distribution of wages, provision of welfare and routine promotion of workers
and cadres from lower ranks to higher ranks according to regulations.
Reform period (1986–now)
In the early stages of doi moi(1986–1991), reform of the SOEs was intensified
owing to the loss of financial assistance from the former Soviet Union (Zhu and
Fahey, 1999). In addition, diversity in ownership of enterprises emerged. Not
only have the traditional SOEs been transformed into new ventures, such as
group companies or Joint Stock Companies (JSCs), but other private ownership
enterprises have also been developed, such as domestic private enterprises
(DPEs) and foreign-owned enterprises (FOEs) (Zhu, 2002). In order to create a
more flexible employment relations system, the government relinquished its
control over the recruitment and employment of workers. Individual firms
gained the autonomy to decide on the number of workers hired, the terms of
employment and the discharge of employees.
There has been a relatively slow pace in the transforming of life-time
employment into a new contract-employment system, with the predominance
of fixed-term contract employment since the new system was initially intro-
duced in 1987. By the mid-1990s, for example, 2.7 million workers were still
working under the old system (Norlund, 1993). At present, there are three types
of contracts covering different type of employees: the unlimited-term contract
for employees who joined the work unit before the introduction of the new
system; the fixed-term contract with a duration of one to three years for
employees who joined the work unit after the introduction of the new system;
and the temporary contract with a duration of less than one year for casual
workers or seasonal workers (Zhu, 2002). However, due to the economic diffi-
culties in a large number of SOEs, many so-called ‘permanent employees’ who
are under unlimited-term contracts can be retrenched due to further restruc-
turing of SOEs in recent years. So an unlimited-term contract does not mean
any security at all.
Another major change in the area of employment relations is the trans-
formation of wage systems. The central task is transforming the old egalitar-
ian system in which levels of wages were based on length of service to the
new system in which levels of wages link more closely with company and
individual performance in terms of profit, productivity, responsibility and
skills. The employee receives a basic wage and additional benefits accrue from
several forms of bonuses. Some companies can afford to pay cash bonuses
from profit sharing whereas other enterprises may pay wages in kind, from
part of the company’s production, such as clothes that cannot be sold (Zhu
and Fahey, 1999).
The third issue of reforming employment relations is changing the welfare
system into a social insurance system (Norlund, 1993). The old ‘cradle to grave’
type of welfare system (even it covered only the minority of the labour force
HRM in East Asia 213