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China to End Job Guarantees for 30M State Workers

China plans to phase out lifelong jobs for the country's 30 million state employees. The move is the latest step in China's effort to dismantle its "iron rice bowl" employment system as it moves toward a market economy. The official China Daily newspaper Tuesday said that China will end the jobs-for-life system for government workers within the next five years. The announcement, made by the Ministry of Personnel, sounds the "death knell of lifelong employment" for public employees.

The report says the country's 1.3 million state-owned institutions will instead draw up employment contracts for workers. It is "one of the biggest shake-ups in the field of employment in China," said the newspaper, "and a vital part of the country's modernization."

China Daily quotes a senior personnel official as saying that the overhaul will lead to layoffs for some workers. That could become a political problem later on, as China already is struggling to cope with tens of millions of unemployed workers.

Andy Rothman, an economist with CLSA Emerging Markets in Beijing, called the announcement the latest step in China's long effort to cut the size of its government bureaucracy. "By the end of the 1990s, China had reduced the size of its central government workforce by about one-third," he said. "And they were also making attempts to cut back on the amount of government regulation, and that's accelerated significantly since China joined the WTO a year ago."

Mr. Rothman said the reforms of China's public sector mean that the traditional "iron rice bowl," or lifetime guarantee of employment, is no longer a reality for Chinese workers.

Under the planned economy of the past, government employees received free housing, medical care and many other benefits.

In addition to the cutbacks in China's civil service, Chinese state-owned enterprises have laid off some 30 million workers over the past five years. The country also has millions of unemployed farmers and workers whose jobs have been placed on indefinite, unpaid, leave from state enterprises.