The state sector reforms

Some countries have relatively larger state sectors; and when the economic growth is slowing down, people often think about reforming the state sectors in order to improve the efficiency. However, often the state sector reform leads to a leap in the unemployment level as to improve the efficiency the job cut is often a necessary procedure. There is one problem over here that how much of the excess labour supply could be absorbed by the market. To mitigate such problem and support a stronger economic growth, the government needs to encourage growth in one new private sector. For example, last century, the Chinese government encouraged a rapid growth in the manufacturing sector. Therefore, the state sector reform requires stronger expansion in the private sectors.