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3.1 Post-Wage Grid Wage Determination analyzing the marketization of the labor market, wage determination mechanisms are a crucial component. For the purpose of this paper the scope will be limited to this dimension. Fragmentation of the labor market and different reform efforts has had its effects on the wage determination process. At this stage the Chinese workplace relation system is in the making; with several competing or perhaps interrelated systems in place. Current competitive labor markets are coexisting with government control and attempts of collective bargaining (Chan, 2000) but it is still unclear which system will prevail. Regional experimentation rather than the big bang approach has been a notable feature of Chinese reforms as policy makers did not prescribe to the mainstream economic formula of development ( Qian, 2002). When dealing with the evolution of the labor market similar developments are noticeable.authors such as Meng (2000) will argue that the Chinese labor market has become increasingly flexible with evidence of a neoclassical labor market with an evolving market mechanism, whilst others will reject the competitive hypothesis and argue that administrative controls on wages continue to exist (Yao, 1999) and that there is no evidence of regional or sector wage conversion (Yang, 2005) as the neoclassical model would predict. Other recent studies (eg Fleisher and Yang, forthcoming/Cai, Park and Zhao, 2004) indicate no major developments, which have led to an improvement in the functioning of labor markets. Yet, others argue that China has inherited several institutions from the pre-reform era, which in the post-reform era interact with the newly emerged labor market (Cai, Wang and Du, 2005). The current discussion shows the complexity of the Chinese labor market and conflicting conclusions for different segments. In some cases, the different perspectives can be explained by the different sectors of the labor market, which have been the focus of analysis, but a comprehensive understanding is still lacking. However, current literature will agree to the fact that the labor market has become increasingly flexible while pre-reform institutions are still influencing the newly developing labor relations. To illustrate the increasing marketization of the Chinese labor market the influences of three existing wage determination mechanisms and the problems for the labor force which result out of them will be briefly outlined: flexible labor market, government control, and collective bargaining.
3.1.1 Flexible Labor Market
Pay based on qualification and performance is a driving component in the marketization of the Chinese labor market, both in the state as well as the private sector. Though the government may still influence wages (see section 3.1.2 belo...
