group has generally acted as a long-term employment opportunity for migrants. 45 From 1993-2001, while employment in the traditional urban formal sector has been shrinking (from 81.4% to 36.1%), the urban informal sector (where services account for the major part) has been adding workers rapidly (from 6.3% to 15.3%, though it had a slight decline in 2000 mainly due to a reduction in self-employed, see table 11). In addition, service industries in small towns would be an important resort for redundant rural labor, where public services, transportation, warehousing and trading of agricultural products, and information and technical services will have great room for expansion. Based on a

**-** **<u>Table 11. Changes in the Urban Employment Structure (1990 2001, millions)</u>**

|Year|Total<br>|Traditional F|ormal Sector|Inform|al Sector|
|---|---|---|---|---|---|
|||||||
||ran<br>Employed|Total number of<br>staff and workers|% in total urban<br>employed|Total number of<br>employment|% in total urban<br>employed|
|1990|166.16|138.95|83.6|6.71|4.0|
|1991|169.77|142.92|84.2|7.60|4.5|
|1992|172.41|145.10|84.2|8.38|4.9|
|1993|175.89|143.13|81.4|11.16|6.3|
|1994|184.13|141.01|76.6|15.57|8.5|
|1995|190.93|140.31|73.5|20.45|10.7|
|1996|198.15|139.03|70.2|23.29|11.8|
|1997|202.07|135.83|67.2|26.69|13.2|
|1998|206.78|107.09|51.8|32.32|15.6|
|1999|210.14|99.88|47.5|34.67|16.5|
|2000|231.51|93.24|40.3|34.04|14.7|
|2001|239.40|86.50|36.1|36.58|15.3|

Notes: 1. The “traditional formal sector” refers to the urban state-owned and collective units, and the “informal sector” refers to the domestic informal private and self-employed units (mostly enterprises). In the urban employment, except these two categories, there are also the “emerging formal sector”, which includes units (mostly enterprises) with joint, share-holding, or limited liability ownerships (which can be broadly defined as ‘formal private’. Refer to table 8), as well as foreign and Hong Kong, Macao, and Taiwan ownerships and their affiliates. Also, for the “traditional formal sector”, here we only include the “staff and workers”, which refer to the full-time employees but exclude the re-hired retirees.

2. In the Chinese statistics, the “total urban employed” also includes the laid-off or _Xiagang_ workers from state-owned and collectives. These workers have been laid off while still nominally holding an employment relationship (or contract) with their enterprises or units. However, many of them do not receive any living expenses from their units or have any other source of income, and they should be categorized as “unemployed”. This is one of the reasons that, in the Chinese statistic books, there is a discrepancy between the total employed and the total number of employees in all formal and informal sectors adding together.

Source: _China Labor Statistical Yearbook_ 2002, _China Statistics Yearbook_ , various years, and Hu, Angang (2001).

preliminary estimation, by 2005, about 33 percent of China's labor force will be working in the service sector, which is expected to recruit about another 30 million new employees in the coming years. 46 Service industries are knowledge and labor-intensive, and therefore are particularly necessary for the transition to a knowledge based society. Their businesses are also crosscutting all other sectors, thus, productivity gains made in service sector industries not only benefit the service industries themselves, but benefits also trickle down through

> 45 See Meng, Xin’s study (2001) based on a survey of 1504 rural-urban migrants in Jinan city, Shandong Province in 1995. “The Informal Sector and Rural-Urban Migration – A Chinese Case Study”, _Asian Economic Journal_ , V15, No.1, 2001.

> 46 “Call for More Jobs in China's Service Sector”, _Asia Times_ , April 27, 2002: h _ttp://www.atimes.com._

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