With many of China’s Local Governments facing near bankruptcy, the so-called iron rice bowl of secure public sector jobs is beginning to show some cracks.
The County of Guzhang, in Hunan Province, is a typical example. A planned restructure could include consolidating and merging various Administrative Departments, with a consequent downsizing in staff.
Hunan’s Communist Party Secretary, Shen Xiaoming said the goal was to optimise administrative service efficiency, alleviate fiscal support pressures, and direct limited financial resources towards ensuring and improving people’s livelihoods.
Nearly four per cent of residents in Guzhang are Public Servants and with local finances in crisis, many are considering what to do next
Executive Chair of the Guangdong Society of Reform, a think tank connected to the Government, Peng Peng said that due to the simultaneous downturn in the real estate sector and the national economy, local finances were facing significant difficulties.
“Excessive expenses on meaningless pursuits further exacerbated the burden on public finances and the challenges of maintaining essential public services,” Mr Peng said.
“Tax cuts during the pandemic also made it challenging to grow revenue in the short term.”
He said Governments throughout China were unlikely to make significant cuts to expenditure on essential public services — and sustained investment growth was unlikely.
“Perhaps the only possibility is downsizing the Government workforce by eliminating some redundant positions and unnecessary expenditures,” Mr Peng said.
According to a report published by financial news provider, Caixin, some Local Governments are being forced to take out loans to pay Public Servants, while others have simply stopped paying.
A member of the Government’s Economist Intelligence Unit, Xu Tianchen, said iron rice bowl jobs could become less stable, with salaries and headcounts potentially reduced.
“However, the streamlining of the public sector will not result in large-scale lay-offs,” Mr Xu predicted.
“Some people will be taken care of by early retirement, while others will be reassigned to lower-paid work in Government Departments.”
Beijing, 10 September 2023
