Human Capital Failure In Social Transformation

Full employment policy, in the form of job placement by state, has been inexistence in China for a long historical period. As the SOE reforms progress toa deeper level, under the double pressure from market-orientation andstructural adjustment of industries,a large amount of SOE employees wereseparated from their job labeled as laid-off workers. Even though governmentat all levels has taken effective measures to solve this problem,unemploymentcaused by such laid-off workers is still too high. In the mean time, there is theso-called human capital failure in terms of those workers'incomedetermination, social class identification, and social attitude. Studies on suchphenomenon in the social structural transformation have been give greatpriority in academic field.This paper adopts qualitative as well as quantitative methods. The paper firstreviews the development and current situation of human capital theory basedon literature and materials and then empirically analyzes the problem based onsurvey questionnaires and interviews. Policy advice and conclusion areprovided at the end.Social transformation is always quoted to refer to the transformation processfrom traditional to modern society, an evolvement process characterized byalternation in playing the determining role in society between traditional andmodern factors. Currently, China is moving towards industrial, urban, andopen modern society from agricultural, rural, and closed traditional society,which is a social rational process. Some features of our social transformationinclude, existence of obvious contrast between the traditional culture andpsychology and the requirements of modern society; a relatively long processbeing needed; and non-harmonious social structure during the transformation,which can cause social disorder to certain extent.Theories of human capital have been growing rapidly as a branch of thoughtsin western economics since 1960s. Human capital refers to the capital formedby people's investment on health, education, and training. When theaccumulation of human capital has no effect on raising labor income nor onpromoting rationalization social attitude, there is what we call human capitalfailure. Causes for this phenomenon lies in the changes in knowledge and skillsystem in labor market associated with social transformation that lead tofracture in human capital.Frictional and structural unemployment are referred to as naturalunemployment because of their nature of being inevitable. Existence of thenatural rate of unemployment has relatively strong correlation with humancapital failure. This rate has direct effect on human capital failure through thechannel, or in other words the reason, of the faulty-matching phenomenonregarding knowledge and skill, an inevitable result brought up by socialstructural transformation. There is reasonably strong correlation between thepsychological ability to endure and the failure. Such failure among SOElaid-off workers is highly correlated with social transformation. The charactersof this phenomenon vary with regions and labor markets. In the east coastregions, the problem is not as serious as that in the north less developedregions.Social transformation involves every aspect of social life as well as everysocial class and interest group; therefore, it is a deep, complicated, andarduous historical process. The transformation that China is experiencing iseven deeper, more complicated and more arduous. It is so due to the Chinesespecific context. Firstly, we have a low starting point. Secondly, there arechanges in the concept of value. The value orientation emerged under theChinese traditional moral concepts and in the planned economy era isconfronted with a severe test under the impact of market economy tides. Lastly,if the problem of ownership system can not be solved properly, then, our socialtransformation will not make smooth progress.The social transformation in our country results in a complex phenomenon ofhuman capital failure. Besides economic factors such as changes in industrialstructure, there are other factors including concept of value, culture and moral,political aspect, ownership system, and social aspect. With the comprehensiveeffect of all these factors, the human capital failure in our case is not onlycontinuous but also multivariate, possible to be replicated, and able to causeother sequential action and movement.Based on the above analysis, this paper puts forward the following policy...