China to cut 1.8 million steel and coal jobs

Author: PM editorial | Date: 2 Mar 2016

Reduction of industrial capacity part of wider economic slowdown

The Chinese government is planning to cut 1.3 million jobs in coal and 500,000 in steel to reduce overproduction.
These job losses equate to 15 per cent of the steel and coal workforce, which is currently about 12 million people. China produces half the world’s steel, more than the European Union, USA, Russia and Japan combined.
“This involves the resettlement of a total of 1.8 million workers. This task will be very difficult, but we are still very confident,” said Yin Weimin, China’s minister of human resources and social security.
Around 100 billion Yuan will be provided by the government as unemployment relief over the next two years, to help workers who lose their jobs to re-train and improve their chances of re-employment.
The State Council said China will not approve any new coal production capacity over the next three years.
China’s economy has been slowing for some time; although it still grew by 6.9 per cent last year, it was down from 7.3 per cent in 2014 and 10.4 per cent in 2010. Last year was its weakest growth for 25 years.
According to The World Bank, unemployment as a percentage of the total labour force has been rising slowly in China since 2011, although official figures from China say it has been a steady 4.1 per cent for much of the past five years.
The overproduction of steel has had global repercussions. In the UK, Tata Steel is cutting over 1,000 jobs as the industry struggles to compete with a glut of steel on the market, causing its value to fall. At the end of 2015, US Steel began laying off 2,000 steelworkers at its Granite Works in Illinois.