Phasing Out of Laid-Off Status Continues

08 May 2001
A meeting on social security and re-employment policies in Beijing announced the city government’s plan to complete the transition to a formal, fully socialised unemployment system by the end of next year (2002). Officials at the meeting also said that the rate of urban registered unemployed in the capital would be stabilised at 2% by 2003.

The Chinese government is in the middle of pushing through its reform of the unemployment and redundancy system, with a number of provinces and municipalities leading the way.

Up until now, surplus workers from state-owned enterprises were categorised as “laid-off” (xiagang) and generally remained on the books of the SOE that employed them. The SOE was legally obliged to open a “Re-employment Centre” and laid-off workers could attend the centre for a maximum of three years. While a worker remained registered at the centre, the SOE was legally obliged to pay a laid-off wage (set at about 70% of the normal wage), medical expenses and pension contributions.

Beginning this year, the Beijing government has begun the process of phasing out the city’s 1,067 re-employment centres. Since January 1st, 2001, laid-off SOE workers have not been directed to re-employment centres, but enter the labour market directly and try to find new jobs through government and private labour exchanges. After completing the relevant legal procedures, surplus workers will no longer remain attached to their SOE (or attend re-employment centre if they have completed the maximum three years) and the employer-employee relationship will be formally ended once the labour contract is terminated. However, prior to such a termination, SOEs are obliged to have fulfilled all their legal obligations to the employee, including pension contributions and relevant compensation agreements.

SOEs that are in financial difficulties may, with government approval, sell off various assets including idle machinery and land use rights in order to raise money to fulfil their obligations to sacked employees. A company may also make agreements with employees to reduce the rent on company housing, or sell off housing to an employee as part of an employment termination agreement.

SOEs must ensure that the rights of workers either leaving re-employment centres or being made redundant are not infringed.

(China: Renmin wang, 08/05/01)
Back to Top

This website uses cookies that collect information about your computer.

Please see CLB's privacy policy to understand exactly what data is collected from our website visitors and newsletter subscribers, how it is used and how to contact us if you have any concerns over the use of your data.