China's Rapid Economic Growth In Employment And Unemployment Warning Study

China' s economy has been growing at very fast speed ever sincethe 1980s. Its annual GDP growth rates are 9% or even more over the years.China is one of the fastest growing economies in the world while itspressure of unemployment is always increasing. In this sense, thephenomenal growth of China' s economy is achieved under the context oftremendous pressure of unemployment. Over recent years, the number ofChina' s registered unemployed personnel in urban areas is over 8 million,rating 4.3% of the total labor force while the size of surplus rural laborremains 150 million. As indicated by a number of research programs,China' s economy is growing fast in the absence of a high rate ofemployment. Its economic growth model is so akin to "growth withoutemployment" that Okun' s law no longer applies in this country. Giventhis fact, research on the mechanisms of China' s strong economic growthis a very important program for the sustainability of China' s economyand the labor economics of China in both theoretical and practical terms.Based on literature review of employment theories both home and abroad,studies on research findings of employment in China, and a historicalreview of the evolution of China' s tradition of employment and laborinstitutions—their historical contexts, characteristics, merits anddemerits, as well as China' s major employment and labor reforms, thispaper gives a systematic analysis and study of China' s employment issuesat different development stages. Based on this, the time-line of China' s employment elasticity co-efficient is also marked out. Incorporating arange of important factors such as China' s current economic developmentstage, transition of ownership, technological advancement, capitalsubstitution, etc., this paper gives an in-depth analysis of the reasonfor China' s low employment elasticity. Besides, the existing statisticalestablishments of China' s employment and the employment situations ininformal sectors are also studied in the paper. Built on the results ofthe study, a number of corrections are made to the existing statisticsof employment elasticity in China. Given the context of strong economicdevelopment, this paper also provides a further analysis of the employmentelasticity and the employment elasticity co-efficient demand at the"demographic dividends" period, on which an ideal function ofemployment elasticity and economic growth is tentatively established.Furthermore, this paper also provides an analysis of the "harmpotentials" of four groups of unemployed personnel in China based on anexplication of why China' s unemployment problem has not yet generatedextreme harms. Unemployment alarm systems in foreign countries as wellas their implications to China are also studied. Based on a systematicpositive study on the construction of unemployment alarm system in China,the author tentatively puts forward a model of unemployment alarm systemfor the country. In addition, an analytical prediction of China' s laborsupply and demand as well as its structural development trends in thecoming decade is made, incorporating a general evaluation of China' semployment scenario during the 'eleventh five years' period. Topics inthis part include: the migration and employment of China' s rural labor,comparative study of the development trends of the economic, industrialand employment structures of Hong Kong, New York, Seoul and Singapore inthe post-$5000 per-capita GDP era, the complete meaning and implicationof full employment and the target model of full employment for China, putting forward options of economic growth that second employmentexpansion, and a framework of active labor policies for promotingemployment in China.Major research findings in this paper include: 1) The co-existence ofstrong economic growth and low employment elasticity is closely relatedto a range of factors such as its current economic development stage andgrowth model, characteristics of its industrial structure, the scale andstructure of the enterprises, ownership transition, technologicaladvancement, capital substitution, etc.; 2) There is sufficient growthof employment over the recent two-decade strong economic growth in China,the allegation of "high growth & low employment" is incorrect, China' sphenomenal economic growth is a strong boost to job creation, and previousalgorithms of China's employment elasticity do have some grossstatistical deviations; 3) As China is moving towards a more matureeconomy its employment elasticity will diminish, and there is a negativecorrelation between the ideal employment elasticity co-efficient andeconomic growth rate. Strong economic growth accompanied by lowemployment elasticity is a normal phenomenon in that the elasticity cannotand need not be high as in the context of strong economic growth the sizeof employed labor force can increase even though the employment elasticityis relatively low. The employment elasticity variable in the idealeconomic growth function refers to a variety of elasticities at differenteconomic development stages. It is a primary indicator of whether jobincrease is kept at an appropriate level. In China' s case, sufficientemployment can be made possible in the coming two decades so long as thenumber of new jobs increases at over 1.5 percent per annum in China. Thereis a negative correlation between the ideal employment elasticityco-efficient and economic growth. 4) Through a comprehensive analysisover some major groups of unemployed labor like middle-aged migrant workers and urban laid-off workers, etc. it is found that unemployedcollege graduates and migrant workers born in the post-1980s period posethe greatest potential harms to the society. 5) The major problem ofChina's labor market is the quantitative and qualitative contradictionof the labor force. Whilst the great pressure from over-supply of labormay attenuate along with the fast economic growth and demographic changesthe structural imbalance in the labor market resulting from qualitativedisparity between the urban and rural labor force will become worse. 6)As the case study of Shanghai shows unemployment rate is influenced bya variety of factors including GDP growth rate, but the influence has atime lag about 3 quarters, which calls for a necessary unemploymentearning warning system.Major policy implications of this research paper are:1). Development of education and optimization of HR allocation channelswhich make optimal spread of high-quality labor into efficient jobspossible are the two important step stones for China if it is to changeits big population into a big stock of human resources.2). Appropriate government intervention is needed both for economicdevelopment and for employment promotion, which means implementation ofactive employment policies to reach the goal of "relatively sufficientmarket-based employment"3). Active employment policies shall include these following measures:constructing a government responsibility system for sufficientemployment in order to create a friendly environment for employmentpromotion; implementing macro-economic policies of employment promotionin order to establish virtuous interaction of sustained economicdevelopment and job creation; constructing a regulated, market-basedemployment system for better allocation of human resources; developingeducation and training to improve the quality of the labor force, meetthe demand of the labor market for human resources and attenuate the pressure of unemployment resulting from the abovementioned structuralcontradiction; developing small-and-medium-sized enterprises, activelysupporting new businesses for the multiplier effect of job creation;making great efforts to create a better environment for the migration andemployment of the rural labor, integrating the urban and the rural labormarkets; improving employment aid system and providing base-lineguarantee to people with difficulty of finding jobs; establishingunemployment early warning system in case of worsening unemployment thatwould otherwise do great harms to the society.