1. Chinese Society GEE 2190K Instructor: Ho-fung Hung Week 5. Work Unit

2. Origins of the Work Unit (or Danwei, 單位 ) System Before the nationalization of private enterprises, the Communist government in China focused their attention on the land reform in the rural area. Before the nationalization of private enterprises, the Communist government in China focused their attention on the land reform in the rural area. After the Communist government completed the nationalization process in the big cities in the late 1950s, it encountered the problem of: After the Communist government completed the nationalization process in the big cities in the late 1950s, it encountered the problem of:

3. 1) How to organize the workers and integrate them into the socialist economic system based on state command. 2) How to improve the living conditions of the workers. 3) How to establish effective political control over the workers.

4. Before 1949, the Communist Party had spent two decades in the village, liberating the peasants through land reform and organizing a revolutionary army. It was not experienced in managing urban enterprises. Before 1949, the Communist Party had spent two decades in the village, liberating the peasants through land reform and organizing a revolutionary army. It was not experienced in managing urban enterprises. To solve the problems listed above, the Communist government invented the system of work units, which were cell groups linked to one another through a hierarchical structure of command and control, just like brigades in an army. To solve the problems listed above, the Communist government invented the system of work units, which were cell groups linked to one another through a hierarchical structure of command and control, just like brigades in an army.

5. The System of Work Units as a Whole Each work unit was subordinated to a larger unit, which was in turn subordinated to an even larger unit, and at last to a government bureau. Each work unit was subordinated to a larger unit, which was in turn subordinated to an even larger unit, and at last to a government bureau. Government bureau Smaller unit Larger unit

6. Example: Example: http://www.shougang.com.cn/companyintro/company/ind ex.html http://www.shougang.com.cn/companyintro/company/ind ex.html http://www.gov.cn/frontmanger/centralGov.jsp

7. Under this hierarchical structure, each unit did not operate autonomously. Each unit simply executed the orders (e.g. about what to produce and how many) from superior units and relied on the resources from above. Under this hierarchical structure, each unit did not operate autonomously. Each unit simply executed the orders (e.g. about what to produce and how many) from superior units and relied on the resources from above. This structure was somewhat similar to the structure of the People’s Commune system, which was based on the Commune – production brigade – sub-brigade hierarchy. This structure was somewhat similar to the structure of the People’s Commune system, which was based on the Commune – production brigade – sub-brigade hierarchy.

8. Internal Organization of Work Units A work unit was not just an economic organization, but also a social and political organization. A work unit was not just an economic organization, but also a social and political organization.

9. - Social functions of a work unit: (1) Providing workers with different non- wage benefits, such as education, medical care, housing, loans, subsidies and bonus; (2) granting permissions regarding all aspects of workers’ daily life, such as marriage/divorce, paid leave; (3) issuing passport; and so forth.

10. - Political functions of work units: (1) Mobilizing workers to participate in different political activities such as studying national leaders’ speech, celebrating national day, and all sorts of mass rally. (2) Monitoring each worker’s activities; Compiling and keeping evaluation report (based on production enthusiasm, political progressivenes, etc.) of each worker.

11. The internal organization of a work unit was based on a hierarchical patron-client network, which created personal dependence (i.e. each worker was personally dependent upon his/her superior). The internal organization of a work unit was based on a hierarchical patron-client network, which created personal dependence (i.e. each worker was personally dependent upon his/her superior). Patron Client Patron Client

12. Each patron maintained the loyalty of his/her clients through dispensation of various resources (as mentioned previously under the subtitle “social functions of work unit”). Each patron maintained the loyalty of his/her clients through dispensation of various resources (as mentioned previously under the subtitle “social functions of work unit”). As workers were totally dependent on their superiors in the work unit for these resources, they had no choice other than being absolutely loyal to the latter. As workers were totally dependent on their superiors in the work unit for these resources, they had no choice other than being absolutely loyal to the latter.

13. Impact of the work unit system Positive impacts: Positive impacts: - It created an efficient economic system under which China industrialized rapidly, particularly in the military-industrial sector. - It provided urban residents with comprehensive social welfare. - It helped maintain social stability.

14. Negative Impacts: Negative Impacts: - It cultivated a culture of dependence, which reduced the incentives of individual work units and individual workers to excel. - It fostered corruption and the emphasis on personal networks (guanxi) in the society. This ran contrary to what was promoted as the official ideology of the Mao era. - Workers lost their freedom and privacy.

15. Demise of the Work Units The most crucial foundation of the work unit institution was the command economic system under which all urban residents relied on their work units for all necessities in daily life. The most crucial foundation of the work unit institution was the command economic system under which all urban residents relied on their work units for all necessities in daily life. This foundation began to erode in the advent of market reform, which enabled people to obtain necessities in daily life from the market, and to seek employment in private enterprises. This foundation began to erode in the advent of market reform, which enabled people to obtain necessities in daily life from the market, and to seek employment in private enterprises.

16. When the weight of private enterprises increased in China’s economy and when government lifted its financial support of state enterprises during the reform, state enterprises faced great difficulties in competing with the private enterprises and in making ends meet. When the weight of private enterprises increased in China’s economy and when government lifted its financial support of state enterprises during the reform, state enterprises faced great difficulties in competing with the private enterprises and in making ends meet. To increase the competitiveness of state enterprises, government introduces, though bit by bit, state enterprise reform ( 國企改革 ). To increase the competitiveness of state enterprises, government introduces, though bit by bit, state enterprise reform ( 國企改革 ).

17. The reform mainly consists of: The reform mainly consists of: - Terminating the practice of life-long employment of workers, so that the enterprises can cut cost by laying off employees. - Getting rid of the social functions of work units (such as stopping providing free housing to workers, privatizing hospitals, schools, etc run by work units).

18. Provided with the above-mentioned transformation of state enterprises and the respective work units, it becomes insensible to maintain the political function of work units. Recently, the government declares that work units are no longer the places which grant permission for marriage/divorce and issue passports. Provided with the above-mentioned transformation of state enterprises and the respective work units, it becomes insensible to maintain the political function of work units. Recently, the government declares that work units are no longer the places which grant permission for marriage/divorce and issue passports. Work unit as an institution is becoming history, though the state enterprise reform faces a very tough road ahead. Work unit as an institution is becoming history, though the state enterprise reform faces a very tough road ahead.

19. “Danwei People Become Citizens.” “Danwei People Become Citizens.” Economist, September 6, 2003. Economist, September 6, 2003.