trolled enterprises have laid-off workers and significantly reduced their social benefits. Some segments of the labor force were able to benefit from this transformation, while others struggle to deal with the increased social risks (see section 3). The changing composition is illustrated in Table 1. Various forms of private ownership types are crucial in job creation enabling the government to reduce employment in the state-owned sector.
Initial reforms limited exposure to market mechanisms, but continuous privatization efforts reforms began to specifically target the labor market affecting a higher proportion of the labor force. Labor market reforms entered the most radical phase in the 1990s when the government significantly downsized the public sector, putting an end to cradle-to-grave socialism and lifetime employment (Dong, 2004).
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Please note that employment data by enterprise type are based on the annual population sample survey. As a result, the sum of the data by ownership and by sector is not equal to the total. p align="justify"> Downsizing of the state sector is reflected in Figure 1, as the proportion of employees in state enterprises rapidly decreased in the early 1990s whereas it remained relatively stable in the years before. Consequently, as has been the case in other post-communist countries, a major employment and welfare institution was reformed, significantly influencing fundamental values ​​of the Chinese society. Continuous liberalization resulted in marketization of labor relations, specifically related to determination of hiring, dismissal, and wages, transforming the paternal employer-worker system to an exchange of labor services for wage payments (Rawski, 2003). p align="justify"> The demolition of the danwei system and the establishment of a mix-economy have brought along an increase in private held enterprises, entrepreneurialism, and profit orientation. But unlike in many Western countries where capitalism and workers rights were able to develop themselves during the industrialization process, any such developments remain under tight orchestration of the Chinese government. In order to please the country s desire for industrialization and economic development, output and profits have been given key priority. Often this came at the expense of workers rights and the environment as a mechanism needed to be developed to find employment for a massive number of laid-off state employees in an effort to reform highly unproductive government enterprises. If this apparent economic policy path chosen by the Chinese government was necessary for job creation remains debatable.
2.2 Consequences for a Labor Force in Transition
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