OPPapers.com

Employment Relations In China

Introduction
Since the death of Mao Zedong in 1976, Deng Xiaoping has remarkably changed the outlook of China’s economy. China has gone from a centrally planned economy to a socialist market economy, which is still influenced by the Marxist perspective, by pursuing a third way between a command economy and the capitalist alternative.

A socialist market economy is characterised by the operation of a market mechanism within the context of economic dominance by public ownership and the political dominance by the Communist Party. In the sections below we shall discuss the characteristics of employment relations in China and compare its differences to that of Singapore.

Three Old Irons
Before the beginnings of the transition from a centrally planned economy, the system of three “old irons”; the iron rice bowl (guaranteed lifetime employment), the iron chair (selection based on political orientation, absence of punishment for poor business performance), and iron wages (a state –administered, inflexible wage structure and low wage policy). With this system employees were assigned to state-owned enterprises and received guaranteed lifetime employment. However, all was not well with this system as problems such as overstaffing, lack of motivation and inefficient use of labour were rampant.

Transition
The transition of China’s economy occurred in 1978, and Deng Xiaoping made many reforms to the system, known as the breaking of the “three irons”. Three new systems were established including the establishment of a labour contract system, a floating wage system, and a manager engagement system (e.g decentralising economic decision-making powers so that managers had increased authority and responsibility). In this new system, the two most important aspects of China’s industrial relations are the Workers’ Congress and the Trade union.

Workers Congress
In Modern China, the communist ideology dictates that the workers are the most important in...