re become more flexible. According to Fleisher and Yang (forthcoming), major problems contributing to problems within the labor market can be contributed to current legislation often not being incentive compatible with the goals of local governments . Current efforts to privatize and let market forces take over have paid-off, enabling the evolution to a more market based economy, but at the same time other parallel institutions contributing to a labor market with fair treatment of labor have been neglected. In how far the government has remained in complete control of these privatization efforts should also kept in mind. Heilmann (2004) argues that due to bureaucratic confusion regarding how to control the private sector combined with a general underestimation of the developments, growth was fairly unnoticed and uncontrolled. This led to the point where the private sector had gotten too large to enforce a conservative counter-strike .
4. Trade unions in a transforming labor market
4.1 Organizational Structure and Function
All-China Federation of Trade Unions (ACFTU), the governing body for all unions in China, has not much changed in terms of its basic organizational structure, although its responsibilities have dramatically changed with the demolition of the iron rice bowl where unions main duties were related to social welfare and leisure activities (Heuer, 2004). In 2007 the ACFTU had over 150 million official members, covering about 20% of the labor force (ACFTU, 2007). A breakdown of unionization by ownership type is a difficult task, as figures cannot be confirmed by official ACFTU data. However, Shen (2007) provides own estimations as well as figures used by other authors. Generally, SOEs are likely to have a high degree of unionization, with as much as 90% of enterprises having a trade union. Figures for private enterprises and foreign owned enterprises vary by author, ranging from under 10% to about 50%. These figures are to be treated with caution, but it can be assumed that non-SOEs are significantly less likely to unionize voluntarily.ACFTU s current structure is a top-down, hierarchical organization . As outlined by Chinese Trade Union Law grass-root unions can be established at the enterprise level if so desired by workers, which would then represent the lowest organizational level. The law does not tolerate competing enterprise unions and all established grass-root unions are subordinate to the local, provincial and industrial levels of organization, with the national ACFTU on top. Grass-root union representatives are usually appointed by party officials and as a result one can expect that union leadership is more likely to side w...
