Introduction

As the most populated country in the world, China has always faced huge challenges in the area of labour policy, and the situation has become worse since China's market transition, which was due to the huge increase in the labour force, the insolvency of the inefficient SOEs and the large scale of rural–urban migration. The key challenge facing China's labour policy is how to respond to this pressing problem of unemployment. This chapter starts with a brief review of Chinese labour policy prior to the economic reforms, followed by an overview of labour policy changes in the reform era. It then focuses on unemployment problems in the context of market transition and the Chinese government's policy responses. The last part examines the impact of the labour policy reforms, in particular the government's unemployment measures, from a well-being perspective.

Labour policy before the economic reforms

After the CCP came to power in 1949, the new government set out to abolish all labour laws and policies implemented by the ousted nationalist government, and to formulate new labour policies in accordance with socialist principles. The key goals of socialist labour policy were to turn wage workers into key players of the means of production and to ‘set them free’ from unemployment and capitalist exploitation. As discussed in Chapter Three earlier, a universal, lifelong employment policy was adopted and comprehensive welfare packages provided for workers.