Globalisation

Making Sense of Job Gains and Losses

Workers in mainland China are hearing confusing messages about the jobs impact of China's entry into the WTO. On the one hand the Government claims that accession to the WTO will lead to a massive influx of foreign investment and the creation of millions of new jobs. On the other hand, workers are constantly being warned that widespread job losses will occur under the economic restructuring, deregulation and privatisation policies required by the WTO.

Immediately following China's formal accession to the WTO, the Minister of Labour, Zhang Zuoji, announced that "in-depth restructuring in the labour market" required under WTO obligations will lead to increased unemployment, with the prospect of the urban unemployment rate rising from 4.5% to 7% by the end of 2002. Zhang Zuoji claimed that in order to prevent the unemployment rate from rising above 4.5%, an estimated eight million jobs must be created in the next 12 months. At the same time, Min Tang, chief economist for the Asian Development Bank (ADB) advised the Chinese government that another 15 million workers must be laid off from the state sector over the next three to five years in order to maintain "competitiveness" and "efficiency."

Within the first month of China's WTO membership several major state-owned corporations announced a new wave of mass dismissals. Again the language of "competitiveness" and "efficiency" was used to justify these layoffs. For example, the China Petroleum and Chemical Corporation (Sinopec) announced the dismissal another 90,000 workers as part of a series of measures taken to achieve "global competitiveness" under the WTO. Similarly, in the state-owned railway and transport sector another 20,000 railway workers will be dismissed in 2002, adding to the 90,000 dismissed in 2001 and 10,000 in 2000. Half of the dismissals planned for 2002 are from the commercialized sate-owned enterprise Railcom Co. under the Ministry of Railways. These layoffs coincide with US$60 million in new profits.

Like many of the corporate restructuring measures taken by major state-owned enterprises, these mass layoffs are also designed to attract foreign investment. Railcom Co.'s mass dismissals are part of its plan to make it more attractive to foreign investors. Under China's WTO commitments, from 2002 foreign investors can own up to 49% of joint ventures in the rail transport industry. By 2005 this will be increased to allow majority ownership by foreign joint venture partners, and by 2007 100% foreign ownership will be allowed. What this example also illustrates is that the WTO is not primarily about the international trade in goods and services, but international investment. The mass dismissal of workers and the violation of their right to livelihood protection occurs in a context where the rights and interests of foreign capital takes priority.

Three days after Zhang Zuoji's announcement, the World Bank released its report, China and the Knowledge Economy: Seizing the 21st Century, in which it claims that 100 million jobs must be created over the next 10 years to "absorb" mass layoffs in the state sector and displacement from agriculture. This massive displacement (in which the Bank's neoliberal policies and coercive lending played a direct role) is cause for concern not because the lives and well-being of millions of working people are at stake, but because social stability is threatened. As in most other countries around the world, official policy treats the "problem" of mass unemployment as a potential threat to the political and economic elite, not the systematic violation of workers' social and economic rights.

The promise of jobs and prosperity under the WTO appears to have been forgotten amid new warnings about job losses. Even attempts by major newspapers to prove that the benefits outweigh the costs tend to encourage more doubt in this era of uncertainty.

According to research data reproduced in the Beijing Morning Post on November 13, 2001, an estimated 1.35 million jobs will be lost over the next seven years as a direct result of China's WTO membership. The report also notes that in addition to expected job losses of 1.35 million, another 9.6 million people will be displaced from agriculture and forced to seek work in other industries. This brings the total expected job losses to 10.95 million. In contrast, the article claims that 12 million jobs will be created. The article presents the following sectoral breakdown of these job losses and gains:

JOB LOSSES BY INDUSTRY
Automobile parts and assembly 498,000
Machinery & equipment 298,000
Grain and edible Processing 133,000
Communications equipment & electronics 109,000
Electrical machinery 97,000
Instrument manufacturing 78,000
Metallurgy 42,000
Oil & natural gas 38,000
Oil processing 31,000
Coal mining 22,000
Agriculture 9,600,000
TOTAL 10,946,000

JOB GAINS BY INDUSTRY
Textiles 2,825,000
Wholesale & retail 2,615,000
Apparel 2,610,000
Construction industry 928,000
Chemicals 589,000
Infrastructure 416,000
Food processing 316,000
Leather & leather goods 219,000
Stationery 145,000
Building materials 57,000
Metals & metal products 49,000
Services 49,000
TOTAL 10,818,000

Based on the data provided in the article, it would seem that there is a balance of 128,000 jobs lost over the total number of job opportunities created. No evidence is provided concerning the figure of 12 million, except that the article attempts to present a "positive" outcome.

Such reports are typical of mainstream analyses (both in China and abroad) of the impact of the WTO on employment. Little attention is given to the workers behind these jobs figures, and it is assumed that the movement from employment to unemployment and into some form of new employment is an "economic" transaction, rather than a violent social process.

This narrow view of the WTO's impact also neglects the massive job losses imposed during the destructive process of China's attempt to gain access to the WTO. In textiles for example, an estimated two million workers in the state enterprise sector were made redundant as a result of the Chinese government's attempts to gain WTO membership. This formed part of a series of concessions to overseas governments (especially the US and EU) and foreign big business that cost millions of state enterprise workers their livelihood.

Finally, data on job gains and losses fail to account for significant differences in the impact on workers according age group, gender, province and other social and demographic factors. Clearly, workers in different provinces face very different experiences, suffering the costs or enjoying the benefits of this "in-depth restructuring in the labour market" according to the whims of foreign capital.