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Bill Savadove

SHANGHAI IS TURNING towards the humble soybean to help ease the pains of unemployment.

Making tofu and other soybean products is just one of the nearly 100 business start-up opportunities that a government agency is offering the city's jobless workers.

'We want them to be little bosses,' said Sheng Zuhuan, vice-director of the Shanghai Business Start-Up Guidance and Service Centre.

Looking at Shanghai's gleaming skyscrapers and trendy shopping malls, it is easy to forget that the city has at least 100,000 laid-off workers.

Shanghai is better off than most of China, especially the northeast 'rust belt' which is home to decaying state industry.

Foreign companies, a handful of strong state enterprises and a growing number of private firms have helped create jobs in the city.

Shanghai has moved to privatise and lay off workers at smaller state companies while supporting industry giants such as Shanghai Automotive Industrial and Baoshan Iron and Steel, which are among the city's biggest employers.

Two years ago, Shanghai started the so-called '4050 Project', named for the two largest groups of jobless people: women in their 40s and men in their 50s.

Officials say the move has helped keep a lid on social unrest, though they admit there are some people who are unemployable because of a lack of skills, laziness or refusal to take low-level jobs.

Mr Sheng said one of the challenges had been convincing haughty Shanghai people to take jobs typically given to 'outsiders' from poor provinces, such as cleaning toilets or acting as crossing guards.

The start-up centre, an offshoot of the Labour and Social Security Bureau, provides training to jobless workers and offers backing to small companies to secure bank loans.

One of the biggest problems for a new business is funding. Shanghai, like other mainland cities, has used the interim solution of having the government or even private agencies act as guarantors to help private companies get loans.

Banks still lend the money, but the guarantors assume the risk should borrowers fail to pay.

Through the centre, the unemployed could try their hand at starting their own business or find work with someone who had already established a small company, Mr Sheng said.

The opportunities ranged from making dumplings to raising ostriches to selling women's lingerie.

Although the centre evaluates the companies offering these opportunities, there are no guarantees these ventures will succeed. Failure could make the workers jobless once again.

Shanghai's private companies vowed this week to do more to employ laid-off state workers. The pledge comes ahead of a key Communist Party meeting next week, which is expected to give greater political recognition to private companies.

Shanghai has 220,000 private companies, employing 2.5 million people, and an additional 253,266 entrepreneurs running small businesses that employ more than 302,000 people.

They have provided jobs to 640,000 people laid off from state companies since 1996, official figures showed.

Fang Huiping, deputy director of Shanghai's Industrial and Commercial Bureau, said more than 800 private companies will participate in a job fair this weekend with 8,000 positions on offer.

The move would allow private companies to make a contribution to re-employment, she said.

Shanghai should depend on its growing service sector to employ more people, analysts said. But job creation should depend on true demand for labour instead of the government simply making work for the unemployed.

Mr Sheng said the aim was to use the market to create jobs, instead of government intervention. 'If you depend on favourable policies, it's like a child relying on a parent's money,' he said.

Still, Shanghai exempts companies started by former laid-off workers from paying some fees to the local commercial bureau and also grants them tax breaks.

Following a party leadership shuffle early next month, one of the biggest challenges the new line-up will face is handling millions of jobless workers and setting up a new social security system.

The move to give private companies a greater role in the economy meshes neatly with the policy of creating more jobs.

And Shanghai officials say they are eager to do their part.

Other cities in eastern China, such as Wenzhou, have raced ahead of conservative Shanghai in allowing private firms to flourish.

Shanghai Mayor Chen Liangyu, who was just appointed party secretary, says the city hopes to create a more hospitable environment for private companies.

'We want to attract the private enterprises of Zhejiang and Jiangsu provinces. We want to pick the good state enterprises and sell them,' he said earlier this year.



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