Dive Brief:
- China announced today that it expects to lay off about 15% of its workforce — or 1.8 million workers — in the coal and steel industries due to industrial overcapacity. For the steel sector alone, the layoffs will affect about 500,000 workers.
- "The economy faces relatively big downward pressures and some firms face difficulties in production and operation, which would lead to insufficient employment," Yin Weimin, minister for human resources and social security, said in a news conference.
- While there is no clear timeline of when the layoffs may occur, it was announced that the Chinese government will allocate 100 billion yuan (or $15.27 billion) over two years to relocate the laid off workers.
Dive Insight:
As the world's second-largest economy, China creates a ripple effect on the way markets operate across the globe. The country's economy grew 6.9% in 2015, which was the weakest growth in 25 years, according to Reuters.
And, as the ripple effect may have it, employers who work in the scrap metal industry across North America have been feeling the squeeze as economic downturn and a drop in scrap metal trading has influenced a troublesome market. Scrap metal exports from the U.S. dropped 4.7% in the first half of 2015 compared to the first half of 2014, according to statistics gathered and summarized by the Journal of Commerce.
"Although this is a very difficult task, in every respect, it is something that we must actively work to accomplish," said Weimin in a news conference.
It is unclear so far how this may affect employers in the U.S., if at all, however it is important for scrap metal recyclers to fasten their seatbelts for what could continue to be a bumpy experience on the cyclical economic rollercoaster ride.
