Chinese Labor Market

Transition of the Chinese labor market. Breaking the Iron Rice Bowl. Consequences for a Labor Force in transition. Labor market reform. Post-Wage Grid Wage determination, government control. Marketization Process. Evaluating China’s industrial relations.

Рубрика Экономика и экономическая теория
Вид курсовая работа
Язык английский
Дата добавления 24.12.2012
Размер файла 567,5 K

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Despite immediate suppression, attempts to establish autonomous trade unions have occurred in the past including the Beijing Workers Autonomous Federation, migrant workers of Guangdong 1995 and 2002, the Beijing taxi drivers in 1998, and the Free Labor Union of China (see Howell, 1997 and 2003). The existence and actual work of independent unions is negligible as authorities are quick to step in. Autonomous union involvement during the Tiananmen Square events of 1989 have contributed to creating a nearly impossible environment for setting up independent unions in the near future, but as Howell (2003) says: “such attempts are a constant reminder to the ACFTU at both the national and local level that its claim to represent is questionable and its power to defend the interest of workers (is) weak.” Ironically, at times the government gave in to demands, sometimes enforced by illegal strikes, organized by autonomous unions or labor activists only to then imprison the responsible people (Heilmann, 2004). These attempts underline the current frustration of many workers and reservations against the ACFTU. In their usually short-lived formations independent trade unions can only play one role: remind the Chinese leadership, that for the majority of the workforce the current role of ACFTU affiliated trade unions is insufficient and the government should attempt to improve and enforce its duties as outlined in the legislation.

4.5 NGO and Foreign Influences on Labor Relations

Foreign enterprises have entered China in large numbers since the beginning of the 1980s and have in many cases shifted labor intensive production from countries with higher pay and stricter labor legislation. China's enormous workforce and limited regulations provide favorable conditions for investors needed for economic growth. Foreign enterprises involvement in emerging or developing economies is controversial, as weak legislation and different labor standards give rise to exploitation of workers. In the past and to this day, reports of poor working conditions in foreign enterprises are common. If put on the spot by the press or non-governmental organizations (NGO), and because of the recent trend of corporate social responsibility, companies will usually give in to the public outcry and improve working conditions above the domestic levels or at least to the minimum domestic levels. Under this Western moral pressure, companies may improve working conditions for its labor force. Existing evidence suggests that in China international firms do provide higher pay and more favorable working conditions, much in contrast to enterprises under Greater Chinese ownership, which are notorious for bad labor conditions (see Ge, 2007; Fu and Gabriel, 2001; and Heilmann, 2004).

NGOs have become allowed to operate in China to some degree, but usually these are foreign or Hong Kong based. Recently, efforts by Social Accountability International, a US based NGO for promotion of corporate social responsibility, has lead to heated discussions if they have protection of Chinese workers' rights in mind or if they are working on behalf of Western protectionism trying to erode China's competitive advantage (Chan, 2005). There have also been reports of NGOs assisting workers who have been denied payment of wages (China Daily). In how far there is domestic diffusion and what roles foreign influences play would require further study. Given the concentration of foreign enterprises to the Eastern seaboard as well as the limited role of NGOs in China it can be suspected that the overall impact is small and will only affect a share of the workforce, mainly in areas where competition for labor is high.

4.6 Are there “Real” Chinese Trade Unions

As mentioned above Chinese trade unions by no means fit any Western definition. However, when evaluating Chinese trade unions one needs to consider the inherited institutional structure in which national trade union practices need to be constructed (Clarke, 2005). At this stage it would be unfair to judge Chinese unions on the basis of understanding of trade unions in advanced economies. Despite all its advances China remains an emerging economy and it is far from having completed its transformation from a planned economy. The newly developed labor market is little more than a decade old. Additionally, the size of the Chinese economy and having the world's largest labor force creates additional challenges, perhaps calling for a different approach. Potentially trade unions may have a balancing effect in the increasing marketization of the Chinese economy after growth has been the driving force behind much of the economic policy during initial stages of economic development often compromising the labor force. Increasing environmental degradation and violation of workers' rights are now a source of discontent; current economic policy and unions may provide the necessary instruments to appease these developments. At this stage wage bargaining, a core function for Western trade unions is not at the center of attention. Much more it is the instruments protecting workers' rights. However, an important obstacle which ACFTU affiliated trade unions must overcome is their limited credibility with its members (see section 4.5). Limited credibility will result in failure of this pressure valve and the threat to release itself in another way, potentially causing political and social unrests, which cannot be in the interest of any government. It remains an open question whether the current trade union structure can achieve the goals the government has in mind without further reforming the organization and powers of trade unions. In sum, Chinese trade unions currently are facing a significant number of limitations including problems of representation, close management and party ties, weak enforcement of laws, and the desire for continuous attraction of investment and growth. Though their overall position is weak, trade unions are a potential tool in improving protection of workers' rights. In order to develop into a powerful balancing labor market institution it will be necessary to build on its current, in comparison to Western unions limited, objectives and further evolve from there. At this stage protecting the legal rights of workers has become a central issue for the Chinese government and trade unions have the potential to be successful. A study based on the Chinese Economic Census Yearbook 2006 conducted by Ge (2007), while highlighting trade union's weak position, the weak enforcement of laws, as well as the limited scope of collective contracts, concludes that unions do contribute to the protection of workers' rights. He further finds that in an employer dominated environment with frequent violations of the law, trade unions might be the only institutions, which currently can improve workers', working condition and legal status. Most importantly, unionized enterprises provide workers with the necessary channels to protect their legal rights, whereas in non-unionized enterprises workers interest might be significantly less protected.

5. Evaluating China's industrial relations

Labor markets, for a number of reasons, are a special market. Workers as a factor of production differ from capital and land, comprising a human component. Unlike other factors, they have a desire for fairness and equality. In this sense, fully flexible and competitive labor markets may not be the best alternative in the long-run when transforming a command economy, requiring the government to set up institutions pressing for a non-market outcome when required (Knight and Song, 2005). An unregulated market cannot be relied on to solve all problems in the long-run; much in contrast to this a regulated market within a functional institutional framework is a prerequisite for a positive long-term development. In its evolution the Chinese labor market faces many challenges and one cannot expect it to change as fast as other parts of the economy. An institutional arrangement considerably distinct to the pre-reform arrangement needs to be carefully developed. Following Deng Xiaoping's famous “feel the stones while crossing the stream” phrase, China has chosen a unique and pragmatic approach in transforming the country: adjusting the institutional design while testing different arrangements and correcting them when necessary. Similar developments are now observable in the labor market as it is in the process of shaping and reinventing itself. At its current transformational path it is not yet clear which destination it is heading for. Moreover, China's current labor market is an evolving and tremendously crucial component of the Chinese transformation process.

Market determined forces have significantly contributed in transforming the Chinese command economy to a more market based one, but with rising inequality and an unequal employer-employee power balance, more harm could be done than gained if non-market institutions are not able to develop themselves. Chinese workers have been granted the right to choose their own employment while at the same time paternalistic institutions were withdrawn and bargaining power is significantly in favor of employers (Saha, 2006). In a way, the Chinese government is in a dilemma. On the one hand it needs to find ways to quickly create jobs for the largest labor force in the world, increasingly relying on the private sector and market forces rather than historically proven failure prone government control. On the other hand, despite improved living conditions for most of the population it is facing growing income disparities and discontent among its labor force, potentially creating social and political problems threatening the necessary reform process. While conditions have been unevenly favorable for enterprises, the continuous and apparent hardship may require the government to seriously take distinctive measures attempting to rebalance the power disparities in Chinese industrial relations.

China's economy still needs to develop the necessary institutions for its market based economy to function efficiently. Otherwise marketization is in danger of going too far, too fast, annihilating non-market institution or not enabling them the chance to develop (Knight and Song, 2005). Unbridled marketization has its limits in developing a sustainable economic structure, as it is beneficial only if the power balance is strong enough to prevent the strongest from exploiting the weak. From a macroeconomic perspective such a market based labor market may establish an inflation/deflation prone system when it lacks institutions, which could contribute to more predictability and control. Labor markets have a different function with different stages of development (Cai, Wang and D, 2005) and at this stage it might be necessary to consider the development of non- market institutions. Facilitating the establishment of employer and employee associations may contribute to improved coordination in the labor market. Trade unions can be an effective tool in achieving this goal. However, the federal government's current goodwill towards strengthening their position still needs to actually materialize on the provincial level both to gain legitimacy from its members and to establish itself as a powerful tool in balancing industrial relations.

6. Wages in China

In this paper I would like to write about the wages in China and the policy of attraction of foreign experts into the country. I chose exactly this theme because I have plans of connecting my future career with China. Currently I study Chinese and am planning to go to China to study for the spring semester.

China is the world's largest manufacturing power. Now it takes a fifth place of global manufacturing. Its factories have made so much, so cheaply that they have curbed inflation in many of its trading partners. But the era of cheap China may be drawing to a close. Costs are soaring, starting in the coastal provinces where factories have historically clustered. Increases in land prices, environmental and safety regulations and taxes all play a part. The biggest factor, though, is labor.

As different parts of China have very different standard of living, China does not set one minimum wage for the entire nation. Instead, the task of setting minimum wages is delegated to the local governments. Each province, municipality, or region sets its own minimum wage in accordance with its own local conditions. The table below lists the minimum monthly wages for the most popular provinces or regions in China.

Hong Kong

Monthly (Yuan)

Monthly (US$)

Hubei

600, 670, 750, 900

95.33, 106.45, 119.16, 143

Hunan

600, 650, 725, 800, 850

95.33, 103.27, 115.19, 127.11, 135.05

Jilin

830, 890, 950, 1000

131.87, 141.41, 150.94, 158.88

Inner Mongolia

680, 750, 820, 900

108.04, 119.16, 130.28, 143.00

Shanxi

740, 820, 900, 980

117.57, 130.28, 143.00, 155.71

Shandong

600, 800, 950, 1100

95.33, 127.11, 150.94, 174.77

Shanghai

1280

202

Beijing

1260

198.74

Guangzhou (Guangdong)

1300

205.16

Wuhai (Inner Mongolia)

900

142.04

Hainan

680, 730, 830

108.04, 115.99, 131.87

Looking on this graph we can see that the wages in China increase every year. This makes the country an attractive place for work.

7. The program of attraction of foreign experts in China

Nowadays China is actively undertaking the problem of attraction of high quality experts, scientists, and managers. Attractive working conditions for foreigners even lead to such tendency, as "brain drain" in the Republic of China.

The deputy head of Public administration for foreign experts of China Liu Yanguo in interview for the China Daily edition says that in China there is a campaign for attraction of foreign experts for implementation of the active involvement in various scientific and economic spheres of China. It is planned to complete the project in 10 years and attract 1000 high quality experts from the various countries of the world. The program started to operate last year, from 40 involved experts 30 started to work, and the others were by the end of September of this year. The main spheres and fields of knowledge where foreign professionals will work are mathematics, physics, researches in the field of chemistry, environment, engineering, power, biological sciences, and also management in the business sphere.

Liu Yanguo noted that there is a very serious approach to selection of candidates for work in China. Among requirements -- age less than 65 years, possibility of work in China not less than 3 years, and also carrying out in the country not less than 9 months a year. Well and, of course, high qualification of the candidate which will be checked by the special commission.

Since the beginning of the program, 530 offers from candidates for work were applied. Mostly interest to work in China is shown by the USA, Japan, Great Britain, Germany and Russia.

Yanguo also specifies in this regard that, in contrast to "the American dream" about which people spoke in the past much, there came time of "the Chinese dream" which can be attractive to the most talented experts from all over the world. Due to the world globalization and rapid development of China the country is ready to invest money in attraction of experience of foreign experts, and also to create attractive conditions for work. So the foreign expert who is coming in China for work within the project, the single subsidy of 1 million Yuan (about 157 700 dollars) from the government of China will be paid. Foreign researchers can also receive grants on carrying out scientific researches at the rate from 3 to 5 million Yuan.

Experiment of China on attraction of highly skilled experts from other countries is capable to lift national economy on new level, as occurs now. Other countries, obviously, can study much from this.

7.1 Chinese experience of attraction of foreign experts

Involving experts from abroad China is focused, first of all, on accumulation of knowledge in the most advanced areas from all over the world for the purpose of their effective application for the benefit of economic, military and technological power of the country. However this policy isn't new. In 1990th scientists from other countries began to come to China. Jeffrey Lekhman, the rector and the professor of Institute of law of Michigan University, started to organize trips for scientists from Michigan to work at the Beijing University. This tendency is suitable also because of reduction of budgets of many western higher educational institutions -- scientists are ought to look for work in other scientific centers, and China in this regard offers attractive prospects.

In 2008 the government of China also started the project of attraction of the foreign experts, called "The program of one thousand talents". Within that program about 1600 people arrived, many of whom, however, were the ethnic Chinese living abroad. Li Jun, the assistant professor of Hong Kong University of pedagogics, believes that due to the fact that universities of China receive huge financial means from the government, they are capable to attract highly-skilled personnel from other countries for the scientific work.

The foreigners working at the universities of China increase their competitiveness and reputation that is important in the conditions of the competition among higher education institutions. It, in turn, promotes receiving of the scientific capital by universities that necessary for carrying out researches. The Chinese higher educational institutions attract generally specialists of applied scientific branches -- mathematics, design, and various technological branches. The country during an era of technological breakthrough needs such experts providing further technological and economic development of China.

Also the attraction of foreign experts helps them to receive a great experience and necessary information, which can be very valuable in the homeland. Due to this interaction the Western world learns China and its rules of the game in modern difficult economic conditions.

The requirements to the foreign specialists who want of work in China increased in respect of scientific qualification and experience due to a large number of people who are willing to work and need of the country for the most talented scientists. These programs offer foreigners to pay for all the expenses, connected with moving, providing conditions for accommodation, and also good conditions for career and professional growth.

The authorities of China also pay much attention to attraction of highly skilled experts of the Chinese origin who have earlier left to study abroad and reached certain professional heights in other country. The government of China is ready to stimulate financially such people to homecoming, offering attractive working conditions. Such experts earn several times more than average inhabitants.

It is obvious that to other countries including Russia do have things to learn from the Chinese colleagues who concentrate the advanced scientific experts and their mobilization for the solution of necessary scientific and technological tasks, which rise national economy forward.

Russia, being geographical "neighbor" of China, closely cooperates with it in the most different areas, including migration of labor. It is necessary to note that in China there are a lot of natives of Russia, working at prestigious positions. Sometimes they are more demanded than Americans or Europeans thanks to the fewer claims for living conditions and level of wages. More often Russians work in the companies, which are anyway focused on Russia in respect of trade, tourism, finance or cargo transportation.

Why the Chinese model of attraction of qualified personnel is attractive? First of all, because the country, in the conditions of an economic crisis, pays special attention to attraction of the foreign experts who have the knowledge and experience necessary for China, and the country is ready to pay for it. The use of foreign experience is applied fast in the latest technologies, which also receive generous financing by the authorities of China.

Chinese don't hesitate to study from foreigners, adopting their experience, while being on study or work abroad. The government of China encourages Chinese students for study abroad and provides the financial help to such students by means of various funds, aspiring to integration of the citizens into the foreign companies. Then the most talented experts "grown up" thus entices back, to China.

China becomes more and more popular place both for work, and for tourism. Chinese language gains popularity around the world. The Chinese economy shows impressing rates of economic growth. All these became possible not least because of the thought-over policy of attraction of talented scientists, experts and managers to the country.

Bibliography

1. Pravda.ru, article name “КНР создает аналог `американской мечты'” by Sergey Vasilenkov, from February 10, 2012

2. Wikipedia, article name “List of minimum wages in People's Republic of China”, modified on 29 September 2012

3. The Wall Street Journal, article name “China's Labor Market Tightens”, by TOM ORLIK, August 23, 2012

4. The Christian Science Monitor, article name “Employment report: more jobs, less pay” By Robert Reich, November 2, 2012

5. ACFTU (2007), Chinese Trade Unions Statistics Yearbook 2006. China Statistics Press.

6. Dong, X. (2004). The Changing Wage Structures in the 1990s: A Comparison between Rural and Urban Enterprises in China. paper presented at the International Research Conference on 6

7. Poverty, Inequality, Labor Market and Welfare Reform in China, Australian National University.

8. Ge, Y. (2007). What Do Unions Do in China. Available at SSRN: http://ssrn.com/abstract=1031084

9. Howell, J. (1997). Looking Beyond Incorporation: Chinese Trade Unions in the Reform Era. Mondes en Development, 25-99-73-90

10. Knight, J. & Song, L. (2005). Towards a Labour Market in China. Oxford University Press.

11. Meng, X. (2000). Labour Market Reform In China. Cambridge University Press.

12. Sek, H.N. and Warner, M. (1998). China's Trade Unions and Management. St. Martin's Press.

13. Stiglitz, J. (1996). Some Lessons from the East Asian Miracle. World Bank Research Observer, Oxford University Press, Vol. 11(2), pages 151-77.

14. Yueh, L.Y. (2004). Wage Reforms in China During the 1990s. Asian Economic Journal

15. Zhao, Z. (2005). Migration, Labor Market Flexibility, and Wage Determination in China: A Review. Labor and Demography No. 0507009, EconWPA

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