Dismissal and Labor Turnover

Abstract

This chapter looks at two other crucial aspects of employment: hiring and retention/dismissal practices. It also explores how foreign investors from Japan and the United States have affected the development of China’s labor market, especially hiring, promotion, and dismissal practices. It details the dynamic process of institutional change—both the reform of Chinese labor market institutions and the adjustment of United States and Japanese institutions that operate in China-based subsidiaries. It begins with a discussion of attempts to reform labor market practices during the period 1978–92, including the introduction of labor contracts and state attempts to manage foreign-invested enterprises’ (FIEs’) labor market practices through organizations such as the Foreign Employment Services Company (FESCO). Next, it analyzes labor reform efforts since 1992, especially focusing on the Labor Law of 1994, the Japanese and US labor market institutions that firms brought to China, and the demonstration effects of US and Japanese labor models in China. It concludes with a discussion of micro-level dynamics in the process of state-guided globalization and reform of labor market institutions.