Since the death of Mao Zedong in 1976, Deng Xiaoping has remarkably changed the outlook of China’s economy. China has gone from a centrally planned economy to a socialist market economy, which is still influenced by the Marxist perspective, by pursuing a third way between a command economy and the capitalist alternative.
A socialist market economy is characterised by the operation of a market mechanism within the context of economic dominance by public ownership and the political dominance by the Communist Party. In the sections below we shall discuss the characteristics of employment relations in China and compare its differences to that of Singapore.
Three Old Irons
Before the beginnings of the transition from a centrally planned economy, the system of three “old irons”; the iron rice bowl (guaranteed lifetime employment), the iron chair (selection based on political orientation, absence of punishment for poor business performance), and iron wages (a state –administered, inflexible wage structure and low wage policy). With this system employees were assigned to state-owned enterprises and received guaranteed lifetime employment. However, all was not well with this system as problems such as overstaffing, lack of motivation and inefficient use of labour were rampant.
The transition of China’s economy occurred in 1978, and Deng Xiaoping made many reforms to the system, known as the breaking of the “three irons”. Three new systems were established including the establishment of a labour contract system, a floating wage system, and a manager engagement system (e.g decentralising economic decision-making powers so that managers had increased authority and responsibility). In this new system, the two most important aspects of China’s industrial relations are the Workers’ Congress and the Trade union.
In Modern China, the communist ideology dictates that the workers are the most important in hierarchy and as in most communist countries, worker participation is highly important in management. In China the workers participation is carried out through the workers’ congress. The Chinese workers’ congress system under the Communist party was formed on the 8th CPC Congress in 1956. It was established to encourage workers’ participation in management through making proposals to management.
In the workers’ congress the delegates generally include workshop directors, section chiefs and group heads. However it is stated that workers should not constitute less than 60% of the total number of representatives.
The presence of the workers’ congress gives certain rights to the workers, in particular, it requires top management to report its activities on a regular basis. However, the factory director has the authority to return a resolution to the workers’ congress for reconsideration. If this fails, the dispute will be referred to a higher authority in the state who will make the final decision. The worker’s congress have the following functions and rights: 1.Examining decisions concerning production and management of enterprises. 2.Approving or disapproving wage adjusting plans, bonus distributing schemes, labour protection measures, awarding or punishing regulations and other important rules and regulations of enterprises. 3.Deciding on plans of budgeting welfare funds of workers and staff members and on plans of distributing housing of workers and staff members. 4.Appraising and supervising leading cadres at various levels in enterprises, making proposals on commendation or punishment, appointment or dismissal. 5.Electing directors/managers according to the decisions adopted by the government departments in charge of approval.
In summary, the workers’ congress represents a consultative forum that imposes limited obligation on top management. Within it, they are usually dominated by more skilled workers and supervisors and when not in...