China's Workers Seek Anchors In Swiftly Changing Economy

FOR five years, executive Shi Qingping has searched for his niche.

Frustrated with his dead-end career at a state-run trading firm, Shi Qingping quit his job in 1988 and joined the private sector. But the export manager soon became disenchanted with his new post and left over differences with the owner. After six months of unemployment, he enrolled with a Beijing recruiting agency and recently contracted to work with a health products company.

"Since reform and opening, all the state enterprises are supposed to be profit-oriented. But they don't know the value of a good manager who can improve the efficiency of the business," he says. "Most enterprises in China are not aware of the worth of executive talent."

Workers from factory assembly lines to management offices are grasping, as he is, for new job anchors in a labor market thrown into chaos by sweeping economic change.

Since the communists came to power in 1949, Chinese have worked under a system of lifetime employment in which jobs, pay, and benefits were dictated by the state. Fearful of losing their safety net, many workers have clung to old jobs and their "iron rice bowl" of cradle-to-grave welfare.

But the government's looser control over job movement and its inability to support the bloated work force of state enterprises is breaking up the old system and forcing millions to search for new work. Growing numbers have left jobs voluntarily, shunning state companies for the riskier but dynamic private sector - a process known here as xia hai, or "going into the sea."

Millions of other workers have been forcibly sidelined at state-run companies. According to People's Daily, the Communist Party newspaper, 10 to 15 million of the 80 million employees of state-run firms are not needed, and the government has pledged to slash redundant employees.

In the first six months of this year, unemployment in the cities jumped 9 percent as state workers and new migrants from the countryside joined the job market, and urban job slots dropped by more than 1 million, to 146 million, according to the Labor Ministry. Unemployment figures do not include rural areas, where record numbers are leaving the land.

"In short, the current labor market is in total disorder, and its development is not standardized," says Ren Jijun, an economist at a government think tank who has started a private executive placement agency. "We now have an unhealthy and somewhat twisted labor market."

The official unemployment rate of 2.3 percent is expected to swell as the government tightens up on the fast-growing economy and rampant inflation. Authorities raised interest rates in May and July, ordered banks to recall high-risk loans, and began cracking down on speculative investment in an effort to cool off the economy.

Both rising unemployment and high inflation increase official worries of social instability. Five years ago, soaring prices, consumer shortages, and hoarding led to the unrest that culminated in mass pro-democracy demonstrations and the June 1989 military crackdown.

Recently, the government reported some success in stabilizing the skyrocketing money supply; it pledged to hold inflation to about 10 percent this year, although government analysts project 12 to 13 percent inflation. Previously, prices rose nationally at 14 percent a year.

But executive vice premier and troubleshooter Zhu Rongji, who has led Beijing's campaign to tighten up on free-spending regions, warned that austerity measures will be intensified because of resistance from some local cadres. This week, the Labor Ministry announced a clampdown on soaring wages and bonuses for urban workers. Pay increases will only be allowed for state enterprises making profits and trying to reduce debts.

Still, the government has gone slowly in calling in speculative loans on some troubled state enterprises and projects, fearing a wave of high unemployment similar to that of five years ago, when an estimated 7 million workers were idle.

Indeed, even in today's more flexible job market, the state retains control over workers through a system of personnel files. If a worker leaves a job, he must transfer his file to his new workplace. If he goes into the private sector, his work file is held at a state-run talent exchange center. If he works for a foreign joint venture, his placement is controlled by a government agency that takes a large chunk of his salary.

BATTLING the government gridlock on free job movement, Mr. Ren and four other economists at the prestigious Chinese Academy of Social Sciences set up their own company to recruit and place managers from state and private enterprises in new jobs.

Ren, who claims his firm is the first of its kind in Beijing, says his agency's development has been slowed by government obstruction in transferring files, advertising for placements, and recruiting for foreign joint ventures. Still, he says the government will continue to slowly loosen up the job market, which is pivotal to the success of China's economic reforms.

"Whoever controls the talent market has the greatest future," he says. "But not only is economic reform involved; social and political reform are involved in this respect, too. Through the file system, party managers control the cadres and retain their leadership."

Changing the system, Ren says, "requires reform of the party itself and a change in the mind-set of the people."