Informal Employment and Internal Migration: The Case of China Johannes Jütting Theodora Xenogiani OECD Development Centre DRC, Beijing, 27 November 2007.

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Presentation transcript:

Informal Employment and Internal Migration: The Case of China Johannes Jütting Theodora Xenogiani OECD Development Centre DRC, Beijing, 27 November 2007

Why Focus on China? Big informal sector: about half of urban employment is informal Large migrant flows from the countryside to cities: 120 – 150m internal migrants Serious concerns about migrants’ social protection rights, working conditions and integration Less focus on the situation of those (family members and others) who are left behind in rural areas

Characteristics Informal employment accounts for about ½ of total urban employment (different definitions provide slightly different results) Employment in the informal sector rose from 32m in 1995 to 125m or 47% of total urban employment in 2004 (Cai, Du and Wang, 2006) The informal sector is considered as: othe fastest growing segment of urban labour market oa highly dynamic and mobile sector oheterogeneous omore competitive and less segmented than formal sector ooften as the driver of economic growth in China

Employment Trends Structure of Employment in Urban (Rural) Areas Self employment3.7 (73.7)8.9 (75.3)9.6 (76.9) Regular wage employment 86.8 (12.9)78.9 (17.1)51.4 (22.2) (formal sector)86.5 (12.6)75.8 (16.0)43.2 (19.3) (informal sector)0.3 (0.3)3.1 (1.1)8.2 (2.9) Irregular employment 9.5 (13.4)12.2 (7.6)39.0 (0.9) Source: Ghose 2005

Characteristics What is particular about the informal sector in China and the way it is perceived? Considered as one of the main forces driving economic growth Treated as part of national economy, subject to government regulations and management A highly mobile, dynamic and competitive sector It has tight links with internal migration

Causes of Growing Informality Economic restructuring (decline in agriculture, SOE restructuring) Migration to cities, urbanisation, demographic pressure Productivity, missing formal jobs Labour market segmentation Globalisation leading to increasing demand for labour- intensive product exports Weak formal safety nets Social protection system providing incentives for growing informality Other?

Migration: High and on the Rise Numbers and growth rates of rural migrants Numbers (million) Increases (%) Source: Cai and Wang, 2005

Migration: Only Positive? Migration has played a major role in Chinese growth and economic development (macro level) Migration “must” be good for the migrants themselves (micro level) BUT concerns about: oSocial protection of migrants and their families oWorkers’ rights and work conditions oSocial impact in sending regions oSustainability?

Migration, Labour Markets and Social Protection: An Emerging Agenda in China? Key questions: What policies need to be put in place to manage the challenges of social protection and bad work conditions? What is the impact of migration on families left behind (remittances, social protection, education, health care)? What is the impact on the sending regions (labour markets, productivity, trade)? What changes in institutional set-ups are needed to promote a more harmonious society?

Thank you!