r detailed research. Perhaps other economic policies would have been more suitable and sustainable, but a full discussion of this topic is beyond the scope of this paper (see eg Stiglitz, 1996). Regardless of this debate, this policy influenced initial economic reform and labor market polices. After achieving first milestones, these policies have not been able to adapt to challenges related to dissatisfaction and uncertainty in society. China s current social problems become apparent when considering the growing income and wealth gap in the country as well as the speed at which this has happened. Certainly the vast majority of the country has benefited from the countries development in terms of living standards, but as the wealth gap is rising and workers rights are being violated further change seems necessary. Abolishing the iron-rice bowl under the danwei system were important steps in the marketization efforts, but the government has not yet established labor market institutions effectively protecting worker s rights, while at the same time private enterprises have had the opportunity to exploit a wide range of opportunities with little regulation creating a significant power imbalance.lack of supporting social institutions might now be a threat to the continuous transition to private employment (Fu and Gabriel, 2001). The move from a socialist paternal labor relations system has been implemented without providing the labor force much possibility to adjust nor supplying it with necessary support providing institutions. In a sense the Chinese labor market flexibility has become so prevalent that when there is no work workers often have no income, but during busy periods overtimes reach levels in violation with national laws (Chan, 2005). The government has relied on the private sector for job creation as it was downsizing the state-owned sector and perhaps for this reason has provided management much leeway in establishing an industrial relation system best suiting their needs. In this process the government has shifted from a system where it had complete control over labor, benefits and wages to a system where its influence has significantly been reduced. From an enterprise s perspective these conditions might be favorable at first, but this kind of capitalism cannot be beneficial in the long-run. Uneven institutional evolution of labor markets including their regulation has profound economic, social, and political consequences for China. Dealing with the challenges of the transformation of the labor market is an essential task the Chinese government must tackle (Fleisher and Yang, 2003).
3. Labor market reform
continuous reform efforts the labor market has attempted to progressively marketize. Equally the Chinese labor market ...
