Exchange rate fluctuations impact prices of export and import goods (including intermediate goods), change the competitiveness and production scale of exporting companies, further affect the demand for labors of exporting enterprises and have two effects such as employment creation and employment meltdown. Based on the panel data of micro enterprises from 1998 to 2007 and the fixed effect calculation model, this paper disintegrates the challenge of real effective exchange rate for employment into employment meltdown effect and employment creation effect and analyzes its spillover effect on China’s employment by real effective exchange rate change, the results show that, with regard to exporting enterprises, real effective exchange rate rise (Renminbi Appreciation) has the effect of both employment creation and employment meltdown and its influential coefficients are almost approximate, that total employment situation is not affected, however, Renminbi appreciation has significantly negative impact on total labor demand of domestic manufacturing industry and intensifies employment pressure. Therefore, it is not appropriate for CNY to be appreciated dramatically in the current period.