The Internal Labor Market and the Transformation of Labor Relations in China: Based on Survey Data and Fieldwork on Migrant Workers in the Pearl River Delta

Our survey data on migrant workers in the Pearl River Delta region from 2006 to 2010 and recent fieldwork show that the enactment of the Labor Contract Law encouraged both the signing of labor contracts and the long-term nature of these contracts, making enterprises more willing to increase investment in human capital, increase employee insurance and welfare and give more attention to human-centered management, leading eventually to the establishment of an internal labor market that incorporates migrant workers. This is accompanied by progress in human resources management techniques and strategies in SMEs and private enterprise. Although the Labor Contract Law to some extent intensified the tendency for migrant workers to undertake collective protection of their rights, the establishment of an internal labor market could also ease the tension between labor and capital and lead to employees becoming more rational and prudent in safeguarding their rights, thereby providing a basis for a transition from confrontation to win-win cooperation between labor and capital. The Labor Contract Law has accelerated and strengthened the trend of individualized development in China’s labor relations. The protection of labor rights through the two channels of the “rigid” legal system and “flexible” internal management can help reduce the risk of large-scale collective labor disputes and establish a relatively harmonious institutionalized labor relationship.