The challenge of urban job creation and

 the role of local governments

Presentation by Azita Berar Awad, Director Employment Policy Department, ILO,

 at the Mayor’s Forum, Chengdu, 10 December 2007

Good afternoon to all.

1.      It is a pleasure to participate in this Mayor’s Forum. On behalf of all my ILO colleagues, who are attending this Forum and the following Workshop on Rural-Urban Labour markets integration, this is from the Employment Sector in Geneva, and from the Regional Office in Bangkok in addition to our ILO Office in China Of course, let me express the appreciation to be associated with the discussion of such  challenging objectives of integrating the urban and the rural labour markets that the Government, MOLS, Mayors and many other stakeholders have given themselves to achieve.

2.      Amongst the many issues with respect to employment and labour markets in China that have been analyzed and studied over the last year through the efforts of the Ministry of Labour, I would like to pick-up three that I think are particularly relevant for our discussion today.

3.      First, is the challenge of job creation in rural and urban areas. In spite of the formidable dynamism of the Chinese economy, all evidence suggests that the number of job seekers will continue to exceed the jobs available. It is imperative therefore that employment generation measures target both and cater for urban and rural areas. While the pressure is highest on the cities and it is likely that this trend continues in the near future, intensifying efforts to diversify job and income opportunities including in rural areas is of highest relevance. Many initiatives are underway but need to be sustained across regions and provinces that most need it through various packages of support to self-employment, non-farm activities and to SMEs that are adapted and tailor made to specific local conditions and the target groups. This will not end the pressure of job seeking in the urban areas but it will provide much needed alternatives for some groups of population at the same time provide alternative avenues for investment including by return migrants and their families.

4.      The second issue is the severe segmentation of the Chinese labour market in spite of massive and rapid rural to urban migration. Indeed, the various surveys carried out in recent period, clearly show that the rural and the urban workers cater for different segments of the market and more significantly they are treated differently and the rural labour has different and less advantageous conditions of work and terms of employment. The high demand for labour in growing urban areas has not had the equalizing effect that can be expected to take place through market mechanisms. Various factors contribute to this situation. These have been analysed and are well known to you.

5.       The result is the unequal conditions of rural and urban labour that obviously is a societal problem but can also lead to economic inefficiencies in the allocation and the use of labour at the time the Chinese labour market is undergoing rapid structural transformation. The inequalities in wages, in conditions of work especially long hours, in access to training including for occupational safety and health, and in access to social security are all well documented.

6.      What is important to note and what the experience in other countries suggest, is that removing labour market segmentation, elimination of structural discrimination in economies that function along market mechanisms, can not be achieved with administrative measures alone. There needs to be an integrated policy platform combining legal and administrative measures with economic and market based incentives developed at the local level, through dialogue with key stakeholders including the participation of the main beneficiaries. This integrated platform needs to be consistently applied to progressively redress the situation.

7.      This platform entails generalizing and applying the principle of equality of opportunity and treatment across the policy measures, but also a good appreciation of the market considerations and the economic incentives motivating workers, including migrant labour as well as those of the employers. This also requires overcoming cultural barriers; understanding the specific constraints faced by different groups and providing the right response;

8.      The third issue and probably the most important for you now that the laws have been passed and the principles set, is  that of putting in place the effective  delivery mechanisms to implement such a multi-component policy platform and to accompany this tremendous structural shifts that the Chinese economy, society and labour are undergoing. Today we heard about the already quite rich and diversified pilot experiences developed in various cities in China. Extracting the lessons of this experience and sharing that will not only benefit other cities in China but beyond China.

9.      The effective and productive implementation challenges the traditional functions of labour administration that need to constantly reform, renew and expand in adapting to the diverse reality of the labour today, the absorption of migrant labour as well as to accommodate new flexible forms of employment, the increase in the informalization of labour and the demands by those laid off after reforms of State Enterprises. It also brings to the fore, the significant and key role that local governments in the rural areas and in the urban areas can play and are increasingly playing in different parts of the world to promote job creation, to bring about a more inclusive environment by responding to the diverse needs of diverse groups of citizens such as those in the formal enterprises, those in the urban informal economy, laid off workers and others.

10.   Since today is the Mayors’ Forum, let me point to some of the most recent trends in action by municipalities in other countries. The ILO has recently entered into a strategic partnership with the Cities’ Alliance Network. This is an international network of International Organizations, local governments and Cities .The main objective of this partnership is to integrate job creation and services for employment promotion including for migrants, for informal economy workers and for micro and small enterprises within the mainstream functions of urban management polices and programmes along with and in synergy more traditional functions of municipalities dealing with housing, zoning, and other urban services.  

11.   One of the emerging good practices is the setting up on one-stop multi-purpose enhanced employment services within the governance system of municipalities that provide information, counselling and services in a user-friendly environment  to the diverse groups of workers, including for vulnerable groups eligible for targeted funds and programmes, support to business incubators, micro-credit facilities, special services for women, young job seekers, information and access to social security, to training opportunities and so on.  

12.   Another emerging good practice is the setting up of local level dialogue and monitoring groups including representatives of local governments, businesses, workers and beneficiary groups that regularly discuss and evaluate the effectiveness of these measures and to propose corrective action.

13.   Finally, another lesson of this experience is that it is not sufficient to have the range of comprehensive policies and programmes, but the need to build  coherence and consistency of different policy measures, those that promote economic opportunities, attract investments with those policies that improve the skills and employability, the conditions of work, promotion of equality of opportunity and treatment, and those policies that apply to housing, education, registration and other local government services.

14.   Now that China has embarked on the implementation of the Employment Promotion Law on a massive scale, we invite China to join in this international partnership of Cities’ alliance for job creation and from the ILO’s perspective, we offer to support these initiatives including through the evaluation and sharing of good practices.