A worker is pictured in Shougang Jingtang United Iron & Steel Co on Aug 28, 2014. [Photo/Xinhua]

Minister of Human Resources and Social Security Yin Weimin said recently that the central government would spend 100 billion yuan ($15.3 billion) in the next two years to help resettle 1.8 million laid-off workers in coal, steel and other sectors that suffer from overcapacity. This shows the central authorities' determination to reduce overcapacity as well as resettle laid-off workers.

But the resettlement of laid-off workers should not depend only on the central government's 100 billion yuan allocation. Enterprises have to play the principal role in the resettlement, and local governments should plan and coordinate the entire process.

Four essential arrangements have to be made for the resettlement of laid-off workers in industries with overcapacity: internal arrangements in enterprises, job transfer and start-ups, early retirement schemes, and creation of public welfare posts. The parties involved in the process should shoulder their responsibilities according to the demands of the arrangement plans, and the resettlement fund should be channeled to the laid-off workers no matter which plan they choose.

Internal arrangement in enterprises means enterprises should create new posts depending on their existing facilities and the technologies they use, in order to help laid-off workers get new jobs. In this process, the enterprises have to take the major responsibility and inject more funds to ensure laid-off workers are re-employed, and local authorities should offer preferential policies, funding support and subsidy to the enterprises.

The enterprises should also use more resources to start targeted job-transfer training programs for workers who are likely to be laid off. Local governments, on their part, should start re-employment support programs, and expand their special re-employment and unemployment insurance funds. And to make the entire process effective, the authorities should strengthen monitoring and supervision of the support programs.

For those workers who will retire within five years and could voluntarily seek early retirement, the enterprises could sign agreements with them to change the labor contracts according to the law. However, the enterprises still have to provide the basic living allowance to such workers and pay their basic pension insurance and medical insurance premiums.