Changing Labour Policies and Organization of Work in China

Impact on Firms and Workers

Ying Zhu, Michael Webber, John Benson

• Publisher: Routledge
• Year: 2020
• ISBN:
  9780429848087
• Edition: 1
• Topic: Economics
• Subtopic: Economic History
• Index: Economics

The transformation of China's economy from a centrally planned to a market-oriented system has had a profound impact on management systems and practices at the firm level, particularly changes to the organization of work. One of the consequences of this is increasing social disparity reflected through inequality of employees' income and employment conditions. This book, based on extensive original research including interviews and questionnaire surveys in different regions of China, explores the exact nature of these changes and their effects. It examines state-owned enterprises, foreign-owned enterprises and domestic private enterprises, discusses the extent to which employees are satisfied with their employment conditions and whether they think their employment conditions are fair and outlines how managers and employees in China expect conditions to change in future.

1 Economic and social reform in China

Introduction

Over the past four decades, China has implemented extensive economic and social reform which has transformed the economy from a centralized planning arrangement to a market-oriented system with increasing enterprise autonomy (Zhu, Webber and Benson, 2010). At the heart of the economic reform were changes to economic and labour policy at the macro level and the restructuring of management systems and practices at the firm level, particularly changes to the management of labour. This economic reform and the consequent changes not only have had a significant influence on the society and enterprises, but also have impacted on individual employees’ work life.

Earlier assessments of the impact of this reform have been generally positive for workers and many workers have had increases in their income, improved working conditions and an enhanced quality of working life (see Zhu, Webber and Benson, 2010). These benefits have not, however, been spread equally among workers and more generally members of the wider society. One of the consequences of this outcome is the increasing social disparity reflected through inequality of employees’ income and employment conditions (Zhu, Warner and Feng, 2011). Conservative estimates of the Gini coefficient for China, a measure of social inequality, show that the coefficient rose from 0.43 in 1990 to 0.475 in 2016 (NBS, 2017). This rate is generally regarded as above the ‘dangerous’ point of 0.40 for maintaining political, social and economic stability (Tobin, 2011).

Whilst such inequality does not happen in a vacuum, and many factors underpin and contribute to this imbalance, it is equally clear that enterprise-level reform plays a major role in the working lives and general satisfaction levels of employees. The potential impact of these enterprise-level reforms raises further questions around the sustainability of the reform process in China at both the societal and the workplace level. In this book, we will focus on the enterprise, although we recognize that societal factors directly and indirectly interact with workplaces. We will, therefore, take a broad approach to addressing the key questions presented below and the conclusions that are drawn.

Our conceptual framework of analysis utilized in this book is illustrated in Figure 1.1. Economic and market reform directly impacts on the enterprise, in particular on the way it is structured and the way it manages labour (Zhu, Webber and Benson, 2010). The first question we thus seek to address is: what have been the key economic, legal and industrial policy reforms implemented over this time and how have they directly impacted on the management of labour? Reforms, however, require action on the part of various parties, in this case enterprise managers and workers or employees. Thus, our second question is: how have management and workers responded to these reforms and influenced the management of labour and the operations of the enterprise? This leads to our third question, namely: what have been the specific effects on pay, conditions of work (e.g. working time, job security, social insurance, welfare and other benefits) and the opportunities for promotion, training and future development? Even if we find wages and working conditions have improved, the critical issue in understanding the impact on society is whether employees are generally satisfied with their current employment conditions and jobs; that is, do workers perceive the reforms to have led to reasonably fair distribution of outcomes and to have been beneficial to their work and social life?

Figure 1.1 Conceptual framework of the book.

Exploring the above questions will tell us much about the past impact of economic reform although we are also interested in this book to understand the future effects of such reform. Thus, a further question we will address is: how have the changing policies and labour management affected the well-being of employees, their level of work satisfaction, their feelings of equity and their expectations for the future? Finally, we know that inequality in China has increased and many commentators have suggested various reasons for this. Given this book’s focus on labour policy and the management of labour, the final question to be addressed will be: how can labour management and markets best be conceptualized in China and can such theory have application beyond China?

The aim of this book is to address the questions illustrated in Figure 1.1 by using our recent research in China to extend our earlier work on labour management and employment relations. We do this by tracing the impact of reforms at the policy level and changes to labour management work at the firm level and, in turn, the effect on employees (see Zhu, Webber and Benson, 2010). By using the various literatures on policy reform, the management of labour, and the relations between transformation at macro and firm levels, as well as disparities, (un)fairness and (dis)satisfaction at the worker level, the book seeks to integrate the literature and to locate the study of China within the main currents of Western discourse, while recognizing the potential location-specific aspects of the research site.

Changes to the management of labour

As outlined and examined in Chapter 2, considerable reform has taken place in China since the economic transition process started in 1979. This has been discussed in detail elsewhere (Zhu, Webber and Benson, 2010). Building on this earlier work, Chapter 2 will thus provide a commentary on more recent reforms with a particular focus on labour management at the firm level.

Prior to the commencement of economic reform, Chinese labour management was characterized by the central allocation of labour, strict adherence to rules and regulations, the provision of standardized wages and extensive prescribed working conditions, and a range of social benefits, including housing, schooling and recreational activities. Often referred to as the ‘iron-rice bowl’ or a ‘cradle to the grave’ mentality, such an approach was mandated by government and executed through state-owned enterprises (SOEs). Profit was not a driving force and many SOEs were technically loss-making ventures. This approach was possible as long as the individual SOEs met their production quota (Zhu, Webber and Benson, 2010).

Following the opening of the Chinese economy, many SOEs, particularly those with a less strategic role, were subsequently abandoned and had to fend for themselves with little or no state support. Dramatic changes at the enterprise level ensued, including the need for enterprises to become profitable and for workers to adopt new labour management practices. In so doing, it was hoped that the enterprises would be competitive, both domestically and, in some cases, internationally. This early period in the transition of Chinese industry to a ‘socialist market economy’ also witnessed the rise of alternative enterprise structures, including township and village enterprises, privately owned domestic companies, foreign firms and joint-stock companies (JSCs).

These new enterprise forms, along with changes to government employment and labour market policies, heralded a new era for the way firms managed labour. Wages increased significantly, more contemporary human resource management (HRM) practices were introduced and generally working conditions improved (Zhu, Webber and Benson, 2010). Accompanying such changes were tighter controls on workers, more demanding production targets and generally higher levels of accountability and responsibility (Benson and Zhu, 1999).

Importantly, running pa...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Contents
• List of illustrations
• Authors
• Preface
• Acknowledgements
• List of abbreviations
• 1 Economic and social reform in China
• 2 Policy reforms, employment relations and labour management
• 3 Management initiatives on work and labour management
• 4 Employees’ experiences and responses to labour management reform
• 5 Regular workers and perceptions of fairness
• 6 Well-being and satisfaction among workers
• 7 Future expectations among workers
• 8 Conceptualizing the economy of labour beyond markets
• 9 The ongoing challenges of labour management reform in China
• Bibliography
• Index