BEIJING — UNEMPLOYMENT looms as perhaps China's greatest economic challenge as government forecasts show joblessness rising well into the 1990s. The shortage of jobs threatens to further undermine Communist Party power, which depends increasingly on the party's ability to guarantee a steady improvement in living standards for China's 1.2 billion people.
Disgruntled workers played a prominent role last spring in nationwide protests for democratic reforms. The growing risk of unemployment is stirring anxiety among the ``working class'' on whose behalf the party claims to rule. That risk is being exacerbated by Beijing's year-old economic retrenchment.
For at least the next six years, China will face rising unemployment as ``the gap in demand and supply of labor widens,'' Labor Ministry official Zhang Zuoji revealed in an interview published last week. Only half of the 10.5 million Chinese seeking employment this year will find jobs, while ``the rest will have to wait,'' the official China Daily reported Mr. Zhang as saying.
The rate of urban unemployment will rise from 2 percent to 3.5 percent by the end of this year, when the total number of jobless city dwellers reaches 10 million, officials project. Yet the potential for joblessness far exceeds these official figures, since tens of millions more Chinese are virtually idle at their workplaces, the government acknowledges.
Several factors contribute to the rise in unemployment.
Historically, a guaranteed job, dubbed an ``iron rice bowl,'' has been one of the people's constitutional rights that the Communist Party has honored. During its 40 years in power, the government has assigned young Chinese by the millions to jobs, with little regard for the labor needs of employers.
``Our policy was one of low wages and high employment,'' says Chen Ji, an official at the party-led All-China Federation of Trade Unions. ``Enterprises were forced to take people ... and this was intended to stabilize society,'' Mr. Chen adds.
As a result, Chen says, ``five people ate the rice of three'' and productivity stagnated.
A decade of market-oriented economic reform has increased the efficiency of factories and farms, exposing the vastness of what Chinese officials term ``hidden unemployment.'' Today, about 30 million city workers, or 25 percent of the urban work force, are ``unemployed on the job,'' Chinese officials say. Another 150 million farmers, or roughly half the rural work force, are idle.
Under one reform measure, urban factories this year fired more than a million of the surplus workers as part of a ``regrouping for excellence'' drive to streamline state industry. Some localities planned for a 30 percent drop in employment by 1992, according to the official China Youth News.
At the same time, a one-year-old economic retrenchment has dealt a staggering blow to many industries that had absorbed surplus labor.
Five million workers have been laid off over the past year because of an estimated 25 percent cutback in investment for construction projects, according to Western economists and Chinese statistics. About 20 percent of rural industrial firms, which employ 90 million people, are expected to shut down during the austerity drive, official press reports say.
The retrenchment also threatens to cause layoffs among workers hired under a new contract system in Chinese enterprises. About 10 million contract workers, or 10 percent of employees in state-run firms, lack traditional job guarantees and could fail to have their contracts renewed during an economic downturn.
Meanwhile, a recent campaign by Communist Party hard-liners to crack down on private businesses threatens to stifle growth in China's most dynamic economic sector. Individually run private businesses employ several million formerly jobless city youths.
As job opportunities decline, China's working population is expanding. Baby boomers of the 1960s and '70s have flooded into a saturated urban labor market at an average rate of 20 million each year. Chinese retirees are also re-entering the labor pool, and an estimated 10 million of them are expected to look for jobs in the next few years, the China Youth News says.