China is expected to shed 1.8 million jobs as it reduces overcapacity in the steel and coal sectors, according to human resources and social security minister Yin Weimin. The steel industry itself will see 500,000 lost jobs, although no timeframe was given, Kallanish notes.

The scale of the figures is in line with estimates thrown around by commentators over recent weeks, suggesting that these figures may also be an estimate for losses over 2016-2020. The coal and steel industries combined employ in the region of 12 million people.

The figures also suggest that the problem is manageable, as long as Beijing is willing to put up the funds to support increased local government costs. Certainly the 1.8 million jobs lost pales in comparison to the 28 million jobs lost when Beijing reformed state-owned enterprises a little over a decade ago. China is currently adding new jobs at around a net 13 million jobs/year.

Beijing has already said that is will allocate CNY 100 billion ($15.3 billion) to reallocate workers from industries with overcapacity over 2015-2016, suggesting it is willing to top up funding from the existing gas tariff-based mechanism for funding restructuring. The projected job losses have previously been linked by analysts to the target to remove some 100-150 million tonnes/year of steel capacity.

In reality, however, a far bigger problem in terms of employment is dealing with steel companies which can no longer afford to either maintain their workforce or to cope with the pay-offs necessary to let staff go. This is where government support can have the most effect, as transitioning those workers from their current limbo into a pension scheme allows companies that have little economic value and are a drain on credit to go out of business.