The biggest challenge for work in China will be ending the household registration system (hukou) that ties citizens to a particular place and to a designation as either an urban or rural citizen. For decades, China’s growth model has relied on low-cost, low-skilled, transitory labor from the countryside. Every year hundreds of millions of rural citizens leave their inland villages for cities and development zones across the country. When they do so, they are looking for work.
Mary E. Gallagher is an associate professor of political science and director of the Lieberthal-Rogel Center for Chinese Studies at the University of Michigan.
But because of the barriers of the hukou system, they are often barred from long-term permanent residency in cities. Their work lives are in one place while their legal place of residence is another. Their children must return to rural areas to enroll in public schools. Urban schools will often bar migrant children from attending local schools or make it too expensive. Not only are families divided for decades while parents migrate for jobs, these jobs are often the dirty, dangerous, and difficult jobs that urban citizens have spurned. The insecure city employment that they do find often does not come with the full protections offered by law. Migrant workers are far less likely to have formal contracts or to be included in social insurance programs for pensions, medical care, and occupational injury and disease. The workers who are most at risk for injury or disease at the workplace are those least likely to receive protection.
This segmentation of the population into two categories based on birthplace, with different citizenship rights and entitlements, isn’t just unfair. It’s also bad for the Chinese economy. The restrictions on migration and permanent legal urbanization reduce mobility between regions. The reliance on a transitory workforce does not permit much skill upgrading. Workers are motivated to earn as much money as possible and switch jobs often. Employers develop production strategies to adjust to high turnover, by simplifying production, so that little or no training is needed. Productivity gains are less than they could be. Low wages and a weak safety net also restrict social mobility so migrant workers cannot contribute much to China’s domestic consumption. Restrictions on education opportunities for the children of migrants risk creating a vicious circle of social and economic marginalization passed down to the next generation. Inequality in China, already very high, is in danger of rising even more.
The Chinese government has been well aware of these problems for over a decade. Changes to the hukou system have been touted as a critical reform since early this century. In 2014, the government announced plans to urbanize more than 100 million migrants, reducing but not erasing the gap between the number of people who actually live and work in cities and those with legal urban citizenship.
The workplace is key to the success of these reforms because it is the entry point for migrant workers on a path toward urban citizenship. Migrants go to cities in search of work; many of the urban social welfare benefits are available through the workplace. China’s employment laws also do not discriminate between rural and urban citizens. In recent years a rash of new legislation has further increased the penalties for non-compliance, boosting protection for migrant workers. There has been some gradual improvement in migrants’ access to formal employment, with formality increasing from a low of 12 percent in 2005 to 33 percent in 2010. Access to social welfare has also modestly improved. In some cities, actual hukou status matters less; as long as migrant workers have formal jobs, they can begin to take advantage of urban public goods.
Overall, however, a large gap still exists between the promises of the law and actual compliance. Rural migrants have for decades been at the lowest rung of the urban labor market, taking informal, insecure jobs that no one else wanted and accepting conditions that were far from decent. Employers justified the unequal treatment because rural workers could always return to their hometowns when they were no longer needed or too sick or old to continue working. Land security was guaranteed through the system of collective land ownership that allocated land to rural families. Access to rural land justified the mistreatment and discrimination that migrants faced in cities.
This system is breaking down on both dimensions. First, migrants are no longer so willing to tolerate abject workplace conditions and clear legal and social discrimination. As China’s economy boomed over the past decade, migrant wages have gone up along with their own awareness about legal protections they should receive but often don’t. The new generation of migrant workers is also better educated than their parents; many have little or no interest in returning to rural life. They are aspiring urban citizens despite the barriers that still exist. Second, land security is no longer guaranteed as rural local governments have expropriated agricultural land to make up their fiscal deficits and grow the local economy through commercial and real estate developments. Experts estimate that well over 50 million rural people are now landless. The government can no longer avoid the urgency of urbanization because many rural migrants can no longer return to the countryside.
Changing how the workplace functions and breaking down the discriminatory barriers between urban and rural citizens will be incredibly difficult. The government is also confronting a slowing economy, an anxious middle class, and a volatile stock market. Urban citizens have already protested reforms to improve educational access for the children of migrants because these reforms threaten their own access to scarce and valuable resources in an incredibly competitive society. But these changes, however difficult, are crucial to the transformation of the Chinese economy to a more sustainable model of development.
For the Future of Work, a special project from the Center for Advanced Study in the Behavioral Sciences at Stanford University, business and labor leaders, social scientists, technology visionaries, activists, and journalists weigh in on the most consequential changes in the workplace, and what anxieties and possibilities they might produce.