Informal employment in China: recent development and human resource implications

A key feature contributing to the rapid economic development of China is the deregulation of the labour market and the dramatic growth in the use of informal employment. This paper reviews recent developments of informal employment in China and the role of institutional actors. It also examines the role of government policy and regulation in improving or worsening, directly and indirectly, the terms and conditions of those engaged in informal employment. The study contributes to the understanding of the situation of informal employment in China as one of the countries that contains the largest number and proportion, in relation to formal employment, of informal workers, not only in the semi- and manual skilled segment, but also increasingly extended to include highly educated workers, notably university graduates. It has implications for employment relations and social policy for foreign firms wishing to enter or already operating in China in terms of their human resource acquisition and management. The paper concludes that strong state intervention is necessary to uplift the employment prospect of workers in informal employment, particular in labour markets where workers hold weak bargaining power and are largely unorganised.