China's Labour Market in Transition

Over the past decade, the share of jobs not controlled by the state has increased considerably, whilst employment in agriculture has declined, against the backdrop of ongoing urbanisation. Over 200 million people have been drawn into urban areas through official or unofficial migration, despite various obstacles to labour mobility, including the registration system and the associated restrictions to social service access. New labour laws were introduced in 2008 to better protect employees in a market now dominated by private-sector employers, notably via more systematic use of and adherence to written labour contracts, in particular of indefinite duration ones. To what extent the new legislation and implementing regulations will be enforced remains to be seen. For the time being, de facto employment protection is far less than de jure, with an enduring preponderance of fixed-term contracts, involving few restrictions. Minimum wages are set locally and have not kept up with average wages, nor are they effectively enforced. During the recent slowdown, average wages adjusted rapidly and employment was soon on the rise again. However, this episode also highlighted the need to integrate migrants better, not least by relaxing registration rules.