About 39 million people will be affected by sweeping reform of the country's government-sponsored institutions by 2020, Outlook Weekly, a magazine run by the Xinhua News Agency reported on Sunday.

These government-sponsored institutions mainly serve as complimentary work units to government departments to provide public services such as education. A work unit or danwei is the place of employment in the State-run sector.

A total of 30 million people work in government-sponsored institutions, with another 9 million retired.

The reform will divide government-sponsored institutions into administrative, profit-driven and non-profit categories, the report stated.

Administrative units would be transformed into government agencies, profit-making institutions into enterprises and non-profit would remain government-sponsored institutions.

The welfare of employees working at government-sponsored institutions, such as pension, would also be improved.  

Government-sponsored institutions face problems, the report explained. For example, some work in the interest of officials instead of working for the people.

The reform will correct systematic problems, experts said.

"The current system has some shortcomings. For example, there are no clear lines between government and government-sponsored agencies," a professor at the Chinese Academy of Governance  told the Global Times on condition of anonymity on Sunday.

"Some units' sizes are larger than necessary and cost a large sum from the public budget," the professor said.

The professor believed government-sponsored institutions will play a crucial role in establishing a government of service, and become the main provider of public services after reform.

Education and medical staff benefits remained comparatively attractive, He Fengqiu, a professor at the Chinese Academy of Governance, told the Global Times.

Other sectors' welfare benefits needed improving, he said.