Top leaders have urged all areas of China to make the issue of unemployment one of their top priorities, warning that failure to tackle the problem could lead to social instability and damage the country's modernization drive.

At a meeting in Beijing over the weekend, President Hu Jintao and Premier Wen Jiabao said that China faces a grave employment situation, and urged all localities to fully understand the importance and urgency of the situation and take concrete measures to rectify it.

Analysts here said that the move not only reflected the government's increasing concern over re-employment, but also indicated a shift of policy from more emphasis on economic growth to putting economic growth and employment on an equal footing.

Since China started its reform and opening up in the late 1970s, the country's planned economy has given way to market-oriented reform, which has increased both the efficiency of State-owned enterprises and the number of laid-off workers from these enterprises.

At the same time, large numbers of surplus labourers in rural areas have been swarming to cities to hunt for jobs, further exacerbating the already tense urban labour market.

Official statistics show that some 10 million job hunters will enter the labour market this year, in addition to over 6 million laid-off workers and 8 million registered unemployed people nationwide.

The situation is expected to remain tough as labour supply will continue to exceed demand for the next few years.

"It's interesting to note that the unemployment issue has come along with the high economic growth of the past years," said Zheng Gongcheng, a professor at the School of Labour Relations and Human Resources under the Beijing-based Renmin University of China.

In the 1980s, one percentage point GDP growth would provide jobs for 1.3 million people, but the figure dropped to 900,000 in the 1990s and then to 800,000 at present. "This indicates that job opportunities do not emerge simply with economic growth," he said.

Zheng cited Zhongguancun in Beijing, the so-called Silicon Valley of China, as an example, saying that the district is a major contributor to Beijing's GDP growth, but it absorbs only a limited number of people from the labour force.

"The move by the Chinese Government to make the re-employment issue more prominent fully reflects its new development concept and also indicates the issue has been given an equally important role in the country's development," said Zheng.

At the meeting, Wen Jiabao called for great efforts to develop labour-intensive industries, tertiary industry and the non-public economic sector, which he said are major sources for employment.

"This also reflects a change of idea by the government," Zheng said, noting that the country has long sought high economic growth basically through high-tech industry.

High-tech industry should not be developed at the cost of industries that can absorb huge numbers of jobless people, as China has a population of 1.3 billion people, millions of whom are looking for work.

Zheng's point of view was echoed by Lu Xueyi, president of the China Sociology Society, who said that greater efforts should be made to develop tertiary industry, or the service sector, which has absorbed 70 per cent of the country's new labour force over the past five years.

"Great potential for employment still exists in the sector," he said, noting that this could be achieved through quickening the pace of urbanization.

To meet this year's employment challenge, the government has set a goal of creating 8 million jobs to ease the labour market tension.

Both government officials and economic experts here are optimistic about achieving the goal, saying that the rapid economic growth in the first six months of this year has laid a solid foundation for it.

In the first half of this year, China realized a GDP growth rate of 8.2 per cent despite the impact of SARS (severe acute respiratory syndrome) and the yearly target of 7 per cent economic growth is expected to be fulfilled by the end of the year.

Meanwhile, the service sector is recovering rapidly and increasing its ability to absorb more of the workforce now that SARS has been contained.

"As long as effective measures are taken to boost labour-intensive industries, tertiary industry and the non-public economic sector, both targets, can be fully achieved," said Zheng.

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