Chinese laid-off workers in the reform period

Transcription

1 National University of Singapore From the SelectedWorks of Ting ting Hu Spring April 4, 2014 Chinese laid-off workers in the reform period Ting ting Hu, Nanyang Technological University Available at:

2 2014 Tingting Hu Course number: cc6307 Chinese laid-off workers in the reform period 1

3 1. Introduction With the booming economic trend, a lot of changes have taken places in china "Historically, when the economy has faced some serious challenges, we will implement some reforms, such as economic reform. One of the most fundamental changes to the Chinese economy over the last few decades has been the reform of the state-owned enterprises (SOEs). Initiated in 1978, SOE reforms enhanced the economic performance of state enterprises but, at the same time, gave rise to numerous social problems, such as unemployment, labour disputes and social unrest. In this essay I will draw attention on these aspects, firstly why we have the economic reform, secondly the effects it has brought to us, laid-off workers unrest, thirdly, The attitude of government and how to deal with it. 2. The reason for the laid-off workers appeared---soe reform Cai et al. (2009) hold the view that it was employment growth and structural changes that led to China s reform. While only in the context of the reform can make employment-related issues correctly understood. From the Lewis model of dual economy we can elaborate how economic growth has impact on creating job opportunities and revise the unlimited labor supply, then for better development we need to have the economic reform to carry out methods to solve a serious of problems and seek for more welfare. The 14th National Congress of the Communist Party of China clearly defined the objective of the economic reform is to establishment of a socialist market economy and point out the five main reforms. One of them is state-owned Enterprises (SOEs). The problem is that this reform neither has a clear blueprint at the beginning, nor scheduled time for the completion. Therefore lead to a lot of problems for example unemployment, labour disputes and social unrest. 2

4 3. laid-off workers pose an negative impact to our stable society Massive unemployment in urban China that emerged during the period of radical economic transition and in the late 1990s due to the Chinese government carrying out an unprecedented reforms of state-owned enterprises involving the retrenchment of millions of workers. The official count of laid-off workers increased from 3 million in 1993 to million in (Chinese labour statistics 1999). Laid-off in Chinese means xiagang, it refers to the workers who lost their jobs during the reform of State-Owned Enterprisrs.As it mentioned that in the reform of SOE company include the retrenchment of workers to gain more warfare. About this reform manager became substantial shareholder and laid-off workers were divided into two groups early retirement and buy-out offer. For the Early retirement it is usually refer to the workers who will retire soon and give them living expenses each month until retire after the legal age. About the buy-out offer, the enterprise according to the workers seniority, pay the salary one-off offers and then removes the work relationship. Comparing with the lad-off workers situations we can find that before they are laid off, workers lived in plenty and enjoyed the welfare from the state and after laid off, they became poor as no incoming and dropped to new underclass who faced to discrimination, meanwhile due to the incomplete social security system, they have neither living security nor warfare. Then Chen (2000) pointed out that due to more independent, workers feel free to take actions to deal with the enterprise authorities, in addition to the unsatisfied situation after laid-off, which conduct to the collective action of protests and demonstrations. Lee (2000) described that the reason for the worker s resistance was equal to a revenge of history. At that time, China was still an authoritarian regime but why the collective action often took place in that period? Cai (2002) pointed out that it was because the SOE reform and the inadequate unemployment insurance system, which was said in Chinese Draining the water before the tunnel is ready. Since a lot of disadvantages such as job loss and decreased salary had brought to a huge 3

5 number of workers, they created strong feeling for worker resistance. Meanwhile, (Li and Cheng (2013) referred the persons whose subsistence was at risk were the most likely to be involved in collective actions. We can find that most cases have relationship with economic issues as in the SOE reform period a lot of companies bankrupt either by lose money or embezzled, which provokes laid-off workers unrest, for their own behalf like subsidy, compensation, pension and so on, When are the workers more likely to take action? Cai et al. (2002) mentioned that the resistance is likely to occur when laid-off workers feel grievances to their enterprise or government officials. At that time, they want to struggle for their own benefits and then take collective action which may pose a threaten to the government and official whose duty is to maintain the society stability. The constraints on the government sometimes made them concessions that make room for workers collective action. Apart from that the possibility of collective action success need people to co-ordinate their actions as well. Other indispensable factors are the leader and the enough participants. In addition, comparing with the two modes of laid-off, simultaneous lay-offs more likely to cause unrest than sequential lay-offs, either in produce organizer aspect or tend to affect more people. 4. How to ease problems of lay-off workers While for Chinese government the SOE reforms were the top priority during the past twenty years of reform. Because of the ill-prepared of many SOES for this process conducted massive laid-offs, xiagang workers thus began to take the center stage. Although workers resistance was not enough to stop the SOEs reform, but it do pose negative effects to our society, so how to deal with these problem. The Central Party Committee together with the State Council issued a notice in an attempt to regulate the xiagang process in June 1998, which emphasized on the transparency procedural and the managerial level collective decision-making and build the re-employment centre and its program. Stephen et al

6 also put all the laid-off workers on record to make the city government to control over the number for sake of distribution of xia gang workers. For the re-employment centre, firstly is the job placement. Secondly paying some social insurance premiums for works as well as basic living allowances. Thirdly it enables xiagang workers to join retraining programs and organize recruitment talk a worker can assigned to the center for 3 years and then become officially unemployed who will receive unemployment benefits. But xiagang workers also have some hidden injuries for instance the jobs they got were usually of low status and casual in nature, besides their experience and skills are no longer valued. Therefore they feel increasingly marginalized by the current labor market. (Stephen et al. 2004) Besides, Edward et al. (2006) pointed out that for China, in order to ease the lay-offs problem, it is crucial to put a comprehensive institutional reform on the political agenda. It is shown in Table 1 that the number of newly created jobs is greater than the number of imaging workers and the reason for big amount of laid-off workers is that many companies use a lot of temporary workers and laying off formal workers, and the majority of temporary workers are peasant workers (nong min gong). Besides there are more and more immigrant workers labor force appeared. Meanwhile laid-off workers have shown preference in re-employment. Then Edward (2006) thought that the way to resolve the problem is let them following western style pay more attention on demand-side factors, for example the new jobs in new market especially the tertiary industry. For China, in order to ease the severe problem of massive layoffs, it is crucial to put a comprehensive institutional reform on the political agenda. Table 1. Employment rate and economic transform. YEAR Urban employment growth rate (%)

7 Annual job creation (million) GDP growth (%) According to March and Olsen (1999), they thought that for successful in the reform is that larger reforms are divided into smaller, planned steps with which the political system can cope. First we need to use formal unemployment to change transitional unemployment and then transitional institution arrangement have been created, also housing reform may help laid-off workers no fear in disturbance the time they consider seeking jobs in the non-state sector. Meanwhile, Sandeep et al. (2006) also mentioned that from the econometric results we can know that self-employment in rural China is productive and shares many features of a formal small-business sector found in developed countries, thus it is also a good solution to laid-off worker. 5. Conclusion For decades the Chinese economic transform conducted a lot of laid-off workers, who pose a serious threaten to our society stability. Collective actions by laid-off workers in China were prompted by their belief that they had been denied their basic right to subsistence, which they were entitled to before the retrenchment.in this paper the reasons for appearance of laid-off workers have been elaborated. For the SOES reform, to some extent, the laid-off workers become the big losers.although the government outlined a detailed program of labor retrenchment and re-employment in order to keep the process under control, there is a huge discrepancy between theory and practice. The approacned to ease problems of lay-off workers are elaborated. 6

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9 References: Chiu, S. W., & Hung, E. P. (2004). Good governance or muddling through? Layoffs and employment reform in socialist China. Communist and Post-Communist Studies, 37(3), Cai, Y. (2002). The resistance of Chinese laid-off workers in the reform period. The China Quarterly, 170, Cai, F., & Wang, M. (2010). Growth and structural changes in employment in transition China. Journal of Comparative Economics, 38(1), Cai, F., Park, A., & Zhao, Y. (2008). The Chinese labor market in the reform era. China s great economic transformation, Cheng, T., & Selden, M. (1994). The origins and social consequences of China's hukou system. The China Quarterly, 139, Dittmer, L., & Xiaobo, L. (1996). Personal politics in the Chinese danwei under reform. Asian Survey, Li, J., & Cheng, J. Y. S. (2013). Workers' Moral Economy and Collective Action by Laid-off Workers in China. Journal of Comparative Asian Development, 12(1), Mohapatra, S., Rozelle, S., & Goodhue, R. (2007). The rise of self-employment in rural China: development or distress?. World Development, 35(1), Solinger, D. J. (2002). Labour market reform and the plight of the laid-off proletariat. The China Quarterly, 170, Qian, Y. (1996). Enterprise reform in China: Agency problems and political control. Economics of Transition, 4(2),

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