Chinese steel and mine industry to shed 1.8 million jobs

Overcapacity in China’s coal and steel industries will send 1.8 million workers, or 15 percent of the workforce, packing.

It was the first time a senior government official has given a number for job losses as China deals with industrial overcapacity amid slowing growth.

In the USA, the coal industry is struggling under the weight of factors including low prices being paid for the commodity, with the regulator in charge of miner’s safety recently expressing concern about 2016 fatalities.

Yin said central the government would provide 100 billion yuan (HK$118 billion) for redundant workers as a result, adding that he was “confident” of a smooth transition.

No timeframe was given for the 1.8 million figure cited.

China aims to eliminate production capacity of as much as 500 million metric tons of coal and 150 million tons of steel by 2020.

He said the funds being made available would be used only after the enterprises go bankrupt and settle their debts, adding that local governments would also be responsible for dealing with those debts.

But he did not give a time frame.

“They have proposed this dedicated fund only to pay the workers, but there is no money for the bad debts, and if the bad debts are too big the banks will have problems and there will be panic”, said Xu Zhongbo, head of Beijing Metal Consulting, who advises Chinese steel mills.

In 2015, China recorded a consecutive drop in coal use for a second year, with coal consumption down by 3.7 per cent, official data shows.

Despite of economic downturn, there have been no reports of mass layoffs as occurred during the global financial crisis, when over 28 million workers were laid off between 1998-2003.

According to the National Bureau of Statistics of China, the number of employed people in the country at the end of 2015 was 774.51 million, and in urban areas, it stood at 404.10 million.