China & Inner Asia: Table of Contents
Organizer and Chair: Deborah Davis, Yale University
Discussant: Yanjie Bian, Hong Kong University of Science and Technology
He Gaochao, Hong Kong University of Science and Technology
This paper examines two contrasting regimes of labor relations in state-owned enterprises undergoing market reform. The first one features centralization of authority, highly formalized, strictly enforced rules, and performance-based reward distribution. The second one combines rationalization of control with open avenues for input from middle management, flexibility in rule-enforcement, and active efforts by management to promote workers’ collective welfare.
Factories under both regimes faced similar constraints before the reform but have since grown out of the plan and attached increasing importance to profit-making. Their divergent paths of restructuring are closely related to the initial circumstances in which reforms were started, the sequencing of reform measures, and the managerial ideology of enterprise leaders. In the short term neither regime demonstrates superiority over the other for improving profitability. But tension between management and labor runs high in enterprises adopting the first model, where workers also express a strong desire to democratize decision-making.
In-depth interviews (N=312) and questionnaire surveys (N=3400) conducted in eight large and medium state-owned enterprises in Kunming constitute the main source of information.
Gao Wang, Yale University
Since 1993, the Chinese government has basically withdrawn from dictating labor practices, and as a result a labor market has emerged in urban China for the first time in nearly fifty years. On one hand, the retreat of government regulation has given employers and laborers greater freedom. But in cities, like Mudanjiang (Heilongjiang Province) where many state enterprises failed to make a profit for nearly a decade and non-state employment has expanded slowly, "new freedoms" have been costly, especially to poorly educated, manual staff.
Drawing on surveys conducted in twenty industrial enterprises in Mudanjiang in fall 1996, and supplemented by in-depth interviews and six months of field observations, this paper studies the impact of labor marketization on social inequality among industrial workers.
Individual workers are now free to choose or change employers. However, in 1996 the number of new jobs fell short of the number of surplus workers, and income inequality sharply increased. In theory employers are free to hire and fire whomever they wish. However, in practice, enterprises must still guarantee current employees a living wage, either by paying them severance pay until they find new jobs or by creating new jobs. Of particular interest is the contrast between the still quiescent and relatively satisfied employees, and the increasingly anxious managers.
Andrew Watson, University of Adelaide
Since the early 1980s, the reform process in China has inexorably moved towards the commodification of labour and the growth of labour markets. In the coastal regions these developments have taken place in the context of rapid economic growth, strong diversification of ownership systems (the growth of township and village enterprises and foreign-invested enterprises), and the absorption of surplus labour from outside. In the interior regions, which until the early 1990s were challenged by preferential policies biased towards the coast, the process of structural economic change has been slower. The old state enterprises remain dominant, the ratio of TVEs is much lower and the levels of foreign direct investment are small. The adjustment problems created by labour marketization are thus more severe.
This study explores these issues through an analysis of labour market development in Shaanxi province, focusing on Xi’an. The province was a major beneficiary of the plan period, with substantial development in both the 1950s and under the Third Front policies. As a result it developed a large state-owned heavy industry base, most of it in the region of Guanzhong around Xi’an. During the early 1980s the province attempted to retain this heavy state industry focus and was severely hit by the late 1980s shift towards the coastal development strategy. The result is that the province has been slow to develop alternative types of industry and the capacity to generate employment outside of the crumbling state enterprises is limited. In early 1996 the provincial governor, Cheng Andong, stated that per capita GDP was among the lowest in the country and that, since incomes were well below the national average, ‘even small fluctuations in prices can influence social stability.’
Against that background the process of labour marketization faces significant hurdles. The decline of the state enterprise system is severe, yet the potential for workers to find alternative employment is limited. The pressures for them to accept lower wage levels (one way in which the province might compete with the coast for example) are strong, yet the ability of the provincial government to provide social and economic support during the process of adjustment is low. This study will analyze the process of labour marketization in the context of a backward interior province and define the way these factors affect the positions of government, enterprise managers and the work force.