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

Published online by Cambridge University Press:  17 February 2009

Susan L. Shirk
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Extract

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.

Type
Research Article
Information
The China Quarterly , Volume 88 , December 1981 , pp. 575 - 593
Copyright
Copyright © The China Quarterly 1981

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References

* This article is based on a paper delivered at the Conference on the State and the Economy in Twentieth Century China, February 1981, sponsored by the ACLS-SSRC Joint Committee on Contemporary China Subcommittee on the Economy of China and the Hoover Institution.

1. For analyses of industrial labour policies and factory organizations before and during the Cultural Revolution readers should consult the following works: Andors, Stephen, China's Industrial Revolution: Politics, Planning, and Management, 1949 to the Present (New York: Pantheon, 1977);Google ScholarBaum, Richard, “ Diabolus ex machina: technological development and social change in Chinese industry,” in Fleron, Frederic (ed.), Technology and Communist Culture (New York: Praeger, 1977);Google ScholarBettelheim, Charles, Cultural Revolution and Industrial Organization in China (New York: Monthly Review Press, 1974);Google ScholarBrugger, William, Democracy and Organization in Chinese Industrial Enterprise, 1948–1953 (London: Cambridge University Press, 1976);Google ScholarHoffmann, Charles, The Chinese Worker (Albany: S.U.N.Y. Press, 1974);Google ScholarHowe, Christopher, Wage Patterns and Wage Policy in Modern China, 1919–1972 (London: Cambridge University Press, 1973);Google ScholarLaodong Gongxi Wenjian Xuanbian (Selected Documents on Labour Wages), Planning Commission of the Fujian Revolutionary Committee, 1973 (available at the Asia Library of the University of Michigan); Perkins, Dwight H.et al., Rural Small-scale Industry in the People's Republic of China (Berkeley: University of California Press, 1977);Google ScholarRichman, Barry, Industrial Society in Communist China (New York: Random House, 1969);Google ScholarRiskin, Carl, “ Workers' incentives in Chinese industry,” in China: A Reassessment of the Economy (Washington, D.C.: Joint Economic Committee, U.S. Congress, 1975);Google ScholarSchurmann, Franz, Ideology and Organization in Communist China (Berkeley: University of California Press, 1968);Google ScholarWalder, Andrew G., “ Industrial organization and socialist development in China,” Modern China, Vol. 5, No. 2 (April 1979), pp. 233CrossRefGoogle Scholar–72; Walder, Andrew G., “ Some ironies of the Maoist legacy in industry,” The Australian Journal of Chinese Affairs, No. 5 (January 1981), pp. 21–38;CrossRefGoogle ScholarWhyte, Martin King, Small Groups and Political Rituals in China (Berkeley: University of California Press, 1974).Google Scholar

2. Nanfang ribao (NFRB), 19 December 1979.

3. Tianjin ribao (TJRB), 22 February 1980.

4. For example see Jingji yanjiu (JJYJ), No. 11 (1978), pp. 55–60; Renmin ribao (RMRB), 21 July 1979; NFRB, 14 November 1979.

5. Zhongguo qingnian bao (ZGQNB),7 July 1971; RMRB, 14 July 1979.

6. RMRB, 3 July 1980.

7. These new hiring policies, combined with academically selective educational selection policies, and policies which concentrate funds on higher education and elite key schools, close the gates of the cities to peasants and create an effective urban monopoly of opportunities for upward mobility.

8. The replacement of temporary workers with permanent “ big collective” workers who are the children of their own employees has important political implications. Because the disparity in treatment between the state and big collective workers is narrower than the disparity which existed between state and temporary workers, and because of the family ties between state and big collective workers, there is likely to be less intra-class conflict between the two groups of workers than there was in the past. On the other hand, whatever disparity in treatment remains will probably be protested even more aggressively by big collective workers than by the temporary workers who preceded them. The big collective workers are more secure and their aspirations are higher. The fact that those who work in Chinese factories are treated more equally than in the past does not mean that the dualistic structure of Chinese industry has been eliminated, but rather than its locus has shifted. There is now a clear hierarchy between the state and big collective enterprises on top and smaller, neighbourhood- or commune-based collective enterprises on the bottom. On the conflict between temporary and permanent workers in the Cultural Revolution see White, Lynn T. III, “ Workers' politics in Shanghai,” Journal of Asian Studies, Vol. XXXVI, No. 1 (November 1976), pp. 99–116.CrossRefGoogle Scholar

9. The infrequency of wage increases - there were only four national increases from 1956–77, in 1956, 1963–64, 1971, and 1977 - is now condemned as a form of egalitarianism. Because rises were so rare, several generations of masters and apprentices had identical wages. JJYJ, No. 11 (1980), p. 56. Nevertheless, the lowering of the birthrate and the increase in the number of working women resulted in an increase in per capita family income. In 1965 each state employee supported 3·4 dependants; the number had shrunk to 2·1in 1978. NFRB, 8 November 1979.

10. The Chongqing Machine Tools Factory had been prevented by political conflict from carrying out the 1971 pay rise, so they used the 1971 criteria in 1977.

11. NFRB, 8 November 1979.

12. Ibid.Ibid.. 1 November 1979.

13. In one Canton plastic goods factory, the workers complained in a big character poster that six of the 11 people chosen to receive rises in 1979 were leaders, and five of these leaders had received increases the year before. NFRB, 28 February 1979.

14. NFRB, 1 November 1979.

15. Gongren ribao (GRRB), 11 January 1980; RMRB, 21 February 1980.

16. RMRB, 22 January 1980; GRRB, 20 March 1980.

17. GRRB, 20 March 1980.

18. TJRB, 6 January 1980.

19. RMRB, 22 January 1980: NFRB, 1 November 1979.

20. All these practices were criticized. GRRB, 18 January 1980.

21. TJRB, 7 January 1980; GRRB, 9 January 1980; Beijing ribao (BJRB), 31 January 1980.

22. An Inquiry into the Nature and Causes of the Wealth of Nations, excerpted in Reflections on Inequality, ed. Stanislav Andreski (London: Croon Helm, 1975), p. 54.Google Scholar

23. As one article said, the problem has been finding a bonus system which is “ conducive on the one hand to enhancing the worker' productivity, and on the other hand, conducive to maintaining unity among the workers.” When trying to correct egalitarianism, it is necessary to use a “ good method,” otherwise “ contradictions will be created among the workers.” It is the problem of contradictions among the workers which caused leaders of many factories to “ resort to the old practice of egalitarianism in distributing bonuses.” Beijing wanbao, 1 May 1981, FBIS, 22 May 1981, p. K9.

24. One commentator punned that instead of “ appraising for bonuses” (ping bi) most workers were “ giving equal bonuses” (ping bi). An lao fenpei yu si ge xiandaihua (Distribution According to Labour and the Four Modernizations (Beijing: China Finance and Economics Publishing House, 1979)), p. 137. Also RMMB, 28 December 1979.Google Scholar

25. GRRB, 21 February 1980; TJRB, 11 September 1979; An lao fenpei, p. 138.

26. Some people argued that if the differential were any larger, it would create too much inequality among co-workers (GRRB, 10 January 1980) and “ harm working class unity” (GRRB, 8 December 1978). The press rebutted this view by explaining that if the differential were too small, it would not provide an effective work incentive. GRRB, 8 December 1978. Other articles pointed out that when bonuses were converted into “ supplementary wages” (fujia gongzi) during the Cultural Revolution, workers came to think of them as part of their monthly wage. Now that bonuses have been revived and the supplementary wages cancelled (in some enterprises) if bonuses are too small, workers’ income may remain the same or even be lowered in the case of older workers. This would be counter-productive. “ Some questions about bonuses,” JJYJ, No. 9 (1978), p. 50.

27. One shift leader was praised for never taking more than a second- or third-grade bonus even though her group was the most productive one in the factory. GRRB, 19 January 1980.

28. NFRB, 15 April 1979.

29. Because these monthly bonuses had no special name and no clear standard, workers simply thought of them as a source of more income. BJRB, 7 March 1980. One commentator defended this tendency as the inevitable consequence of the country's poverty. Wages are low and people's livelihood is poor, so it is natural that workers think about bonuses as a wage supplement and distribute them to one another in roughly equal shares. BJRB, 3 February 1980.

30. Shaanxi ribao, 18 May 1981, FBIS, 8 June 1981, p. T2.

31. An lao fenpei, p.138. NFRB, 15 June 1979. One of the major rationales for the shift away from enterprise autonomy and back to centralization is the need to prevent the I “ generosity ” of enterprise managers from bankrupting the economy. Most enterprises I are now told by the government just how much they can distribute as bonuses. Hongqi (Red Flag), No. 8(16 April 1981); FBIS, 15 May 1981, p. K11.

32. BJRB, 7 March 1980.

33. Guangdong Provincial Service, 11 June 1981, FBIS, 16 June 1981, p. P3; RMRB, 28 December 1979.

34. NFRB, 3 November 1979; GRRB, 16 January 1980; RMRB, 24 January 1980; GRRB, 26 January 1980; GRRB, 30 January 1980; GRRB, 5 February 1980; one billion yuan ($60 million) was paid out in year-end bonuses in 1979. GRRB, 25 January 1980.

35. RMRB, 20 February 1980; Jingji guanli (JJGL) (Economic Management), No. 10 (1980), p. 43; JJGL, No. 12 (1980), p. 31.

36. NFRB, 13 March 1980. At the Chongqing Iron and Steel Company, production units receive 11 yuan ($6.60) per person if they fulfil their targets, support units 8 yuan ($4.80) per person, and service and administrative units 7 yuan ($4.20) per person.

37. An lao fenpei, p. 132.

38. GRRB, 8 December 1979. A “ floating wage system ” has been proposed which would make part of a worker's regular wage dependent on the profit level of his or her enterprise. Xinhua, 23 May 1981; FS/S, 29 May 1981, p. K16.

39. GRRB, 8 December 1978; GRRB, 25 January 1980.

40. Xinhua, 29May 1981;FBIS, 22 May 1981, p. K11.

41. One article explained that “ counting the bonus (ji jiang)” is preferable to “ evaluating the bonus (bi jiang).” If there is a record of individual output then you can see at a glance how much bonus to give. TJRB, 11 September 1979.

42. RMRB, 15 May 1981; FBIS, 22 May 1981, p. K10. The rural model is also praised for its fairness (when “ the quantity and quality of labour expended [is measured] in terms of the final product, every commune member stands equal in front of the same measurement ”) and its “ simplicity and straightforwardness.” Guangming ribao (GMRB), 25 April 1981; FBIS, 14 May 1981, p. K7–8.

43. GRRB, 23 May 1981; FBIS, 29 May 1981, p. K16.

44. RMRB, 5 September 1979.

45. An lao fenpei, p. 116.

46. Despite the praise for piecework in central economic documents of 1961–62. Under 5 per cent of production workers worked for piecework pay in 1960, 10 per cent in 1961, 3·8 percent in 1962 and 19–6 per cent in 1963. “ On piecework,” JJYJ, No. 2 (1979), p. 49.

47. For example repair and supply work cannot be counted, and it is difficult to examine the quality of heat treatment work. “ On piecework,” p. 52. Jobs which involve heavy physical labour and manual work also lend themselves more easily to piecework pay. An lao fenpei, p. 116.

48. Hongqi, No. 4 (1980), pp. 9–11.

49. NFRB, 20 August 1979; NFRB, 6 October 1979; RMRB, 6 October 1979; NFRB, 9 October 1979; NFRB, 21 November 1979.

50. Bonuses are supposed to be adjusted periodically to keep up with changes in production techniques. They must not be too high or too low. The majority of workers should be able to reach the quota, but only the most outstanding should be able to surpass it: that is the definition of an “ average advanced ” quota. Workers are supposed to be able to appeal to the labour-wage department of the enterprise if they are unhappy with the quota. In order to encourage innovations in production methods the quota should not be revised for six months after the introduction of an innovation. TJRB, 11 September 1979.

51. An lao fenpei, pp. 116–17; NFRB, 9 October 1979; NFRB, 21 November 1979; GRRB, 17 January 1980; GRRB, 24 January 1980.

52. “ On piecework,” p. 51; BJRB, 13 February 1980.

53. NFRB, 19 April 1979; GRRB, 28 January 1980. One article suggested that to remedy these quality and safety problems it was better to return to a combined bonus than continue with the piecework-type bonus. NFRB, 17 November 1979.

54. GRRB, 21 January 1980.

55. Ibid.. 10 January 1980. Ibid.. 1 March 1980.

56. In heavy industry most of the production workers are men and many of the support workers are women. The introduction of the new agricultural pay system has also caused barefoot doctors (who, like support workers, cannot benefit from the new system) to complain that their relative economic position is declining. Xinhua, 24 March 1981, FBIS, 25 March 1981, p. L18.

57. As one worker said, in an opera orchestra the cymbalist cannot simply clap his cymbals more times if he wants to earn more bonus. In other words, individual output cannot be calculated in group activities. GRRB, 10 January 1980.

58. Beijing wanbao, 7 May 1981; FBIS, 22 May 1981, p. K11.

59. The distinction between efficiency-oriented and organization-oriented enterprises is adopted from Ronald Dore's distinction between market-oriented and organization oriented firms. (Dore, British Factory-Japanese Factory, The Origins of National Diversity in Industrial Relations (Berkeley: University of California Press, 1973); and Dore, “ Late development—or something else? Industrial relations in Britain, Japan, Mexico, Sri Lanka, Senegal,” Institute of Development Studies, University of Sussex, August 1974.)

60. BJRB, 13 February 1980; TJRB, 19 April 1981; FBIS, 7 May 1981, p. R5.