China Eases Employment Residency Requirements

In late February 2009, the Chinese State Council announced plans to loosen household registration requirements as part of a job stimulus package aimed at mitigating the effects of the slowing economy. The Chinese government’s household registration system – commonly known as hukou in Chinese—restricts Chinese citizens from moving freely between cities for employment purposes. The system has been in effect since 1958 and has been enforced with varying levels of severity over the past five decades. In the 1990s, computerization of the registration system made it easier to manage, but government enforcement has been less strict in recent years. Many people recognize that restricting professionals from career relocation would be detrimental to the economy.
Although professional candidates have not experienced many problems with the hukou system, many recent university graduates who could not land jobs in their home cities were restricted from finding work elsewhere by hukou regulations. Thus, in its recent announcement, the State Council asked every city in China, with the exception of Beijing, Shanghai, Tianjin and Chongqing, to eliminate hukou restrictions for college graduates. These individuals are free to seek employment almost anywhere in China.
While many foreign-invested firms in China are now laying off blue-collar workers, the economic downturn might be an opportunity to hire and train talented local college graduates for leadership roles. According to China’s Ministry of Human Resources and Social Security, there are expected to be over six million graduates from institutes of higher learning in 2009. While many of these individuals will be seeking employment, analysts point out that more than 1.5 million of 2008’s graduates are still unemployed. This gives foreign companies the opportunity to hire and retain young local talent that might have been scarce in the days when the job market was hot.
In addition to loosened restrictions for college students, the central government has hinted at changes to hukou requirements for migrant workers. Government estimates show that close to 20 million migrant workers are without work. A large percentage of these are in the heavily industrialized Guangdong province, where many foreign manufacturing companies are cutting back production or closing plants because of the global drop in demand for manufactured goods.