Recent development in China's labour market : China Update 1998

Since the economic reform initiated in 1978, state enterprise reform has been a difficult task for policymakers. The enterprise reforms introduced in the early 1980s were aimed at providing managers of SOEs with more autonomy in the decision making process. However, as SOEs still operated under soft budget constraints the increase in decision-making power encouraged SOE managers to pursue the maximisation of income and benefit per employee rather than profit maximisation. This paper provides some insights into the problems associated with reduntant workers and discusses the effect of the slow down of economic growth as a result of the Asian crises and tighter monetary policy of the last few years on future employment and unemployment