ABSTRACT
An important component of state-owned enterprises (SOEs) reforms in China is the reform of the labour system. After the inception of the economic reforms, the system of permanent labour became a conspicuous problem. With the purpose of creating a labour system under which both enterprises and employees could make mutual selections, the government began to reform the labour system in various localities of China in 1978. Reforms began with the expansion of the employment channels. The implementation of the contractual labour system had, in the early years of implementation, made little impact upon the status of permanent employees because the new system applied only to newly recruited workers. Permanent workers continued to enjoy what was called the 'iron rice bowls', meaning a secure job. Another component of SOEs reforms was the reform of the wage system. During the planned economy era, the determination of the wage level was highly centralized.
