Expediting the flow of labor and the market determination of wage rates is one of the important aspects of the market-oriented reforms of China as a whole. After China's WTO entry, the Chinese government will honor its international commitments and propel as ever the reforms in this field. In the days to come the marketization of labor in China will tend to develop in the following directions:

1.Urban, Rural and Regional Labor Markets to Be Gradually Integrated and Labor to Be More Efficiently Allocated

Establishing a unified urban and rural labor market is not only the innate requirement for establishing a market economy system, but also an objective necessity for accelerating the industrialization and urbanization of China and for ensuring sustained, healthy and rapid development of the economy. Large numbers of surplus rural labors flowing to urban areas and flowing from backward areas to developed areas will help restrain the rise in wage costs in the urban primary labor markets, so as to keep China's manufactured goods competitive in the field of international trade. It brings out the concentrative effect of the cities to keep steady increase in total consumption volume and sustained upgrading of consumption standards, forming new growth points for the economy. The current situation of development shows that after over 20 years of reform and opening up. China's market economy system has been preliminarily consolidated; the conditions for the integration of urban and rural labor markets are basically available; enormous progress has been made in reforms relating to social security, housing and household registration system, preparing for the integration of the labor market; rules, regulations and measures have been enforced for improving the labor employment ability and for protecting the lawful rights and interests of employees. Currently most of the subsidies for urban and rural residents have been abolished. Social security systems independent of enterprises covering all urban units and employees have been established. Some cities have started to provide certain types social security to the peasant laborers working in the city. The lawful rights and interests of employees as specified in the Labor Law of the People's Republic of China are protected and realized. More and more rules and regulations concerning training of employees and safety and health of them are made available and improved. On the whole, the in-depth advancing of China's reform is constantly reinforcing the basic conditions for free flow of labor in China. A unified national labor market full of vigor is about to be completed, providing China's economic development with more sustainable vitality and inexhaustible power.

2. Mechanism of Market Determined Wage Rates Under the Government's Macroeconomic Control to Take Dominance and Wage Rates to More Precisely Reflect Labor Supply and Demand

Establishing a market determination mechanism for wage rates under the State's macro control, and letting wage rates be determined through bargaining between the employer and the employee are an important manifestation of protecting the lawful rights and interests of the market entities under the market economy conditions as well as an important protective measure against violation of employees' lawful rights and interests in face of the reality that labor supply will be in excess of demand for a long period in China's labor market. Presently, collective bargaining for wage rates is widespread in developed market economy countries, in which the government formulates reference wage rates in guiding the collective bargaining to determine the increase in wage rates under macro control. Under the market economy conditions, the government, in order to ensure the realization of macro economic targets, has to control the increase in wage rates in accordance with the social economic development standard, the consumer price indexes of urban residents and other economic and social indicators. By formulating and announcing the guideline wage rates, impartial basis and standards are provided for the enterprises to determine distribution at their own will and for the collectives to bargain for the wage rates, thus the wage rate determination under the market economy conditions that is conducted in a scattered way, in a micro economic sense, is put under macro economic control, and the micro economic wage rate decision is coordinated and united with the macro economic decisions. In 1999, China launched a labor market wage rate guidance policy, which was put into trial run in 88 cities. The feedback showed that the announcement of guidance wage rates for labor market at various localities basically reflected the wage rates and skill requirements for major professions and jobs. Among them Shanghai achieved the fastest progress, where wage rates for a total of 627 professions were announced by the end of 2001. In the days to come. China will continue to summarize such experience and popularize the experience gained, to establish a labor market wage rate guidance system to be announced at multiple levels with the central cities as the base for reference to cover a wide range of areas. This will be the trend for the development of market determined wage rates in China.

3. China's Labor Market and Wage Rates to Be Compatible with the International Standards

Such compatibility refers to the situation in which China's labor market and wage rates will interact with those of the international market and tend to fluctuate with them in a synchronized way. Despite the fact that labor cannot freely flow directly between countries, it can be mobilized and allocated in an indirect way by means of international investment and international trade, so that one industry or trade could reflect the basic supply and demand situation and wage rates in the global labor market. In the era of economic globalization, international capital, especially industrial capital, would seek for ideal locations for investment in pursuit for maximization of profits according to the relative differences in labor supply and demand and wage rates in all countries. After the WTO accession, China will be further involved in international division of work, greatly improve its investment environment, so as to become a hot spot for investment of international capital. China's labor force with relative advantage will be more efficiently allocated according to the position taken by China in the international division of work. In this way the supply and demand and wage rates of China's labor will be able to basically reflect the relative wage rates and labor supply and demand situation around the world, and to keep mutual contact and influence with the international market. On the one hand, China has a huge labor force with relatively low wage costs and relatively higher level of education that satisfies higher technological requirements of modern industry. This will affect the relative advantages in international trade and the direction of international investment, as well as the labor supply and demand situation in some of the global industries, especially in those labor-intensive industries, intensifying the competition for international job opportunities, to form wage rates that can reflect the international situation of labor supply and demand. On the other hand, under the circumstances where the world industrial structure is under adjustment, the permanent shifting of industries internationally and the incessant alterations in dynamic international relative advantages, the labor supply and demand situation, quality of labor and wage rates in other areas will influence China to a certain extent, so that China's labor market and wage rates will be increasingly more connected with those of the international market.

(China.org.cn November 7, 2003)