BEIJING - CHINA'S prosperous eastern province of Jiangsu has reduced insurance and other head-count costs to encourage companies to retain workers as part of a series of local responses to combat rising unemployment.

Chinese provinces and cities have come up with ad hoc solutions to keep workers in their jobs, for fear that an economic slowdown could threaten social stability.

Jiangsu, home to many private export factories, will allow companies to pay less medical, unemployment and maternity insurance for their workers in 2009, the local government said in a statement published on Monday.

Companies are also allowed to delay such payments for six months or apply for government subsidies to cover those costs as long as they promise not to cut jobs in 2009, it said.

They can also renegotiate workers' pay to reflect shorter working hours, or pay overtime wages on instalment, the statement said.

The move follows a central government ruling in November that included a freeze on minimum wage increases to help firms to better cope with the global financial crisis while keeping as many workers as possible on their payrolls.

Other provinces, including Hainan in the south and Hubei in central China, have already rolled out their own measures to help factories.

Rising unemployment has fed fears of unrest as forecasts for China's economic growth next year fall below 8 per cent.

The Chinese Academy of Social Science said in a report earlier this month that urban unemployment has risen to about 9.4 per cent, double the official figure. -- REUTERS