China to set up $15.3 billion fund for workers who lost jobs

China will establish $15.3 billion fund to assist workers who lost their jobs due to massive industrial restructuring undertaken by the government in almost all sectors, following the economic slowdown, a minister said today.

Allocated over two years, the 100 billion Yuan (USD 15.3 billion) fund will cover training and job seeking, said Feng Fei, vice minister of industry and information technology.

“The process of dealing with poor-performing ‘zombie companies’, and undertaking mergers and acquisitions mean that job losses will be inevitable. Thus, re-employing workers will be a major task,” Mr. Feng said.

He said cutting overcapacity was listed as one of the five major tasks in supply-side structural reform along with destocking, deleveraging, reducing costs and shoring up weak growth areas.

The Chinese government has stepped up efforts to slash excess production capacity in saturated sectors, especially in steel and coal resulting in huge job losses.

From 2011 to 2015, 91 million tonnes of outdated capacity in the iron industry and 94.8 million tonnes in the steel industry were eliminated.

Besides job losses in various manufacturing and mining sector, the government has also announced plans to cut the size of 2.3 million strong army by retiring three lakh troops in the next few years.

China’s economy, the second largest in the world grew by 6.9 per cent year on year in 2015, its lowest annual expansion in a quarter of a century as the Communist giant embarked on painful economic reforms.

The 6.9 per cent growth rate is the slowest witnessed by the country since the 3.8 per cent in 1990, a year after the Tiananmen Square crackdown rocked the country and isolated it internationally.

China drew a lot of flak for ‘starting’ a currency war after it resorted to nearly four per cent devaluation of yuan in August, which led to a sharp sell-off in emerging-market currencies, including the rupee.