Governance, Economic Growth And Unemployment

In the past years , with many laid off workers in the society, the problem of unemployment has been getting more and more serious in China. What with the problem concerning almost every household and having cast some side-effects on numerous social factors, such as reform, development and stability, etc. our government has laid great emphasis on unemployment tackling. In 1993, the project creating more jobs for laid off workers started gradually all over the country. Since 1998, the expansion of internal demands has, to some extent, eased up the problem. Though the unemployment policy has had a certain amount of success, there is still a lot to be desired: the number of lay-off workers in the urban areas is very large and tends to become larger. The key reason for this is that we lack essential realization of the characteristics of unemployment in the urban areas and thus fail in grasping the main side of the problem.According to its basic features, unemployment may be categorized into two sorts: one is the natural unemployment, caused by structural imbalance of the labor market; the other is the quantitative unemployment, caused by imbalance of the total amount of labor force in the labor market. The recent unemployment in the urban areas in China certainly includes natural unemployment, such as structural unemployment, factional unemployment, etc. Because of the stagnant situation of national economy, the disguised unemployment caused by historical factors in the state-run enterprises has been laid bare, national economy depresses periodically; and redundant agricultural labor force shifting to non-agricultural fields, supply of labor force exceeds demand and there are fewer posts have become the main problems of unemployment in urban, thus, quantitative unemployment is the basic feature of unemployment in urban areas. So far as unemployment tackling is concerned, a lot of attention should be paid to quantitative unemployment, or the problem of unemployment tackling cannot be solved effectively.Two methods are available for tackling national unemployment: one is to reduce supply of labor force. All ways of reducing supply of labor force, such as reduction of population growth, reduction of work participation rate, limitation of agricultural labor force entering urban areas, etc, are all governed by many factors in the national economic life and thus none of them is effective. The other is to expand demand of labor force. There exists a good way to expand demand of labor in our society, that is, to promote economic growth. Generally speaking, economic growth will result in more demand of labor force. This will happen naturally when organic components of capital remain stable. Even when there is progress in technology and there is increase in organic components of capital, the total number of posts in the society tends to be larger...