Toward Labor Flexibility with Chinese Characteristics? The Case of the Chinese Construction Machinery Industry

Abstract

This paper takes an institutional perspective to study the roles of institutional change and continuity in shaping Chinese enterprises’ labor flexibility strategies. Based on intensive field research in seven construction machinery enterprises, I find that employment practices in these workplaces are converging toward extremely numerical flexibility including the use of temporary labor, short-term labor contracts, termination of labor relationships, internal retrenchment and flexible working time. I argue that both institutional change and continuity have played important roles in shaping these labor flexibility practices. On the one hand, the changing household registration system, the changing social protection system, the establishment of the labor contract system, the weakening workers’ representation in the workplace, and the ambiguous labor regulations and weak enforcement have directly provided pre-conditions for the spread of extreme numerical flexibility practices in the Chinese workplace. On the other hand, the continuity of other institutions including the macroeconomic control of the state, the underdeveloped business credit system, the cultural preference of extremely short lead time, and the vocational education and training system has indirectly imposed imperatives of extreme numerical flexibility on these enterprises by increasing uncertainties and fluctuations of product markets and worsening the labor market condition of excess low skilled and scarce high skilled labor.