China is planning to lay off 1.8 million workers in the coal and steel industry, as the country addresses issues stemming from slowing growth and industrial overcapacity.
Around 1.3 million workers in the coal sector and 500,000 from the steel sector could lose their jobs, said Yin Weimin, the country’s minister for human resources and social security, in a news conference as reported by Reuters. This amounts to about 15% of the total workforce in both those sectors.
“Although this is a very difficult task, in every respect, it is something that we must actively work to accomplish,” said Yin, according to CNN.
These moves have been made as the country reported its worst annual growth in 25 years, as the government shifts its growth engine away from manufacturing. The country has also been hit by the fall in global commodity prices, with Thomas Gatley and Rosealea Yao at Beijing consultancy Gavekal Dragonomics calling 2015 a “year of historic declines in China’s output of coal and steel.”
Last year, the country’s steel industry, which accounts for more than half of global production, contracted for the first time in almost 35 years. China also saw coal consumption drop by 3.7% in 2015, as the country moved away from a reliance on fossil fuels.
China has already cut around 560 million tons of coal production capacity in the past five years, according to China Daily, and have pledged to cut crude steel production capacity by 100 to 150 million tonnes in the next five years.
To help resettle newly-unemployed workers from the two sectors, the government will allocate around $15 billion over the next two years as it tries to curb overcapacity, reported Reuters.