Formation of new vulnerable groups

In general, the new urban poverty and vulnerable groups could be classified into three main categories: the “laid-off” or unemployed former workers, pensioners, and the

“floating population”, including all kinds of migrants without a local “Hukou”. The formation of the three categories will be discussed in turn as follows.

“Laid-off” workers

In the years of planned-economy, public-owned enterprises were major employers of the urban population. With less emphasis on economic efficiency and more emphasis on full employment, most public sector enterprises and their affiliated organisations employed more people than they should have. Work that could be done easily by one person was handled by two or more, and overstaffing was a main feature of the socialist Work Unit system. After the 1980s, when the private economy was introduced, the redundant employees became one of the biggest weaknesses for public enterprises in the face of the fierce competition in a liberalised market. Actually, since the early 1980s, the economic output of public sector has begun to take less and less proportion of the national economy, and more employees had transferred from the public to the private sector. However, in order to accelerate such a process, in the late 1990s the government adopted tougher policies to reduce the redundant labour forces and increase efficiency in the state-owned enterprise sectors, particularly in the larger ones of heavy industries which usually displayed poor performance in the market. A great number of workers, especially the unskilled blue-collar workers with lower productivity, lost their jobs.

Between 1996 and 2003, 64.4 million work posts were eliminated from the public sector (Zhou, 2003). In some cities, about 30% of all jobs in public-owned enterprises were cut (Zhu, 1998). Normally, those redundant employees were described as “laid-off”

workers, to differentiate them from the “unemployment” population. In theory, the laid-off workers were still in receipt of basic livelihood allowances from their previous employers or local government until they get new jobs. The government and employers set up various re-employment service centres to help the laid-off workers to find new jobs or to learn new skills. However, because of the huge size of “laid-off” groups increasing in such a short period, the rate of re-employment was not at all satisfactory.

At the end of 1999, the re-employment rate was 42%, a drop of ten percentage points from the previous year. In later years, the rate plummeted rapidly to just 10% or lower (He, 2002; Zhu, 2002). Some of them had to become long-term or permanent unemployed people, because many small or poorly performing public enterprises could not afford to run the re-employment service centres or even pay the basic living allowances. For millions of laid-off families, the financial difficulties could soon become as bad as those experienced by the “traditional urban poverty” groups. Their incomes rely greatly on the basic livelihood allowances and other subsidies, but that was far from enough to sustain the normal standard of life. An official study discovered that, nationwide, 20 to 30 million urban-registered workers had fallen into poverty around the turn of the century, and with their family members, they added up to about 40 to 50 million people altogether, or almost 13% of the urban population (Chinese Central Organisation Department Research Group, 2001).

Pensioners

The retired people with downward personal finance formed another group of the new urban poverty. In most Chinese cities, the ratio of pensioners to all employed people has increased significantly in recent decades. Official statistics show that the number was 1:30 in 1978, and 1:7.5 in 1985, but in 2002, it reached a record high, around 1:3. There were over 42 million pensioners in cities and towns at the end of 2002, 13 times the figure for 1978 (3 million) (Ministry of Labour and Social Security and State Statistical Bureau, 2003). The rapid growth in the number of pensioners is not only the result of the longer average life-span, but is also associated with radical reform of public enterprises. In many Work Units of the public sector, some “unimportant” employees (usually the unskilled workers or low-level managers aged over 40 or 45) were encouraged to retire early, when they had not yet reached the official retirement age.

This could be seen as a supplementary approach to help cut off the redundant employees of public sector. However, it soon led to severe financial difficulties for millions of

pensioners. First, the amount of pension they received was usually very small. As a legacy of the planned economy, every pensioner can receive a fixed monthly payment as a proportion of his/her wage before retirement. That ensured the pension payment was very poor, for in the past the wage was kept at a low level, just as a nominal reward for their work. The governments from time to time did increase the level of the fixed payment for pensioners, but the growth could never catch up the inflation. Moreover, pensions were normally paid by the employers, but many poor performing enterprises frequently deferred the payment because of financial difficulties. Actually, the wages to existing employees were already a great burden, so the pension payment had to be a lower priority. In practice, some younger early retired people did try to find new jobs, but only a few of them succeeded. Lack of skills and their age were big shortcomings for them in the competition for new jobs. Some old pensioners had to live together with their laid-off children so their lives might be more difficult. Recent pension reform has aimed to centralise pension management to municipal level and avoid the problems caused by bankruptcy enterprises. Nevertheless, the reform was still on the way and seems too late for those pensioners already in long-term hardship.

Floating population

This category comprises many kinds of new urban residents who have migrated from other areas and who had no local “Hukou”. Those who may not stay in cities for too long or change their addresses very frequently are called the “floating population”. The majority of them came from rural areas and were referred to as rural migrant workers. In the early 1980s, “the household contract system” and advanced agricultural technologies (such as Hybrid Rice) were introduced into practice in rural China. The agricultural productivity increased significantly and more and more rural labour became surplus. New economic policies allow them to work and live in cities. The rural migrants quickly occupied most of the low-paid labour in urban areas. However, without an urban hukou, many of them had to suffer very poor working conditions, including overtime working, rigid workplace and delayed wages (Fan, 2001; Solinger, 1999, 2006; Wang, 2004a). Also, most of their jobs were never secure and they were often excluded from many well-paid industries⁶. In recent years, people other than rural

6 In almost every Chinese city, there are still some regulations to allow only a limited number of people without local Hukou to be employed in some “protected” industries, such as cashier and banking, post office, telephone switchboard, vehicle driver including taxi, ticket sales and collecting, nursery, shop assistant in department stores and so on. The unlimited jobs are usually hard, dangerous and dirty, physical, labour-intensive work.

migrants have also joined the category of “floating people”. Some of these new migrants may be better educated, young and unmarried. They have gone to large cities for more job opportunities, but in the face of fierce competition, most of them have to wait a long time for jobs, or get insecure low-paid jobs only. Some other farmers who had always lived on the periphery of large cities also joined the procession of rural workers from remote villages, for their agrarian land had been occupied by the recent urban sprawl. It is very hard to count the accurate number of all the “floating population” and the proportion of them varies from city to city, but it is estimated that, in some very large cities like Beijing and Shanghai, the number of “non-registered”

people is nearly 30% of the total population (Gu and Shen, 2003, p. 112).

It is hard to know how many of the “floating people” have poor personal finance, but of course in the macro-scale their average income is significantly lower than that of the

“registered” urban residents in any city. Moreover, the income of workers with low wages might be higher than that of the non-employed people, but in fact many of them always send their income to their rural homes to support their family members. As a result, they should be the group with lowest “real” income in cities, even excluding those subject to the frequently prevalent delayed wage payment.