Self-employment Activity and Ascension to Urban Citizenship for Rural-to-Urban Migrant Workers in China

Written by Guangjie Ning.

By 2013, the total number of rural migrant workers reached 160 million (National Bureau of Statistics of China (NBS), 2014). However, due to various institutional barriers and restrictions such as the hukou system (the resident registration system), most of these migrants cannot live in the cities long-term – because they cannot convert their rural hukou into an urban one, they are not eligible for urban public services, and thus cannot settle down permanently and integrate into urban life. On average, the residence of these migrants in the city lasts only 7 years.

The proportion of the urban population by residence increased from 18% in 1978 to 47% in 2009. However, the proportion of urban population in terms of hukou status increased to just 27% by 2009 (NBS, 2010). This huge gap means there are around 250 million people who live in urban areas without possessing an urban hukou.

This is problematic in terms of rural migrant well-being, and raises uncertainties for sustainable economic development in China; related challenges include the migrant worker shortage in rural areas, children being left behind in the countryside and the unbalanced consumption-demand ratio.

For temporary migrants in China, gaining urban citizenship (obtaining an urban hukou, social security, and the same rights as urban citizens) constitutes a significant stage of the integration process, reducing certain discriminatory barriers and making it possible for them to become part of the urban community. Furthermore, in the era of urbanisation and sustainable economic development in transforming China, the number of migrants acquiring urban citizenship is also important to city administration.

In my research on rural migrants, I have examined which factors were most significant in leading to successful attempts to obtain an urban hukou, with a particular focus on employment status. Employment is the basis of rural migrant workers’ survival in cities because only if they secure a well-paid job can they consider buying a house and settling down in the city, beginning the gradual process of becoming an urban citizen.

Employment is also closely related to obtaining urban hukou, social security coverage and education eligibility for children. Employment choice is one that the migrant can make relatively freely under the existing institutional framework, and hence becomes a feasible method for obtaining urban citizenship. However, as migrant rural workers often hold low-paying, unstable jobs, they are less likely to survive in urban areas and thus to integrate into urban society. Some researchers point out that self-employed migrants with a higher income should be given higher priority when it comes to the citizenship path for migrants.

Self-employment has become increasingly common among rural-to-urban migrants in China. In 2009, the proportion of self-employed rural-to-urban migrants in China was 25%. By 2012, the corresponding figure rose to 33% (National Population and Family Planning Commission, 2012). Despite this increase, the self-employed group is often ignored by the city labour administration. Although most self-employed workers do not employ other staff, they generally earn more than waged workers and thus are generally more able to buy property and contribute to the economic foundations for urban citizenship.

The average investment of self-employed rural-to-urban workers amounts to only 35 thousand RMB. A large proportion (69%) of these workers invest less than 30 thousand RMB, and only 10% invest more than 100 thousand RMB. Consequently, the sunk cost arising from self-employment activity is not large, and in turn they are more willing to move among cities. As for social networks, the characteristics of self-employment do not equip them with a wide social network, and they generally have fewer relatives and friends in the cities compared to wage workers.

According to my research, self-employed migrants enjoy a higher level of life satisfaction, and are capable of obtaining a higher income and higher quality of life. However, they are likely to live in cities on a temporary basis, and the likelihood of them living in the city permanently is lower, because the self-employed migrant is not covered by the social security system and is discriminated against by the current urban Hukou system.

Summing up, self-employed migrants differ from wage workers in both opportunity and willingness to acquire citizenship, and policy design needs to adapt in order to meet the different demand. Under the context of the migrant choosing their employment status freely, the government should help self-employed migrants to obtain urban citizenship and to integrate to urban life by means of establishing a social public service, and the income generated by such entrepreneurship should be fully evaluated in the prerequisites of the Hukou policiies.

Guangjie Ning is a Professor of Labour Economics at Nankai University, China. Image Credit: CC by leniners/Flickr.