From Iron Rice Bowl to Informalization: Markets, Workers, and the State in a Changing China

Chapter 2. The Informalization of the Chinese Labor Market

Chapter 2 The Informalization of the Chinese Labor Market Albert Park and Fang Cai The Puzzle of the “Missing”Workers of China The Chinese urban labor market has experienced a substantial diversification of ownership types.The most striking change was the rapid decline of the state and collective sectors. According to official employment statistics published in the China StatisticalYearbooks, employment in the state-owned enterprise (SOE) sector, which had actually grown in absolute number from 1990 to 1994, fell at a mean annual rate of 6.4 percent from 1995 to 2000,a total loss of 31.5 million jobs or 15 percent of the urban labor force.The collective sector, which had begun declining earlier,had already shed over 10 percent of the 1990 workforce by 1995 and shrank by another 13.8 percent per year from 1995 to 2000, losing 16.5 million jobs over the period.As a share of all urban employment, jobs in the state and collective sectors fell from 76 percent in 1995 to 41 percent in 2000 to only 27 percent in 2005 (fig.2.1 and table 2.1).The employment shares of other enterprise ownership forms, especially private ownership and limited liability corporations, increased significantly. Remarkably, the category of workers that witnessed the fastest rate of increase was “other” workers (see fig. 2.1 and table 2.1). Starting from a low base in 1995,“other” workers increased by 24 percent per year and accounted for 39 percent of all workers in 2002 and 2003, before declining to 36 percent in 2005.These workers can be described as“missing”workers because they reflect differences in the numbers of workers reported using different statistical reporting systems. It is our estimate that all of these workers are working informally. 18 Park and Cai Total urban employment comes from the annual labor force surveys conducted by the National Bureau of Statistics (NBS),which are sample surveys of the entire population.The number of workers employed by different ownership types comes from the Comprehensive Labor Statistics Reporting System (CLSRS), which is based on direct reporting by all independent accounting units to the NBS each year. Estimates of self-employed workers are based on the number of such individuals registered with the Industrial and Commercial Bureau.The difference between the larger number calculated from the labor force surveys and the smaller number of workers reported by the CLSRS is precisely the “other” category reported in table 2.1. In principle, this category should include unreported urban workers and unregistered informal employment, including undocumented work by migrants in urban areas. The large increase in the number of such workers thus suggests that informal urban employment may have increased significantly in recent years. The Chinese annual population and labor force surveys also are likely to undercount migrants working in urban areas. According to the 2000 census, Figure 2.1 Employment by employer type, 1978–2005. Source: National Bureau of Statistics of China ([NBSS] 1979–2006). 3050-898-002.indd 18 3050-898-002.indd 18 7/15/2011 12:51:43 PM 7/15/2011 12:51:43 PM TABLE 2.1 Urban employment by employer type, 1978–2005 Year Stateowned Collective Cooperative Joint ownership Limited liability corporation Share-holding corporation Private enterprise Foreign and joint venture Selfemployed Other 1978 78% 22% — — — — — — — — 1980 76 23 — — — — — — 1% — 1985 70 26 — — — — — — 4 — 1989 70 24 — 1% — — — — 5 — 1990 61 21 — 1 — — — — 4 14% 1991 61 21 — — — — — 1% 4 13 1992 61 20 — — — — 1% 1 4 13 1993 60 19 — — — 1% 1 2 5 13 1994 60 18 — — — 2 2 2 7 10 1995 59 17 — — — 2 3 3 8 9 1996 56 15 — — — 2 3 3 9 12 1997 53 14 — — — 2 4 3 9 15 1998 42 9 1% — 2% 2 5 3 10 26 1999 38 8 1 — 3 2 5 3 11 31 2000 35 6 1 — 3 2 5 3 9 35 2001 32 5 1 — 4 2 6 3 9 38 2002 29 5 1 — 4 2 8 3 9 39 2003 27 4 1 — 5 2 10 3 9 39 2004 25 3 1 — 5 2 11 4 10 38 2005 24 3 1 — 6 3 13 5 10 36 20 Park and Cai which did a better job counting long-term migrants, 10.8 percent of the Chinese population did not have a resident permit for the location in which they...