Labour Markets and Social Protection in China: Experiences and Issues

    1.Recent developments in the Chinese labor market
    With fast economic growth in the past decades, China has also witnessed substantial labor market development by introducing market mechanism in labor allocation, reforming the social protection system, and improving regulations. Developments in the Chinese labor market have been indicated by both labor mobility driven by labor market signals and institutional changes guided by the labor market policies. In details, recent labor market developments in China could be briefed as the following aspects.
    Moving Out of Countryside
    In the early reform period – namely from early 1980s through mid 1990s, the employment of rural and urban China expanded mainly through the transformation of farmers from agricultural job to non-agricultural job. Job creation by township and village enterprises and massive labor migration from rural to urban sectors are most impressive, unique and worldwide-recognized “China miracle”.
    Since 1990s, rural to urban migration has played a dominant role in labor mobility. In 2010, migrant workers from rural areas totaled 153 million, which has become an indispensable component in urban labor market. Because the course of rural-to-urban migration was initiated by the large scale of surplus labor in rural area, it generates two effects of transition and development. The first is the effect of resource re-allocation, namely, labor transfer from sectors with low productivity (agriculture) to those with high productivity (secondary and tertiary sectors) alone contributed 21 percent to the overall GDP growth rate during the early reform period (Cai and Wang, 1999), and 16.7 per cent in the past decade (Cai, et. al., 2010). The second one is income effect – namely, while the wage rate of migrant workers is lower than urban workers with local hukou on average, the enlargement in total number of migrants has enhanced the total income of rural households as a whole.
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    ( in Alakh Sharma (eds.) Labour markets and social protection in emerging economies: Experiences and issues in Brazil, China, India and South Africa )