has ALL you need!

A community for book lovers to create their own bookshelves, share and explore books.

For the past decade, the specter of unemployment has been at the forefront of the Chinese government’s concerns about social unrest. During the recent economic downturn surveys have shown that as many as 20 million of the country’s 130 million migrant workers are unemployed. Western media outlets have all reported on this disconcerting trend, but most have neglected to place the recent rash of unemployment in any kind of historical context.
In 2002, those same media were fixated on similarly ominous unemployment reports, only they were not about China’s migrant workers, but instead its millions of state-owned enterprise employees. Between 1993 and 2006, approximately 60 million of those workers—the bulk of China’s working class who had benefited from its socialist economic structure from 1949 until the 1980s—lost their jobs. Few found channels for re-employment.
As William Hurst, an assistant professor of government at the University of Texas at Austin, shows in his comprehensive study of SOE layoffs from 1978 to 2002, the Chinese Communist Party’s role as helmsman in guiding the country from a command to market economy has been anything but masterful. Based on more than 300 interviews of SOE managers and employees in eight Chinese cities, Mr. Hurst’s work reveals that layoffs of employees lurched and lagged behind market forces. Less the result of streamlining by SOE managers, layoffs were more often politically motivated moves to garner increased subsidies or slash operating costs amid unfavorable business conditions.
Mr. Hurst takes a regional approach to telling the story of the disintegration of Chinese SOEs. As he rightly points out, too often studies of China lack the breadth to examine economic and political trends that vary as widely as in similarly vast countries like the United States or India. He sets out to study five distinct groupings characterized by eight cities: the upper Yangtze River near Chongqing; the central coast near Shanghai; the northeast near Benxi; north-central China near Datong and Luoyang; and provincial capitals near Harbin, Shenyang and Zhengzhou.
With each group facing varying regional economic conditions and relations to the central government, the stories of SOE layoffs and the trials workers faced were different. Although by the mid-1990s unemployment from SOE layoffs in the Northeast had hit crisis levels, it was not until 1997 that the government decided to make SOEs profitable by increasing layoffs. Incentives such as subsidies were offered to firms that cut jobs. As a result, even profitable firms in China’s wealthiest cities reduced workers in order to gain funding. These top-down policies ensured that from 1997-99 Shanghai’s SOEs cut 36% of jobs.
Although formalized social protection met with some success in wealthier urban areas, such as Shanghai, informal means of addressing the unemployment problem were far more successful in impoverished areas, such as northeast and north-central China. Motivated by fear of riots or protests that would get local officials in trouble, unofficial street committees were set up to support the unemployed with welfare or medical coverage. And many workers who were able to find jobs did so via self-employment through personal connections or family wealth.
Mr. Hurst has told the story of SOE layoffs more comprehensively than any other author, but still his plodding and opaque prose leave much to be desired. With his 300 interviews, he might have spiced up his book with more anecdotes. And while his regional approach to SOEs is welcome, it is at times incomplete. For example he represents the upper Yangtze with one city, Chongqing, which was the beneficiary of the campaign to develop the west in the late 1990s. As he admits, because of this campaign the city is not fully representative of the region.
The story of China’s laid-off SOE employees and indeed the wider story of the current unemployment problem remains open-ended. The experience of many SOE employees with China’s planned safety nets does not bode well for crucial policies established to address China’s current migrant-worker employment slump. For example, the crucial rural dibao, or minimum subsistence-allowance program that the government has been attempting to set up since March 2007, must not go the way the urban dibao program did in the 1990s. Mr. Hurst finds convincingly that through 2002, workers in poorer areas rarely saw benefits of the dibao program. And even in prosperous Shanghai the program proved extremely costly to implement.
Many laid-off SOE workers are still not out of the woods. The longer the global recession continues, the more perilous the situation will become for former SOE employees. Of those who have found jobs, many are only informally employed and therefore “hidden” from protective work regulations and social-insurance systems. At the same time those who have found low-level entrepreneurial success with small shops or companies now face tough market conditions. It is thus imperative that policies like the dibao program, health-insurance and medical-assistance schemes be streamlined and put more widely into practice.
While Mr. Hurst remains open to the possibility that China’s current developmental authoritarianism is sustainable, he gravely prognosticates that “as the Chinese economy is pried away from the plan and thrust into the stormy waters of a still inchoate market, the political demise of the working class could be the final maneuver of a desperate and isolated Party destined to lose control of its country in the years to come.” In the past 20 years, the identity of China’s once-proud working class has been shattered and its former members left at the mercy of the country’s nascent market and leaky social umbrella. And with new plans for an investment firm under the State-owned Assets Supervision and Administration Commission to continue restructuring and consolidating SOEs, China’s viability as a nation may come to rest on its ability to patch together a more comprehensive social-safety net and find more efficient ways to employ those on the losing side of its market reforms, for whom life will likely get harder in the coming years.