Horde of unemployed worries stability-obsessed China

By Lucy Hornby

BEIJING (Reuters) - More than a million Chinese college graduates unable to find work could make coping with unemployment harder now than it was during the Asian crisis, the head of China's largest vocational training organisation said.

The country will also have to find a way to absorb migrant workers who have lost jobs but are unable to return to farming in their villages, said Chen Guangqing of the National Association of Vocational Education.

China is worried that the thousands of factories shutting or laying off workers, especially along the export-dependent coast, could lead to unrest if the unemployed hit the streets, threatening Communist Party rule.

"The employment situation may be worse than the 1990s ... This time, college graduates are not finding work, and there are so many of them," Chen told Reuters.

In the late 1990s, China's government weathered mass unemployment as the Asian financial crisis and bankruptcies of state-owned enterprises slowed the economy to a crawl.

Many college graduates now lacked the skills needed to compete for jobs in a fast-changing economy and were unwilling to take less respected jobs, Chen said.

More than six million students will try to enter China's workforce next year, half a million more than last year. Up to a quarter could have difficulty finding jobs, the Chinese Academy of Social Sciences said on Monday. [nPEK172220]

At least four million migrant workers who have lost jobs have left the cities and are looking for part-time work in large towns and county seats, rather than going back to their villages. Urban unemployment is already at 9.4 percent, according to the Chinese Academy of Social Sciences.

ARDUOUS TASK

Labour strikes, small scale protests and land disputes are already cropping up across the country. Disappointed students who will soon graduate add to the problem.

A leading newspaper said on Wednesday that China faced an arduous task to maintain social stability in the face of its economic challenges.

"We are facing new contradictions, especially this year with the conflict of the financial crisis and global economic recession, and our economic development faces serious challenges," said the commentary in the Communist Party mouthpiece, the People's Daily.

"The factors for social instability have increased, contradictions happen more frequently and more easily, and maintaining social stability is still an arduous task."

The commentary said the key was to make sure protests -- often termed in official parlance "mass incidents" -- did not spin out of control.

"If the problem is grabbed early and when it is small, contradictions can be nipped in the bud and will not become big incidents," it said. "Every department must do its job and fulfil its responsibilities; that way social stability can be maintained."

Faltering economic conditions have raised the spectre of growth falling below 8 percent, which the government regards as a benchmark to create enough jobs to sop up excess labour and guarantee social stability.

(Additional reporting by Beijing Newsroom and Benjamin Kang Lim; Editing by Nick Macfie and Jeremy Laurence)