Labor Pains in Changing China
China is fast becoming the world's preeminent manufacturing power, but it has to cope with the labor issues arising from this transformation. These range from questions about labor mobility to how to handle the social unrest that comes with increasingly high rates of unemployment.
Fortune magazine recently reported that China's eastern coast is being changed into the "workshop of the world." Corporations are investing huge sums of money in China in order to take advantage of an immense, inexpensive and disciplined workforce.
But on its way to becoming an economic superpower, China must figure out a way to modernize its labor markets. The Far Eastern Economic Review notes that to become efficient, such markets require workers who are willing and able to relocate, information that flows freely, and opportunities for workers to get new jobs. "By such measures, China's labor market is extremely rigid," reports the magazine. "Local dialects and cultural barriers impede those seeking employment in other regions, and education in China has yet to become a market commodity."
Some experts claim that the biggest impediment is the hukou system, which requires rural Chinese to stay in the region in which they were born. Although the system has been loosened up to allow rural workers to leave their villages for small local cities, the government has not allowed the labor market to become truly fluid. It's worried that completely scrapping the hukou system will cause a mass exodus out of the rural regions and into the cities, sparking uncontrollable social turmoil.
Instead, there's been a gradual trend toward greater labor mobility. A study based on the China National Rural Survey found that in 1990, fewer than 30% of Chinese migrants left their provinces to find jobs. By 2000, the figure was nearly 40%, with younger people being particularly mobile. In 2000, 45% of younger workers (those under 30) were leaving home.
The question is whether labor mobility will increase fast enough. The Far Eastern Economic Review states that a more fluid labor market "could help lower China's natural rate of unemployment – a coveted but elusive policy goal." This goal is bound to become ever more critical in the near future. As China, which recently entered the World Trade Organization, streamlines or shutters its aging state-owned factories, people are being thrown out of work. This has made jobs scarce in parts of the nation. As 12 to 13 million people enter the Chinese labor market each year, only about 8 million new jobs are being generated.
Even in some urban areas, unemployment rates are skyrocketing, exceeding 40% in many northeastern "rust belt" cities such as Daqing and Liaoyang, according to the World Bank. The result has been growing unrest. Recent protests in Daqing were relatively large and lengthy by Chinese standards. In March, as many as 50,000 laid-off employees were in the streets protesting the loss of jobs without medical and social security benefits. One exiled labor advocate claimed that the demonstrations "were probably the largest protests over labor issues since 1949."
The government generally deals with such demonstrations by arresting a few of the leaders, banning news reports, and making some concessions to the majority of workers, according to the New York Times. These strategies are likely to continue as long as such protests don't threaten to become broad-based, national movements that threaten the Communist Party. "The establishment of unofficial labor unions, bringing together activist intellectuals with workers from disparate locations, would alter the situation greatly," says government professor Elizabeth J. Perry of Harvard University.
To ease pressure on workers while avoiding the perceived threat of unofficial unions, the government recently revised China's trade union law. The law now extends membership of China's official trade union to include private-sector employees. In shoring up the official union, which had been losing members in the wake of reforms to the state sector, Beijing is trying to keep some control over labor even as it gives workers greater autonomy from management. Even so, Chinese unions still don't have the right to strike, and such changes may not be enough to quell future unrest. Some analysts claim a solution can't be found without genuine political reform. "They have to let citizens be citizens," says Arthur Waldron, director of Asian Studies at the University of Pennsylvania, in BusinessWeek. "Not letting them be citizens – this is a potentially explosive situation."
For more information on China's growing manufacturing prowess, see
http://www.business2.com/articles/mag/0,1640,38060,FF.html
To read about China's need for labor flexibility, see
http://www.nixoncenter.org/publications/articles/031002FEER(China).htm
For an article on the anger of some Chinese workers over today's economic restructuring, please see
http://www.businessweek.com/magazine/content/02_14/b3777006.htm
For more information on the unrest in March, see
http://www.csmonitor.com/2002/0325/p06s01-woap.html
For information written from a labor point of view, see
http://iso.china-labour.org.hk/iso/
Fortune magazine recently reported that China's eastern coast is being changed into the "workshop of the world." Corporations are investing huge sums of money in China in order to take advantage of an immense, inexpensive and disciplined workforce.
But on its way to becoming an economic superpower, China must figure out a way to modernize its labor markets. The Far Eastern Economic Review notes that to become efficient, such markets require workers who are willing and able to relocate, information that flows freely, and opportunities for workers to get new jobs. "By such measures, China's labor market is extremely rigid," reports the magazine. "Local dialects and cultural barriers impede those seeking employment in other regions, and education in China has yet to become a market commodity."
Some experts claim that the biggest impediment is the hukou system, which requires rural Chinese to stay in the region in which they were born. Although the system has been loosened up to allow rural workers to leave their villages for small local cities, the government has not allowed the labor market to become truly fluid. It's worried that completely scrapping the hukou system will cause a mass exodus out of the rural regions and into the cities, sparking uncontrollable social turmoil.
Instead, there's been a gradual trend toward greater labor mobility. A study based on the China National Rural Survey found that in 1990, fewer than 30% of Chinese migrants left their provinces to find jobs. By 2000, the figure was nearly 40%, with younger people being particularly mobile. In 2000, 45% of younger workers (those under 30) were leaving home.
The question is whether labor mobility will increase fast enough. The Far Eastern Economic Review states that a more fluid labor market "could help lower China's natural rate of unemployment – a coveted but elusive policy goal." This goal is bound to become ever more critical in the near future. As China, which recently entered the World Trade Organization, streamlines or shutters its aging state-owned factories, people are being thrown out of work. This has made jobs scarce in parts of the nation. As 12 to 13 million people enter the Chinese labor market each year, only about 8 million new jobs are being generated.
Even in some urban areas, unemployment rates are skyrocketing, exceeding 40% in many northeastern "rust belt" cities such as Daqing and Liaoyang, according to the World Bank. The result has been growing unrest. Recent protests in Daqing were relatively large and lengthy by Chinese standards. In March, as many as 50,000 laid-off employees were in the streets protesting the loss of jobs without medical and social security benefits. One exiled labor advocate claimed that the demonstrations "were probably the largest protests over labor issues since 1949."
The government generally deals with such demonstrations by arresting a few of the leaders, banning news reports, and making some concessions to the majority of workers, according to the New York Times. These strategies are likely to continue as long as such protests don't threaten to become broad-based, national movements that threaten the Communist Party. "The establishment of unofficial labor unions, bringing together activist intellectuals with workers from disparate locations, would alter the situation greatly," says government professor Elizabeth J. Perry of Harvard University.
To ease pressure on workers while avoiding the perceived threat of unofficial unions, the government recently revised China's trade union law. The law now extends membership of China's official trade union to include private-sector employees. In shoring up the official union, which had been losing members in the wake of reforms to the state sector, Beijing is trying to keep some control over labor even as it gives workers greater autonomy from management. Even so, Chinese unions still don't have the right to strike, and such changes may not be enough to quell future unrest. Some analysts claim a solution can't be found without genuine political reform. "They have to let citizens be citizens," says Arthur Waldron, director of Asian Studies at the University of Pennsylvania, in BusinessWeek. "Not letting them be citizens – this is a potentially explosive situation."
For more information on China's growing manufacturing prowess, see
http://www.business2.com/articles/mag/0,1640,38060,FF.html
To read about China's need for labor flexibility, see
http://www.nixoncenter.org/publications/articles/031002FEER(China).htm
For an article on the anger of some Chinese workers over today's economic restructuring, please see
http://www.businessweek.com/magazine/content/02_14/b3777006.htm
For more information on the unrest in March, see
http://www.csmonitor.com/2002/0325/p06s01-woap.html
For information written from a labor point of view, see
http://iso.china-labour.org.hk/iso/