How Informal is China’s Labour Market? – The Status Quo and Prospects of Informal Employment in the People’s Republic of China

Due to deregulation and growing international competition, recent decades have seen a dramatic increase in informal employment in nearly all parts of the world, including industrialized countries. Current labour market statistics suggest that this is also true for China. In the last few years, the bulk of new employment in urban China has been in the informal economy. The overwhelming majority of rural migrants and retrenched and laid-off urban workers, and also a rising share of graduates, are informally employed in enterprises or run their own micro-businesses. This paper analyses the status quo of informal employment in China’s cities and discusses the implications for the urban labour market. It compares developments in China with global trends and points out the special features of the country’s informalization process, which have resulted from China’s specific path of structural adjustment and economic transformation.