The municipal government of Shenyang plans to offer 44 million yuan (US$5.5 million) in micro-credit loans this year to assist the unemployed to start their own businesses.

According to the local labour department, individuals with a preferential certificate for re-employment and servicemen transferred to civilian work can borrow 20,000 yuan (US$2,500) for two years from this month.

Residents who have a good credit rating can apply for up to 50,000 yuan (US$6,200), while joint programme partners can obtain up to 200,000 yuan (US$25,000).

Labour scholars see the loan policy as one of the most useful measures government can offer to assist laid-off workers.

"But most commercial banks are reluctant to grant small loans because it is time-consuming and often has low profitability," said Zheng Gongcheng, a professor of Renmin University of China.

In Shenyang, more than 20,000 people each year join the pool of those seeking work as the city steps up its reform of State-owned enterprises.

This year, the municipal government raised the loan funds, which means it will be easier for laid-off workers to apply. To obtain the loans, individuals need to get recommendations from their communities, examination and approval from the labour department and a guarantee from a third party.

Most will use the money to run a home business in the service sector. In order to alleviate unemployment, especially for women aged in their 40s and men in their 50s who have been laid off, the municipal government will create 10,000 public positions.

For instance, 2,050 openings will be created for people taking care of trees, grass and other greenery in the city.

Unemployed women aged between 40 and 45, men aged between 50 and 55, and other disadvantaged groups are eligible to apply for these jobs.

They will be offered a salary of 450 yuan (US$56) and social welfare including a pension scheme, medical insurance and unemployment insurance.

Shenyang aims to keep the urban registered unemployment rate under 5 per cent this year.

(China Daily April 7, 2006)