In a circular released Wednesday, the government said: "Uncertainties for economic development caused by the outbreak of SARS (severe acute respiratory syndrome) has brought about new difficulties and had negative effects on employment. It is challenging the realization of this year's employment targets.''

The State Council said local governments must take immediate action and try to keep the jobless rate in their respective areas below 4.5 percent of the working population this year.

"Governments at various levels should think of employment promotion as an essential part of keeping society stable,'' the State Council said.

The latest official statistics indicate that 7.75 million people were registered unemployed in urban areas as of the end of March, 750,000 more than that at the same time last year. The registered unemployment rate was 4.1 percent.

The number of unemployed is expected to continue to increase.

The State Council urged labor and social security departments to include the development of the labor market in their overall local economic and social development plans, with the aim of creating jobs.

The SARS outbreak has badly hit industries such as civil aviation, tourism, catering and taxis.

The State Council said businesses in SARS-hit areas should not fire employees at will, while local governments should help those whose living conditions have fallen below the minimum level required due to SARS.

Experts said they were confident that the government can keep the jobless rate under 4.5 percent despite the spread of SARS.

"China has made significant progress in fighting SARS and this is encouraging for economic development and job creation,'' said Yang Yiyong, deputy secretary of China Society of Labor.

China's economy should grow by at least 7 percent this year, Yang said. About 7 million jobs should be available in urban areas, he predicted.

At the beginning of this year, the government drew up plans to create 9.5 million jobs in urban areas and keep the registered unemployment rate below 4.5 per cent. The jobless rate was 4 percent last year.

An official surnamed Zhang from the Ministry of Labour and Social Security said that, in the long run, the employment situation is "grave'' in the world's most populous country, which has a population of more than 1.29 billion.

Zhang said the supply of labor will greatly overtake demand over the next few years.

Statistic from Zhang's ministry indicate that 22 million to 23 million workers in urban areas will be looking for a job during the next three or four years, with 8 million or 9 million jobs expected to be on offer.

"Moreover, there are about 17 million surplus laborers in rural areas and they have made the employment problem more difficult,'' Zhang said.

(China Daily May 22, 2003)