|Unemployed workers<br>d|76|16.59|299.3|15.50|
|---|---|---|---|---|
|<br>Dependents & others|135|29.48|554|28.69|
|<br>Socially Disadvantaged People|53|11.57|96.5|5.00|
|<br>Total|458|100.00|1930.8|100.00|

Notes: a Those who have jobs but whose salaries are below the urban minimum living guarantee line. b The laid-off workers from state-owned or collective units, who still have nominal employment relationships with their units and normally receive certain small amounts of allowances. c There are different situations in this category: some have terminated their employment relationships with their original units either voluntarily or involuntarily, and some still have relationships but not in duty due to unpaid leave (sometimes involuntarily), illness, etc., but they are not officially registered as unemployed. d Those officially registered as unemployed at labor administration.

Source: Hong Dayong (2003), “Latest Development of Urban Minimum Living Guarantee System”, _China Social Development Research Report 2002_ , Publishing House of People’s University.

On the other hand, it is a very challenging issue how to include the increasing number of rural migrants into the guarantee system. One possible way is to first include those who have lived and worked long enough in urban areas (for example, minimum one year). Another possibility is to consider establishing a nationwide minimum living guarantee system, and connecting the rural minimum guarantee system with the urban one. Furthermore, the enforcement of unemployment policies has to be strengthened by various levels of governments, employers, and other related parties.

Also, in order to better utilize the limited resources, the unemployment-related relief system should not be only a welfare system that just hands out money, but an incentivebased unemployment system, which is linked to achievements such as re-education, retraining or re-skilling.

In addition to the basic living guarantee and unemployment insurance systems, other social safety nets need to be established as well, such as low-income housing, health systems, pension and disability funds, and other transferable benefit packages.

# **_III.6 Improving the Labor Market Flexibility_**

The Chinese Government has acknowledged the importance of a well functioning labor market to support economic restructuring and address the problem of deepening inequalities in China, and has taken important steps to improve the labor market, however, it is far from being complete and faces many challenges. Among the existing labor market pressures, the 150 million surplus rural farm labors and 15 million unemployed urban labors unevenly distributed across China are the most severe ones. In addition, the large “floating population” without residency permits in urban areas may range from 90 to 150 million people, or 13% to 21% of the labor force. Without proper “hukou” (household registration), these people are forced to find low-paid unsavory employment in the black market. Labor mobility, especially rural-urban migration, seems crucial for alleviating these pressures and the associated social stress and inequalities, 59 especially when farmers have become increasingly reliant on off-farm employment and

> 59 Dahlman, C. and J. Aubert, _China & Knowledge Economy: Seizing the 21st Century_ , 2001, the World Bank, Washington, DC.

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