Job Mobility

The physical distancing of foreign-sector managers from their dossiers has gone hand-in-hand with increased job mobility. The opportunity to job switch in the foreign sector contrasts markedly with the generally poor labor mobility that has existed since the 1950s and continues to prevail in the state sector.^[25] Upon leaving high school or university, young people normally are allocated employment by the state. Rather than using a labor market that takes into account employee preferences and talents, job allocation is made according to the priorities of planners, who try to place employees in work units with unfilled employment quotas. Once assigned to the state sector, it is difficult to change jobs within the state sector—the negative side of the job security associated with this system. The relative lack of employee-initiated turnover results from a number of factors. Workers and managers in the state sector have had, historically, the highest level of wages and benefits in urban China, making state-sector jobs highly desirable. With job switching, job seniority is lost, and the state generally will not assign an employee to a second job in the prime state sector. Leaving a prime job therefore usually leads to a lower living standard, since it forces an employee to move to the less generous collective sector. Those lucky enough to be assigned jobs in the state sector are therefore reluctant to leave them. Employees are able in rare cases to transfer (diaodong ) jobs, but transfers usually occur at the initiative and discretion of the organization, not the employee, and tend to be within the boundaries of one administrative "system" (xitong ), such as between factories under one ministry. Even if skilled workers or managers can find comparable state enterprises willing to take them, it is often difficult to gain the necessary cooperation of the original factories' directors and the supervisory offices for both the old and new employer to transfer their dossiers.

[25] On labor allocation and labor mobility in the Mao and post-Mao eras, see Davis (1990, 1992); Lin and Bian (1991); Walder (1986), pp. 71-72; and Alexander Eckstein (1977), pp. 101-104, 139-145.

Recognizing the costs of this system to production and to individual aspirations, reformers took steps to increase job mobility beginning in the early 1980s. It was hoped that a number of the reform policies—decentralization of hiring authority to factories, enhanced authority of line management over Party cadres, sanctioning of the private and foreign sectors, and greater flexibility in wage and bonus scales—would provide incentives for a more flexible allocation of labor. New institutions and procedures were set up to further encourage mobility. Enterprises looking for new staff can now hire through talent exchange centers. Employees are allowed to take temporary unpaid leaves of absence (tingxin liuzhi ) to move to other factories. Individuals may also apply directly for jobs. The top graduates at the elite universities may be recruited by selected employers, and, in 1995, 90% of college graduates were made responsible for finding jobs on their own. There are plans for easing the household registration system, permitting the freer flow of people between cities.^[26]

These reforms have led to some increase in job mobility.^[27] However, they have not produced a true labor market. As of 1987, annual turnover of technical and professional staff averaged a mere 3%.^[28] As of 1989, annual turnover was less than 2% in the state sector as a whole, and over half of the changes were due to retirements.^[29] Higher mobility has remained elusive for a number of reasons. There is reluctance among many central and local officials to move to a full-fledged labor market, in part because of fears of labor unrest caused by rural migration to the cities. Moreover, there are disincentives for factory directors to let go of employees; particularly as enterprises have been pressed to become more efficient, directors are loath to release talented managers, especially if the directors have invested in managers' training. Compounded by the need for multiple permissions to transfer dossiers, the negative incentives for hoarding labor have stifled the ambitions of many of the best

[26] On these various policies, see Davis (1990, 1992); Bian (1994); China Youth Daily (1995); and "China to Abolish City Hu-Kou (Two-Tier Registration) System" (1994).

[27] In addition, for white-collar workers, mobility also often has meant emigrating from China. Rural workers have migrated to cities or emigrated completely from their towns or villages, often without the permission of their danwei (unit) authorities. On the other hand, some émigrés have reported that their danwei actively encouraged their departure. Brick (1993).

[28] There was some increase in job turnover in certain areas in the early 1980s, but this trend reversed itself after 1984. Davis (1990), pp. 86-88.

[29] Davis (1992), p. 1066.

employees. Even if college graduates can choose their own first jobs, administrative barriers to job transfers continue to affect them. Talent exchange centers do not completely solve the mobility problem either, again because the need for multiple permissions opens the possibility for vetoes at each stage. The continuing role of state enterprises as providers of key benefits, particularly housing, also creates disincentives for workers and managers to try to take advantage of the new rules.^[30] The key to changing jobs within the state sector continues to be the use of guanxi with well-placed cadres.^[31]

The situation is significantly different in the foreign sector; managers there have shown a surprising, and in some cases extreme, degree of job mobility.^[32] It is quite common to find managers who have moved, from the government or state-sector jobs to which they had been assigned, to foreign-backed enterprises where they have been hired independently or via FESCO, and then perhaps to yet another foreign enterprise. In contrast to the state sector, such movement among foreign-sector managers is usually at the initiative of the manager, who is sometimes lured away by the middlemen of executive-level labor markets, "headhunters." Moves outside a given geographical area are not uncommon. This new mobility appears greatest in the coastal areas, particularly in the SEZs, and in Shenzhen. In one extreme case, a Shekou-based foreign-sector manager moved jobs on his own initiative five times in less than three years, after completing a graduate-level business degree. He anticipated that he would continue to move until he landed his ideal job as senior manager of a JV or WFOE. More generally, pools of middle-level managers are beginning to appear in Beijing, Shanghai, and Shenzhen, since those with some formal training are making their way to these areas in

[30] Davis (1990), pp. 89-106, and Davis (1992), p. 1066. Other odd incentives exist as well. For example, after 1987, factories were allowed to redistribute wages of workers who had transferred among the other employees. As a result, units resisted taking new employees unless they could bring their wage quotas with them—something that old enterprises were highly unlikely to permit. Alternatively, supervisors were known to refuse to give the day off to employees taking exams for further education, or to refuse to release employees who received further training, even if the unit could no longer use them (Davis [1990], pp. 92-93). Davis argued in 1990 (p. 87) that there remained a deep-seated hostility toward the idea of a labor market; labor continued to be seen as an asset to be deployed, as the state would an army. By 1992 (p. 1084), however, she had seen some erosion in this view even though other of the barriers to increased mobility discussed here remained.

[31] Davis (1992) and Bian (1994).

[32] Increasing mobility for the floating population—another new economic group but a mass-level one—has been documented in Solinger (1991), pp. 15-16.

search of attractive jobs.^[33] Foreign-sector managers expect that they will be able to move once again for better jobs, sometimes even to the state sector, if an appropriate job is offered. The direction of mobility for foreign-sector managers is almost always upward.

Job mobility in the foreign sector has been possible because of the relatively greater ability of foreign-backed firms to hire managers independently (rather than having them assigned) and the increasing frequency of job borrowing.^[34] As a result, foreign-sector managers often find jobs on their own, and then arrange the transfer of dossiers. Even representative offices, which must hire personnel through FESCO, have been allowed increasingly to identify those managers they would like to hire, and FESCO in turn borrows those managers from their original units.^[35] Mobility also has been encouraged by the establishment of the more neutral repositories (i.e., talent exchange centers) for dossiers, which earn fees when job switching occurs. For example, in Shekou, where China Merchants holds all dossiers, foreign-sector managers may change jobs among any of the two hundred companies located in the zone without obtaining permission. Managers there find this feature very attractive, particularly insofar as they believe that the zone administration will not force them to move to another company within the zone against their will.

This is not to say that the mobility of foreign-sector managers is without hindrance. Managers working in state-owned enterprises who wish to take a job in the foreign sector still may face resistance from superiors in their state enterprises. Intra-region or intra-city transfers that require permission from local authorities still can be difficult. In such cases, managers may rely for transfers on the strength of their relationships with their superiors or with local officials.^[36] Nonetheless, foreign-sector managers have greatly reduced the obstacles to mobility.

[33] Borgonjon and Vanhonacker (1992), p. 18; and 1995 interviews.

[34] Laws formally guarantee JVs and WFOEs the ability to hire personnel independently, such as through newspaper advertisements and university recruiting. See, e.g., the 1983 Implementing Act for the Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment (Zhonghua renmin gongheguo zhong wai hezi jingying qiye fa shishi tiaoli ). Foreign JV partners continue to complain of some pressure to take on staff from the Chinese partner, but the pressure has declined in recent years.

[35] After the 1989 crackdown, some foreign managers reported that FESCO temporarily was more resistant to taking such suggestions. This was less likely due to politics than a reaction to the contraction of many ROs, a phenomenon that expanded the rolls of unemployed FESCO personnel and made FESCO more desperate to have ROs hire off of these lists.

[36] A 1992 survey of JVs and WFOEs found that 80% were able to transfer some employees (presumably including both workers and managers) without problems, but half reported that problems had arisen in some cases. One-third reported that they had to compensate the employee's work unit an average of 1,000 yuan ($190) (Frisbie and Brecher [1992], p. 25). Obstacles to transferring from the state sector to foreign businesses became somewhat greater after 1989, as it became necessary to obtain an even stronger endorsement from the original unit in order to change jobs.