The paper charts the process through which employment has been transformed in China. Measures of employment quality captured by estimates of regular and non-regular employment and unemployment are used to form a view of the changing employment situation. The increase in the share of regular employment in total employment, from 40.1% in 1990 to 62.7% in 2011, is staggering for the most populous country in the world. This is what lies behind the improvement in employment in China. This paper argues that factors behind the improvement in employment in China can be traced to sequenced policy shifts in sector growth strategies on one hand, and the gradual removal of effective constraints on the physical movement of labour on the other. In other words China has managed its process of structural change.

This paper is concerned with measuring categories of employment that have an economy-wide meaning in the developing world. Employment has always had two interconnected sides, output and income, and these two dimensions of employment operate under very different conditions in advanced and developing economies. A developing economy is divided into two parts, organised and unorganised in respect of labour. A large amount of surplus labour exists in the unorganised part creating underemployment that manifests itself in a range of forms of employed labour. In this situation the headcount of the employed overestimates economy-wide employment; and the headcount of the unemployed seriously underestimates economy-wide unemployment.