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China moves to break civil servants' 'iron bowl' - People's Daily Online August 24, 2010
Lu Tao, a pioneer in the establishment of the civil servant system in China more than 20 years ago, is now leading a bold administrative reform in this coastal city, with an aim to terminate the "iron bowl" -- a heritage from the planned economy now reserved mainly for civil servants.
The solider-turned-official in charge of personnel management in Shenzhen hoped to have 30 years to transfer the city's 40,000 government officers in service from de facto life-long employment into limited employment based upon labor contracts.
"Judging from either national development strategies or social needs, renovating the civil servant system has become a significant frontline of the Chinese reforms started 30 years ago in the country's economic fields," said the deputy director of the Human Resources and Social Security Department of Shenzhen city.
"It is not a question of reforming or not, but a question of reforming today or tomorrow and a question of reforming proactively or passively," Lu said.
In September, a group of 50 local personnel officers will go to Hong Kong for a brief training on the operation and management of government pensions for civil servants. Their objective is to bring back useful Hong Kong experiences so that Shenzhen, one of the earliest spearheads of China's economic reform, can provide another first in advancing the mainland's Civil Servant System Reform, according to Lu.
"Geographically, Hong Kong is the nearest developed region to Shenzhen. And its experiences have the most relevance for us. Learning from Hong Kong has jet-propelled Shenzhen's economic takeoff from an obscure fishing village more than 30 years ago. We hope to continuously use such geographic advantage to make a breakthrough in the system design of administrative management," he said.
After small-scale experiments from 2007 to 2009 during which 53 civil servants were signed on, Shenzhen Municipal Government began taking bold strides by signing all of the 350 new employees to three-year labor contracts.
"This is a land-mark move as it sends a signal that civil servants will no longer be a privileged group and might lose jobs as people in any other occupation do. Such insecurity is conducive to raising civil servants' sense of duty and facilitate the Chinese administration to become more service-oriented," said Li Luoli, vice president of the China Society of Economic Reform.
Official figures show that a record high of more than 40,000 college graduates applied for the 350 openings. As 34,545 people had taken the exam, this year has witnessed the fiercest competition on record.
"Such popularity indicates that our reform is welcomed and widely accepted. Although civil servants are no longer secure as lifetime jobs, those who excelled in their occupation have a chance to have their contracts renewed," said Lu.
Under Chinese labor laws, once a worker has signed two labor contracts with the same employer in a row, the employee and employer can sign, through negotiations, a work contract with no fixed terms. This stipulation, Lu said, also applies to local civil servants.
"Our goal is to gradually iron out the discrepancy between government workers and other occupations to facilitate the free movement of people in all jobs on an equal footing," said Lu.
Iron bowl fading out
Originated in the United Kingdom more than 200 years ago, the civil servant system was foreign to China until the 1990s when the Shenzhen Special Economic Zone was approved by the Ministry of Personnel as the country's pilot city to experiment with reforms.
Before that, the new China established in 1949 had clung to a "collective mindset", with all businesses run by the government and all job assignments decided by the government. All those who relied upon public finance for salaries, either government officers or employees of state-owned enterprises, shared one catch-all name: "state cadre".
A dividing line has been drawn, since the late 1980s when labor contracts were adopted to facilitate the ownership reform of state-owned enterprises. "Breaking iron bowls" had been hailed as a land-mark move to end equalitarianism and encourage competition.
The reform later spread to public institutions affiliated to governmental departments in the 1990s when permanent employment was replaced by labor contracts.
Administrative agencies were left as the place where employees were guaranteed to work till their retirement age as long as they were not removed for missteps or died earlier. Unlike average Chinese who depend on social security funds for life in their declining age, civil servants can count on public finance for retirement pay.
"This has caused so many side-effect," said Lu Tao. "Taxpayers tend to compare themselves with civil servants and complain about the high retirement pay of civil servants. As civil servants have become the few Chinese enjoying an 'iron bowl' in China, individual misconduct often triggers public resentments over the group and tarnishes the reputation of all civil servants."
For instance, he said, running a red light could be trivial, but when it came to a civil servant, that would serve as good fodder for a metropolitan newspaper.
"I should say it is public opinion that is forcing us to speed up administrative reforms," said Lu.
Global practices show civil servant systems based upon labor contracts are prevalent in developed countries and regions including the United States, the United Kingdom and Singapore.
Although China only partly duplicated the civil servant system by tabling labor contracts in the 1990s, Professor Li Luoli said that the initial administrative reform was positive for China as becoming civil servants was no longer the results of administrative order but public competition. Moreover, the rights and obligations of civil servants were clearly defined.
Tough nut to crack
When Lu was transferred to the personnel department of Shenzhen 20 years ago from Guangzhou, he was immediately infected by the city's dynamic to blaze a trail for China's economic take-off.
He recalled that the pioneering national civil servant system had been decided by local government in 1992 as "one of the strategies" to promote China' s political system reform that could help China catch up with the booming economy of Asia' s four Little Dragons, namely the Republic of Korea, Singapore, Taiwan and Hong Kong.
Thirty-two years later when the overall strength of the Chinese economy has become something no nation could afford to ignore, the country, said Lu, must overcome unprecedented resistance as the ongoing reform was no longer to fill a vacuum, but to reshuffle resources and redistribute interests.
When labor contracts were introduced into Shenzhen two years ago, repulsion was a knee-jerk reaction by many civil servants who feared losing their lifelong employment. But resistance was nothing new to reformers like Lu. And their magic weapon was "incremental reform" , as always.
"If our reform can appeal to new hires and bring them benefits, I am sure more civil servants with seniority would hope to follow suit," said Lu.
As Chinese civil servants in administrative agencies would receive retirement pay on public finance, they are not covered by the country's old-age insurance as people in any other occupation are. In contrast to the monthly accumulated and inherited old-age insurance, retirement payments are issued only after a civil servant passed his or her retirement age. If he or she died before that age, despite his work for the government for decades, no retirement pay will be provided to his survivors.
To remedy the situation, Lu thinks it is time for the government to think about establishing a government pension compatible with corporate annuities and bringing civil servants access to social security funds, as without a monthly accumulation in old-age pensions, many civil servants are reluctant to do any job-hopping. Lu thinks that explains at least to some extent why Chinese people often complain administrative agencies have more hands than work available and are not service-oriented enough.
"If government officers can be dismissed or change their jobs without worrying about their losses in old-age pensions, a healthier job competition will emerge. And more talented people will be invited into the rank of civil servants," said Lu.
Also Lu thinks this is a good way to ease the financial burden of government. "Under a market economy, public finance can go bankrupt. If governments continue failing to put some money in reserve now for the retirement payments of its 6.3 million civil servants when the economy is good, once there was an economic downturn, public finance would face a great challenge," he said.
Lu disclosed that Shenzhen Government was considering borrowing overseas experience to establish a special government pension for civil servants and earmark a certain proportion into the individual accounts of civil servants every month. Although money in this account can not be withdrawn until a civil servant resigns or retires, its owner can seek to preserve its value through several government-authenticated financial companies.
Apart from labor contracts and government pensions, another land-mark reform Shenzhen government is trying to advance is to classify the posts of civil servants into three different categories, namely administrative management, law enforcement and special expertise. According to the plans, nearly 70 percent of civil servants can then be promoted by seniority rather than administrative ranks.
For more than two thousands years, the Chinese people have taken it for granted that he who excels in learning shall be an official. "When everyone needs an administrative rank to elevate his pay and benefits, a *** race become a common occurrence in the officialdom, and that is detrimental to the building of a service-oriented government," said Lu.
Although it is too early to see when the central government might endorse a national practice of the ongoing Shenzhen reform, Li Luoli noted that one profound merit of what Shenzhen people are doing now was to iron out the privileges of government officers and correct the prevalent mistaken Chinese mind-set that civil servant employment is not an ordinary job, but an official position.
Source: Xinhua
Lu Tao, a pioneer in the establishment of the civil servant system in China more than 20 years ago, is now leading a bold administrative reform in this coastal city, with an aim to terminate the "iron bowl" -- a heritage from the planned economy now reserved mainly for civil servants.
The solider-turned-official in charge of personnel management in Shenzhen hoped to have 30 years to transfer the city's 40,000 government officers in service from de facto life-long employment into limited employment based upon labor contracts.
"Judging from either national development strategies or social needs, renovating the civil servant system has become a significant frontline of the Chinese reforms started 30 years ago in the country's economic fields," said the deputy director of the Human Resources and Social Security Department of Shenzhen city.
"It is not a question of reforming or not, but a question of reforming today or tomorrow and a question of reforming proactively or passively," Lu said.
In September, a group of 50 local personnel officers will go to Hong Kong for a brief training on the operation and management of government pensions for civil servants. Their objective is to bring back useful Hong Kong experiences so that Shenzhen, one of the earliest spearheads of China's economic reform, can provide another first in advancing the mainland's Civil Servant System Reform, according to Lu.
"Geographically, Hong Kong is the nearest developed region to Shenzhen. And its experiences have the most relevance for us. Learning from Hong Kong has jet-propelled Shenzhen's economic takeoff from an obscure fishing village more than 30 years ago. We hope to continuously use such geographic advantage to make a breakthrough in the system design of administrative management," he said.
After small-scale experiments from 2007 to 2009 during which 53 civil servants were signed on, Shenzhen Municipal Government began taking bold strides by signing all of the 350 new employees to three-year labor contracts.
"This is a land-mark move as it sends a signal that civil servants will no longer be a privileged group and might lose jobs as people in any other occupation do. Such insecurity is conducive to raising civil servants' sense of duty and facilitate the Chinese administration to become more service-oriented," said Li Luoli, vice president of the China Society of Economic Reform.
Official figures show that a record high of more than 40,000 college graduates applied for the 350 openings. As 34,545 people had taken the exam, this year has witnessed the fiercest competition on record.
"Such popularity indicates that our reform is welcomed and widely accepted. Although civil servants are no longer secure as lifetime jobs, those who excelled in their occupation have a chance to have their contracts renewed," said Lu.
Under Chinese labor laws, once a worker has signed two labor contracts with the same employer in a row, the employee and employer can sign, through negotiations, a work contract with no fixed terms. This stipulation, Lu said, also applies to local civil servants.
"Our goal is to gradually iron out the discrepancy between government workers and other occupations to facilitate the free movement of people in all jobs on an equal footing," said Lu.
Iron bowl fading out
Originated in the United Kingdom more than 200 years ago, the civil servant system was foreign to China until the 1990s when the Shenzhen Special Economic Zone was approved by the Ministry of Personnel as the country's pilot city to experiment with reforms.
Before that, the new China established in 1949 had clung to a "collective mindset", with all businesses run by the government and all job assignments decided by the government. All those who relied upon public finance for salaries, either government officers or employees of state-owned enterprises, shared one catch-all name: "state cadre".
A dividing line has been drawn, since the late 1980s when labor contracts were adopted to facilitate the ownership reform of state-owned enterprises. "Breaking iron bowls" had been hailed as a land-mark move to end equalitarianism and encourage competition.
The reform later spread to public institutions affiliated to governmental departments in the 1990s when permanent employment was replaced by labor contracts.
Administrative agencies were left as the place where employees were guaranteed to work till their retirement age as long as they were not removed for missteps or died earlier. Unlike average Chinese who depend on social security funds for life in their declining age, civil servants can count on public finance for retirement pay.
"This has caused so many side-effect," said Lu Tao. "Taxpayers tend to compare themselves with civil servants and complain about the high retirement pay of civil servants. As civil servants have become the few Chinese enjoying an 'iron bowl' in China, individual misconduct often triggers public resentments over the group and tarnishes the reputation of all civil servants."
For instance, he said, running a red light could be trivial, but when it came to a civil servant, that would serve as good fodder for a metropolitan newspaper.
"I should say it is public opinion that is forcing us to speed up administrative reforms," said Lu.
Global practices show civil servant systems based upon labor contracts are prevalent in developed countries and regions including the United States, the United Kingdom and Singapore.
Although China only partly duplicated the civil servant system by tabling labor contracts in the 1990s, Professor Li Luoli said that the initial administrative reform was positive for China as becoming civil servants was no longer the results of administrative order but public competition. Moreover, the rights and obligations of civil servants were clearly defined.
Tough nut to crack
When Lu was transferred to the personnel department of Shenzhen 20 years ago from Guangzhou, he was immediately infected by the city's dynamic to blaze a trail for China's economic take-off.
He recalled that the pioneering national civil servant system had been decided by local government in 1992 as "one of the strategies" to promote China' s political system reform that could help China catch up with the booming economy of Asia' s four Little Dragons, namely the Republic of Korea, Singapore, Taiwan and Hong Kong.
Thirty-two years later when the overall strength of the Chinese economy has become something no nation could afford to ignore, the country, said Lu, must overcome unprecedented resistance as the ongoing reform was no longer to fill a vacuum, but to reshuffle resources and redistribute interests.
When labor contracts were introduced into Shenzhen two years ago, repulsion was a knee-jerk reaction by many civil servants who feared losing their lifelong employment. But resistance was nothing new to reformers like Lu. And their magic weapon was "incremental reform" , as always.
"If our reform can appeal to new hires and bring them benefits, I am sure more civil servants with seniority would hope to follow suit," said Lu.
As Chinese civil servants in administrative agencies would receive retirement pay on public finance, they are not covered by the country's old-age insurance as people in any other occupation are. In contrast to the monthly accumulated and inherited old-age insurance, retirement payments are issued only after a civil servant passed his or her retirement age. If he or she died before that age, despite his work for the government for decades, no retirement pay will be provided to his survivors.
To remedy the situation, Lu thinks it is time for the government to think about establishing a government pension compatible with corporate annuities and bringing civil servants access to social security funds, as without a monthly accumulation in old-age pensions, many civil servants are reluctant to do any job-hopping. Lu thinks that explains at least to some extent why Chinese people often complain administrative agencies have more hands than work available and are not service-oriented enough.
"If government officers can be dismissed or change their jobs without worrying about their losses in old-age pensions, a healthier job competition will emerge. And more talented people will be invited into the rank of civil servants," said Lu.
Also Lu thinks this is a good way to ease the financial burden of government. "Under a market economy, public finance can go bankrupt. If governments continue failing to put some money in reserve now for the retirement payments of its 6.3 million civil servants when the economy is good, once there was an economic downturn, public finance would face a great challenge," he said.
Lu disclosed that Shenzhen Government was considering borrowing overseas experience to establish a special government pension for civil servants and earmark a certain proportion into the individual accounts of civil servants every month. Although money in this account can not be withdrawn until a civil servant resigns or retires, its owner can seek to preserve its value through several government-authenticated financial companies.
Apart from labor contracts and government pensions, another land-mark reform Shenzhen government is trying to advance is to classify the posts of civil servants into three different categories, namely administrative management, law enforcement and special expertise. According to the plans, nearly 70 percent of civil servants can then be promoted by seniority rather than administrative ranks.
For more than two thousands years, the Chinese people have taken it for granted that he who excels in learning shall be an official. "When everyone needs an administrative rank to elevate his pay and benefits, a *** race become a common occurrence in the officialdom, and that is detrimental to the building of a service-oriented government," said Lu.
Although it is too early to see when the central government might endorse a national practice of the ongoing Shenzhen reform, Li Luoli noted that one profound merit of what Shenzhen people are doing now was to iron out the privileges of government officers and correct the prevalent mistaken Chinese mind-set that civil servant employment is not an ordinary job, but an official position.
Source: Xinhua
