an administrative post in a state-owned companyfor over two years. “Because its not an iron rice bowl any more. The steel industry is undergoing drastic changes and WISCO is no exception. Also I cannot

3、 accept living the same way all my life， ” he wrote. “The experiences I had at WISCO are unforgettable. However， its time to say goodbye.” He has since found a new job at an emigration company. “The payment matches my ability and work intensity.” Duomaguo is considered to be lucky， compared to his f

4、ormer WISCO colleagues who work at steelmaking posts. The likelihood of layoffs is hanging like the sword of Damocles over millions of workers as China seeks to slash overcapacity in traditional industries， in order to shift its engine from investment to domestic consumption， services and innovation

5、. The Chinese Government announced in February that an estimated 1.8 million workers from the coal and steel industries would be relocated in order to address industrial overcapacity. In March， Ma Guoqiang， President of WISCO， told the Peoples Daily that WISCOs steelmaking business would need only 3

6、0，000 employees if the de-capacity reform goes through. The company currently has 80，000 employees. Sun Jin， Director of the Publicity Department of WISCO， told Beijing Review that this doesnt mean the company will shed 50，000 workers. “If a newspaper finds that there are too many reporters and disp

7、atches some to do proofreading or parttime distributionall the while continuing to hand out social insurance and living subsidiescan it be said that the newspaper has laid off its reporters？” Even so， resettling millions of workers still poses a challenge for the Chinese Government as it directly af

8、fects the interests of the workers， the implementation of the supply-side structural reform and overall stability of society. The process may not be smooth， but the government is determined to tackle the issue properly to minimize the impact of the de-capacity measures on families and society. While

9、 the Central Government has set aside 100 billion yuan （$15.4 billion） to help relocate those affected， some analysts have questioned whether that will be enough to soften the blow. Premier Li Keqiang said in March that the fund can be increased if necessary and local governments should handle their

10、 responsibilities accordingly. A government guideline was also issued on April 7 jointly by the Ministry of Human Resources and Social Security （MOHRSS） and six other ministries， outlining a range of measures to relocate those to be laid off in the coal and steel sectors. On his visit to the MOHRSS

11、on May 6， Premier Li said that while the steel and coal sectors are reducing capacity， the government must provide job trainings and policy support to avoid large-scale job losses. “We do not allowzero-employment families， ” he said. An inevitable trend “The latest reform plan is not a sign that Chi

12、na is about to be swamped by a wave of unemployed workers， ” wrote Cui Ernan， an analyst at financial services company Gavekal Dragonomics. In a note published on March 10， Cui claimed that “Chinas job market has been adjusting to the end of the housing boom for two years already， and while this adj

13、ustment is hardly pleasant， it is also manageable.” Cui also said that the loss of 1.8 million more workers was “less a radical departure than the evolution of an existing trend.” Philip Moscoso， professor at the IESE Business School in Spain， told Beijing Review that “the good thing is that the gov

14、ernment has recognized the problem.” Moscoso explained that what China is undergoing is a trend that has happened in most other countries as well. “You have an economy that starts to develop and at some point you move from a more heavy industrial base output to an economy which is more value-added，

15、hi-tech， knowledge-intensive， and heading toward more service-based business， ” he said. “If you put it in the overall picture， thats a natural thing.” Lin Yueqin， Director of International Department II at China Social Sciences under the Chinese Academy of Social Sciences， echoed similar views as M

16、oscoso and Cuis on Chinas economic development over time. “This is a process that China has to go through in the long term. Once the economy transforms to one that is innovative， environment-friendly， low-carbon and centered on hitech industries and consumption， society will be much more stable， ” L

17、in told Beijing Review. Lin explained that this is a process every country needs to undergo. “The government， enterprises and individual workers all need to adapt to the changes brought about by technological advancement， ” he said. “China should learn from countries such as Russia and the United St

18、ates in terms of providing social relief and training for workers laid off in the process of industrial restructuring in order to help them secure reemployment and relevant job information.” “However， if the government cannot properly handle laid-off workers， small-scale protests may happen， ” Lin s

19、aid. “These are normal and the restructuring shouldnt stop for these obstacles.” Migrant jobs Workers from north Chinas Shanxi and Hebei are likely to be affected the most by the government plan to cut excess industrial capacity， since the two provinces are the countrys largest coal and steel produc

20、ers， respectively. On April 21， Hebeis provincial authorities told journalists that up to 150，000 steel workers will be laid off throughout the region. Song Limin， Deputy Chief of the Hebei Provincial Development and Reform Commission， told a press conference in Handan that “we estimate that 100，000

21、 workers will need to be resettled in five years.” Citing a lack of diversified economies in these regions， Cui stated that it will be difficult for laid-off workers to find similar jobs locally. “So one of the main solutions for workers shed from excess-capacity sectors is to relocate to a coastal

22、province where they are more likely to find a decent job.” Even if they were to migrate to other areas of the country， how would that affect the provinces theyve left behind？ Lin explained the consequences to Beijing Review. In the long term， Lin claimed that “the huge transition will create greater

23、 development opportunities as these provinces can directly transform from high-pollution industries to those centered around the Internet and environmental protection.” Workers lacking skills will still have to be laid off in provinces over-reliant on resource industries， but Lin said that those who

24、 remain will primarily be competent workers. Therefore， “the efficiency of production will improve and their salaries and consumption ability may improve as well.” Song said that some enterprises will not go bankrupt after eliminating overcapacity but will continue to provide job opportunities throu

25、gh mergers and acquisitions. The service industry， which accounts for more than half of Chinas GDP， is considered a reliable source of job creation. Lin argued that those who are laid off will find jobs in the service sector after receiving training and some may even start their own businesses. “Aft

26、er two or three years adjustment， the overall income level may increase， ”said Lin. Industrialized welfare The governments April 7 guideline has outlined four measures to resettle those to be laid off： relocation within the company， retraining， early retirement， and social security subsidies to thos

27、e having difficulty finding new jobs. In addition to the help given to redundant staff， support will be offered to firms who create new jobs by adopting the “Internet Plus” strategy， developing new industrial fields and products， and expanding domestic and overseas market， said the document. A “back

28、-to-work” program should be created so that workers receive training and career guidance for free. The program will also open channels for those who want to start their own businesses， giving them access to government support. The guideline also said that the govern-ment will also arrange special jo

29、b fairs for those to be resettled， and can provide living allowances for those who will be retrained. Local authorities are required to enhance trans-regional cooperation to relocate redundant workers to regions with employment opportunities. “The Hebei Provincial Government is mulling over specific

30、 measures for resettling workers. We have already taken a series of measures including transferring them to other positions， ” said Song. “We will mainly reallocate workers in the service industry after offering them relevant training.” WISCO has already proceeded with the relocation process. Larry

31、Wu， who works at WISCO but asked to use a pseudonym， told Beijing Review that WISCO began its first round of layoffs in December 2015， when 6，000 workers approaching their retirement ages were let go. The cuts were not made in terms of job position， but on the basis of agemen who were older than 55

32、and women between 45-50 were among those affected. “In order to ensure the living standard of workers who have been laid off， WISCO will give them economic subsidies， ” he said.“Before they meet the national official retirement age （60 for men and 55 for women） ， WISCO will not only pay social insur

33、ance but also give them living expensesup to 2，500 yuan （$385）every month until they reach the official retirement age.” Li Jianguo， who retired from WISCOs Marketing Department one year ago， told Beijing Review that employees in the sectors to be affected by the reforms are facing a mental process of adjustment and adaptation. Even so， he said， “As the national strength becomes consolidated， the government and enterprises have taken enough measures to make sure that everyone gets through this process and finds their own place.”