Iron Rice Bowl

Origin

The term comes from a story in Ji Yun's Qing-dynasty notebook Notes of the Thatched Abode of Close Observations (閱微草堂筆記): a maid in a squire's household repeatedly breaks bowls without punishment because of her beauty, so the squire replaces all his bowls with iron ones that she can never break. The phrase then came to mean a stable occupation providing steady income and welfare. Sources date the work inconsistently to 1798 or 1800, so a single year should not be asserted.

Formation and early conditions

When the People's Republic was founded in 1949 nearly half the urban labour force was unemployed and the 1948–1949 hyperinflation had made urban life unsustainable; job security was a central promise of the Communist Party. As private enterprises were replaced by state-owned enterprises, the state became the main employer, paying wages and providing benefits. State enterprises and public institutions guaranteed lifelong employment, wages were uniform regardless of merit, and the slogan 'whether you work or not, you get thirty-six a month' captured the arrangement. The result was overstaffing, low efficiency and high employer costs across most sectors.

Contraction and dismantling

Employment rose during the Great Leap Forward (1958–62), but after its failure many projects were shut down and about 20 percent of the labour force had to be removed. As Deng Xiaoping's labour reforms began, guaranteed lifetime employment and state welfare were curtailed: in 1980 the government sought to end lifelong employment in state enterprises through fixed-term contracts for new hires, and children could no longer automatically fill a parent's post. From 1 October 1986 new state-industry workers were hired on fixed-term contracts.

A 1992 constitutional amendment replaced the planned economy with a socialist market economy open to privately-owned, individually-owned and foreign-invested enterprises. Around 1995–1996 about half of state-owned enterprises reported losses, worsened by the 1997 Asian financial crisis. At the 15th Party Congress in September 1997 Jiang Zemin announced accelerated reform of medium and large state enterprises and major layoffs, while smaller state enterprises were disposed of through mergers, leasing, selloffs and sometimes bankruptcy. WTO accession in 2001 required China to 'break the iron rice bowl'.

Xiagang and its scale

Xiagang (下崗) is a form of unemployment peculiar to China, distinct from dismissal: workers remain de jure employed but have no work and receive no proper salary, retaining only minimal benefits from their work units. Unlike the unemployed (失业), who are entitled to government support, xiagang workers received minimal payments financed one-third by the state and two-thirds by their former employers. The distinction eased the burden on the welfare system, concealed real unemployment figures and divided the working class, preventing unified action.

Between the mid-1990s and the early 2000s, the height of the xiagang era, total layoffs are given as somewhere between 27 and 35 million, with the figures varying by source. By 1998, 67.84 percent of state-enterprise employees had been retrenched, and by 1999, 13.2 percent of the urban labour force had been fired. CNPC and Sinopec each laid off roughly 700,000 workers, while Daqing Oilfield ruled out layoffs because of strong worker reprisals. Women and workers in poor health faced greater risk of retrenchment, whereas men, the higher educated, Party members and those in higher-skill jobs were less likely to be fired.

Current situation and regional comparison

Civil servants still hold iron-rice-bowl job security, a circumstance often blamed for inefficiency and corruption; as of the end of 2015 there were 7.167 million government officials. In 2011 Guangdong continued efforts to break the bowl through grassroots recruitment, employment by contract and performance-based pay. When the Regulation on the Personnel Management of Public Institutions took effect on 1 July 2014, public institutions redefined their relationship with staff as a contractual one, ending life tenure in that sector.

The system was also uneven regionally. It was not as prevalent in Taiwan, which has fewer state enterprises and more foreign-owned companies and lacks the infrastructure for such a state welfare system, so Taiwan largely escaped the unrest of workers losing job security and benefits. Hong Kong, historically a centre of foreign investment with fewer state enterprises and greater exposure to market pressures, saw a more limited iron rice bowl.

Debates and distinctions

The scholarly debate turns on two distinctions: that xiagang was a distinct institution, not merely delayed pay, and that the iron rice bowl was not identical with a seniority-promotion scheme. Some scholars argue that lifetime employment and seniority promotion were not the root problem; the crux lay in the contradiction between individual, collective and state interests, since state enterprises surrendered all profits to the state and wages were paid on a nationwide scale little related to enterprise finances, so workers could not develop a strong economic identity with their enterprise. Lü and Perry (2015) argue that the crux of the incentive problem lay with the state-oriented ethos rather than the practice of lifetime employment.

Using the 1990s state-enterprise reform as a natural experiment, one study estimates that precautionary saving accounted for about 40 percent of state-enterprise household wealth accumulation between 1995 and 2002, and that groups more vulnerable to unemployment risk accumulated more precautionary wealth, illustrating how breaking the iron rice bowl reshaped workers' saving and consumption. In the West the term has been used of government-funded scientists and laboratories, and in Korea the related expression denotes a job with both security and good pay.