China's Human Resources

IV. Bringing into Play the Fundamental Role of Market Allocation

As a socialist market economy is gradually taking root in China, the Chinese government — by way of following the objective laws of human resources development — has set out to reform the cur-rent human resources system to enable the market to play its due role in the allocation of human resources and respect workers' freedom to choose jobs. The government has been making efforts to foster and develop the human resources market, gradually achiev-ing the transition from a planned to a market allocation of human resources.

A market allocation mechanism for human resources has basically taken shape.

Since the 1980s a multi-dimensional human resources market has gradually been formed in China as its economy, dominated by the public ownership, is growing along with diverse forms of ownership. From 1998 to 2009, the number of those working in state-owned en-tities dropped from 90.58 million to 64.20 million, a decrease from 41.9% of all urban employees to 20.6%; the number of those work-ing in limited liability companies and companies limited by shares rose from 8.94 million to 33.89 million, an increase from 4.1% of all urban employees to 10.9%; and those working in private entities or self-employed grew from 32.32 million to 97.89 million, a rise from 15% to 31.5%.

Chart 5 Percentage of China's urban employees in different forms of ownership in 2009

Since the mid-1980s China has gradually been reforming its per-manent worker system established under the planned economy, known as the "unified distribution of the work force." It gives employers the right to freely choose their workers while at the same time gives work-ers the right to freely choose their jobs, thus establishing a new mode of labor relations, formed basically through mutual choices, free con-sultation and the signing of employment contracts between employers and employees. All these factors have improved the vibrancy and effi-ciency of the human resources market. To adapt to the needs of a so-cialist market economy, the Chinese government has removed one obstacle after another in mechanisms that restrain the free flow of the work force, by reforming social security, household registration and university graduate distribution systems. These measures have con-tributed to the vibrant flow of labor force across the country's regions, industries and trades. In 2009 workers registered for employment at various human resources service agencies was 97 million, and 36 million people succeeded in landing jobs or changing their jobs, an increase of 77 million and 26 million respectively, as compared with the year 2000. In 2009 farmers who went to cities to seek employ-ment or worked in non-agricultural sectors in local areas for at least six months totaled 229.78 million, of which migrant workers working outside their localities accounted for 145.33 million and those em-ployed in secondary or tertiary industry not far from their villages reached 84.45 million.

Human resources service industry has grown rapidly.

Since the 1980s China has constantly expanded the scale and ele-vated the level of the human resources service industry. The service has become diversified in terms of scope and content, moving from recruitment and personnel agencies in the early period to training, la-bor dispatch, employment guidance, professional assessment, man-agement consultation and human resources service outsourcing. As a result, a relatively complete service chain in this respect has been formed. In 2008 China had more than 49,000 agencies providing human resources services, basically forming a multi-level, multi-dimensional human resources service system, which consists of govern-ment-sponsored employment and personnel service agencies, private human resources service agencies and Chinese-foreign joint ventures specializing in human resources service.

Since its entry into the WTO in 2001 China has actively fulfilled its commitments, leading to a steady rise in the number of for-eign-invested human resources service agencies. In 2009 there were 160 Sino-foreign human resources service agencies in Chinese territory, compared to 30 in 2003.