Faced with China's serious unemployment situation, the government is urging university graduates and laid-off workers to start their own businesses and become their own bosses.
 
A recent example was set by eight graduates from Beijing Union University who contracted to run the canteen at their alma mater.

All eight are journalism majors and equal partners in the new venture. Zhao Mingchen, one of the eight, serves as canteen manager.

They're now busy preparing to reopen the facility. The canteen has been renovated and renamed and applications have been made for business and taxation certificates.

All the grads are excited to be operating their own business. "We felt it would be a great opportunity for us," said Zhao.

Finding way out

More than 2.8 million students have graduated from Chinese universities this summer, and most are facing a crowded job market. The Ministry of Education says the employment rate among university graduates will exceed 70 per cent by September, which means at least 800,000 graduates will join the ranks of the unemployed immediately after leaving school.

The ministry's strategy is simple: Do not make them jobless, make them bosses.

"Government institutions should continue to help students get small loans to start businesses," said Liu Dawei of the ministry's Department for College Student Affairs.

Last year, as graduates faced fierce employment competition, the ministry and related departments developed a small-loan system to help students create jobs.

At the same time, the State Administration for Industry and Commerce implemented a tax-exemption policy to encourage students to run their own companies.

Those options are not only for college graduates.

Last month the government launched a three-year programme to help individuals become their own bosses. It is an effort to make small business owners out of as many as 100,000 people who are finding it difficult to land jobs.

Laid-off workers, college graduates and urban migrants are expected to become the primary beneficiaries of the national programme dubbed SIYB (Start and Improve Your Business).

With sponsorship from the British Government, the International Labour Organization (ILO) and the Ministry of Labour and Social Security are involved in the programme, which aims to create jobs, develop the private sector and reduce poverty.

Andreas Klemmer, chief technical adviser of the ILO's SIYB China programme, said the project will be conducted on a year-by-year basis.

Until next July the programme will be carried out in 14 pilot cities, including Beijing and Chengdu.

Some 50,000 laid-off workers in State-owned enterprises will benefit from training and technical support provided by the programme office.

"For the first year we will mainly target laid-off workers," said Klemmer, adding that some urban migrants and university graduates will also be included.

Klemmer said the ILO has developed a package of training courses that include how to generate business ideas and start, improve and expand enterprises.

He said much experience has been gathered since his organization implemented such projects in nearly 80 countries over the past decade.

Sources within the labour ministry said a small-scale pilot programme to help start micro businesses has been launched in three cities since 2001, including Jilin in Northeast China's Jilin Province.

Government backing

The country's unemployment situation has grown more and more serious in recent years. Fresh college graduates, migrant farmers and laid-off workers from State-owned enterprises are major factors in straining the job market.

The urban registered unemployment rate increased from 3.1 per cent in 2000 to 3.6 per cent in 2001, 4.0 per cent in 2002 and 4.3 per cent last year. More rural surplus workers are trying to find jobs in cities.

Zhang Xiaojian, vice-minister of the Ministry of Labour and Social Security, said the government will use every means at its disposal to keep the registered urban jobless rate under 4.7 per cent while a total of 24 million job hunters are expected to flood into the nationwide labour market this year.

To solve the problem of unemployment, Zhang cited international experience that shows medium and small business should play a bigger role.

Statistics indicate small and medium enterprises, which account for 99 per cent of all Chinese business, have created more than 75 per cent of the nation's jobs.

"So we need to continuously cultivate the spirit for starting such enterprises and creating more jobs," said Zhang.

The government recently attached greater importance to helping start small businesses. Government agencies have enhanced their support for laid-off workers by making bank loans more readily available to them so they can start their own small businesses.

During a teleconference last month, the labour ministry and the People's Bank of China (PBOC) -- the nation's central bank -- revealed the small-amount guarantee loan system for laid-off workers will be extended to cover 100 major cities by the end of the year.

Liu Kang, an official from the labour ministry, said the loan system will help implement the SIYB programme and address China's serious problem of developing employment.

The Chinese Government started encouraging the granting of small, guaranteed loans to the growing ranks of laid-off workers in 2002.

By the end of May the total amount of outstanding loans stood at 1.2 billion yuan (US$145 million), the PBOC said.

Such loans, typically smaller than 20,000 yuan (US$2,400) and in terms no longer than two years, are mostly subsidized by the Ministry of Finance. Commercial banks are generally reluctant to grant such loans due to their low return and high risk.

Liu urged greater financial support for small and medium-sized enterprises, which are the major generators of new jobs.

More than 28 million Chinese workers in the State sector were laid off by the end of last year as the reform of State-owned enterprises proceeded. Nearly 19 million of them have found work, while another sizable portion have become bosses of small businesses.

To help the loans play a larger role in the nation's re-employment drive, the risk-sharing mechanisms need to be improved and procedures simplified, said Liu.

He said efforts need to be made to ensure fiscal subsidies are promptly granted, and financial institutions need to improve their services.

The small loan system has been implemented in many cities. Dalian of Northeast China has set an example providing low-interest loans to laid-off workers in a bid to help them start their own businesses.

"We should provide an obstacle-free service, convenient and sincere, to the laid-off workers of the city," said Mayor Xia Deren.

An employment breakthrough is a key goal of the municipal government in the port city in Northeast China's Liaoning Province.

By the end of June, more than 2,000 laid-off workers got bank loans totalling 42 million yuan (US$5 million) and were guaranteed by the city's financial departments.

In an effort to encourage small business development, the Dalian municipal government has moved to establish a credit guarantee system and increase the amount of loan.

Traditionally, an individual could get a loan of 20,000 yuan to run their own business.

Xia said the amount is now 2.5 times larger, and people with good credit can qualify for up to five times that amount.

(China Daily August 4, 2004)