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Migrant workers encouraged to start own firms

2015-June-23       Source: Global Times Net

The State Council, China's cabinet, released a set of guidelines Sunday to encourage migrant workers to start businesses in their hometowns, at a time when employment growth in cities is slowing down.

The State Council, China's cabinet, released a set of guidelines Sunday to encourage migrant workers to start businesses in their hometowns, at a time when employment growth in cities is slowing down.

Business registration procedures will be simplified and favorable fiscal and tax policies will be provided for migrant-worker-turned-entrepreneurs, according to a statement on the central government's website.

The State Council previously released on June 16 a set of guidelines to promote entrepreneurship and innovation, in a move to foster new growth engines for the country's economy, which slowed to a six-year low of 7 percent in the first quarter.

According to the latest guidelines, college graduates and army veterans will also enjoy the same support policies if they plan to start businesses in their hometowns, the statement said.

"The move [to encourage migrant workers to start businesses in their own hometowns] will help spur growth in rural areas and reduce the growth gap with urban areas," Yuan Gangming, a research fellow at Tsinghua University's Center for China in the World Economy, told the Global Times Monday, adding that efforts need to be made to achieve more balanced development.

A shortage of labor has been one of the reasons for the slow economic growth in rural China in recent years, experts said, as many farmers have moved to cities seeking better opportunities.

By the end of 2014, the total number of rural workers in China was 274 million, up 1.9 percent year-on-year. Among that number, 168 million had left their hometowns to seek work in other places, according to a report from the National Bureau of Statistics in April.

Migrant workers have played a key role in the rapid growth of urban areas in recent years. However, as employment growth slows in cities, they should be prepared to embrace new opportunities, experts said.

In the first quarter of this year, the number of people with jobs in urban areas grew by 3.24 million, 200,000 less than in the same period last year, the Ministry of Human Resources and Social Security said in April.

"There is great growth potential in rural areas, in terms of both infrastructure and people's living conditions, so there is huge demand," Wang -Xiaoying, a research fellow at the Rural Development Institute under the Chinese Academy of Social Sciences, told the Global Times Monday.

Encouraging migrant workers to return to their hometowns could create more jobs, help reduce the income gap between rural and urban employees and also ease some social problems, experts said.

As many rural workers have gone to seek work in big cities, the social care needed for "left-behind" children and seniors has become an increasingly alarming issue.

In some cases, left-behind children have even chosen to commit suicide, but cases such as this could be reduced if migrant workers go back to their hometowns, Wang noted.

The new guidelines also called for e-commerce companies to expand their presence in rural areas in order to support migrant workers who are looking for e-commerce opportunities.

Better access to financing for migrant worker entrepreneurs was also promised in the guidelines to alleviate credit problems often faced by small companies.

The central bank has cut banks' reserve requirement ratio (RRR) twice since the beginning of this year, and has also announced extra monetary loosening for rural banks.

For instance, when the central bank cut the overall RRR by 1 percentage point on April 19, the ratio for some smaller rural banks was lowered by 2 percentage points.

Even with the latest measures, however, companies in rural areas still do not receive as much financial support from the government as those in urban areas, Yuan noted. "The government should give much more financing support to rural areas in the future for balanced growth," he said.

Editor: Chan

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