improving rural labourers' status in china's construction industry
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Improving rural labourers' status in China'sconstruction industryKaixun Sha & Zhenjian Jianga Shandong Institute of Architecture and Engineering , 47 Heping Road, Jinan, 250014,Peoples Republic of China E-mail:Published online: 13 May 2010.
To cite this article: Kaixun Sha & Zhenjian Jiang (2003) Improving rural labourers' status in China's construction industry ,Building Research & Information, 31:6, 464-473, DOI: 10.1080/0961321032000166406
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Improving rural labourers’statusin China’s construction industry
Kaixun Sha and Zhenjian Jiang
Shandong Institute of Architecture and Engineering, 47 Heping Road,Jinan 250014, Peoples Republic of China
E-mail: [email protected]
The state of human resources in China’s construction industry presents significant problems for the national economy
and for the efficiency of the construction industry. This paper considers policy and practical questions for improving the
quality and efficiency of the large rural workforce in construction. Labourers from rural areas form 90% of the national
workforce, yet 90% of them lack any formal job training. The existing problems besetting labourers from rural areas
include low-quality outputs, low wages, poor living and working conditions, and high mobility. The proposed remedy
needs to include: training provisions for labourers from rural areas to improve their working skills and overall quality;
creating organized labour to increase the stability of the workforce; creating a proper labour-cost system; and developing
a more complete labour market. Some privately owned Chinese construction companies are setting an example of
innovative leadership in improving training and working conditions for labourers from rural areas and consequently are
benefiting from increased profits.
Keywords: human resources, labour cost, labour market, labourers, rural areas, sustainable development, vocational
training, China
En Chine, la situation des ressources humaines dans le secteur de la construction est a l’origine de graves problemes qui
pesent tant sur l’economie nationale que sur les rendements de cette industrie. Cet article analyse les aspects politiques et
pratiques, l’objectif etant d’ameliorer la qualite et l’efficacite de la main d’œuvre d’origine rurale a 90% employee dans la
construction. Or, dans 90% des cas, ces ouvriers manquent d’une veritable formation professionnelle. Les problemes
actuellement lies a la main d’œuvre venue des zones rurales sont les faibles rendements, la qualite mediocre du travail, les
remunerations peu elevees, les mauvaises conditions de vie et de travail et la forte mobilite. Pour y remedier, il
conviendrait de prendre des mesures visant notamment a ameliorer la formation professionnelle des ouvriers issus des
campagnes afin d’accroıtre leurs competences et d’ameliorer la qualite de leur travail, d’organiser cette main d’œuvre
pour la stabiliser, de creer un systeme de couts salariaux correct et de developper un marche du travail plus complet.
Quelques entreprises privees chinoises montrent l’exemple en prenant la tete d’initiatives novatrices qui visent a ameliorer
la formation professionnelle et les conditions de travail des ouvriers issus des zones rurales et qui, par ailleurs, leur
permettent d’accroıtre leurs profits.
Mots cles: Ressources humaines, couts salariaux, marche du travail, travailleurs, zones rurales, developpement durable,
formation professionnelle, Chine
IntroductionAgriculture, rural areas and farmers are of great importance
to China’s reform, development and stability. The continuing
modernization of the country cannot be realized if the coun-
tryside is excluded from consideration because more than 800
million of China’s 1.3 billion population live in rural areas.
The problems of agriculture, rural areas and farmers need
inclusion in any discussion of the development of industry
and of urban areas. In particular, the development of
China’s construction industry cannot be separated from
BUILDING RESEARCH & INFORMATION (2003) 31(6), November–December, 464–473
Building Research & Information ISSN 0961-3218 print ⁄ISSN 1466-4321 online # 2003 Taylor & Francis Ltdhttp: ⁄ ⁄www.tandf.co.uk ⁄journals
DOI: 10.1080 ⁄0961321032000166406
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agriculture and rural issues because construction depends
heavily upon its natural ties with agriculture, rural areas and
farmers.
The overwhelming majority of employees in China’s building
sector are labourers from rural areas (LRAs).1 They account
for 90% of the workforce on the production front of con-
struction projects. Many construction projects are interrupted
for the farming season, e.g. May and September in northern
China, when LRAs go home to busy themselves with reaping
and sowing.
In recent years, China’s economy has witnessed ‘town–coun-
try syndrome’ (see below), characterized by insufficient
domestic demand and a slowdown of the growth rate.
Under such circumstances, the problems of agriculture and
rural areas have become the focus of recent, intense discus-
sion by the government and economists (Wen, 1999; Lu,
2000; Zhu, 2001). Researchers have already paid attention
to many LRA issues (Cao, 1999; Xu, 2000; Li, 2002;
Wang, 2002). However, systematic studies on LRAs engaged
in the building sector have seldom been seen. This paper
offers insight into specific problems for LRAs in the building
sector and raises a number of important issues that need to be
addressed. It is hoped this paper will serve as an introduction
in order to stimulate further research and discussion.
Dual socio-economic system and the‘town^country syndrome’Wen (1999) argued that the issues of China’s development
could be summarized as an agricultural country pursuing
industrialization with an expanding population and deficient
resources. China’s dual socio-economic system, or ‘one
country, two policies for urban and rural areas’, is a product
of the strategy that gave priority to the development of heavy
industry. To mobilize resources and lower the costs of capital
formation in an underdeveloped economy, an unseasonable
domicile system2 was formed in the 1950s and it continues
to the present day. This system divides the Chinese citizens
into two distinct groups: the ‘agricultural population’ and the
‘non-agricultural population’. Under this system, rural
dwellers enjoy substantially different treatment from urban
residents in many aspects, involving education, employment,
housing, material supply, taxation, medical treatment, social
welfare, etc. The system assured China’s industrial develop-
ment over a long period. However, rural areas and farmers
suffered because the prices of agricultural products were
artificially suppressed and the redistribution of national
income was poured mainly into cities and industrial depart-
ments, especially heavy industry. This economic system has
resulted in a huge gap between urban and rural areas and it
has become a significant restraint on China’s development.
Although farmers’ net income grew noticeably at an annual
rate of approximately 8% from 1978 to 1997, the gap
between urban and rural areas has not been closed. On the
contrary, it has widened further because the income of urban
residents has increased more rapidly. The difference between
the per-capita disposable income of urban residents and the
per-capita net income of rural dwellers has increased by
13.6 times over the 19 years, from 209.8 Yuan in 1978 to
3070.2 Yuan in 1997. At present, the purchasing power of
one urban resident is equal to that of about three rural dwell-
ers. Statistics from the National Bureau of Statistics showed
that in the 1990s the richest 20% of Chinese households
owned 48% of the total value of private property in the coun-
try, while the poorest 20% only accounted for 4%. The dif-
ference in personal savings deposits between urban and rural
residents has increased by a factor of 232.7 over 18 years,
from 9.92 billion Yuan in 1978 to 2317.95 billion Yuan in
1996 (Yang, 2000). With insufficient peasants’ purchasing
power and a reduced market in rural areas, the development
of both industry and urban areas risks losing one of its key
resources.
Since the summer of 1997, the Chinese economy has wit-
nessed insufficient domestic demand and a weak market, with
negative growth of prices in 26 successive months. Insufficient
demand and depressed investment exist simultaneously, each
taking the other as cause and effect. On the one hand, insuffi-
cient demand has reduced the return of investment.
Consequently, the government’s investment failed to stimulate
non-governmental investment effectively. On the other hand,
depressed investment led to the domestic market worsening.
To boost domestic demand, a proactive fiscal policy was
adopted with large amounts of treasury bounds issued,
government’s investment expanded, salaries of public servants
increased and the interest rate reduced seven times. However,
not all these actions achieved the desired effect.
It is argued that China’s economy continues to suffer from a
‘town–country syndrome’. The undue disparity in income,
especially the widening gap between urban and rural areas,
is the crucial reason for this syndrome. Only when the gap
between urban and rural areas is eliminated can China’s
economy be rid of the vicious circle of ‘insufficient
demand–depressed investment’ (Lu, 2000).
The government has decided again to spend 80 billion Yuan
on increasing the salaries of public servants in 2001. This is
one of the important measures to stimulate consumption. It
is estimated this will stimulate an increment in consumption
of 30 billion Yuan (Wei, 2001). However, this may be an
over-optimistic estimate. This step might not necessarily have
the anticipated results because the marginal effect of income
increasing for high-income earners is much lower than that
for low-income earners. The proportion of consumption to
household income diminishes with an increase of income.
However, an alternative approach would be to raise farmers’
relatively low incomes thereby easing their financial burdens.
LRAs could play a significant role in raising the income of
farmers and generally redressing the balance for the rural
economy. They have become the main cash resource in some
regions. For example, in Sichuan Province, the remittances
from LRAs have been equal to the financial income generated
within the whole province according to a news report in
China Youth Daily (2002).
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Surplus rural labourers and LRAsLRAs are a consequent product of China’s dual socio-
economic system and the increasing conflict between limited
cultivated land and a large agricultural population.3 In
2001, China’s rural labour rose to 482 million, accounting
for about 70% of the nationwide total labour supply.
However, only 100 million people are needed to work the
country’s current cultivated land. This means more than
300 million workers should be moved off the land to non-
agricultural industries. Township enterprises that thrived in
the 1980s had once an active role in absorbing surplus rural
labourers. However, their functions in this aspect have
declined distinctly since 1995 owing to a slowed growth rate
and changes in their personnel composition. The latest
forecast indicates that the surplus labour force awaiting
transfer to non-agricultural industries is now 170 million
(Wang, 2002).
With the constantly rapid development of the economy, a
large number of surplus rural labourers have been crowding
into cities, forming a large community of LRAs. LRAs and
their families are confronted with a series of decisions:
whether or not to leave their rural domicile, which urban area
to choose and how to make the transition. These decisions
are generally based on cost-effectiveness analysis. Besides
income, several factors have a great influence on LRAs’
decisions:
� Opportunity cost (whether or not to leave their rural
home). The opportunity cost to move toward non-
agricultural work is so low that most LRAs can accept
low payment and endure the poor working conditions
that urban people avoid
� Entry cost (which urban area to choose). As shown in
Figure 1, LRAs are mainly distributed over the low-entry
barrier industries: 38.5% in the construction industry,
32.6% in the service industry and 24.6% in the manufac-
turing industry where little cost of training is required
� Information cost and risk (how to make the transition). A
sample survey shows that the media by which LRAs
enter non-agricultural industries are the function of
information cost and risk (Du, 1997). From the view-
point of LRAs, relatives and acquaintances in their vil-
lage are a more reliable and efficient approach
compared with official organization. As shown in
Figure 2, a small number of LRAs enter non-agricultural
industries through the recommendation of an official
organization (9.5%) or labour contractor (10.6%), while
most enter under the guidance of a relative (42.7%) and
of acquaintances within their village (23.1%)
The relative- and acquaintance-dependent behaviour has
formed an ‘employment chain’ which has resulted in a distin-
guishing phenomenon that LRAs from certain regions mostly
engage in the same trades. Thus, these regions gradually
acquire the tradition and advantages in these trades. For
example, there are more than 40 counties where a majority
of local people become bricklayers. Being distributed mainly
in Shandong and Jiangsu Provinces,4 these counties are
named ‘home of builder’ because a large number of LRAs
leave for urban centres to undertake contract construction
projects.
Existing LRAs in the building sectorThe Chinese construction industry is charged with the heavy
responsibility of completing more than 65% of investment in
China’s capital construction. The output value of the building
sector amounts to 1.6 trillion Yuan in 1999 (Jin, 2001). LRAs
are the main force of China’s construction industry account-
ing for 72.2% of all employees of the building sector and
about 90% of the workforce at the job sites of construction
projects. Figure 3 shows that the rapid development of the
construction industry is accompanied by a similar increase
in the numbers of LRAs. Although cities’ capacity to absorb
surplus rural labourers has acutely decreased owing to a stag-
nant economy and the total number of LRAs reduced to 44.24
million in 1998, nonetheless at the same time there were still
24.03 million LRAs in the building sector (Zhang, 2001).
Figure 4 shows LRAs’ dual functions. They are the principal
workforce in the completion of capital construction, but they
also provide an injection of cash into the rural economy and
therefore play an important role in promoting consumption
in rural areas. Not only are LRAs an important factorFigure 1 Distribution of industries in which labourers from ruralareas are engaged. Source: Du (1997)
Figure 2 Distribution of media by which labourers from ruralareas enter non-agricultural industries. Source: Du (1997)
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effecting the development of China’s construction industry,
but also they have a role in the whole national economy.
However, LRAs engaged in China’s building sector do not
reach their potential for a variety of reasons:
� Low quality
� Low payment
� Poor living and working conditions
� High mobility
Low qualityThe overall quality of LRAs in the building sector is too low
to suit the requirements of modern production. Statistics from
the Ministry of Construction show that only 3.1% of LRAs
in the building sector possess technical certificates through
vocational training, and 7.8% accept short-term training.
That is to say, about 90% of LRAs are on the job without
formal or acknowledged training (Zhang, 2001), although
some skills are developed through work. Poor working con-
ditions and low payment mean most young and well-
educated surplus rural labourers are not willing to enter the
building professions. An investigation of some construction
enterprises in Shandong Province supports this fact. Over
90% of LRAs in construction in this province are between
30 and 50 years old, but 80% have attained an educational
level under a junior middle school, and at least 30% have not
yet graduated from a primary school (Sha and Sang, 2001).
Most LRAs also have little awareness of the detailed aspects
of law and regulations as well as to what these specifically
mean when performing their job. The low quality of the
majority of the workforce at construction job sites has
become the bottleneck that is restricting the development of
the construction industry to deliver quality and innovation.
Low paymentLRAs in the building sector can be categorized into several
ranks, including unskilled labourers, skilled workers and
foremen. Whether or not it is recognized, the existence of
exploited surplus labour is an irrefutable fact. The lower the
Figure 3 Number of total employees and labourers from rural areas for the construction industry. Source: Almanac of China’s LabourStatistics (1999)
Figure 4 Double functions of labourers from rural areas
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rank, the more exploited the person is likely to be. The inves-
tigation of some construction enterprises in Shandong
Province (Sha and Sang, 2001) shows that the daily wages
of unskilled labourers range from 20 to 30 Yuan; for skilled
workers from 30 to 40 Yuan; and for foremen from 35 to 50
Yuan. LRAs work actually much more than 8 hours a day, so
the ‘daily wages’ here are not those under the normal 8-hour-
day system. Strictly speaking, the wages should form only a
part of their overall reward. In addition to wages, employees
should receive medical insurance, unemployment insurance,
salaried holiday, vocational training, etc. Yet, most LRAs
do not obtain these benefits. Ordinarily, they are only paid
living expenses on a monthly basis; wages arrears are paid
either during the busy farming seasons when they return
home for reaping and sowing or at the end of the year with
no interest paid. What is worse is that about 70% of LRAs
only receive 70% of their due wages (Sha and Sang, 2001).
Poor living and working conditionsThe improvement of LRAs’ living and working conditions is
a significant problem. On average, they work more than 10
hours a day, with a high labour intensity and poor living
conditions. Safety accidents during construction occur
frequently. The accidental death rate in construction is three
in 100 000, taking second place only to the mining industry
(Zhu et al., 2001). The overwhelming majority of the injured
and the dead are LRAs. Furthermore, having little awareness
and knowledge of protecting themselves through the law,
LRAs cannot obtain the necessarily legal assistance when
wages arrears and industrial accidents occur. In addition,
they have to leave home for a city and work away for more
than 10 months a year. This creates heavy burdens for their
families and exerts negative influences on the development
of their children.
High mobilityShort-term behaviour is one of characteristics of the Chinese
economy during its transitional period. At present, most
LRAs are employed as casual labourers without a normal
contract. Once a longer-term contract is offered, employers
must bear responsibilities, e.g. insurance for an old-age pen-
sion, unemployment insurance and medical insurance.
Therefore, most construction enterprises prefer to sacrifice
the stability of the workforce rather than offer LRAs a
longer-term contract. On the other hand, this offers LRAs
mobility and the potential to choose the most appro-
priate short-term benefits that fluctuate according to the eco-
nomic cycle.
DiscussionLRAs’ unfavourable situation is the result of the interaction of
various factors in China’s socio-economic system. Figure 5
shows how these factors influence the behaviour of LRAs and
the building sector. Most LRAs are not satisfied with existing
wages and current working conditions. However, even such
low payment is sufficient to compensate them for leaving the
countryside. That is why so many LRAs do not return to their
home village and continuously change their jobs among
various trades, or various enterprises, in the same trade in
cities. The social and economic consequences for stabilizing
the rural population (as a peripatetic workforce) and preven-
ting further permanent migration into urban areas are an
important component in a sustainable society.
The construction sector has a low entry barrier and formid-
able tasks to complete investment of capital construction.
Consequently, the construction industry recruits the largest
portion of LRAs in China. It is the cheap workforce that
underpins the building sector over a long period. However,
the undue dependence on cheap labourers has weakened the
incentive of the sector to develop its human resources and
thereby engage in innovation. Figure 6 shows the cost compo-
sition of construction projects in state-owned construction
enterprises. The proportion of labour cost fluctuated between
10 and 13% from 1985 to 1992; machinery costs were
always lower than 9%; while material costs occupied a domi-
nant portion of approximately 60%. The low equipment
levels in construction enterprises also confirm this problem.
Table 1 shows that although the financial value of machinery
per labourer increased from 2572 Yuan per person in 1991 to
5756 Yuan per person in 1999, the power of machinery per
labourer (measured in kWh) had little change. This is because
during the same period prices inflated by a large margin.
The above-mentioned problems involve various aspects but
do consider the remedies needed and what this entails for
future reforms. In view of this, it would not be possible or
wise to attempt to find the solutions to these problems in one
paper. However, the identified problems need to be addressed
across a variety of policy issues that include:
� structure of the labour market
� calculation and award of labour costs (wages and benefits)
� provision of vocational training
� creation of organized labour and negotiation
Figure 5 Labourers from rural areas: from the countryside tothe building sector
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Labour marketThe basic circumstances of the labour market in China’s
building sector are:
� excessively fast growth in the labour supply and a com-
parative insufficiency in demand which causes huge
employment pressure
� disordered business system that causes unfair competition
and encourages local protectionism
It was not until the mid-1980s that the concept of a labour
market and the practice of labour commercialization were
justifiable in China. Given its primary stage of development,
the labour market in China’s building sector is imperfect.
Further efforts are needed to develop the labour market:
� appraisal of qualifications in the labour force
� information on supply and demand in the labour market
� employment counselling
� arbitration in labour disputes
A current matter being debated by government, practitioners
and researchers is whether to introduce a workforce admis-
sion system into the construction industry. This would nor-
malize the labour market and hasten the implementation of
LRAs’ training. One way to achieve these ends would be a
more regulated system. This would entail:
� new labourers not being permitted to enter the labour
market without vocational training, and existing
labourers undergoing training and necessary assessment
to certify their qualifications
� contractors wanting to bid for labour-only subcontracts
would require confirmed qualifications in advance
� qualified labourers and licensed contractors enjoying full
freedom in the labour market and being free from the
restriction of regional blockades and barriers
China is developing a market economy that demands more
market competition, more administration according to law
and less direct government interference. However, as the mar-
ket system is still imperfect, some unqualified contractors bid
for labour-only subcontracts with unduly low prices by
employing cheap, unqualified labourers. This unfair competi-
tion has introduced disorder into the construction market
with the frequent result of poor quality in construction pro-
jects. Therefore, a transition is needed at present to improve
quality outputs and conditions within construction by intro-
ducing requirements for admission into the workforce. The
proposed system would establish a temporary barrier in the
labour market, but this would assist in creating an improved
future market with less barriers. In addition, this workforce
admission system would be put into effect by legislation
Figure 6 Proportions of labour, material and machinery to the total cost of construction projects in state-owned constructionenterprises. Source:Almanac of China’s Statistics (1993)
Table 1 Machinery and equipment owned by constructionenterprises
Year Value of machineryper labourer(Yuan per person)
Power of machineryper labourer(kYper person)
1991 2572 4.01992 2719 3.81993 4105 4.31994 3446 4.01995 4264 4.71996 4154 4.61997 4729 4.11998 5127 4.31999 5756 4.5
Source: Almanac of China’s Statistics (2000)
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instead of by government interference. The large amount of
existing LRAs (accounting for 90%) with some skills but
no formal qualifications means it will be a formidable task
to assess and validate them. A realistic, practical approach
would be to begin assessment and certification of new
labourers and labour-only contractors.
A sound legal system is the basis of a labour market. In recent
years, the government has made great efforts to rectify and
standardize the order of the labour market. In accordance
with the Labour Law, several regulations were promulgated
and implemented in 2000, including the Regulation on the
Administration of the Labour Market, the Regulation on
Employing Skilled Workers and the Procedures for
Implementation of the Training of Labour Reserves. A 3-year
programme for the overall planning of urban and rural
employment has been carried out since 2000. However, there
has been little improvement in the situation of LRAs in the
building sector. This can be attributed largely to the current
city–rural domicile system that has become an obstacle for
the allocation of human resources in line with market
demands. Benefits would result if it was thoroughly reformed.
In recent years, the reform of the domicile system has been
tested in some cities where the threshold requirements for
entering the city are greatly lowered. However, at present,
those who have benefited from the reform are mainly the
talented and propertied rather than LRAs. It would be unrea-
listic to cancel a system that has lasted for 50 years. Reform
could be gradual rather than sudden to create a gradual
improvement of LRAs’ situation.
Labour costIt was believed for a long time that the comparative advan-
tage of China’s building sector resided in its cheap labour.
However, the unduly low labour cost may not be favourable
for the sustained development of the sector. Normally, the
labour price should be a function of the forces of supply and
demand in the labour market as well as being determined by
factors such as the necessary means of livelihood for
labourers and their families, labourers’ training expenses, etc.
However, under the current cost management system, the
cost of a construction project in China is normally developed
on the basis of a cost-estimating quota system5 that distorts
labour cost and labour price. It is the unreasonable cost-esti-
mating quota system that is one of the main reasons for
LRAs’ low payment.
Reform has been carried out to redress distorted labour cost
and labour price. For example, a new method to determine
the cost of labour has been adopted in Shandong Province
since 1 July 2000. As shown in Table 2, the wage standard
for the labourers engaged in civil engineering projects has
been provided as a range rather than as a point for given
enterprises. Construction enterprises of different grades could
then determine the labour cost on the basis of the negotiation
with the labourers. No doubt, the raised wage standard is
conducive to the improvement of the cost composition of
construction projects. However, whether or not LRAs’
income can actually be increased is still a matter of debate
because the price of a labour force in the final analysis
depends on supply and demand in the labour market. At pre-
sent, the labour supply exceeds demand by a big margin.
Therefore, a minimum wage standard may be necessary to
protect LRAs’ legitimate rights and interests. From a long-
term point of view, the fundamental solution to the problem
lies in the thorough reform of the cost-estimating quota sys-
tem and the development of the labour market.
Figures 7 and 8 show, respectively, the overall labour produc-
tivity and annual average wages of working staff and workers
in the construction industry in Shanghai (the largest city in
China) and in Jiangsu and Shandong Provinces (famous as
the ‘home of the builders’). In the early 1990s, the wages in
the three regions were almost at the same level – so was the
productivity. The increased differential in wages in the late
1990s was accompanied by a significant gap in productivity
between these regions. Data from this example indicate:
� wages (labour costs) have a direct relationship to labour
productivity
� it is crucial for a labour-intensive industry such as the
building sector to develop a proper labour-cost system
� it is also a difficult task to determine a proper labour-
cost level
Vocational trainingVocational education and training are an important precon-
dition for enhancing LRAs’ level of education and working
skills. This, in turn, has a number of positive implications:
� enhanced productivity and an improved quality of
product
� reduced accidents in construction work
� improved employment circumstances for LRAs
In recent years, significant progress has been made in voca-
tional education and training among managers and profes-
sionals (including architects, civil engineers, quantity
surveyors, etc.). However, vocational training for the general
Table 2 Adjustment of the wage standard for the laboursengaged in civil engineering projects in Shandong Province
Grade ofenterprises
Beforeadjustment(Yuan perpersonper day)
Afteradjustment(Yuan perpersonper day)
Rangeadjusted(%)
A 19.57 22^28 12.42^43.31B 16.18 20^25 23.61^54.50C 13.12 17^22 29.57^67.68D 12.53 15^20 19.71^59.62
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workforce (forming the majority of the industry) is far from
satisfactory and can be attributed to:
� unduly low labour costs that deflate enterprises’ eco-
nomic incentives for innovation and vocational educa-
tion/training
� strong mobility of LRAs provides ‘free riders’ an oppor-
tunity to take advantage of the efforts and investment of
other construction enterprises. This creates risk for indi-
vidual companies when investing in LRAs’ vocational
training if they cannot retain their staff
The establishment of training bodies specifically for LRAs
would provide a number of benefits. It would heighten the
overall quality of LRAs and enhance the stability of the work-
force in the building sector. Concentrated training could be
organized during the construction off-season (winter).
Trained LRAs could be validated through examinations.
Only the qualified might be allowed admittance into the
labour market. It has been suggested that the only way to
organize good vocational training in the construction indus-
try is collectively by employers together with trade unions
and/or by the government avoiding serious ‘free rider’ beha-
viour in the labour market (Bremer and Kok, 2000).
However, it is neither government nor trade unions that can
exercise this control in China at the moment. Instead, indivi-
dual enterprises, especially private construction companies,
would be in a position to adopt vigorous measures and make
positive contributions to aspects of LRAs’ oriented training.
Figure 7 Overall labour productivity (in terms of value-added) of the construction industry in Shanghai, Jiangsu and Shandong.Source:Almanac of China’s Statistics (2000)
Figure 8 Annual average wages for working sta¡ and workers in the construction industry in Shanghai, Jiangsu andShandong.Source:Almanac of Jiangsu’s Statistics (1991^99) andAlmanac of Shandong’s Statistics (1991^99) andAlmanac of Shanghai’s Statistics (1991^99)
Improving rural labourers’ status in China’s construction industry
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A good example of an individual building company imple-
menting a successful pattern of training for LRAs is
Guangxia Co. Ltd. Founded in 1984 in Zhejiang Province,
it was the first listed private construction company in
China. It is compulsory for all LRAs to be trained in ‘LRAs
Oriented School’ attached to the company before commen-
cing work, and more than 80 000 LRAs have been trained
in recent years. The company also offers a labour contract
to LRAs that enables them to settle into the company. The
resulting well-trained and relatively stable team of employees
has brought the company considerable positive results.6 A
full-time regular school, Guangxia Vocational Education
College, has been established. With 55 hectares (ha),
140 000 m2 of school building and a capacity of 5000 stu-
dents, the college will be an important job training base not
only for the Guangxia Co., but also for the construction
industry of Zhejiang Province. The Guangxia Co.’s experi-
ment proves it is beneficial to invest in the training of LRAs
and that labour contracts are an important factor to ensure
and accelerate job training.
Organized labourThe level of organization is an important indicator of LRAs’
overall quality. Obviously, unorganized labourers cannot
negotiate effectively with their employers under the pressure
of the absolute abundance of labour. Only LRAs with skills
and organization have the potential to negotiate effectively.
The following elements contribute to the low organization
of LRAs:
� LRAs’ high level of mobility that makes the organization
of a construction team difficult
� small farmer’s ideology that resulted from the small-scale
peasant economy and which is characterized by self-suf-
ficiency makes it difficult to obtain commitment to orga-
nized participation or negotiation
� imperfect labour union cannot represent LRAs and there-
fore has few attractions for them
The labour contractor is an organization/person supplying
labour only to construction companies and is an important
part of the system that should not be overlooked when
LRAs’ organization is concerned. Most labour contractors
themselves belong to the agricultural population but now are
the boss of ordinary LRAs. At present, a striking contrast is
presented between LRAs and labour contractors, the income
disparity being more than 10 times and even up to 50 times in
some construction teams.
A lack of awareness of democracy and the law means that
few LRAs have joined labour unions. Even with a larger
membership, such unions could do little to protect LRAs
from infringement because the unions play a role of no
importance in most businesses. In spite of the stipulations of
the Labour Law and the Labour Union Law, LRAs’
legitimate rights and interests cannot be effectively protected
through labour unions.
It is an especially difficult task for LRAs to change their ‘small
farmer’s ideology’ and for labour unions to transform their
role to become a champion LRAs’ rights. Therefore, it is unli-
kely in the short term for LRAs to form any organized nego-
tiation and representation. Nevertheless, sweeping economic
reform has occurred, so the transformation of the role of the
labour union is likely to occur over the longer term in tandem
with a change in LRAs’ ideals.
ConclusionsLRAs are the product of special conditions, a dual socio-
economic system in a transitional period. The widening gap
in income between urban and rural areas has created problems
within China’s economy of ‘insufficient demand–depressed
investment’. As the principal workforce and the important link
between industry and agriculture, LRAs are one of the most
important factors that affect the development of China’s con-
struction industry as well as the whole national economy.
This large, mobile and rural population needs economic stabi-
lity to underpin the rural economy; otherwise, further pressure
will be placed on cities to accommodate this population. The
current situation requires change to allow China’s construc-
tion industry to continue to be an engine for growth in the
national economy and to meet the challenges posed by
China’s recent accession to the World Trade Organization.
It has been argued that a proper level of labour costs (wages
and benefits) is crucial to achieve sustained development of
the construction industry and to provide benefits to both
LRAs and their employers. However, determining the
‘proper’ level of labour costs is a very complex issue that
involves a number of variables (e.g. labour market, voca-
tional training cost, labour productivity, etc.) and which
requires further investigation and study. As the theory and
practice of the labour market have been fully developed in
industrial countries, this gives lessons for China’s construc-
tion industry to learn from.
Improving the overall quality of LRAs involves education,
working skills, awareness of democracy, organizing labour,
etc. (Table 3). The anticipated benefits for employers are
enhanced productivity, improved quality of outputs, reduced
construction work accidents, a more stable workforce and
increased profitability.
Improving rural labourers’ status involves a wide range of
sociological and economic issues. The current dilemma for
LRAs in the building sector is a result of complex interactions
between government, enterprises, labour contractors and
individual labourers (as well as their families). At present, the
government and most state-owned construction enterprises
have neither the time nor the financial capacity to increase
input to improve LRAs’ status. LRAs’ situation appears to
be changing slowly, with difficulties and with uncertainties.
Nevertheless, some construction enterprises, especially newly
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founded private companies, are playing an active role in
implementing change and thereby are gaining the upper hand
in competition. In spite of their relatively small size, these
enterprises represent the direction for reform and the pro-
spects of LRAs in the building sector, as well as for the whole
construction industry.
AcknowledgementsResearch was supported by the Natural Science Foundation
of Shandong Province (Grant No. Y2001H01). The authors
are grateful for the comments of three anonymous referees
and the Editor on a previous version of this paper.
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Endnotes1LRAs are a special group with many features that could not befound in other countries. They work as casual labourers in citiesthroughout the year, but belong to an ‘agricultural population’rather than to a ‘non-agricultural population’. They make a greatcontribution to the development of urban areas but cannot enjoythe same rights and treatment that urban residents have. MostLRAs lead a migratory bird-like life: living alone away from homemost of the time, they are at home only in the busy farming seasonand/or at the Chinese traditional New Year or the Spring Festival.
2Article 90 of China’s Constitution promulgated in 1954stipulated that citizens had the right to change their residencefreely. On 9 January 1958, however, the Standing Committee ofNational People’s Congress promulgated the Regulation onResidenceManagement andRegistration. It stipulated that citizenswho moved from the countryside to cities must have one of thefollowing three certificates: (1) that of employment by a labouradministration of a city, (2) that of admission by a university or aspecial middle school and (3) that of approval for moving by aresidence registration administration of a city. The citizens’ right tochange their residence freely stipulated in the Constitution of 1954then ceased to be effective.
3China has a current population of 1.3 billion, but only limitedcultivated land, less than 133.32 million ha. Its per-capitacultivated land is 0.1 ha, far below the global average of 0.25 ha.What makes this situation even grimmer is that 666 counties,constituting 33.7% of the national total, failed to reach the criticalmark of 0.05 ha for per-capita cultivated land established by theUN Food and Agricultural Organization (FAO).
4Shandong Province has a population of more than 90 million,i.e. about 7% of China’s population, while the territory of theprovince is 157 000 km2, or 1.63% of China’s territory. JiangsuProvince is the most densely populated with more than 73 millionpopulation and 1.05% of China’s territory.
5There are various quota systems in China’s building sector: theMinistry of Construction promulgated theGeneralQuota for CostEstimating, while each province has its own quota system. Evenwithin the same province, each district derives its local quotasystem from the provincial one because of difference in prices.
6This company merged with a large-scale, state-owned enterprise,Chongqing No. 1 Construction Company, spending 30.6 millionYuan in 1998, and another large-scale, state-owned enterprise,Beijing No. 2 Construction Company, spending 33.6 millionYuan in 2002. These mergers further strengthened the company’sresolve to intensify vocational training.
Table 3 Input^Output analysis on labourers from rural areas
Input Output Output forenterprises and/orthe constructionindustry
Increase of wagesor labour cost,cost of vocationaleducationand training
Enhancementof quality
Improvement onproductivity
Cost of labourcontract(insurance forold-age pension,unemploymentinsuranceand medicalinsurance, etc.)
Increase in senseof security
Development oforganization
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