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CHINESE LABOR AND EMPLOYMENT LAW BY NATHAN JACKSON April 2011 This FAQ is an attempt to answer questions that a foreign layperson may ask about China’s labor and employment laws. China’s labor policy is often a politically charged issue in foreign countries and much misinformation is frequently deployed in political debates. In addition to providing an overview China’s labor and employment laws, this FAQ also attempts to highlight relevant topics that may be unfamiliar to informed laypersons. The focus of this document is on law, but as the FAQ will show, there is often a large gap between law and actual practice. Where possible, comments are included that provide a practical perspective of China’s labor and employment laws. Why do China’s labor and employment laws matter to me? China’s labor environment matters to you because changes in labor and employment laws influence the prices of goods and services around the globe, the locations in which companies and individuals choose to invest or move production, and the social stability of China. In November 2001, China became a fully admitted member of the World Trade Organization and in recent years the press has heavily covered China’s growing participation in international trade. China has not only become a major export power, but also an attractive investment target for international investors seeking to sell goods and services within China. As China’s share of world trade and investment continues to increase, its labor environment will likely attract more attention from outsiders interested in assessing the country’s economic competitiveness. How large is China’s labor force?
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China’s labor force consists of more than 800 million workers, up from 500 million in 1980. At least 130 million of these are migrant workers who move from relatively poor rural areas to urban and industrial centers to work. Many of these migrant workers remit portions of their earnings back to family members in their hometown. Until recently, China has typically had an oversupply of unskilled labor and a shortage of skilled and professional workers. However, in the past several years, some companies in the major industrial hubs have begun to complain about labor shortages. As a result, many companies now raise wages 10 percent or more annually to retain workers, while others have closed their doors and moved to poorer inland areas or countries with cheaper labor. Interestingly, salaries for new university graduates have stagnated because of the sharp increase in the number of graduates from China’s quickly expanding university system. While university graduates start their careers with wages comparable to a factory worker, their salaries typically rise much more quickly than those factory workers. How have China’s labor laws changed in recent years? There has been a tremendous change in China’s labor and employment laws in the past 35 years. Prior to the early 1980s, nearly all jobs were allocated to citizens through an administrative bureau. Employees could not choose their employer or terminate their employment. Further, regulations set an expectation that the employee would work for the same employer for her or his whole working life. Companies in this era could only terminate employees for gross misconduct. This type of labor market and social safety net was called the Iron Rice Bowl because the employer guaranteed job security and benefits to employees regardless of their productivity or the employer’s profitability. In other words, the benefits could not be taken away and were ―iron‖ clad.
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In 1983, the government introduced a contract system that attempted to address the low productivity of the labor market by replacing the Iron Rice Bowl with short-term labor contracts. At first, state-owned companies resisted this trend and the government succeeded only in minimal reforms. In 1992, the National People’s Congress promulgated a Trade Union Law that required all trade unions to be affiliated with the All-China Federation of Trade Unions (ACFTU). This effectively brought labor unions under greater control of the government. The Labor Law of 1994 liberalized the labor market. The labor law, when combined with economic reforms, resulted in more than 40 million lost jobs in government and state-owned enterprises. As a result of the reforms, the government shuttered inefficient businesses and the formerly economically dominant northeast turned into a rustbelt. Meanwhile, Chinese entrepreneurs and Hong Kong investors transformed the formerly weak southeast province of Guangdong into the largest center of manufacturing in the world. In 2008, the government introduced a Labor Contract Law that rolled back some of the laissez-faire approaches to the workforce that the government introduced in the 1990s. This new law abolished the system of at-will employment for most full-time employees and required employers to provide employees with written contracts. Since 2008, the government has also revisited its policy of tight control over the All-China Federation of Trade Unions (ACFTU). While all unions must still be approved by and affiliated with ACFTU, it appears that the government is allowing the ACFTU greater authority to advocate for the rights of workers than it did just a few years ago. That said, the government continues to imprison workers who advocate for the formation of independent trade unions. WAGES Does China have a minimum wage?
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Yes. There are two standards of minimum wage: monthly and hourly. Minimum wages are set at the provincial and municipal level. The government prohibits employers from reaching an agreement with employees for wages that fall below the local minimum wage standard regardless of whether the employee is still in her or his probation period or internship. A probationary period occurs at the beginning of an employment relationship and allows employers to terminate employees without severance pay up to a maximum of six months, but usually just two months. The probation period allows the employer to make sure the employee is a good fit with the employer before being locked into the full term of the employment contract. Provincial and municipal governments frequently adjust statutory minimum wages. For example, many municipalities have raised their minimum wages twice in the past year alone. How much is China’s minimum wage? It depends on the locality. For example, Shanghai’s minimum wage for full-time employees is RMB 1,120/month, or roughly $165. However, in the poorer inland city of Chongqing, the minimum wage is RMB 870/month, or roughly $130. Of course, purchasing power differences prevents these figures from being directly comparable with another country’s wages. The relative cost of living in China is lower than in many developed countries, but even when wages are adjusted for relative prices they remain much lower than in highly developed countries. How much do factory workers earn? It depends on the locality, industry, skill level, and a host of other factors. However, several sources keep broad indices of costs for general factory labor across many regions. Although the indices are only rough estimates, they are helpful in gauging wage differentials across the country. For example, a skilled manufacturing employee in Beijing can be hired for
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RMB 3,000/month, or roughly $445. A similar worker in the poorer inland municipality of Chongqing can be hired for RMB 1,900/month, or roughly $280. To illustrate how important geographic location is in determining wage rates, the average employee salary in Beijing is nearly three times higher than in the poor inland province of Jiangxi. Do Chinese workers get overtime? They’re supposed to. Under China’s Labor Law, an employer must pay overtime compensation to any employee who works more than 40 hours per week. As a general rule, an employer cannot require overtime of more than one hour per day, or three hours per day under special circumstances, and no more than 36 hours per month. As in many other countries, white collar workers like managers and sales staff are often exempt from the overtime pay rules. The following payment schedule illustrates the overtime pay requirements. Extended Working Hours Typical working day Rest day (min. one per week) (i.e., weekend) National holiday
Minimum Overtime Pay (percent of regular wages) 150 percent 200 percent 300 percent
Many migrant workers desperate to earn quick money agree with the employer to work beyond the maximum overtime requirements so they can send extra money home to their families. This type of overtime work is frequently found in industrial hubs and is a contributing cause of recent labor strikes because employees who agree to these arrangements place downward price pressure on wages and upward pressure on hours. Employers are also able to maneuver around overtime regulations by applying to the local labor authorities and asking for approval to use an alternative system of working hours. What are the wage levels for workers who are paid piece-rate?
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Piece-rate is a compensation system where the employer pays the employee for each unit produced or action performed, not on the basis of time. Piece-rate wages are still a feature of China’s manufacturers, but over the past decade, the government has developed rules to address the exploitation of employees through piece rates. For example, workers were exploited when employers paid workers at piece-rate, but then fined them for quality defects, tardiness, or no reason at all. These penalties effectively left workers with wages far below what the employer promised the workers during the hiring process. The first principle of piece-rate wages is that employers cannot set a work quota so high that it prevents an employee from completing the work within an eight-hour day or an average 40-hour week. Second, the employer must set piece-rates that reflect the amount of work normally accomplished in a forty-hour week. For example, in the industrial hub of Guangdong province, for an employer’s piece-rate to be valid, more than 70 percent of employees must be able to achieve the work quota within the legal working hours. SAFETY How many workers are injured on the job each year? Despite many safety regulations, China’s workplace safety record is still extremely poor. According to the State Administration of Work Safety, more than 83,000 workers died in work accidents in 2009, or roughly one out of every 10,000 workers. Of these, more than 2,000 of the dead were coal miners. In 2006, government statistics placed the number of workplace injuries at 625,000. And in the manufacturing hub of Guangdong province, more than 40,000 fingers are severed each year. The majority of injured workers are migrant workers and the most frequent causes of injuries are carelessness and fatigue. Both of these causes persist because of substandard job training and overly long work hours on repetitious tasks.
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Does China have a Workers’ Compensation system? Yes. Each province in China has its own Work-Related Injury Insurance Regulations that require employers to pay the medical expenses of injuries, disability, and occupational diseases. The regulations cover all companies, including unregistered companies and those that illegally avoid paying the premiums. The insurance fund is financed through employer-paid premiums that the government determines by gauging the dangerousness of the workplace. For example, an employer with low risk work like accounting pays 0.5 percent of total payroll expenses into the insurance fund, while an employer with high risk work like shipbuilding pays 2 percent of total payroll into the fund. The law prohibits employers and employees from contractually opting out of the WorkRelated Injury Insurance systems. While coverage of employees has continued to increase, many employees are unfamiliar with this worker’s compensation program and provincial level taxation departments continue to under-enforce it. Similarly, employers continue to underfund the insurance scheme by understating payroll, hiring employees without contracts, and paying wages in cash. What kind of safety regulations exist for Chinese workers? China has a large patchwork of safety regulations, but workplace safety is still very bad by the standards of highly developed countries. The Labor Law requires employers to inform employees of occupational hazards during the hiring process. The law also requires that employers provide workers with safe and hygienic working conditions. The Safe Production law requires some large manufacturers to establish full-time safety supervisors and training for employees. Other important safety regulations include the Occupational Diseases Law and the Administrative Penalties for the Violation of Production Safety Laws.
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What are the penalties for safety violations? It varies. First, the onus is largely on employees to report safety violations to the authorities. Employees are allowed to refuse to perform risky work and they have the right to resign summarily when the employer gives them an order to do unsafe work. In such cases employers must pay the employee severance in accordance with the Labor Contract Law. For many workers, especially migrant workers, this job protection is still insufficient to encourage them to report safety violations. The civil courts impose punishments like warnings, fines, and workplace closures on employers that violate health and safety regulations. How much compensation do employees receive for workplace injuries? The Work-Related Injury Insurance Regulations contain a disability scale that determines the amount to be paid to the injured worker. For example, if a worker loses an eye in a workplace accident, the employer must retain the labor contract with the injured worker, even if the worker is unable to perform her or his job. As compensation for the injury, the worker will receive a lump sum equal to a portion of the national average wage for the type of work and an ongoing disability allowance equivalent to a portion of the average monthly wage. In 2011, the government released a new Work-Related Injury Insurance Regulation that eliminates some of the gaps in injury payments between poor and wealthy regions of China. Under the previous regulation it could take an injured employee months or years to finalize a settlement, but under the new regulation the authorities are to reach a decision on payment within fifteen days of accepting the injured employee’s application for benefits. In practice though, problems continue to persist in the payment of injured workers. The law requires employers to pay employees while they are in the hospital recovering from work injuries, but in one survey, only 33 percent of injured workers received their salary while in the
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hospital. To receive benefits, employees must confirm their employment relationship with the company at which they were injured. Because employers in dangerous industries often ignore the Labor Contract Law by not providing their employees with contracts, it is challenging for an employee to prove that she or he is covered under the Work-Related Injury Insurance Regulations. Further, the new regulation adds a provision that prevents employees from collecting benefits if she or he is the primary cause of the accident. While this may seem logical, the most common workplace injuries are caused by distraction and fatigue, both of which are difficult to investigate because their causes can often be blamed on both the employer and employee. What kind of laws does China have against child labor? China has several different laws to protect against the labor exploitation of minors. Under the Child Labor Regulations, employers are not to recruit, employ, or facilitate the employment of children under the age of sixteen. Exceptions exist for child entertainers, athletes, or vocational training, but in these cases employers must ensure the health of children. These new regulations also remove exceptions that allowed children to engage in labor for the family and loopholes that previously allowed local authorities in poor areas to allow certain forms of child labor. Employees between the ages of sixteen and eighteen are classified as underage employees and may not engage in mining, unhealthy or hazardous work, or highly laborintensive work. Employers of underage workers must arrange to have these workers receive regular physical examinations. Despite the regulations that prohibit employment of children under the age of sixteen, exploitation of child workers persists in China, though the situation has dramatically improved
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from even a decade ago. Both employers and child workers desperate to earn a meager living sometimes ignore the regulations. In 2007, the authorities ended one of the worst documented cases of child labor abuse after 500 or more children and mentally disabled adults were discovered working in the brick kilns in Shanxi province. Major lapses like these suggest that China’s child labor problems stem from poor enforcement, not a lack of regulation. UNIONS Can Chinese workers unionize? Yes. Establishing a union is easy— there is no need for employee balloting or employer counter-campaigns. To establish a union, 25 workers simply join the union, and the employer will usually be required to accept the request. However, unions in China differ greatly from their counterparts in many other countries. First, the primary function of unions is to avoid labor unrest, not to advocate for the interests of workers. Second, while many unions exist in China, all unions must maintain an affiliation with the All-China Federation of Trade Unions (ACFTU). The union discourages rank-and-file employees from airing grievances or striking. Some labor experts have described Chinese unions as bearing a closer relationship to a European work council than what is commonly called a union. This comparison is apt because in a work council country, a national labor organization reaches agreements with employers at a national level while the work council is just a local component of a national labor organization. In short, the national labor organization largely shapes the local work council’s efforts. Unions in China may best be described as intermediaries between workers and management who do most of their work by negotiating behind closed doors. Who runs the unions?
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It depends. Under China’s Labor Union Law, labor unions may only be established by workers voluntarily. However, unions in China are mainly set up by employers, often to preempt organization by workers. This type of organization is called a company union and they are often prohibited in developed countries because they prevent the workers from organizing independently and choosing their own advocates. In China, union officials are often members of management and they are directly paid by the company, not by workers. In some instances, employees are able to administer their own union, though they may only negotiate with the employer under the watch of the local or national union. Do Chinese workers collectively bargain? Yes. In 2006, the ACFTU negotiated collective agreements covering more than 110 million workers. However, the unions that conduct collective bargaining are often not in an adversarial relationship with management. Rather, the union acts as an intermediary who seeks to maintain both the profitability of the company and prevent worker unrest. Union officials have broader considerations than just the interests of workers. Unions must spread their efforts between advocating for workers, maintaining a positive economic environment for employers, and preventing industrial instability that could threaten broader economic policy. As a matter of social policy, the government is now encouraging workers to engage in collective bargaining. The Shenzhen Human Resources and Social Security Bureau and Shenzhen All-China Federation of Trade Unions recently announced that they will target 120 large enterprises for collective bargaining with the hope that once industry-leading companies collectively bargain, the practice will spread throughout the industries. The government is adopting this approach in the hope that it will address the growing income inequality gap by pressuring companies to use their profits to pay workers higher wages. However, even though
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collective bargaining has surged in recent years, collective contracts frequently ensure only legal minimum labor standards and do little to improve employee wages or benefits. How are union leaders chosen? While companies frequently set up a union, the local branch of the labor union typically appoints the workers’ representatives. Usually this means that the chair of the local trade union will be the workers’ chief representative. In instances where the negotiating representative is not assigned by the trade union, the representatives are chosen by democratic vote from the employees. How do Chinese workers and management settle disputes? The law requires disputing employers and employees to work with each other through mediation and arbitration committees. At the outbreak of a dispute, workers and management are first required to consult with each other. Only after consultation fails can the parties seek mediation. After mediation, the parties enter an arbitration committee. If this still fails to resolve the dispute, the workers or the employer can bring the dispute before a judge. In 1996, China’s arbitration committees handled almost 48,000 cases. By 2008, and after passage of the Labor Contract Law and the Labor Dispute and Mediation Law, the number of cases reached 693,000. Resolving disputes peacefully to ensure industrial stability is a top priority of the government and labor law commentators largely give positive reviews to the arbitration committees. BENEFITS How much holiday and annual leave do Chinese workers receive? Employees with between one and ten years of work experience are to receive a minimum of five days annual leave per year. Employees with between ten and twenty years of work
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experience receive a minimum of ten days per year. For more than twenty years of work experience, the employee receives a minimum of fifteen days per year. These laws apply to all employees, including managers. Chinese workers receive many more days of holiday than in the U.S. Each year employees receive eleven days of national holiday, and women receive an extra half-day for Women’s Day. In addition, employers traditionally rearrange work schedules so that employees can receive seven-day holidays during Spring Festival and National Day. In return, the employees work during the following weekend to make up for the additional days of holiday. Each year the week-long break during Spring Festival leads to the largest human migration, as more than 150 million workers leave their jobs to visit family and friends in their hometowns. During this time nearly all businesses close. Do Chinese workers have a national retirement system? Yes. Employers and employees must contribute to a basic pension insurance fund that is administered at the provincial or municipal level. Some cities have also set up supplementary pension insurance funds that employees have the option to join. Typically, employers contribute roughly 20 percent of total wages and employees typically contribute roughly 8 percent of wages. It should be noted that most pension amounts are insufficient to support retirees. For this reason, the government offers and encourages workers to enroll in supplemental retirement plans. The general retirement age for men is 60 and for women it is 55. Employees are not allowed to make early withdrawals from their pension accounts, but the accounts are transferrable when the employee changes employers or moves to a new city. Employer contributions are subject to strong enforcement and employer defaults can be subject to very large fines. When an employer defaults on pension payments, the local government is permitted
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to garnish the payments from the employer’s property. This is typically done through the largely state-run banking system. Do Chinese workers receive basic medical insurance? Yes. A law passed in late 1998 requires most employers to participate in the national basic medical insurance system. Under the system, employers contribute roughly 6 percent of total staff payroll, and employees contribute 2 percent of their individual wages to a pooled insurance fund and employee personal expense accounts. The employee’s contribution is placed in his or her own personal medical expense account. The employer’s contribution is split into two portions: 30 percent of the employer’s contribution is placed in the employee’s personal medical expense account and the remaining 70 percent of the employer’s contribution goes to the pooled fund. Supplemental medical insurance is also common among white collar workers. Do Chinese workers receive maternity leave? Yes. Female employees are entitled to a minimum of 90 days of maternity leave. Employers are prohibited from discharging or discriminating against women because of pregnancy or status as mothers. Employers may not subject pregnant women to overtime or hazardous work. China also has a maternity insurance fund that compensates a woman for any lost wages during maternity leave. The insurance fund is financed by employers that contribute roughly one percent of payroll expenses. Men are not covered under the maternity leave provisions, although most employers allow men several days off following the birth of a child. Do Chinese workers receive unemployment insurance? Some do. The current unemployment regulations only cover urban residents with a proper hukou, or household registration. This means that for a worker to receive unemployment insurance payments, she or he must be working in her or his place of official registration. To
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receive unemployment insurance, workers must fall within a working age range, be able to work, and register with the government. These criteria filter the number of workers eligible for unemployment insurance down to 120 million out of a total workforce of 800 million people. Like other national insurance schemes, the unemployment insurance system is financed by employers who must pay two percent of payroll. Additionally, employees must contribute one percent of their wages to the fund. To receive unemployment benefits, the worker must be registered for benefits, have paid premiums for at least one year, have involuntarily lost employment, and be actively seeking work. Do Chinese workers have other benefits? Yes. Local governments in urban areas typically operate housing funds. Under these programs, the employer and employee contribute an amount each month to a fund dedicated to assisting employees in buying, refurbishing, or renting a home. The accounts are popular with workers who are attempting to save for housing, as house prices have continued to skyrocket. If the employees do not use the funds in their account for housing, they can only remove the funds for retirement, a permanent move overseas, or several other scenarios. CONTRACTS Do Chinese workers have employment contracts? The 2008 Labor Contract Law requires employers to provide full-time employees with written contracts that contain the term of employment, job description, place of work, working hours, rest and leave periods, wages, social insurance, labor protections, and description of working conditions. Part-time employees must have at least an oral contract. Before the Labor Contract Law of 2008 went into effect, it was estimated that 40 percent of full-time workers did not have written contracts. The Labor Contract Law has been extremely successful in increasing
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the number of workers covered by written contracts. The government hopes that written contracts will reduce the number of disputes between employers and employees and provide employees with employer assurances that can be backed by contract law. That said, it is still common for many workers, particularly migrant workers, to work without labor contracts. Can Chinese employers use at-will employment contracts? Not anymore. The at-will employment doctrine allows both the employer and employee to terminate their employment contract for any reason or no reason at all. Under the Labor Contract Law, employers may no longer terminate full-time employees’ contracts at will. Employers may only terminate at-will during the probation period between one to six months at the beginning of the contract. Likewise, a full-time employee must provide her or his employer with 30 days notice before resigning from the company. The employer can unilaterally terminate an employment contract, but only in cases where the employee "seriously breaches the Employer's rules and regulations." In other words, a serious breach would require a violation equal to dereliction of duty or graft. Under the Labor Contract Law, an employer cannot terminate an employee for incompetence alone. In an employee is incompetent, the employer must re-assign the employee or provide further training before terminating the contract. To terminate an employment relationship without cause, both parties must reach a severance agreement by negotiation. A minimum severance in cases of termination for cause is calculated as roughly one month of salary for each year of service. An employer may also have to pay severance to an employee at the end of an employment contract. If an employer does not offer the employee a new contract with equal or better terms, the employee is entitled to her or his standard severance payment. How does an employer fire an employee in China?
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The process can be quite complex depending on unionization or the status of the worker. If the company has a union, the union must be notified before the employer can terminate the employee’s employment contract. The labor union is entitled to respond, and if the labor union disagrees with the termination, the employer must consider the response and provide the union with a written notification of how it will respond to the disagreement. Disagreements between the employer and union are settled by negotiation. Employers are also prohibited from firing workers who have been exposed to occupational disease hazards before being checked by medical staff. Employers may not fire injured workers during their period of medical care, those who are pregnant, ill, or nursing, and those who are within five years of retirement. How do employees quit their jobs? Employees can quit by resigning unilaterally, by reaching a mutual agreement with the employer, or by reaching the end of their labor contract. Under the Labor Contract Law, employees must give 30 days’ notice to the employer before resigning unilaterally. However, the employee may immediately resign if the employer has abused the employee, failed to pay wages or social insurance on time, or compelled the employee to perform dangerous tasks. Can employers have employees sign non-compete or confidentiality agreements? A non-compete clause limits the ability of employees to compete with their former employers. Chinese courts allow non-compete agreements, but the courts treat non-compete agreements with suspicion and require employers to compensate former employees if they wish to exercise the non-compete contract provisions. The 1994 Labor Law allowed businesses to include provisions in contracts that prevent key employees from taking business secrets with them after they leave the company. By 2006, these provisions could only be applied to directors
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and senior management. In 2008, the Labor Contract Law expanded the ability of employers to use contract law to protect trade secrets and intellectual property. A non-compete agreement binds only senior management, senior technicians, and key personnel with confidentiality obligations. Employers may only enforce non-compete agreements for a maximum of two years and during that time they must continue to compensate a former employee to maintain the agreement. The amount of money to be paid to maintain the non-compete or confidentiality provisions is fixed in a contract. Courts have fined employees for failing to abide by non-compete agreements, but only in small amounts. However, courts have given jail time and fines of nearly $1 million to employees who breach confidentiality clauses and cause serious damage to their employers. Regardless of the regulations, employers, particularly among technology companies, complain that employees steal their intellectual property and trade secrets and then take that knowledge to competitors or establish their own companies. ENFORCEMENT Who enforces labor and employment laws? Health and safety regulations are enforced by the State Council’s Work Safety Commission. However, the Commission has many other functions that dilute its ability to be an effective enforcement authority. As a result, enforcement is often left to local safety boards that lack training or independence from government officials whose job it is to attract investment. Because the central government rates and promotes provincial and local leaders on their ability to grow the local economy, there is a conflict of interest in that these same authorities are left to oversee the enforcement of safety laws. Wage and hour violations are also in most cases enforced by local government administrations.
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Are they frequently enforced? It is difficult to quantify, but commentators agree that the laws are increasingly enforced. First, employees have been bypassing their unions and taking their disputes to court in increasing frequency. After the Labor Contract Law of 2008 was passed, the number of labor disputes in court jumped by more than 90 percent over the previous year. In some developed cities, the number of labor-related court hearings tripled. Further, the government has gradually allowed the ACFTU greater leeway to intervene on behalf of worker interests. That said, the authorities tasked with enforcing labor and employment laws are frequently understaffed and undertrained to adequately enforce China’s labor laws. Further, China’s courts are not independent and equal branches of government. Instead they are responsible to the National People’s Congress, the same body that decides economic policy. Again, this is significant because there is a conflict of interest in that the National People’s Congress can attempt to maintain economic growth by preventing courts from taking an aggressive stance in enforcing labor laws. China’s legal system does not treat court decisions as precedents that are binding on lower-level courts. This adds to the struggle of the Supreme People’s Court to improve enforcement of labor laws at the local level. EQUALITY Does China have laws against workplace sexual harassment and gender discrimination? Yes to both. The laws against sexual harassment were passed in 2005 and have seen increased prosecution in courts. Gender is a protected status under the Labor Law. The law provides that women cannot be denied employment by reason of gender. Nor can women have their employment standards raised above those for men except in the most physically demanding
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work conditions. The gender provisions do not say anything on the status of transgender individuals. Does China have equal pay for equal work laws? Yes. Under the Labor Law, there are three tests used to determine if an employer is providing employees with equal pay for equal work: 1. Equal pay for employees holding the same position with the same work assignment; 2. Equal pay for employees holding the same position with similar expectations of work volume; or, 3. Equal pay where the same working volume achieves the same performance. Employees may bring a civil claim against their employer if none of these three tests are met. If the employer meets even one test, it has satisfied the requirements of the law. MIGRANT WORKERS Why do so many workers migrate to cities to find work? Several reasons. Urban companies pay better wages and provide workers with better working conditions because there is more competition among employers. Migrant workers became a prominent feature of China’s labor market in the 1980s after economic liberalization led to tremendous growth in some regions while others remained dominated by agriculture and resource extraction. Since that time, the Chinese government has allowed workers greater freedom to move throughout the country to find work. As a result of the changes, China has experienced history’s quickest rural to urban internal migration. In 1978, only 18 percent of the population lived in urban areas. Currently, 46 percent of China’s population lives in urban areas.
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Who are the migrant workers? Of China’s more than 130 million migrant workers, seventy percent are between the ages of fifteen and thirty-five. China’s last census showed that in the manufacturing province of Guangdong, more than 60 percent of factory migrant workers were female. In Shenzhen, this number is 70 percent. The construction trades are dominated by men. Most migrant workers come from relatively poor rural areas. Sixty-five percent of migrant workers stay within their province to find work, while the rest typically move to industrial hubs near the coast. Why do workers often live in factory dorms? Efficiency. Factories often include dormitories for workers to live in as part of their compensation package. These factories also typically provide a canteen at which the workers eat their meals for a small fee, often between 30 to 50 cents per meal. Workers usually share a small dormitory room with one or more other workers. Because factories are often located far from city center, there are few acceptably-priced living quarters nearby. Living in the dorms saves workers money and reduces commute time while giving the company extra production flexibility in having labor on-site at all times. A secondary benefit for employers is that because workers rely on their employer for housing, the workers may be less inclined to argue with management or seek other jobs. Why don’t migrant workers move their families to where they work? Some do, but most realistically cannot for combination of reasons. First, the travel and living expenses would be too high for most migrant workers to bring their families with them. Second, China’s hukou or household registration system, prevents migrant workers from obtaining residential status in the city where they work. In other words, a worker’s residential status is set at the place she or he came from and the worker cannot change the status easily.
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Without residential status in the cities where they work, migrant workers cannot receive social benefits like unemployment insurance payments or schooling for children. Workers who cannot change their residential status and benefits are more likely to be victims of labor exploitation, discrimination, and abuse. Why doesn’t China allow migrant workers to permanently move themselves and their families to cities? This is a bit complex. First, many migrant workers and their families are able to move to urban areas without changing their registration location. There are no borders to stop the migration and many migrants can find low wage work legally and relatively easily. The Chinese government uses the registration system to slow the already massive migration from rural to urban areas in an effort to preserve social stability. The government’s fear is that sudden influxes of rural families to the cities will lead to greater unemployment, lower wages, and ultimately violent frustration among poor workers. Further, by not allowing workers to change their registration easily, the authorities ensure that most migrant workers will send a portion of their earnings home, hopefully spurring economic development in poor regions. Do migrant workers receive the same treatment as local workers? China’s Employment Protection Law prohibits employers from discriminating against migrant workers and states that migrants are entitled to the same labor rights as local workers. However, migrant workers are more likely to experience unpaid wages and poor working conditions. According to one survey, more than 70 percent of China’s migrant workers were owed some form of back pay by their employers. Migrant workers often work without contracts despite the new Labor Contract Law and migrant workers are often unaware of their legal rights
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despite the efforts of some labor lawyers. As a result, employers disproportionately assign migrant workers to dangerous jobs with low pay. RECENT LABOR NEWS What caused the outburst of labor strikes in China in the summer of 2010? Did the workers receive any benefit from their strikes? Workers in China do not have the right to organize independently and strike. However, in the summer of 2010, workers at several factories in Guangdong province organized independently and went on strike for better wages and working conditions. This is significant because although the workers did not have the right to take such actions, the government sided with the employees and allowed their organization and strike to continue. The strikes of the summer of 2010 were a break with previous labor unrest because until that point, most labor disputes were settled without strikes and were not covered in the media. Ultimately, the strike continued without an intervention by the ACFTU and the workers won wage increases of 24-34 percent. What was the result of the 2010 labor strikes? Why are they still mentioned in newspapers? Several other events occurred during the summer of 2010 that pressed the government to alter labor policy. First, after the successful independent strike early in the summer, strikes spread to other nearby factories. Second, a string of worker suicides at the contract electronics manufacturer Foxconn led to intense international media coverage. As a result of the embarrassment from the international coverage of worker strikes, Foxconn raised wages by 30 percent for tens of thousands of its workers. After these events, the government then intervened by significantly raising minimum wages in many of the major industrial centers of the country. As an example of the scramble to meet worker expectations, the Beijing city government raised
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its minimum wage twice in a six- month period. In March of 2011, the southern manufacturing hub of Shenzhen announced it will raise its minimum wage by 20 percent. This will be Shenzhen’s eighteenth minimum wage rise since 1992. CONCLUSION China’s economy has achieved tremendous growth over the past 30 years and overall working conditions have improved at a similar rate. Fewer workers are dying on the job each year, wages continue to rise, and more and more of the country is able to take part in economic activity. China has also promulgated a tremendous amount of legislation that is modeled on labor and employment law of many developed countries. In fact, in comparison to the U.S.’s labor and employment laws, China’s law appear much more progressive. However, promulgating laws is much simpler than creating governance structures to enforce them. China’s labor law enforcement record is spotty and depends greatly on the region, industry, or individual case at hand. This gap between law and enforcement is a theme that has dogged China for centuries. There are signs that this situation has improved in recent years, but it remains to be seen how long it will take to standardize enforcement across the country.
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