Labor Market in the People's Republic of China (PRC) and its Adjustment to Global Financial Crisis

A conference on "Labor Market in the People's Republic of China (PRC) and its Adjustment to Global Financial Crisis" was held at ADBI in Tokyo from 18 to 19 June 2009 under ADBI's global financial crisis project. The conference reviewed the recent development in the PRC's labor market and its perspectives on possible adjustments to the global financial crisis, focusing on the following five areas:

• recent macroeconomic and labor market development in the PRC and the perspective of its long-term growth potentials
• PRC's internal labor mobility across urban and rural areas and across regions
• implications of labor market reform for income inequality and their roles in rebalancing PRC's economy and buffering the global economic downturn
• related reforms in social security system, which are essential for a well-functioning labor market
• regional experiences and lessons in labor market adjustment to financial crisis

The participants included experts and academics from the PRC, Australia, and ASEAN member countries, and policymakers and representatives from regional and international institutions. The participants argued that despite the significant progress in labor market reform in the PRC, there are still some important institutional barriers which hinder the development of an integrated labor market in the PRC.

The conference was divided into five sessions. The first four sessions discussed evidence and research findings from empirical studies conducted by the involved experts who documented the development of labor market in the PRC and assessed policy implications for dealing with long-term growth constraints, income inequality across regions, and the current global financial crisis. The participants also reviewed labor market adjustment experiences and lessons of other Asian countries, including Thailand, from the past Asian crisis. The final session was devoted to a panel discussion which further explored the labor market development in the PRC. The panelists argued whether the PRC has passed the "Lewis Turning Point" of surplus labor, comparing with experiences of other East Asian countries, namely Japan, Republic of Korea, and Taipei,China. Furthermore, the panelists noted that while shifting surplus rural labor to more productive urban sectors would sustain economic growth, any barriers including the "Hukou" registration system to labor mobility should be removed. The importance of reforming the Hukou system and the current social security system for a well-functioning labor market was also addressed.