Expediting the flow of labor and the market determination of
wage rates is one of the important aspects of the market-oriented
reforms of China as a whole. After China's WTO entry, the Chinese
government will honor its international commitments and propel as
ever the reforms in this field. In the days to come the
marketization of labor in China will tend to develop in the
following directions:
1.Urban, Rural and Regional Labor Markets to Be
Gradually Integrated and Labor to Be More Efficiently
Allocated
Establishing a unified urban and rural labor market is not only
the innate requirement for establishing a market economy system,
but also an objective necessity for accelerating the
industrialization and urbanization of China and for ensuring
sustained, healthy and rapid development of the economy. Large
numbers of surplus rural labors flowing to urban areas and flowing
from backward areas to developed areas will help restrain the rise
in wage costs in the urban primary labor markets, so as to keep
China's manufactured goods competitive in the field of
international trade. It brings out the concentrative effect of the
cities to keep steady increase in total consumption volume and
sustained upgrading of consumption standards, forming new growth
points for the economy. The current situation of development shows
that after over 20 years of reform and opening up. China's market
economy system has been preliminarily consolidated; the conditions
for the integration of urban and rural labor markets are basically
available; enormous progress has been made in reforms relating to
social security, housing and household registration system,
preparing for the integration of the labor market; rules,
regulations and measures have been enforced for improving the labor
employment ability and for protecting the lawful rights and
interests of employees. Currently most of the subsidies for urban
and rural residents have been abolished. Social security systems
independent of enterprises covering all urban units and employees
have been established. Some cities have started to provide certain
types social security to the peasant laborers working in the city.
The lawful rights and interests of employees as specified in the
Labor Law of the People's Republic of China are protected
and realized. More and more rules and regulations concerning
training of employees and safety and health of them are made
available and improved. On the whole, the in-depth advancing of
China's reform is constantly reinforcing the basic conditions for
free flow of labor in China. A unified national labor market full
of vigor is about to be completed, providing China's economic
development with more sustainable vitality and inexhaustible
power.
2. Mechanism of Market Determined Wage Rates Under the
Government's Macroeconomic Control to Take Dominance and Wage Rates
to More Precisely Reflect Labor Supply and Demand
Establishing a market determination mechanism for wage rates
under the State's macro control, and letting wage rates be
determined through bargaining between the employer and the employee
are an important manifestation of protecting the lawful rights and
interests of the market entities under the market economy
conditions as well as an important protective measure against
violation of employees' lawful rights and interests in face of the
reality that labor supply will be in excess of demand for a long
period in China's labor market. Presently, collective bargaining
for wage rates is widespread in developed market economy countries,
in which the government formulates reference wage rates in guiding
the collective bargaining to determine the increase in wage rates
under macro control. Under the market economy conditions, the
government, in order to ensure the realization of macro economic
targets, has to control the increase in wage rates in accordance
with the social economic development standard, the consumer price
indexes of urban residents and other economic and social
indicators. By formulating and announcing the guideline wage rates,
impartial basis and standards are provided for the enterprises to
determine distribution at their own will and for the collectives to
bargain for the wage rates, thus the wage rate determination under
the market economy conditions that is conducted in a scattered way,
in a micro economic sense, is put under macro economic control, and
the micro economic wage rate decision is coordinated and united
with the macro economic decisions. In 1999, China launched a labor
market wage rate guidance policy, which was put into trial run in
88 cities. The feedback showed that the announcement of guidance
wage rates for labor market at various localities basically
reflected the wage rates and skill requirements for major
professions and jobs. Among them Shanghai achieved the fastest
progress, where wage rates for a total of 627 professions were
announced by the end of 2001. In the days to come. China will
continue to summarize such experience and popularize the experience
gained, to establish a labor market wage rate guidance system to be
announced at multiple levels with the central cities as the base
for reference to cover a wide range of areas. This will be the
trend for the development of market determined wage rates in
China.
3. China's Labor Market and Wage Rates to Be Compatible
with the International Standards
Such compatibility refers to the situation in which China's
labor market and wage rates will interact with those of the
international market and tend to fluctuate with them in a
synchronized way. Despite the fact that labor cannot freely flow
directly between countries, it can be mobilized and allocated in an
indirect way by means of international investment and international
trade, so that one industry or trade could reflect the basic supply
and demand situation and wage rates in the global labor market. In
the era of economic globalization, international capital,
especially industrial capital, would seek for ideal locations for
investment in pursuit for maximization of profits according to the
relative differences in labor supply and demand and wage rates in
all countries. After the WTO accession, China will be further
involved in international division of work, greatly improve its
investment environment, so as to become a hot spot for investment
of international capital. China's labor force with relative
advantage will be more efficiently allocated according to the
position taken by China in the international division of work. In
this way the supply and demand and wage rates of China's labor will
be able to basically reflect the relative wage rates and labor
supply and demand situation around the world, and to keep mutual
contact and influence with the international market. On the one
hand, China has a huge labor force with relatively low wage costs
and relatively higher level of education that satisfies higher
technological requirements of modern industry. This will affect the
relative advantages in international trade and the direction of
international investment, as well as the labor supply and demand
situation in some of the global industries, especially in those
labor-intensive industries, intensifying the competition for
international job opportunities, to form wage rates that can
reflect the international situation of labor supply and demand. On
the other hand, under the circumstances where the world industrial
structure is under adjustment, the permanent shifting of industries
internationally and the incessant alterations in dynamic
international relative advantages, the labor supply and demand
situation, quality of labor and wage rates in other areas will
influence China to a certain extent, so that China's labor market
and wage rates will be increasingly more connected with those of
the international market.
(China.org.cn November 7, 2003)
