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during 1998. Employment numbers for urban manufacturing staff and workers also declined, from 50.8 million to 37.7 million that year, a drop of 13 million as well. Figures for manufacturing staff and workers in state-owned units decreased by 11 million that year and went down by 5 million in urban collective-owned units, while increasing in by 3 million in “other” ownership units.

What happened to these manufacturing employment statistics during 1998? One reported change was that there was an important shift in the employment statistics coverage in urban areas. Starting in 1998, workers who had been laid off from active employment, but were still connected with their former employment unit, were no longer deemed employed and were thus excluded from the employment figures.16 Therefore, these laid-off (“off-post” or “not-on-post” in the English translation of China’s statistical yearbooks) urban manufacturing workers are not included in the 1998-2002 numbers for urban manufacturing employment, manufacturing employment in urban units, or urban

on-post manufacturing staff and workers.17

By yearend 2002, the net result of the layoff

and rehiring processes was that the number of laid-off urban manufacturing staff and workers totaled 9.13 million.

Adjusted trends in manufacturing employment

In order to gauge trends in manufacturing employment in China, the analyst must adjust for definitional changes and changes in coverage in the urban data. It is important to recognize that before, and even after, the definitional change in 1998, reported urban manufacturing employment figures for China included, and continue to include, millions of surplus workers.18 By the end of 2002, of those surplus manufacturing workers, 9.13 million were in the laid-off category, but through 1997 they were still nominally employed in their manufacturing work units.

One method for attempting to gauge true trends in manufacturing employment in China is to subtract the reported laid-off manufacturing workers from the pre-1998 total manufacturing employment figures (which still included laid-off employees), in order to get comparable figures for before 1998 and afterwards. There were reported to be 2 million laid-off manufacturing employees still nominally connected to their work units in 1995 and 3 million in 1996. Table 2 shows that, after adjustment of the 1995-96 totals for the reported definitional shift, there still was a steep drop in official total and official urban manufacturing employment between 1996 and 1998 that cannot be explained by the one definitional change that has been reported. This table would appear to indicate that on-post (not laid-off) manufacturing employment in China declined from 96 million in 1995, to 94 million in 1996, to 83 million in 1998, to 81 million in 1999. If on-post manufacturing employment were indeed dropping by 2 million manufacturing workers a year, then the total would have been 92 million in 1997, 90 million in 1998, and 88 million in 1999. So the official figures for total manufacturing employment from 1997 to 1998 had a loss of 7 million workers that is not accounted for by the one reported definitional change.

There is no discontinuity between 1997 and 1998 in the official rural manufacturing data series. The definitional shifts appear to be only in urban data, and these shifts come entirely from changed coverage of urban manufacturing staff and


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