Agricultural surplus labour has been a long-standing and persistent problem in China. Due to the inappropriate policies in the past, large amount of excess labour is hidden in the rural area. With the onset of the 1978 reform, this problem surfaced. The accumulation of this surplus labour hampered the improvement in labour productivity, affected the adoption of machinery and created a backward rural economy. Therefore effort should be taken to transfer the surplus out of rural....[ Read more ]

Agricultural surplus labour has been a long-standing and persistent problem in China. Due to the inappropriate policies in the past, large amount of excess labour is hidden in the rural area. With the onset of the 1978 reform, this problem surfaced. The accumulation of this surplus labour hampered the improvement in labour productivity, affected the adoption of machinery and created a backward rural economy. Therefore effort should be taken to transfer the surplus out of rural.

In the past, the process of transfer was disturbed by administrative interferences. A majority of the surplus farmers cannot move out of agriculture. Since 1978, the control of labour movement has gradually loosened. However, uncontrolled labour movements have led to repeated waves of blind flows and back flows.

To solve this problem, three major views have been advocated: diversion to city, local absorption and multi-directional absorption. Under the present circumstance of China, the third view may be more appropriate. Besides, it is suggested that the solution should be divided into four main strategies. First, to reduce labour supply by controlling the population growth and decreasing the labour participation rate. Second, to expand the labour demand by expanding both the agricultural and non-agricultural sector, developing towns and cities, and exploiting the international labour market. Third, to remove the obstacles in the process of transfer by improving the labour quality and developing more employment agencies. Finally, various plans of transfer should be designated to suit different needs of various regions. Apart from these strategies, a suitable reform of the household registration policy is also needed to facilitate the movement of people and promote a better management on the floating population.