China to lay off 5-6 million state workers – report

China is believed to be preparing to lay off 5-6 million workers from industries that are suffering from a supply glut over the next two to three years, Reuters said in an exclusive report on Tuesday.

The plan will be part of efforts to curb industrial overcapacity as well as pollution, Reuters has quoted two sources with ties to the country's leadership as saying.

The government's plans to lay off five million workers in what is known as "zombie enterprises" would be the country's boldest retrenchment program in almost two decades, one source said.

The restructuring of state-owned enterprises from 1998 to 2003 led to around 28 million redundancies and cost the central government about 73.1 billion yuan ($11.2 billion) in resettlement funds.

A second source with leadership ties put the number of layoffs at six million. Both sources requested anonymity because they were not authorized to speak to media about the politically sensitive subject for fear of sparking social unrest, Reuters said.

On Monday, Yin Weimin, the minister for human resources and social security, said China expects to lay off 1.8 million workers in the coal and steel industries which employ a total of 12 million people. However, he did not give a timeframe.

It was the first time China was officially giving figures that analysts say could underline the magnitude of its task in dealing with slowing growth and bloated state enterprises.

Other officials had earlier said that the central government will allocate 100 billion yuan ($15.27 billion) over two years to relocate workers laid off as a result of the efforts to curb overcapacity.

China’s economy, the world's second-largest, grew 6.9 percent in 2015, the weakest in 25 years. The government has announced that it aims to achieve economic growth of 6.5-7 percent in 2016.

China implemented mass layoffs during the Asian financial crisis, when more than 28 million workers were laid off between 1998-2003.

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