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Buildup of Employment Pressures

Over time the moderating effect of the initially young population structure faded with the growing up of baby boomers. With the increase of the rate at which people turning fifteen outnumbered those turning sixty-five, the net enlarging effect on the work-age population grew. Figure 2.2 plots estimates of the annual net addition to the workforce pool.

It shows a decade-long upward increase from the early 1960s to the early 1970s. The trend reversed briefly during the mid-1970s, reflecting the impact of the drastic decline in the natural rate of population growth due to massive deaths (including infant mortalities) during the famine years of the late 1950s and early 1960s.[1] That was followed by a decade with even higher levels of annual addition of new entrants. It was during that decade (i.e., the 1980s) that self-employment and private ownership were legalized by the central government, as described in chapter 1. Other than the cumulative demographic pressures, that timing was also influenced by politics.

During the Cultural Revolution, China’s educational system experienced some major changes. The old system, established after 1949, featured a curriculum of formal education with six years for primary education, six years for secondary education, and four years for tertiary education (He Dongchang 1996). During the nationwide chaos in 1967-1968, many primary and secondary schools were closed. Universities were completely shut down during 1966-1969. After the imposition of martial law in 1968, primary and secondary schools were reopened. But the new government decided to shorten school time to five and four years for primary and secondary schools respectively. When universities were limitedly reopened in 1970,[2] the total number of years of education was also reduced from four to three.

An implication of the shortening of formal education by a total of four years is that it could weaken the buffer of schooling against the employment pressure from new entrants into the workforce pool. This weakening effect was nevertheless moderated and postponed by a concurrent development during the Cultural Revolution. That is, while tertiary education languished, primary and secondary education was expanded, especially in rural areas, where significant numbers of school-age youngsters had been unable to continue their education beyond or even through primary school. That undertaking was intended to address the “elitist” bias in the education policy of the old government led by Mao’s political rivals. The responsibility of financing the school expansion programs, however, fell largely on local governments, especially those in the rural grassroots. It became increasingly unbearable toward the end of the Mao era (He Dongchang 1996).

Soon after the regime transition after Mao’s death, many local governments began to cut back on education and to limit secondary school enrolment. This, coupled with the continuation of the shortened school years, added to the difficulty of coping with the surge of new entrants into the work-age population during the late 1970s and early 1980s, when the central leadership began to relax the restrictions on private economic activities. It was not until the mid-1980s that the total length of primary and secondary education was restored to twelve years and that the expansion of secondary school resumed. An illustration of the fluctuations of school enrolment during different periods of the PRC’s history is offered in figure 2.3. Among the

Demographic Pressures 69

Percentages of graduates able to enter next level of school, 1949-2010

FIGURE 2.3 Percentages of graduates able to enter next level of school, 1949-2010

Sources: CSDMFYNC; CSDMSYNC; ESYC1987,1988,1989,1990, 2010.

movements it shows is a decline of the percentage of primary school and junior high school graduates able to move to the next level of education in the late 1970s and early 1980s,[3] forcing many youngsters to become early participants in the workforce.

Another important phenomenon during the Cultural Revolution was the rustication of urban youths (mostly secondary school graduates), also known as the shangshan xiaxiang (“going up to the mountains and down to the villages”) movement (Bernstein 1977). The origin of the movement can be traced to the mid-1950s, when some idealistic youths voluntarily gave up their urban resident status to live and work in poor rural communities and undeveloped frontier regions. Their intention was to help reduce the wide gaps between urban and rural economies. While their act was praised by the party-state and emulated by hundreds of thousands of secondary school graduates under the encouragement of, and ad hoc arrangement by, local authorities, there was no systematic migration program to transfer urban youths to the countryside.[4] By the end of 1966 a total of 1.3 million urban youths had settled in rural areas (CLWS a, 110).

During the Cultural Revolution, rustication of urban secondary school graduates became a government policy.[5] It was in part driven by the ideological agenda of exposing urban youths to the harsh working and living conditions of rural China and thereby preparing them as reliable successors to Mao’s radical socialist cause. A more realistic concern among policymakers was the shortage in the supply of daily necessities in cities and the lack of employment opportunities in the urban sector, both of which were seriously affected by the revolution. What also added to the initial push for the adoption of the policy was the need to restore political order in urban areas after the overthrow of the old government during 1967-1968. In view of the persistent and spreading revolutionary fervor of student rebels in major centers of public administration, in December 1968 Mao issued a direct call for them to disperse into the vast rural grassroots, so as to facilitate the enforcement of the martial law imposed in the fall of that year. Under the policy implemented thereafter, urban secondary school graduates were required to go to the countryside to work as laborers in people’s communes or state farms. The “sent-down” youth had to stay in the countryside for a minimum of two years before becoming eligible for limited opportunities of being recruited as urban work unit employees, army soldiers, or university students. Only one sibling—typically the youngest one—among the children of each urban family could be exempted from this policy (Liu Xiaomeng 1998).

From 1967 to 1977 a total of 15.8 million urban youths were sent to the countryside (CLWS a, 110). Over time some sent-down youth returned to cities, but the returnees were outnumbered by new “sent-downs.” In 1977 there remained a stock of about 8.7 million sent-down youth. In October 1978 the central government convened a meeting to reassess the rustication policy. After extended debate it was decided that the policy should be gradually phased out (Liu Xiaomeng 1998). In 1979 large numbers of sent-down youth began to seek ways to leave the countryside (e.g., by faking illness, obtaining urban employment through personal connections, or taking the college entrance exam). Some simply flocked back to cities without permission. Attempts by local authorities to hold back or moderate the surging wave of self-initiated returnees triggered various forms of protest in twenty- one provinces, such as strikes, petitions, suicides, blocking of traffic, and even riots.

Accommodating the employment demand of the returning youths posed a formidable challenge to the government. The urban economy was still in an early stage of recovery from the chaos of the Mao era and did not have strong enough capacity to absorb all the returnees. Making matters worse was the fact that during the Cultural Revolution some 13 million native rural residents were recruited to take up newly created or vacated (by retirees) urban jobs that otherwise could have been assigned to the urban secondary school graduates who were rusticated (Liu Xiaomeng 1998, 801). Moreover, the growing constraint on the availability of further education for junior high school graduates due to the withering of the radicalist school expansion program, the continuation of the shortened (four-year) secondary school curriculum, and the discontinuation of the rustication policy for new secondary school graduates all added to the job creation pressures on urban authorities and compounded the issue of placement for rusticated youths.

To cope with the confluence of employment problems posed by the peculiar developments during the Cultural Revolution and the broader cohort effect of overall demographic change, the central government held a national labor policy meeting in August 1980. It was at that meeting that legalizing self-employment was adopted as a stopgap measure.[6] In accordance with the resolution of the meeting, the State Administration for Industry and Commerce (SAIC) created a new licensing category, getigongshang hu (selfemployment entity in industry and commerce), often known in abbreviated form as getihu. That, as discussed in chapter 1, was the first formal step toward legalizing private ownership in the post-Mao era.

  • [1] Some 30 million excess deaths are estimated to have occurred during the famine (Kung and Chen2011).
  • [2] During 1970 and 1976 universities recruited students not on the basis of entrance exam scores butaccording to the recommendations from work units for select employees. In addition to the shorteningand politicization of curriculum, there was also significant cut in the number of students enrolled, aswell as majors and departments. See He Dongchang 1996.
  • [3] The percentage of senior high school graduates able to attend college went up from the early 1980sonward. But the holding capacity of tertiary institutions remained limited, with fewer than 3 millionstudents enrolled each year before 1995 (CSY 2010, table 20.8).
  • [4] In a 1956 draft document on agricultural development, the Secretariat of the Politburo of the CCPindicated rustication as a possible option for the placement of urban school graduates (Lu Yu 2004,543). But no nationwide policy followed.
  • [5] For a detailed account of the entire rustication movement, see a two-volume study by Ding Yizhuang1998 and Liu Xiaomeng 1998. Bernstein 1977 provides an analysis of the politics that drove the earlyphases of the movement.
  • [6] Professor Li Yining of Peking University was one of the economists convened by the central government to undertake preparatory work for the new national policy on self-employment. For an account,based on his personal experience, of the direct causal effect of the job creation pressures on policychange, see
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