By Lin Zeyan, Human Resource Research and Training Center of DRC

Research Report No. 029, 2007

In general, those working in China's state-owned enterprises and institutions and government departments are called system personnel, and those working outside this system are called non-system personnel. With the establishment, development and improvement of the socialist market economy, China began to have a huge force of non-system personnel. According to China Personnel Report 2005: Human Development in the Historical Process of Building a Harmonious Society compiled by China Institute of Personnel Science under the Ministry of Personnel, more than 70% of the country's professional and technical personnel were working in the state-owned enterprises and institutions, or inside the system. But the number of those working in the state-owned enterprises has been declining on the whole since the end of the 1990s. In the meantime, the number of workers and that of professional and technical personnel working in the non-state-owned units, namely in the organizations outside the system, respectively rose by 29 folds and 3.4 folds during the 1994~2003 period. In particular, personnel distribution in some regions where non-public economy was fairly developed had undergone a major change: non-system personnel had outnumbered system personnel. In Yuyao City of Zhejiang Province where non-public economy is fairly developed, only 30% of the 32,000 personnel of different categories are working inside the system, namely in the party and state organs and state-owned enterprises and institutions, while 70% are working outside the system, namely in the non-public economic sector and new economic organizations. Investigations reveal that non-system personnel are mainly from three sources: the locally brought up people, the graduates from the institutions of higher learning, and the personnel flowing from the system, namely from the party and state organs and the state-owned enterprises and institutions.

The inherent vitality of the non-public economy has triggered a strong demand for personnel and also a mass flow of personnel across regions, industries and ownerships. This personnel flow coincides with capital flow and goes forward like waves. This phenomenon is exceptionally striking in the economic sector outside the system. While the number of non-system personnel has risen rapidly, the composition of non-system personnel has also changed. There have been a growing number of management personnel who can manage large or ultra-large-sized private enterprises. Senior professional and technical personnel have also entered the non-public economic sector in droves. As a result, the non-public economic sector has grown into a highland for personnel.

In many places, non-system personnel have outnumbered system personnel. But the governments at various levels have failed to effectively manage this expanding personnel group. Currently, there has been no institution engaged in collecting and compiling information about non-system personnel. Even in Zhejiang Province, the latest data about the personnel working in non-state enterprises were collected three years ago through a joint multi-department investigation. At the same time, non-system personnel are eager to receive social recognition and respect and hope for more standard rules on personnel flow. For a very long time, we have neglected and even ignored the effective management of non-system personnel, who are a product of a specific historical period. Recently as the ranks of non-system personnel expanded, some experts urged the government to exercise effective administration over these personnel and to introduce some policies and regulations to effectively encourage non-system personnel to play their roles in social and economic development. But the lack of a scientific understanding of the essence of personnel being a “potential shared resource” and the rules governing the guidance of social and economic development over the flow of personnel has led to a wide difference between the management of system personnel administration and that of non-system personnel, and has hence made it difficult to effectively bring out the value of non-system personnel. In addition, as the “resources for personnel recognition” at the disposal of the institutions inside the system are overwhelmingly better than those at the disposal of the institutions outside the system, most personnel hope to flow to the institutions inside the system. For example, most graduates from universities and secondary schools try their best to find jobs in government organs and state-owned enterprises and institutions. With the deepening of reforms, the number of state-owned enterprises has gradually diminished and that of private enterprises or economic entities of mixed ownerships has gradually increased. If most personnel continue to flow to the institutions inside the system, such a flow is detrimental to developing and improving the socialist market economy, to economic development, to building a harmonious society and to building up the national strength. This is why we have repeatedly urged the government to introduce a strategy that gives priority to the development of corporate personnel¹.

I. Huge Differences Exist between Development and Management of System and Non-System Personnel

Compared with system personnel, non-system personnel are treated differently in terms of value preference, ideological concept, interest pursuit, political aspiration and lifestyle².

1. Difference in management jurisdiction

Non-system personnel are outside public ownership and the planned economy. Most of them have no personal files deposited with the personnel departments. Many policies and working systems concerning these people are not clearly-defined, leaving numerous blank spots. With the development of the socialist market economy, the ranks of these people have swollen but they remain in a state of natural development. By contrast, system personnel have clear administrative jurisdictions and are managed by corresponding personnel organizations. The organization and personnel departments have established detailed personal files and designed a series of training plans for system personnel.

2. Difference in training and employment

Non-system personnel have complete freedom in career development and job selection. Employment and evaluation of these people are entirely based on market rules. The employers want to have equal or even higher returns for what they pay to these people. Training of non-system personnel happens mostly in the form of self- value addition. After reaching a certain stage, these people will redefine their life goals and continue to work hard to fulfill academic attainment. On the other hand, Training and employment of system personnel often observe past traditions, and their position changes must follow certain paths and procedures.

3. Difference in flow frequency

The organizations outside the system operate under market conditions and generally recruit and lay off employees according to their development needs. As economic development changes fast, these organizations often encounter unexpected changes. For this reason, non-system personnel have no full job security. They are highly mobile and change working units and places frequently. They can accept the challenge of new jobs and new tasks. Once their existing jobs lose appeal or have no sufficient opportunity for personal growth or ample space for development, they tend to look for new opportunities for career development. Likewise, they are promoted much faster. An ordinary staffer can become a senior manager or a boss of his own enterprise overnight. On the other hand, system personnel are in a state of relative isolation and their mobility is subject to numerous limitations. They are highly dependent on their organizations, and have to assume high psychological cost if they want to leave the organizations for free development. For this reason, their jobs are stable, and some of them even spend their lifetime at one post or in one working unit. Their promotion follows certain paths and strict hierarchy and emphasizes seniority and age.

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