SINGAPORE: Creating jobs in areas where workers are displaced is a challenge all over the world, and going by international experience, this challenge has not been dealt with very well, said Deputy Prime Minister Tharman Shanmugaratnam on Tuesday (Jul 19).

Mr Tharman was speaking at the FutureChina Global Forum, where he delivered the closing address.

According to official estimates, between one million and two million have been made redundant, as China restructures its economy and sheds overcapacity in manufacturing and other heavy industries.

However, Mr Tharman noted that this is far less compared to the late 1990s.

He said: “It’s far less than what happened in the Zhu Rongji days in the late 1990s – I think it was 1997 when it started. Thirty million employees of state-owned enterprises lost their jobs, and they lost their jobs quickly. But those days were different, for a few reasons.

“Firstly, the private sector was booming in China during those days. And even then, it took seven years to absorb the 30 million workers. Secondly, the workers were younger then. They were younger than they are now. Thirdly, in Zhu Rongji’s time, the 30 million workers who were displaced were displaced all over China – even in Shanghai and Jiangsu province, you have significant numbers of workers being displaced.”

“Today, it’s concentrated in Dongbei, Inner Mongolia, Hebei, Shaanxi – concentrated in the north and northeast. Where destruction takes place, you need to have creation, otherwise people will just stay unemployed,” Mr Tharman added.

The challenge, according to Mr Tharman, will be to create jobs where jobs have been destroyed.

“This too is a challenge all over the world. To sustain economic growth in an inclusive society, we need a way of helping those who are losing out in industrial restructuring. (This is) much easier in one city like Singapore, but in a major economy and a continental-scale society, it’s an immense challenge,” he said.

Citing examples from the United Kingdom and the United States, Mr Tharman noted there were social costs if the restructuring process is not managed well.

“Depressed areas stay depressed for a very long time in the industrial world. You look at the south of Wales – (it has been) depressed for decades. Look at northern England – they have got jobs there, but they are jobs with low wage growth, they are very poor quality jobs. There’s a mood of depression, which also showed up in Brexit,” he said.

“Look at the United States, look at a place like Tennessee – (that’s been) depressed for decades. Even the cities that have regenerated themselves, like Pittsburgh or Akron in Ohio – they created new jobs, but for new people. Young people moved in and took the new jobs. The old guys who lost their jobs are still jobless,” Mr Tharman added.

As for China, Mr Tharman expressed optimism over the country’s ability to deal with its challenges in a fair way.

He said China has embarked on social policy reforms – in healthcare, for example – which are “ambitious, realistic and achievable”.