Economic Transition and Personnel Reforms in China

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Economic Transition and Personnel Reforms in
China
Weifang Min Peking University April 20, 2006
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Introduction

• To understand current personnel reforms in
  China, one has to understand the social economic
  transition of China from an ossified centrally
  planned economic system to a dynamic market
  economy, which lead to dramatic changes in human
  resource mobilization, allocation and
  utilization.

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All the major changes in personnel system and
personnel policies, such as hiring and firing,
staff development and promotion, wage structure,
incentive system and mobility, fringe benefits
and retirement policies, are related to the
economic reform. On the other hand, personnel
reforms with new incentive mechanism better
motivate and prepare people to participate in the
economic and social changes, thus accelerated the
social economic transition and development of the
country.
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The Talk Is Divided into Four Parts
Part One The Economic Transition and the
Emerging New Human Resource Model Part Two The
Major Targets of Personnel Reforms Efficiency,
Equity, Transparency Part Three Schemes and
Implementation of Personnel Reform Part Four
Current Challenges and Future Trends
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Part One

• The Economic Transition and the Emerging New
  Human Resource Model

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• It was recognized that the old model of the human
  resource, personnel and wage system of the
  centrally planned economy has been very
  inefficient, resulted in huge wastage of human
  resources, especially the high level human
  resources. E.g.
• It was also recognized that one of the keys for
  the economic success of China is to convert the
  heavy population burden into human resources
  advantages, which needs a change.
• Thus the most important reform is the changing
  social economic and institutional context in
  which the human resource model and personnel
  system changed fundamentally .

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• The nature of the human resource model and
  personnel system of the centrally planned
  economy Human resources were developed,
  allocated and utilized according to the
  governmental plan, and everybody was regarded as
  an element of production of the centrally planned
  economy.

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Figure 3 . The Human Resource Model in the
Centrally Planned Economy
Governmental Economic and Social Development Plan
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• Along with the economic reform and opening up to
  outside world, it was clearly stated by the
  Chinese leadership that in the market economy, it
  is the market demands and supply that will play a
  fundamental role in resource mobilization,
  allocation and utilization, including human
  resources. Thus a new human resource model is
  gradually taking its shape.

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Figure 4 The New Human Model in the New
Market Economy
LABOR MARKET DEMAND
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Part Two

• The Major Targets of Personnel Reforms
  Efficiency, Equity, Transparency

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Efficiency

• The best people for the best jobs
• All the people get appropriate positions which
  better fit in with their qualifications and
  situations, in order to best use their knowledge
  and skills.

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Equity

• Equal opportunities for competitions for
  everybody
• Special considerations for the disadvantaged
  groups
• Fairness to everybody emphasized
• to the good workers and not so good workers

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Transparency

• Make the recruiting, evaluating, and promoting
  process all transparent to everyone.
• Let everybody participate into the process of
  changes.
• Make everybody understand the rules of the game

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• Some Basic Guidelines for the Personnel Reforms

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• ?????????????????? From the Iron Rice Bowl
  to competitive selection and promotion and a new
  tenure system

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• ???? Selecting and retaining the top talents and
  giving support to those in priority positions
• ???? Encourage and reward the diligent, and
  punish the indolent

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• ???? Work more make more.
• ???? Merit pay for excellence

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• ???? Encourage sense of competitiveness
• ???? Facilitate mobility

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• ???? Be able to be promoted and demoted
• ???? Be able to be get in and get out.
• Hire and Fire

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Part Three

• Schemes and Implementation of Personnel Reform
• The PKU scheme
• Other universities scheme
• The schemes of public sector in general

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1, Screening, Selection, promotion and tenure

• Initial Selection
• 2 or 3 three-year appointments
• Limited the number of times for applying for
  promotion
• Evaluation and promotion peer review and
  outsiders review
• Avoid Inbreeding of faculty members
• recruitment from oversea universities and
  sending existing teachers and researchers to
  international universities

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2, New Wage and Subsidies System 9 level merit
pay

• 9 level subsidies for performance and positions
  A1 A2 A3, B1 B2 B3, C1 C2 C3.
• Levels of subsidies not based on the title, but
  on the performance
• Top-down allocation of of positions
• Bottom-up process of evaluation

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• Other Universities Scheme e.g. in a central
  China U ?????? Everybody fired and rehired
  according to their qualifications and
  performance.
• Public sector in general

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Part Four

• Current Challenges and Future Trends

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Current challenges

• Strong resistance Reform is a process of
  changing the structure of the distribution of
  interests. There was, is, will be never a real
  reform that everybody applauds.
• Difficult to balance efficiency and equity.
• A society of harmony and complaints of too many
  and too fast changes
• Imperfect legal infrastructure

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Future Trends

• The personnel reform will be proceeded wave by
  wave with rhythm.
• Perfect the legal infrastructure
• The reforms of Personnel system will be
  Institutionalized
• Challenges of entering into WTO