Volatility and regulation
Governments use their legislative and regulatory powers to try to counter volatility and provide businesses with conducive environments. They also try to protect labour from exploitation. In most countries, political pressure sees the balance between labour protection and de-regulation in frequent flux. The video clip below illustrates the uncertainty and volatility even in the state-dominated context of China. Ironically it is a regulative measure – a residence permit needed to work and live in particular areas, which fosters unrest among migrant workers who lack this permit and consequently suffer hardship.
Activity 7: Regulatory impacts
Watch the video ‘Chinese migrant workers’ and answer the question below:
Transcript: Chinese migrant workers
What would be the HR implications for a local or international firm employing workers in these areas?
The Hukou system of resident permits is a regulation designed under Chairman Mao to control the movement of people. It now conflicts with the change in the Chinese economy which has been enabled by massive internal movement of labour. The government’s use of a point-based system reflects similar tactics to those of many Western governments but the government in China has taken this much further by applying the technique to internal movements of labour. The video also notes the different outlooks and expectations among the younger generation of Chinese workers. The implication for HR managers is a need to understand the different regulations governing the movement and the hiring of labour. Paradoxically, these tend to be both stricter, and in other ways, looser than those found in many Western countries. For example, making workers redundant in China can be much easier than in European countries.