Recent Chinese Labour Policies and the Transformation of Industrial Organization in China

Abstract

Since the overthrow of the “ gang of four” and the rejection of the Maoist strategy for economic development, Deng Xiaoping and his allies have initiated new policies about the hiring, paying and rewarding of industrial labour. These labour policies are designed to raise the productivity of factory labour by increasing work incentives and utilizing workers more efficiently than in the past. The implementation of piecework-type wages and bonuses, point systems for bonuses, and examinations for hiring and promotion, represent a shift towards a new, efficiency-oriented, meritocratic industrial organization in China. The old organizational models which prevailed in the past - the seniority based model of the pre-1966 era as well as the politicized, “ virtuocratic” model of the Cultural Revolution decade - are being repudiated. Reforming industrial organization in China has been no easy task. The meritocratic norm, “ to each according to his work” is difficult to translate into concrete distributive rules. Different groups of employees disagree about the fairness of various distributive criteria. Informal patterns of group behaviour often subvert the intentions of managers and policy-makers. And managers themselves hand out bonuses indiscriminately in a manner which enhances their own popularity but not productivity.