Chinese SocietyChinese SocietyGEE 2190KGEE 2190K

Instructor: Ho-fung HungInstructor: Ho-fung Hung

Week 5. Work UnitWeek 5. Work Unit

Origins of the Work Unit (or Danwei, Origins of the Work Unit (or Danwei, 單單位位 ) System) System

Before the nationalization of private Before the nationalization of private enterprises, the Communist enterprises, the Communist government in China focused their government in China focused their attention on the land reform in the attention on the land reform in the rural area.rural area.

After the Communist government After the Communist government completed the nationalization completed the nationalization process in the big cities in the late process in the big cities in the late 1950s, it encountered the problem of:1950s, it encountered the problem of:

1)1) How to organize the workers and How to organize the workers and integrate them into the socialist integrate them into the socialist economic system based on state economic system based on state command.command.

2)2) How to improve the living How to improve the living conditions of the workers.conditions of the workers.

3)3) How to establish effective political How to establish effective political control over the workers.control over the workers.

Before 1949, the Communist Party had Before 1949, the Communist Party had spent two decades in the village, liberating spent two decades in the village, liberating the peasants through land reform and the peasants through land reform and organizing a revolutionary army. It was not organizing a revolutionary army. It was not experienced in managing urban experienced in managing urban enterprises.enterprises.

To solve the problems listed above, the To solve the problems listed above, the Communist government invented the Communist government invented the system of work units, which were cell system of work units, which were cell groups linked to one another through a groups linked to one another through a hierarchical structure of command and hierarchical structure of command and control, just like brigades in an army. control, just like brigades in an army.

The System of Work Units as a WholeThe System of Work Units as a Whole

Each work unit was subordinated to a larger unit, Each work unit was subordinated to a larger unit, which was in turn subordinated to an even larger which was in turn subordinated to an even larger unit, and at last to a government bureau.unit, and at last to a government bureau.

Government bureau

Smaller unit

Larger unit

Example:Example:

http://www.shougang.com.cn/companyintro/comphttp://www.shougang.com.cn/companyintro/company/index.htmlany/index.html

http://http://www.gov.cn/frontmanger/centralGov.jspwww.gov.cn/frontmanger/centralGov.jsp

Under this hierarchical structure, each unit Under this hierarchical structure, each unit did not operate autonomously. Each unit did not operate autonomously. Each unit simply executed the orders (e.g. about simply executed the orders (e.g. about what to produce and how many) from what to produce and how many) from superior units and relied on the resources superior units and relied on the resources from above.from above.

This structure was somewhat similar to the This structure was somewhat similar to the structure of the People’s Commune structure of the People’s Commune system, which was based on the system, which was based on the Commune – production brigade – sub-Commune – production brigade – sub-brigade hierarchy.brigade hierarchy.

Internal Organization of Work UnitsInternal Organization of Work Units

A work unit was not just an economic A work unit was not just an economic organization, but also a social and organization, but also a social and political organization.political organization.

- Social functions of a work unit: Social functions of a work unit:

(1)(1) Providing workers with different Providing workers with different non-wage benefits, such as non-wage benefits, such as education, medical care, housing, education, medical care, housing, loans, subsidies and bonus;loans, subsidies and bonus;

(2)(2) granting permissions regarding all granting permissions regarding all aspects of workers’ daily life, such aspects of workers’ daily life, such as marriage/divorce, paid leave;as marriage/divorce, paid leave;

(3)(3) issuing passport; and so forth.issuing passport; and so forth.

- Political functions of work units: Political functions of work units: (1)(1) Mobilizing workers to participate in Mobilizing workers to participate in

different political activities such as different political activities such as studying national leaders’ speech, studying national leaders’ speech, celebrating national day, and all celebrating national day, and all sorts of mass rally.sorts of mass rally.

(2)(2) Monitoring each worker’s activities; Monitoring each worker’s activities; Compiling and keeping evaluation Compiling and keeping evaluation report (based on production report (based on production enthusiasm, political progressivenes, enthusiasm, political progressivenes, etc.) of each worker.etc.) of each worker.

The internal organization of a work unit was The internal organization of a work unit was based on a hierarchical patron-client network, based on a hierarchical patron-client network, which created personal dependence (i.e. each which created personal dependence (i.e. each worker was personally dependent upon his/her worker was personally dependent upon his/her superior). superior).

Patron

Client

Patron

Client

Each patron maintained the loyalty of Each patron maintained the loyalty of his/her clients through dispensation of his/her clients through dispensation of various resources (as mentioned various resources (as mentioned previously under the subtitle “social previously under the subtitle “social functions of work unit”).functions of work unit”).

As workers were totally dependent on As workers were totally dependent on their superiors in the work unit for their superiors in the work unit for these resources, they had no choice these resources, they had no choice other than being absolutely loyal to the other than being absolutely loyal to the latter.latter.

Impact of the work unit systemImpact of the work unit system

Positive impacts:Positive impacts:

- It created an efficient economic system It created an efficient economic system under which China industrialized rapidly, under which China industrialized rapidly, particularly in the military-industrial sector.particularly in the military-industrial sector.

- It provided urban residents with It provided urban residents with comprehensive social welfare.comprehensive social welfare.

- It helped maintain social stability.It helped maintain social stability.

Negative Impacts:Negative Impacts:

- It cultivated a culture of dependence, It cultivated a culture of dependence, which reduced the incentives of individual which reduced the incentives of individual work units and individual workers to excel.work units and individual workers to excel.

- It fostered corruption and the emphasis on It fostered corruption and the emphasis on personal networks (guanxi) in the society. personal networks (guanxi) in the society. This ran contrary to what was promoted as This ran contrary to what was promoted as the official ideology of the Mao era.the official ideology of the Mao era.

- Workers lost their freedom and privacy.Workers lost their freedom and privacy.

Demise of the Work UnitsDemise of the Work Units

The most crucial foundation of the work unit The most crucial foundation of the work unit institution was the command economic institution was the command economic system under which all urban residents relied system under which all urban residents relied on their work units for all necessities in daily on their work units for all necessities in daily life.life.

This foundation began to erode in the advent This foundation began to erode in the advent of market reform, which enabled people to of market reform, which enabled people to obtain necessities in daily life from the obtain necessities in daily life from the market, and to seek employment in private market, and to seek employment in private enterprises.enterprises.

When the weight of private enterprises When the weight of private enterprises increased in China’s economy and increased in China’s economy and when government lifted its financial when government lifted its financial support of state enterprises during the support of state enterprises during the reform, state enterprises faced great reform, state enterprises faced great difficulties in competing with the difficulties in competing with the private enterprises and in making ends private enterprises and in making ends meet.meet.

To increase the competitiveness of To increase the competitiveness of state enterprises, government state enterprises, government introduces, though bit by bit, state introduces, though bit by bit, state enterprise reform enterprise reform (( 國企改革國企改革 ).).

The reform mainly consists of:The reform mainly consists of:

- Terminating the practice of life-long Terminating the practice of life-long employment of workers, so that the employment of workers, so that the enterprises can cut cost by laying off enterprises can cut cost by laying off employees.employees.

- Getting rid of the social functions of Getting rid of the social functions of work units (such as stopping work units (such as stopping providing free housing to workers, providing free housing to workers, privatizing hospitals, schools, etc run privatizing hospitals, schools, etc run by work units).by work units).

Provided with the above-mentioned Provided with the above-mentioned transformation of state enterprises and transformation of state enterprises and the respective work units, it becomes the respective work units, it becomes insensible to maintain the political function insensible to maintain the political function of work units. Recently, the government of work units. Recently, the government declares that work units are no longer the declares that work units are no longer the places which grant permission for places which grant permission for marriage/divorce and issue passports.marriage/divorce and issue passports.

Work unit as an institution is becoming Work unit as an institution is becoming history, though the state enterprise reform history, though the state enterprise reform faces a very tough road ahead.faces a very tough road ahead.

““DanweiDanwei People Become Citizens.” People Become Citizens.”

Economist, September 6, 2003.Economist, September 6, 2003.