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Chinese City Tolerates Unemployment to Smash Iron Rice Bowl

November 18, 1988

SHENYANG, China (AP) _ Efforts to smash China’s once-sacrosanct ″iron-rice bowl″ system of lifetime employment are taking off in Shenyang, but a safety net is being woven to catch the growing legions of jobless.

This dreary northeastern industrial center, China’s fourth largest city, has become a laboratory for new programs to wean the communist nation from the inefficient system that guaranteed workers a job for life regardless of performance.

For example, Shenyang workers who lose their jobs now can receive training, counseling and money from local offices believed to be the first unemployment centers in China.

City officials say the number of people receiving unemployment compensation will increase as Shenyang intensifies its economic reforms by laying off about 300,000 ″redundant″ workers, or 15 percent of the work force. The city’s population is 4.1 million.

″The purpose of breaking the iron rice bowl is to develop productivity, to increase the efficiency of our economy ... and also to quickly improve the people’s living standard,″ explained Xu Qingyong, a top official in the Shenyang Labor Bureau.

Since 1986, state-run companies in Shenyang have paid 1 percent of their payrolls into a pioneering unemployment insurance fund that has been set up in only a few cities. About 700 people have drawn a total of $10,215 from the local fund, according to Dong Lianzhi, head of the city’s unemployment insurance section.

The unemployed can draw on the fund for up to two years, she said.

The average annual wage in China’s urban areas is about $270.

People who resign can collect 75 percent of their previous salary the first year and 50 percent the second. Fired employees can draw 60 percent of salary for a year and then 50 percent.

The money is disbursed monthly at offices such as the Huanggu District Labor Service Co., which is down a narrow alley in northern Shenyang. According to a large wall chart in the office, the center received 65 unemployed workers in the first three quarters of 1988 and handed out $1,991.

Li Hongxing, a 24-year-old with fashionably long hair, was one of the first workers to receive unemployment compensation from the office when he decided to quit his job at the post office in December 1986.

″I didn’t realize I could get the money,″ Li recalled. ″At first, I felt a little as though I was letting the country down.″ But he added that without the grant ″life would have been pretty tough.″

Li received $10.50 a month for five months before he found a new job as a salesman. He since has opened a beauty salon and says he earns up to $108 a month and plans to start up a restaurant.

Adapting to unemployment, which the communist government for many years refused to acknowledge existed, is difficult for workers, officials said. Many of the people who come to the Huanggu labor office for assistance are enrolled in ″political study,″ a euphemism for pep talks on finding new jobs.

The official newspaper Economic Reference reported in September that about 60,000 ″redundant″ workers already were laid off in Shenyang, with most taking early retirement, extended maternity leaves or receiving newly created jobs.

Xu said the city’s unemployment rate is expected to grow from about 2.5 percent to 4 percent in three years as the work force is further streamlined.

Xu conceded that the superfluous workers ″can’t understand why they are being stripped of their jobs. ... But we don’t say we are not giving you a new job.″

Authorities must persuade the workers of the importance of the new system, he said.

″Even in a socialist country you should have a sense of competition, you need to have competition,″ Xu added. ″This is the way to develop the skills of the workers, this is the only way that they can realize the contributions they can make.″

End Adv Friday PMs Nov. 18

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