Speaking at a news conference, China Human Resources and Social Security Minister Yin Weimin said that the decision would affect 1.3 million workers in the coal sector and a further 500,000 workers from the steel sector. The timeframe for the proposed plan was undisclosed.

According to the National Bureau of Statistics data, coal and steel sectors in China employ about 12 million workers.

The move is a part of the country’s £10bn restructure program due to a slump in its manufacturing activity.

Over the next two years, the central government announced last week of its plan to invest CNY100bn ($15.27bn) to relocate workers laid off with focus on the steel as well as coal sectors.

China Academy of Social Sciences industry researcher Feitao said that the funds are planned to be put in use only after the companies go bankrupt and settle their debts.

Reuters cited Yin as saying: "The economy faces relatively big downward pressures and some firms face difficulties in production and operation, which would lead to insufficient employment."

In 2015, the contribution from the country’s services sector to gross domestic product (GDP) rose to 50.5%.