ABSTRACT
Reforming the state sector has been an issue of top priority for the Chinese government in the past decade. Overstaffing, low efficiency and a high level of bureaucracy have been major problems shackling the performance of the state sector which is increasingly under competitive pressure from the private sector and facing the need for modernization if China wishes to launch itself as a major player in the international arena. Major changes have been made in employment policies and practices in the state sector, which, until the latest employment reform started in 1997, had a massive workforce and an enormous payroll (see Table 3.1). The state sector consists of mainly SOEs, public sector organizations and governmental organizations. Among them, SOEs and the public sector employ the majority of the state sector workforce. While the former has been shrinking since the mid-1990s, the latter has experienced a slight growth in the number of employed, because it was the SOEs that were the main targets for downsizing and not the public sector. For example, by the end of 1996, over 18 million workers were employed in the public sector with a total wage bill of nearly 126 billion yuan (China Statistics Yearbook 2003). By the end of 2002, the public sector had a workforce of over 20 million with a total wage bill of nearly 300 billion yuan (China Statistics Yearbook 2003).
