State-owned firms are expected to finish restructuring within the next two or three years, said Minister of Labour and Social Security Zheng Silin.

Zheng also announced over the weekend that laid-off workers from the State-owned enterprises (SOEs) nationwide will be covered by unemployment insurance, instead of being given basic living allowances, by the end of 2005.

At a national conference on social security, he said the scheme change is expected to improve the efficiency of SOEs, some of which are still burdened with surplus workers.

At an earlier time, Zheng said some 3 million workers may lose their jobs every year until 2006 as China's over-staffed State firms streamline.

"Re-employment will remain a hard nut to crack," said Zheng.

He said the government will close re-employment service agencies by 2005 and laid-off staffers will then be handled by the country's insurance security net.

Re-employment agencies were introduced nationwide in 1998 as an interim programme to help laid-off workers from money-losing, State-owned enterprises.

An official surnamed Lu from the ministry told China Daily that the interim programme has played an important role in the reform of China's SOEs because the country's market-oriented social security schemes, such as unemployment insurance programmes, started to take shape during recent years.

In the planned economy, SOEs offered all-life benefits for workers, no matter if they were surplus or not. But since 1998, about 30 million employees have lost their jobs due to amalgamations or bankruptcies as China deepened its market-oriented reforms.

The interim programme has offered laid-off workers meager sums for basic living necessities in line with a three-year contract from re-employment agencies and are not counted as unemployed. After the contract expires, those still not reemployed will be reclassified as jobless.

Lu said the closure of re-employment agencies will lessen the burdens on SOEs, which are required to provide meager pay and training for laid-off staffers in reemployment centres.

Laid-off people will benefit less from the scheme change, Lu said.

Take Beijing, for example, where an average SOE jobless person can be paid at about 400 yuan (US$48) per month through insurance, while they can get at least 600 yuan (US$72) per month if they stay in reemployment centres.

So far, unemployment insurance networks have covered nearly all SOEs and laid-off staffers in seven provinces in eastern China, including Liaoning and Jilin.

"We will extend the scheme to central and western regions this year," said Zheng.

Lu said China's unemployment insurance scheme is in line with international practices.

And he said the jobless, who are encouraged to find jobs, can benefit from the scheme for two years at most, and if they are not reemployed after the period, they can apply for minimum living allowances.

Zheng urged various-level governments to provide aid and training for the jobless from money-losing SOEs to help people land jobs.

At the weekend, Zheng's ministry announced plans to help 5 million laid-off workers find jobs in 2005 and to keep the urban unemployment rate at around 4.6 per cent.

Zheng said the goal could be achieved if the economy maintains rapid growth and policies favouring re-employment are implemented.

Editor: Olivia