China to End Lifetime Jobs for Workers

China announced Tuesday that it plans to start phasing out the guarantee of lifetime employment for its urban work force of more than 100 million people.

Beginning Oct. 1, all new workers in China’s state-owned enterprises will be hired under labor contracts and will be assured of work for a fixed period. At the end of the contract they may choose to quit, or the enterprise may let them go.

Under the system of fixed job assignments that has been in effect for more than three decades, the state sends each new worker to a particular enterprise, and he or she remains there indefinitely. The work unit retains control over its employees and bears ultimate responsibility for their welfare.

An Ideological Change

The new employment system--which will not affect people already on the job--reflects another significant ideological change for China’s Communist regime. In the past, it shied away from allowing workers to be hired and fired, maintaining that labor is not a commodity. Now China is moving toward a market-oriented approach to employment, just as it has begun to do with respect to prices.

Zhao Dongwan, minister of labor and personnel, described the introduction of the new employment system Tuesday in a report to the Standing Committee of the National People’s Congress. He said the abolition of permanent job assignments is intended to “give both enterprises and workers the right to make a choice.”

The switch to short-term contracts is the linchpin of a broader effort by the regime to reform its labor system. Zhao said that state enterprises, which include virtually all the major industries, will be given new powers to fire workers who repeatedly violate work rules.

In addition, China will introduce a new system of unemployment insurance to provide benefits both for contract workers whose jobs are not renewed and also for those who are fired by state-run enterprises.

All these measures are aimed at increasing the efficiency and productivity of industries by giving them the authority to pare down their work force when demand for their products slackens and to bid for new workers quickly if there is a sudden spurt in demand.

Under the regulations announced Tuesday, the transition to the new labor contract system will be slow.

Only New Workers Affected

Zhao emphasized that the contract system will apply only to new workers and not to those who have already been assigned jobs under the old system. Thus the millions of workers already on the payrolls of state enterprises will still enjoy lifetime job security.

Another exception will be made for demobilized servicemen, who will still be assigned permanent guaranteed jobs. China is in the midst of an extensive military demobilization program, and about 1 million soldiers of the People’s Liberation Army are being returned to civilian life.

China began experimenting with the labor contract system five years ago in the special economic zone of Shenzhen, near the border with Hong Kong. The New China News Agency recently reported that the nation now has 3.5 million contract workers.

Until now, China has had no nationwide unemployment insurance. Under the system of fixed job assignments, the benefits were unnecessary; workers simply could not be laid off.

A separate economic reform being instituted in China this year opens the way for state-owned enterprises to be declared bankrupt. Zhao told the congressional Standing Committee on Tuesday that workers who lose their jobs because their enterprises are bankrupt will also be eligible for the new unemployment insurance.