| Abstract: | Reform of the state-owned enterprise sector is probably the most strategic area of reform during China's transition towards a market economy. For efficiency improvements to be possible, stateowned enterprises must be able to adjust the size and nature of their operations in response to market signals, adding or shedding workers as necessary. However, given that housing, pensions, and healthcare, among a myriad of social welfare services, are tied to the enterprise, labor mobility is highly constrained. This makes it difficult to reallocate redundant labor across occupations, enterprises, and locations. Clearly, for more efficiently-operating labor markets to emerge, worker access to housing and other welfare benefits must be delinked from employment in the enterprise. This paper discusses the possible ways of breaking the link and strengthening the social safety net. The emphasis here being on the urban sector, issues related to safety net provisions in the rural areas, albeit of great importance, will not be discussed at length. |
