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Chapter 1 Introduction and Argument Mary E. Gallagher, Ching Kwan Lee, and Sarosh Kuruvilla Thirty years of economic reform in China have produced economic growth unparalleled in terms of its speed, longevity, and geographical spread (Brandt and Rawski 2008);has lifted millions out of poverty;and has increased GDP per capita from $224 in 1978 to $3,180 in 2008. It has also transformed China from one of the most egalitarian societies in the world to one of the most unequal societies in Asia (Lee and Selden 2008). The accumulated result of economic liberalization has been a drastic shift in the structure of employment.The following stylized statistics sum up the extent of transformation. In the thirty years since reform, the urban workforce increased from 95.1 million to 293.5 million, employment in the state sector decreased from 78.3 to 21.9 percent of the total urban employment, and employment in the foreign-invested sector (including Hong Kong-, Macao-, and Taiwan-invested enterprises) grew from zero to 15.8 million.Agriculture, which accounted for the largest share of employment in 1978 (69.9 percent),now accounts for only 40.8 percent of total employment, whereas industry and services have seen gains (employment in industry increased from 17.1 to 26.8 percent, and service sector employment rose from 12.2 to 32.4 percent during the same period; National Bureau of Statistics of China 2008).Perhaps the most dramatic instance of change in the structure of employment has been the rapid increase in the number of migrant workers.Although precise numbers are difficult to obtain,the National Bureau of Statistics estimated the number of migrant workers to be 225 million by the end of 2008. The transformation in the Chinese employment structure is broadly consistent (migrant worker numbers excepted) with similar transformations in fast 2 Gallagher, Lee, and Kuruvilla developing Asian countries (Kuruvilla 1996) What concerns us in this volume is the changed nature of employment security, in particular the recent and marked trend toward the informalization of employment.By informal, we mean employment that is not stable or secure, that lacks a written agreement or contract ,and that does not provide social insurance or benefits.A plethora of terms are used in the available literature to characterize these workers, such as casual workers, contingent workers, temporary workers, and agency/dispatch workers. The last category, agency/dispatch workers (laowu paiqian), which is also referred to in some industries as labor leasing or co-employment, is a typical triangular employment relationship in which workers employed by a contractor are sent to work at client firms on a contingent basis.A recent estimate finds that the use of agency workers in China has become widespread (they now number more than 75 million),accounting for a hefty 15 percent of the employed population in the industry and service sectors (Wong 2009).The growth of these employment arrangements that reduce employment security, divide workers into core formal workers and peripheral subcontracted agents, and reduce the provision of welfare benefits has been significant over the past two decades. Although precise estimates of the degree of informal employment in China is difficult to obtain, Albert Park and Fang Cai (chap. 2 in this volume), who have carefully and comprehensively mined a variety of official data sources,suggest that an astounding 39 percent of urban employment is informal! This estimate roughly accords with other studies that have tried to determine the degree of informalization.Variation among the studies is often related to different definitions of informal work. Cai Fang, DuYang, and Wang Meiyan (2008) use the China Urban Labor Survey data to estimate the number of informal workers.The survey is unusual because it surveys migrant workers as well.These data show that 18.5 percent of local residents (belonging to urban areas) were informally employed in 2001 and that this number grew to 32.6 percent by 2005. For migrants, 72.5 percent were employed informally in 2001, increasing to 84.3 percent in 2005. Of those surveyed, 54 percent of local urban residents had access to pension benefits in 2005, but only 2.1 percent of migrants had similar access.Till Barninghausen,Yuenli Liu, Zhiping Zhang, and Rainer Sauerborn (2007) suggest that there are 140 million informal workers, whereas Fang Lee Cooke (2008) opines that informal employment accounts for more than 50 percent of urban workers. It is beyond the scope of this chapter to reconcile these disparate estimates on the number of...

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