Labor Market in China

Topics: Employment, Labor, Organizational studies and human resource management Pages: 32 (11444 words) Published: December 16, 2012


Chinese Labor Market

Student: Goremykina Polina
Group № 5302
Supervisor: Razumova T. O.

Table of contents:

1. Introduction3

2. Transition of the Chinese labor market4
2.1 Breaking the Iron Rice Bowl4
2.2. Consequences for a Labor Force in Transition6
3. Labor market reform7
3.1. Post-Wage Grid Wage Determination8
3.1.1. Flexible Labor Market8
3.1.2. Government Control9
3.1.3 Collective Bargaining10
3.2. Marketization Process10
4. Trade unions in a transforming labor market11
4.1. Organizational Structure and Function11
4.2. Role of Grass-root Trade Unions12
4.3. Distinguishing Collective Contracts and Wage Bargaining13
4.4. Independent Unions14
4.5. NGO and Foreign Influences on Labor Relations15
4.6. Are there “Real” Chinese Trade Unions?16

5. Evaluating China’s industrial relations17

6. Wages in China18

7. The program of attraction of foreign experts in China19
7.1 Chinese experience of attraction of foreign experts20


1. Introduction

China’s labor market has undergone significant changes in the past twenty years. A more market- oriented labor market has emerged with the growing importance of the urban private sector, as state-owned enterprises (SOEs) have downsized. At the same time, rural employment growth has slowed, and migrants have sought jobs in the more dynamic coastal provinces. Despite the progress on reforms, a sizable surplus of labor still exists in the rural sector (about 150 million) and SOEs (about 10–11 million). The main challenge facing China’s labor market in coming years is to absorb the surplus labor into quality jobs while adjusting to World Trade Organization (WTO) accession. This paper estimates that if GDP growth averages 7 percent and the employment elasticity is one-half (in line with historical experience), the unemployment rate could nonetheless double over the next three to four years to about 10 percent, before declining as SOE reform is completed. These pressures would be limited by stronger economic growth, especially in the private sector and the more labor-intensive service industries, which have generated the most jobs in recent years. The paper first discusses trends in the Chinese labor market before outlining the progress on reforms. It then presents an analysis of the medium-term outlook for employment and unemployment, and draws some policy conclusions.

Chinese industrial relations have significantly changed from governmental paternalism to a more market oriented system for large portions of the labor force. Previous labor market institutions have either been transformed or abolished while new ones have been slow to develop. The current institutional design suggests that the labor market is not functioning in an optimal manner nor is there a clearly outlined development strategy. It remains an open question if the post-reform institutional design sets the conditions for a competitive labor market. The other question is if a competitive and fully flexible labor market is suitable for China and how the government can influence these developments. In the past and to this day China has often been associated with poor labor conditions and low wages. This constellation may be connected to the rapid economic growth but is also associated with increasing discontent and inequality, which has equally been on the rise as present labor market institutions have been struggling to create social stability. In this current environment of change trade unions have been trying to find their place in Chinese industrial relations. Recently the government has been paying more attention to the potential role trade unions could play in the Chinese labor market. Even so, under the current framework they face considerable...
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