China’s coal and steel capacity cuts and worker re-employment
In early 2016, China’s government urged coal and steel companies to cut excess capacity, in part to track lower demand driven by slowing economic growth and environmental regulations. However, mindful of the job losses that would result from capacity closures, the government prioritised redeployment of workers, including through professional training. Based on China’s 13th Five Year Plan (2016-2020), the Ministry of Finance in 2016 set up the Industrial Special Fund to disburse CNY 100 billion (EUR 14 billion) toward relocating displaced workers in the coal and steel sectors.
As part of these efforts, China’s State Council pledged CNY 10 billion (EUR 1.4 billion) for the training of workers. The government also worked with coal companies to explore new business opportunities that would create jobs for the existing workforce. Shanxi Province in northern China is the country’s largest coalproducing region and the sector is a major source of employment, making it particularly vulnerable to coal and steel closures. Therefore, the regional Shanxi government also pledged CNY 2.2 billion (EUR 0.3 billion) to support job transfers, retraining, early retirement and the creation of public service jobs. The Shanxi Coking Coal Group set up an innovation centre in June 2016 that helped support the creation of 26 businesses, 70% of which were started by the company’s employees. Workers were assisted in finding new jobs in other departments within their factories or at different facilities in the area, while employees in their 40s and 50s could receive extra training to find new jobs (or retire early under certain circumstances). An estimated 31 600 workers in Shanxi province were successfully re-employed, representing 99.8% of the workforce that was made redundant from coal and steel capacity reductions. Across China, in 28 provinces, the Ministry of Human Resources and Social Security estimates that more than 726 000 workers from 1 905 companies in the steel and coal sectors found new employment in 2016.
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