HIST363: Global Perspectives on Industrialization

In addition to population transfers, another major element of the central government's recovery programme was a change in the recruitment of urban labour. Between 1962 and 1965, the CCP established the already-mentioned dual system in the labour market, as well as an equivalent system in education. The reasoning behind this move was simple.

Many factories required new workers in order to meet their post-famine production targets. However, the central government was reluctant to increase the number of people on the state's payroll; a move that had backfired so spectacularly during the Great Leap. Between 1960 and 1963, the workforce in state-owned enterprises had decreased from 59 to 43 million, releasing some of the pressure on the urban welfare system. Some of these losses had been absorbed by the collective enterprises, where the workforce had increased from 9 to 11 million, but the overall number of workers had still dropped, and more labour had to be found from somewhere.

It was soon realized that one way to control government spending while enlarging the workforce was to allow an increase in the number of temporary workers. Short-term work had existed alongside lifetime employment since 1949. A decision by the Labour Department in 1959 had distinguished between three forms of urban work: long-term employment, temporary contract work undertaken by urban workers, and a system of "peasant-workers" recruited from the countryside for short-term work in factories.²⁶ Now, the government dramatically expanded the number of workers in the latter two categories. "Peasant-workers" were an especially useful resource, since although their wages were higher than the average rural income, they remained poorly paid compared with regular urban workers.

It was clear from the outset that peasant-workers were not to be allowed to become part of the permanent urban workforce. A 1965 report by the Labour Department about the situation in Sichuan Province expressed concern that if wages for young peasant-workers were set too high, they would cause tension in the villages after their return. The report also recommended that production brigades should be able to claim compensation for work lost as a consequence of members taking temporary jobs outside agriculture.²⁷ Both these conclusions rested on the assumption that a peasant-worker was and would remain part of his or her rural community, with no prospect of earning admission to the urban world. Although temporary workers were a minority, they were nevertheless a significant part of the urban workforce in the 1960s. By the end of 1965, China had over 33 million permanent workers and 3.18 million urban contract workers; an increase of 540,000 over the previous year. Another two million people were employed as peasant-workers. A contemporary report by the State Statistics Bureau praised the dual labour market for allowing urban work units to replace many permanent workers with temporary staff.²⁸

In expanding the dual labour market, the government never planned to abolish the "iron rice bowl", but it did intend for a significant number of workers to be temporarily employed and denied access to the welfare state. From 1964, President Liu Shaoqi was an important advocate for the dual system in the labour market and in education. In a speech on the topic, Liu argued that while the iron rice bowl was the gold standard, it introduced problems by making it difficult to "withdraw" workers; that is, to fire them. For seasonal tasks, temporary employment was a more desirable route. As Liu put it, "If there is work, they come. If there is not, they can go home".²⁹ Liu argued against future increases in the permanent workforce, and he even suggested that entire sectors might become the exclusive preserve of temporary workers. Discussing the mining industry, Liu noted that life underground could lead to severe health problems, and he proposed that workers should be recruited only to work in the mines for a few years before being mandatorily discharged. While he was careful to frame his argument in terms of workers' interests, "mandatory discharge" would have had the convenient side effect of turning a whole industry into short-term contract work. Liu's speech was rooted above all not in the socialist logic of worker entitlements, but in the government's desire to reduce costs.

In sum, the years between 1962 and 1966 saw a deepening of the urban-rural divide, resulting from a deliberate reduction in the number of people entitled to access the urban welfare state and stricter enforcement of the hukou registration system. A side effect of these policies was to limit social mobility for the rural population. Within the cities, the gap between the permanent and temporary workforce also widened. Nevertheless, the party leadership remained united behind the new measures, and it is notable that Mao never questioned the hukou system in his lifetime, or the various programmes to reduce the urban population.