China pledged on Thursday it will implement an even more proactive employment policy this year and allocate 42 billion yuan to offset unemployment caused by the global financial crisis.

To create more jobs, the government will make full use of the role of the service sector, labor-intensive industries, small and medium-sized enterprises, and the non-public sector of the economy, said Premier Wen Jiabao at the opening of the Chinese parliament's annual session.

"We will do everything in our power to stimulate employment," said Wen when delivering the government work report to nearly 3,000 deputies to the National People's Congress.

He said priority will be given to finding jobs for university graduates and migrant workers.

The two groups are the hardest hit as the deepening global financial crisis dented job demand in the world's fastest-expanding economy.

China set a target of about 8 percent in annual economic growth this year after the economy cooled to a seven-year low of 9 percent annual rate in 2008 as a fallout of the global financial crisis.

"In China, a developing country with a population of 1.3 billion, maintaining a certain growth rate for the economy is essential for expanding employment for both urban and rural residents, increasing people's incomes and ensuring social stability," Wen said.

Worst yet to come

China is yet to see the worst employment situation while its economy has shown signs of recovery, as the rebound of job creation is usually behind economic turnaround, said Li Yining, a leading Chinese economist with Peking University.

"The economy usually demand less labor after experiencing a crisis because it will see improved technologies, equipment and productivity," said Li, also a member of the 11th National Committee of the Chinese People's Political Consultative Conference (CPPCC), the nation's top political advisory body.

The urban unemployment rate rose to 4.2 percent at the end of 2008, up 0.2 percentage points year-on-year.

The country aims to keep its registered jobless rate below 4.6 percent and provide 9 million new urban jobs this year, according to Wen's report.

"It's not an easy target, but the country is actively finding ways to make it happen," said Li.

Li noted that while China should develop capital- and technology-intensive industries for the long-term growth, special aid should be given to labor-intensive companies to meet the urgent need of boosting employment.

He called for reforms to give fair treatment and easier market access to private enterprises, which can absorb a large part of labor force.

Labor oversupply will continue to exist in China in a long period and can only be solved by stronger domestic demand and faster industrial restructuring, said Cai Fang, head of the Institute of Population and Labor Economics, the Chinese Academy of Social Sciences (CASS).