Download Employment of Chinese Migrant Workers in Off-Farm Jobs

EASTERN ACADEMIC FORUM
Employment of Chinese Migrant Workers in Off-Farm Jobs
GUO Jinchuan
Wuhan Yangtze Business University, Huazhong University of Science and Technology, Wuhan, Hubei,
China
[email protected]
Abstract: Since economic reforms began in 1978, China's economy has maintained a rapid growth. The
flow of rural labor force accounts for a significant part in GDP growth, industrialization, and
development of the labor market. However, rural migrant workers haven’t enjoyed the benefits
generated by rapid economic growth. The problems of underemployment, regional imbalance in
non-farm employment and various forms of discrimination against migrant workers need to be
addressed appropriately. The increasing income gap between urban works and migrant workers can be
explained by the low stock human capital of rural labor force, the relatively slow development of the
tertiary industry and urbanization. The stable institutionalized expectation plays an important role in the
transformation of migrant workers to urban citizens. Otherwise, a higher cost would be paid to China’s
urbanization.
Keywords: Economic reforms, Migrant workers, Off-farm jobs
1 Introduction
Since economic and political reforms began in 1978, China's economy has maintained rapid growth and
achieved impressive achievement. Economic growth rates over the past three decades have approached
10 percent (at constant prices). In 1978, per capita GDP was only $155. However, it exceeded $1,000 in
2001 and surpassed $4,000 in 2010, which lists China as an upper-middle income country. Household
Contract Responsibility System, foreign trade and urbanization have driven the rapid economic growth
in great part. Also many observers of China agree that the flow of rural labor force accounts for a
significant part in raising income and productivity. Chen Zheng (2006) claims that it is a good way to
remove surplus labor force to off-farm jobs. It is no doubt that migrants’ workers have played an
important role in industrialization, urbanization and modernization. At present, the majority workforce
of many industries is migrant workers and migrant workers have become an important component of
industrial workers.
2 Migrant Workers’ Contribution
2.1 Contribution to GDP growth
The rural labor force flowing into cities have integrated with the capital of the joint ventures and formed
a huge productivity, which have promoted rapid economic growth. The World Bank (1997) predicted
that the structural changes have provided additional impetus for economic growth from the year of 1976
to the year of 1996. The transfer of labor force can account for 16% of GDP growth. From the year of
1978 to the year of 1994 the average growth rate of GDP is 9.4% annually. The transfer of labor force
from underemployed rural areas to the tertiary industries with higher productivity contributed 1
percentage point. The job shift to other non-state sectors contributed another 0.5 percentage point. The
study by Cai Fang etc. (2005) shows that the transfer of labor force can explain 20.23% of economic
growth from the year of 1982 to the year of 1997. The above figures only consider the contribution of
labor flow as production factor, excluding the contribution to institutional changes.
2.2 An important force for industrialization
According to the fifth national census, migrant workers accounted for 58% of employees employed in
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the secondary industry, 52% in the tertiary industry, 68% in the processing and manufacturing industries,
and 80% in the construction industry. China's migrant workers have become an important component of
industrial workers. (The Research Group on the Issue of Migrant Workers, 2006)
2.3 Development of the labor market
The migrant workers complement the urban labor force by taking some hard dirty or dangerous jobs.
They have contributed a lot in the convenience and comfort of the city life. In addition, they have
reduced the labor cost in urban areas, improved productivity and increased the mobility of urban
workers. They have also exerted a powerful impact on the original urban employment system and the
welfare system in a planned economy. However, there are many problems which need to be addressed.
3 Problems Faced By Migrant Workers
3.1 Underemployed rural labor force
According to the statistics of The Research Group on the Issue of Migrant Workers (2006), the rural
population is about 900 million with 480 million in the labor force, which makes up 74% of the total
social labor resources. With the increase of population a certain number of new rural workers have
added to the labor force each year. As a result, the total rural labor force and the proportion of the
surplus labor continue to rise. On the other hand, only about 1.8 billion acres of arable land has
remained and it is declining at the rate of 6 to 7 million acres each year. It is no doubt that such a
proportion of the population and agricultural land leads to a large number of surplus rural labors.
According to the calculation of National Statistics Bureau (2009), the breading industry in the field of
agricultural production can accommodate no more than 200 million workers with the current level of
technology and mechanization. Another 110 million workers are absorbed into the township enterprises
and the left 200 million workers become surplus labor. Because of dense population and relatively
scarce farmland, only 50% farmers are engaged in farming, animal husbandry, agricultural product
processing industry and tertiary industry. And another 50% of the workforce is in a surplus state, the
state of relative unemployment. Even the farmers occupied in farming are at leisure or in the state of
hidden unemployment for one third to one-half time of a year owing to seasonal and cyclical reasons of
agricultural production.
The underemployment of farmers has become very prominent, which is mainly reflected in insufficient
use of farmer's labor resources. Because of relatively low level of agricultural industrialization and
modernization combined with natural conditions, the busy season of farmers is quite short. Even though
they take in sideline, it is difficult to generate good returns. The farmers who go to cities for odd jobs are
also in a drift state and the quality of their employment is affected by various factors, such as the
household registration system, medical care and welfare system. Even the farmers who attempt to make
a living in cities frequently change the working posts and areas because of low stock of human capital
and unfriendly social environment. The underemployment of farmers brings a lot of problems. For
example, their incomes will not or increase very slowly in a long term; rural areas will not witness
fundamental changes; there will be many factors triggering unrest in society.
Since China needs to feed 1.3 billion people (22% of the world population) with 1.8 billion acre land
(7% of the world arable land), rural labor force can not be fully employed within agriculture and the
internal labor force absorption is not enough.
If agriculture develops rapidly, the rural labor resources can be fully utilized. In recent three decades,
with the development of economy and technology, GDP as well as agricultural output is increasing year
by year. However, the growth rate of agricultural output was significantly slower than that of GDP.
Especially in recent several years, agricultural production has advanced extremely slowly. In the year of
2002, GDP grew by 7% over 2001, while agriculture output increased by only 1.87% over the same
period. Therefore, the slow development of agricultural production fails to provide enough employment
for rural labor force. In addition, after the entry to WTO and the phase out of tariffs and quotas of
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foreign agricultural products into China, 10 million employment opportunities are contracted in the
agricultural sector for the production of rice, cotton, wool, edible oil cuts sharply with a large quantity
imported from other countries. In contrast, the United States subsidizes agricultural production in a large
scale and other members of WTO put a high custom tax on agriculture products. China’s exports of
agricultural products have declined and the volume of its employment has been affected.
3.2 Regional imbalances in non-farm employment of farmers
Due to the differences in geography, climate and material resources economic development varies across
the vast area of territory in China. According to the different levels of economic development, China can
be divided into eastern, central and western major economic zones. The eastern areas are mostly
developed and the western areas are least developed. The imbalance in regional economic development
affects the employment structure of rural labor force. Here we categorize farmers into three groups,
agricultural workers, part-time agricultural workers and non-agricultural workers. There is no significant
difference in proportion of part-time agricultural workers in the three major economic zones. So it will
not be discussed here. But there is statistically significant difference in the ratio of agricultural workers
and non-agricultural workers between well developed eastern areas and underdeveloped western areas.
Table 1 shows the employment structure of farmers in the East, Middle and Western of China in the year
of 1997 and 1998 (Li Ming, 2004). In 1998, 42.68% of farmers were occupied in agricultural production
in the eastern area, while the figure rose to 58.09% in the middle area and to 63.32% in western area. In
the same year, 36.99% of farmers were occupied in non-agricultural production, while the figure
declined to 24.06% in the middle area and to 18.14% in western area. The proportion of agricultural
workers in the developed areas is much lower than that in the underdeveloped areas, while the
proportion of non-agricultural workers in the developed areas is much higher, which represents the
regional imbalance in the farmers’ employment structure.
The study of Bai Nansheng and Chen Chuanbo (2008) shows that the regional rates of migrant working
do not converge. There is a huge difference among different regions in migration rates and local
non-agricultural employment.
Table 1 Employment structure of farmers in the east, middle and west of China
Eastern areas
Middle areas
Western areas
1997
1998
1997
1998
1997
1998
Agricultural workers
41.28
42.68
58.45
58.09
64.14
63.32
Part-time agricultural workers
19.36
20.33
18.50
17.84
18.08
18.53
Non-agricultural workers
39.35
36.99
23.05
24.06
17.77
18.14
3.3 Discrimination against migrant workers
It is generally believed that migrant workers in the urban labor market suffer from discrimination in
various aspects, such as the professional restrictions, pay discrimination and the welfare difference. In
2004, the average wage of the migrant workers was 58% of that of urban workers. More than one third
of migrant workers earned ranging from 500 Yuan to 800 Yuan a month, which could not enable them to
afford housing, children’s education and other expenditures, let alone settling down in cities (National
Statistics Bureau, 2006).
Migrant workers and urban residents are faced with occupational division caused by the typical dual
labor market segmentation. Under the pressure of unemployment and lay offs in many state-owned
enterprises, many cities have enacted policies to restrict the employment of migrant workers. Many job
positions with nice pay and working environment are only available to local residents. The migrant
workers are excluded because of their identity. They have to find jobs in the small manufacturing
businesses, service industries, private small shops, and small restaurants, etc. It is impossible for them to
be employed as the official employees in the public units. If the migrant workers and the urban residents
were treated equally, over 6% of migrant blue worker could take the white-collar jobs, while only 14%
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urban residents could continue to be occupied in the white-collar jobs and another 22% could only find
blue-collar jobs (Meng Xin, Zhang Junsen, 2006). To a large degree, Hukou decides the jobs the migrant
workers take.
In addition, migrant workers and urban workers are paid differently even for the same work they do. The
wage level of migrant workers is much lower than that of urban workers. The study of Li Peilin and Li
Wei (2010) shows that the monthly income of migrant workers only account for 61% of that of the
urban workers and they work much longer hours. The survey indicates that migrant workers work 54
hours a week on average, which is 11 hours longer than urban workers do. There is also clear difference
in the two mechanisms of wage determination in addition to the absolute wage differences. The study of
Cai Fang etc. (2005) indicates that 43% of wage differentials between migrants and non-migrants can be
explained by the institutional discrimination and the left differentials can be explained by human capital.
Besides pay discrimination and occupational division, migrant workers are excluded from the urban
workers in everyday life. The residential patterns of rural migrants in urban can be categorized into four
types: the dormitory or the shed provided by work units, urban residential, the villages in urban-rural
fringe, or self-built communities in the village. The floating population in Beijing and Shanghai has to
live in more crowded apartments with worse conditions. The per capita housing area is only one third of
that of the city dwellers. Less than 1% of migrant workers possess home ownership (Wu Weiping, Wang
Hansheng, 2002). The investigation by the Construction Ministry indicates that migrant workers can
only spent a little in housing with generally low income. The per capita living space is generally small
and the necessary living facilities are not provided. For example, 17% of housing is not provided with
running water, 61% without toilets and 57% without kitchen in Chong Qing (The Research Group of
Construction Ministry, 2006). In addition, there are different degrees of security risks. Even a number of
migrant workers live in the slums of the city. The market allocation model, such as housing loans,
second-hand home sale, leasing, and etc. have largely ignored the needs of the transient population
groups.
In the aspect of children’s education, migrant workers are not treated equally. According to the survey
by the Research Group of Education Ministry in 2006, all over China there are 19,820,000 migrant
children, 74% of who originally registered in rural areas. And 44% are in the age group of 6 to 14 years
old, who are entitled to free compulsory education. What’s worse, 6.85% of them have never gone to
school. Since 1990’s, many migrant workers have been unable to afford the high tuition and fees
charged by the urban public schools and they have to resort to non-institutional help. The educational
request for their children has long been ignored. Although the central government requires local
governments to solve this problem, the local governments do not make an active response, lacking of
appropriate financial resources or failing to recognize the significance of the education to these children.
On the other hand, since the data accounting system of migrant children is imperfect, there is no
demographic statistics nor management of children under 16 years of age, which makes it difficult for
the educational sectors to monitor the compulsory education for the migrant children.
Migrant workers are also faced with social risks, such as unemployment, old age pensions, work injury,
disease, and public health problems and so on after entering an industrialized society by leaving the
traditional agricultural society behind. The wide income gap between migrant workers and urban
residents reduces the formers’ capacity of putting up with social risks. What’s worse, the social welfare
system was originally designed for urban residents, which is obviously unsuitable for them. For example,
most migrant workers can not afford the high rates. And it is difficult to continue the social insurance
relations if they migrate to other cities for jobs. In case of serious illness and accidents, they choose to
go back home, which means that they borne the health consequences individually, imposing greater
burden on the already limited resources of rural households.
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4 Reasons
4.1 Low stock of human capital
In addition to the institutional restrictions, such as the rigid household registration system, the low stock
of human capital limits the employment of farmers and they are not qualified for high skilled jobs.
The data of Table 2 and Table 3 come from “The Comprehensive Surveys of Social Conditions in China
in 2008”, carried out by the Institute of Sociology of China’s Social Academy (Li Peilin and Li Wei,
2010). Table 2 shows educational difference among urban workers and migrant workers. Urban workers
are much better educated for 62% have received senior high school education or above. However, only
21% of migrant workers are in this category. The majority of rural labor force just receives junior high
school education or even below.
Table 3 shows that urban workers have significantly higher skills than migrant workers. Nearly 30% of
urban workers take jobs requiring professional skills, which only 10% migrant workers can do such jobs.
Most of them do the manual jobs or the jobs requiring little professional skills.
Table 2 Educational difference
Education
Primary school and below
Junior high school
Senior high school and vocational school
College and above
Urban workers
4.3
33.6
31.2
30.9
Migrant workers
15.0
64.0
18.1
2.9
Table 3 Skills of migrant workers and urban workers
Migrant workers
Urban workers
Working skills
N=819
N=981
Jobs requiring high professional skills
2.7
6.6
Jobs requiring medieval professional skills
6.5
22.1
Jobs requiring some professional skills
28.6
29.6
Jobs requiring little professional skills
34.9
24.2
Manual jobs
26.5
15.9
Others
0.9
1.6
Sum
100.0
100.0
X2=131.1, P<0.001
Since the majority of rural labor force hasn’t received a high level of school education nor in-service
training, their innovative capacity has been seriously affected. They are inclined to stay in the traditional
labor-intensive trades. It is difficult for them to open up new employment opportunities or to adapt
themselves to the needs of new rising industries. The relatively low quality of rural labor force results in
their relatively low productivity, ultimately making it more difficult for them to seek non-agricultural
employment.
4.2 Relatively slow development of the tertiary industry
Generally, the industrial structure evolves from the first industry to the secondary and then to the tertiary
industry in turn. The multi-country model initiated by Chenery etc. suggests that in developing countries,
the rural labor force mainly transfers to the service industry, as the expansion of the manufacturing
industry creates limited employment opportunities.
Due to historical and institutional reasons, in the conversion process of the economic structure, China's
tertiary industry is seriously lagging behind. The output share and the employment share are far lower
than those in developed countries, even lower than those in low-income countries on average.
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In 1997, the tertiary industry in the United States, Germany and France accounted for 62.9%, 53.0% and
51.9% of GDP respectively. Even the proportion of tertiary industry in India and Thailand reached
56.5% and 45.5% respectively. Although since the economic reform China has seen a steady increase in
the proportion of tertiary industry from12.2% to 34.1% in 2009, there is much room for growth. The
slow development of the tertiary industry not only fails to catch up with the development of the first and
second industries, but also hinders the transfer of the rural labor force.
4.3 Relatively slow development of Urbanization
The process of industrialization refers to the decline of the proportion of agricultural output and the rise
of the industrial output. The process of urbanization refers to the decline of the agricultural population
and the rise of the non-agricultural population. Urbanization goes hand in hand with industrialization.
From the year of 1949 to the year of 1978, the process of urbanizations went on slowly with the
population urbanization rate rising from 12.5% in 1952 to 17.92% in 1978. In nearly 30 years, the
urbanization rate has increased only 5.4% while industrialization rate has increased 26.7% over the same
period. From the year of 1978 to 2009, China's urbanization rate rose by 16 percentage points. Although
the degree of urbanization lagging behind industrialization is declining, the momentum has not been
fundamentally reversed. In 2009, the urbanization rate still lagged behind that of industrialization by
6.4%.
The non-agricultural employment of farmers is closely linked with the level of urbanization. Generally,
the higher the level of urbanization, the greater the combined effect of the public demand, the more
labor force the city absorbs. The slow development of China's urbanization restricts the non-agricultural
employment of farmers.
5 Conclusions
Actually, it is a re-socialization process for migrant workers to adapt to urban life and they need to meet
three basic conditions. First, they need to find a relative stable job in cities. Second, the economic
income and social status brought by the job can enable them to interact with the local residents. Third,
they abandon the old value system and develop the new ones which are similar to the locals’. The stable
institutionalized expectation plays an important role in the transformation of migrant workers to urban
citizens. Some institutional discrimination against them should be removed gradually. On the other hand,
convenient vocational training and information service should be provided in order to improve their job
mobility. Otherwise, a higher cost would be paid to China’s urbanization.
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