Reforming China`s State Socialist Workfare System: A Cautionary and Incremental Approach

Abstract

This paper explains the cautionary and incremental approach that China has adopted toward the reform of its state socialist workfare system, an approach in great contrast to the use of shock therapy by some East European countries. This paper adopts a structural-institutional perspective that contextualizes the socialist workfare system into the wider framework of China’s restructuring of its command economy. The paper relates workfare to China’s dual welfare system and highlights the privileged position that urban state-owned enterprise (SOE) workers enjoy under the socialist workfare system. Workfare has been under harsh criticism, however, as it becomes increasingly incompatible with the emerging so-called socialist market economy. Despite cost reduction as the overall objective in the restructuring of the workfare system, in reality, however the reforms are more about turning workfare into social welfare and overhauling SOEs to become more economically competitive. Furthermore, this paper explains why the establishment of a three-tier social protection system is related to the reform of workfare. In conclusion, this paper argues that China’s reformers are not free in their choice of strategies to adopt in the reform of the workfare and welfare systems. Moreover how far this cautionary and incremental approach is effective in tackling economic and welfare reforms is also discussed.