Professional Documents
Culture Documents
2011
U n i v e r s i t e t e t i O s l o
Introduction
A
new
law
regarding
labour
contracts
in
China
went
into
effect
on
January
1,
2008.
According
to
the
new
98-article-long
"Labour
Contract
Law",
employees
of
at
least
10
years
standing
are
entitled
to
contracts
that
protect
them
from
being
dismissed
without
cause.
The
new
law
also
requires
employers
to
contribute
to
employees'
social
security
accounts
and
sets
wage
standards
for
employees
on
probation
and
working
overtime.
The
law
also
requires
employers
to
consult
an
employee
representative
congress,
usually
a
branch
of
the
official
All
China
Federation
of
Trade
Unions,
on
any
changes
to
matters
including
hours,
benefits
and
compensation.
The
new
law,
which
was
more
than
two
years
in
the
making
before
its
final
passage
in
July,
was
the
subject
of
intense
interest
and
scrutiny
from
companies,
workers
and
union
groups.
Some
estimated
that
as
consequence
of
the
new
reform,
the
labour
costs
would
be
close
to
40%
higher.
It
has
been
predicted
that
foreign
companies
investing
in
supermarket
chains,
restaurants,
building
industries
and
other
low- end
manufacturing,
which
abuse
cheap
labours
and
avoid
paying
social
security
would
suffer
some
losses.
Indeed
in
October,
US-based
retail
giant
Wal-Mart
fired
about
100
employees
at
a
sourcing
centre
in
China.1
But
in
the
long
run,
the
new
labour
contract
law
would
not
negatively
impact
China's
competitiveness
and
appeal
as
a
destination
for
foreign
investment.
These
predictions
arise
some
important
questions?
Why
would
Chinese
authorities
adopt
a
reform
that
would
have
a
negative
effect
on
Chinese
competitiveness?
What
and
who
were
the
main
driving
forces
of
this
reform?
Is
this
reform
one
of
the
steps
taken
as
a
part
of
Hu
Jintaos
administrations
spoken
focus
on
welfare?
While
some
welcomed
the
reform
as
a
laudable
step
forward
others
argued
that
the
reform
would
cause
no
changes
of
significant
importance
as
constraining
companies
ability
to
dismiss
workers
is
something
of
a
moot
point
in
the
context
of
a
tight
labour
market,
with
factories
in
Chinas
coastal
manufacturing
hubs
struggling
to
remain
fully
staffed.
So
is
this
labour
reform
a
meaningful
progress
or
just
another
illusory
reform?
1
Chan
2006
EAST
4507
Candidate
nr.
4704
migrant
workers
had
a
contract,
only
10%
of
them
had
a
medical
insurance
and
only
15%
had
retirement
pensions.6
Up
until
2003,
migrant
workers
were
not
even
eligible
for
membership
in
a
trade
union,
paradoxically
because
they
were
not
considered
as
a
part
of
the
working
class.7
The
sitting
leaders,
Hu
Jintao
and
Wen
Jiabao,
taking
lessons
from
the
SARS
crisis
in
2003
and
the
worsening
developmental
conditions,
sought
to
formulate
a
new
set
of
ideas
about
Chinese
development
that
aimed
to
strike
a
balance
among
economic
growth,
social
development,
and
environmental
protection.8
Already
in
2003,
the
State
Council
issued
an
official
notice,
Notice
on
Doing
a
Better
Job
Concerning
the
Employment
Management
of
and
Services
for
Migrant
Workers,
which
acknowledged
that
migrant
workers
engaged
in
industrial
labour
are
given
irrational
restrictions
(bu
heli
xianzhe)
and
their
lawful
interests
are
not
safeguarded
(hefa
quanli
debudao
youxiao
baohu).9
In
order
to
strengthen
the
administration
of
employment
of
migrant
workers,
the
document
proposed
following:
1.
Elevate
the
knowledge
on
how
to
best
manage
and
service
migrant
workers
2.
Abolishment
of
unreasonable
restrictions
3.
Feasibly
solve
deductions
of
and
delays
in
wage
payment
4.
Improve
working
and
living
conditions
of
migrant
workers
5.
Offer
vocational
training
to
the
migrant
workers
6
Introduce
multi-channel
arrangement
to
protect
the
school
children
of
migrant
workers
7.
Strengthening
and
improvement
of
administrative
controls
on
migrant
workers.10
In
2006,
another
document
on
migrant
workers
was
issued
by
the
State
Council,
which
acknowledged
their
importance
and
outlined
broad
policy
objectives
for
improving
their
situation.11
Many
of
the
policy
principles
and
measures
for
improving
the
situation
of
workers
in
general
and
migrant
workers
in
particular
have
been
eventually
codified
in
the
new
Labour
Contract
Law
of
2007.
The
formulation
of
the
Labour
Contract
Law
started
in
2004
amid
huge
complaints
about
6
Huang
2009
7
Howell
2006:
9
8
Ngok
2008:
57
10
ibid.
11
Ngok
2008:
59
9
State
Council
2003
EAST 4507 Candidate nr. 4704 employers mistreating workers. The first draft was released in March 2006. Soon afterward, the National Peoples Congress (NPC) announced an open comment period, for companies, organizations, and individuals to submit comments and complaints on the proposed law. There were over 200,000 responses received, including detailed complaints from the American Chamber of Commerce in Shanghai and the European Chamber of Commerce in China.12 Labour Contract Law was adopted in June 2007 after four sessions of deliberation. The final version of the Law represents a compromise between the interests of both the employees and the employers.
EAST 4507 Candidate nr. 4704 penalty clauses in employment contracts, unless agreed beforehand.18 To ensure maximum safeguarding of the workers rights, the law requires a physical written contract concluded within one month of employment. The article 82 states that if an employer fails to conclude a labour contract in written form with a worker in more than one month but less than one year after the date of starting to use him, it shall pay the worker double amount of his monthly salary. This was a welcomed move, since the old labour contract system worked poorly because of Chinas disadvantageous labour to capital ratio, which led to a situation where workers were afraid to ask for a written contract in fear of losing their job. 19
Finally,
the
new
Labour
Contract
Law
strengthens
the
workers
right
in
relation
to
dismissals
related
to
occupational
hazards20
and
in
the
case
of
company
restructuring21.
Just
before
the
adoption
of
the
law,
after
the
exposure
of
forced
labour
in
the
brick
kilns
of
North
Chinas
Shanxi
Province,
a
new
clause
was
added
to
stipulate
that
government
officials
guilty
of
abuse
of
their
office
would
face
administrative
penalties
or
criminal
prosecution.22
Controversies
As
mentioned
before,
the
final
version
of
the
Law
represents
a
compromise
between
the
interests
of
both
the
employees
and
the
employers.
Thus
some
less
fortunate
and
controversial
clauses
are
bound
to
be
included.
A
number
of
possible
shortcomings
and
uncertainties
in
the
law
will
be
identified,
although
because
of
the
scope
of
this
article,
far
from
all
shortcoming
will
be
addressed.
The
area
that
perhaps
spawned
most
disagreement
between
the
involved
parties
concerned
forms
of
contracting
and
termination
of
employment.
While
workers
organizations
pushed
for
job
security
and
compensation
in
the
even
of
dismissal,
the
companies
in
their
turn
18
LCL
Article
25
19
Ngok
2008:
55
20
LCL:
Article
42,
32
21
LCL:
Article
33,
34
22
Ngok
2008:
59
EAST 4507 Candidate nr. 4704 wanted to reduce the cost of contract termination.23 As a result there have been made no clear-cut divisions between manual labour relations (laodong guanxi), service relations (laowu guanxi) and employment relations (guyong guanxi). Even though three different laws regulate three of them, confusions and gray zones arise both intentionally and unintentionally.24 The outcome often is that workers engaged in one of the standard categories enjoy protections, while non-standard workers fall between the regulations. When talking about non-standard workers, one group sticks out - namely migrant workers. As written above, just like the 1994 Labour Law, the 2008 version also fails to offer a clear definition of what a labourer is. As there is no specific definition available, it still very unclear whether migrant workers are labourers in the sense of labour law.25 Even though the migrant workers are still protected by some general provisions of the law, the undisputed reality is that they dont enjoy the same rights in terms of social security, wages and other benefits, as urban workers. As one scholar argues, migrant workers are labourers in a legal sense, but they can be treated differently by policies adopted by local governments.26 Perhaps the biggest controversy was surrounding the revision of the first draft, which by some NGOs account, was gutted by global corporations.27
The
Debate
On
December
11th
the
Chinese
National
Peoples
Congress
Legal
Affairs
Committee
held
a
meeting
to
debate
the
suggested
revisions
to
the
Draft
Labour
Contract
Law
received
during
the
public
comment
period.
The
committee
met
again
on
December
19th
and
soon
issued
a
revised
draft
of
the
law.
In
contrast
to
the
first
public
comment
period,
the
government
invited
only
select
parties
such
as
American
Chamber
of
Commerce
to
submit
comments
on
23
Cooney
et
al.
2007:
794
24
Wu
2011
26
ibid.
27
Global
Labour
Strategies
2007:
4
25
Ngok
2008:
60
EAST
4507
Candidate
nr.
4704
the
second
draft,
and
provided
copies
of
the
legislation
only
to
these
invitees.28
So
what
were
the
demands
or
the
objections?
An
opposition
to
measures
that
would
limit
the
capacity
of
corporations
to
structure
their
employment
arrangements
as
they
chose
was
the
primary
fuel
for
the
debate.29
Some
of
the
more
positive
clauses
were
eliminated
or
modified.
For
example,
the
initial
draft
of
the
Labour
Contract
Law
provided
that
if
an
employer
failed
to
enter
into
a
written
contract
with
workers,
the
law
implied
a
non-fixed
term
contract.
30
In
a
case
of
a
dispute,
the
ambiguities
were
to
be
interpreted
in
favour
of
the
employee.31
Article
9
of
the
first
draft
states
that:
on
existence
of
different
understanding
of
labour
relations,
unless
contrary
is
proven,
the
understanding
of
workers
prevail.32
The
first
draft
of
the
law
also
provided
for
negotiations
over
workplace
policies
and
procedures,
health
and
safety,
and
firing
with
a
labour
representative.
The
article
4
of
the
first
draft
stated
that:
The
employer's
rules
and
regulations
directly
related
to
the
interests
of
workers,
shall
be
subject
to
trade
unions,
trade
unions
or
employee
representatives.33
It
also
expressly
stated
that
before
a
company
may
lay
off
fifty
or
more
workers,
it
must
reach
consensus
(xieshang
yizhi)
with
the
trade
union
through
negotiation.34
The
final
draft
of
the
law
no
longer
requires
that
the
subjects
of
directly
related
to
the
interests
of
workers,
be
adopted
by
trade
unions.
Instead
the
wording
is
changed
to
the
less
binding
equal
consultation
by
employers
and
labour
union
or
representatives
of
workers.35 Employers
28
ibid.
29
Cooney
et
a.l
2007:
789
30
Global
Labour
Strategis
2007
13;
Cooney
et
a.l
2007:
789
31(First draft of the Labour Contract Law) Zhonghua Renmin gong he guo laodong
33 Zhonghua remin gong he guo laodong hetong fa (cao an): Article 4: 34 Zhonghua remin gong he guo laodong hetong fa (cao an): Article 33 35 LCL: Article 4 8
EAST 4507 Candidate nr. 4704 also no longer need to negotiate with the trade union or staff representative over large-scale economic lay-offs and only needs to explain the situation to the union and report to the local labour administrator.36 A pathway from temporary work to permanent work was also severed. Where in the first draft of the law the temp agency workers could become permanent employees after one year37, temporary workers could now only receive permanent position after working uninterrupted for no less than ten years38.
These
were
the
words
of
a
38year
old
male
warehouse
department
worker
written
in
an
open
letter
to
Walt
Disney
Co.
(Hung
Hings
buyer).
Just
couple
of
month
after
the
Labour
Contract
Law
went
into
effect,
several
Chinese
NGOs
have
documented
several
cases
of
workers
being
forced
to
sign
blank
or
incomplete
contracts.39
There
were
even
reported
cases
were
the
workers
had
to
sign
their
contracts
in
English.
In
the
recent
FOXCONN
incident,
the
situation
for
some
were
so
desperate
that
they
in
sheer
desperation
jumped
to
their
deaths
from
the
roof
top
of
the
factory
building.
In
all
of
the
cases
mentioned
above,
All
China
Federation
of
Trade
Unions
(ACFTU)
did
close
to
nothing
to
support
the
workers.
The
positive
results
came
only
through
desperate
measures
taken
by
the
workers
themselves.
Even
though
the
new
Labour
Contract
Laws
intention
was
to
boost
ACFTUs
role,
examples
posited
above,
paint
a
whole
different
picture.
36
Global
Labour
Strategies
2007:
16
38
LCL
Article
14.
39
Chan
2009:
46
37
Zhonghua
remin
gong
he
guo
laodong
hetong
fa
(cao
an):
Article
40
EAST 4507 Candidate nr. 4704 Through 30 years of reform, China has moved more and more towards becoming a full scale market driven economy, and with this the ACFTUs role, seeing it as an organization founded upon principles of a socialist society, has also become more ambiguous. Many even tend to doubt ACFTUs role as a channel for workers to demand and improve their rights and instead view it as an appeasement tool meant to control the level of discontent. Chen (2003) argues that cases taken up by AFCTU are mostly the ones where managerial malfeasance was unmistakably against the Labour Law.40 There are several views on why ACFTUs enforcement power is so weak. The first one as mentioned, is a failure to adapt itself to the market-driven economy. Secondly, the ACFTU is still not independent from the party-state apparatus and has to work inside the constraints set by the party policy. When the Party is for improving workers conditions, there is also a space for the ACFTU to do so, but with Chinas political priority lying in keeping the growth-rates up, the ACFTUs mandate to protect and represent the workers also becomes weakened.
Concluding
Remarks
Chinese
Labour
Contract
Law
has
drawn
a
lot
of
attention
and
interest,
not
only
from
domestic
stakeholders,
but
also
from
foreign
interest
groups.
The
law
itself
came
about
at
a
relevant
time
in
Chinas
development
to
provide
a
much-needed
fix
for
the
gaping
holes
of
the
preceding
labour
law.
Although
the
final
draft
of
the
law
bears
the
mark
of
being
hollowed
out
by
the
compromise
between
the
interests
of
both
the
employees
and
the
employers,
it
still
is
a
clear
improvement
on
the
legal
position
that
prevailed
prior
to
its
enactment.
While
being
a
positive
step
forward,
the
law
in
itself
is
far
from
enough
to
address
the
compliance
problems
that
have
plagued
(and
is
still
plaguing)
China.
The
ACFTU,
a
body
which
in
theory
should
have
the
power
to
ensure
employers
compliance
with
the
law,
has
shown
little
will
to
intervene
on
behalf
of
workers,
unless
if
it
is
a
case
where
the
violation
is
so
clear
that
they
are
sure
to
win.
To
quote
one
professor:
Although
these
developments
may
help
to
strike
a
balance
between
labour
protection
and
economic
growth,
the
legacies
of
the
old
development
paradigm,
which
focused
on
the
growth
of
GDP
at
the
cost
of
labour,
40
Chen
2003:
1014-1015
10
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11
EAST 4507 Candidate nr. 4704 Labor Contract Law of the People's Republic of China: (http://en.cnci.gov.cn/Law/LawDetails.aspx?ID=6079&p=1) Mitchell, Dominique (2008), Law of the Peoples Republic of China on Employment Contracts, AFTINET Selden, Mark & Perry, Elizabeth J. (2010), Chinese Society: Change, Conflict and Resistance Third Edition, Routledge State Council (Guowuwan) (2003), Guowuyuan bangongting guanyu zuo hao nongmin jin cheng wugong jiuye guanli he fuwu gongzuo de tongzhi. Wu Youshui (2011), Lun woguo laodong guanxi, guyong guanxi he laowu guanxi de jieding. http://www.bjzh148.com/ShowArticle.shtml?ID=20074815431241833.htm Zhonghua Renmin gong he guo laodong hetong fa (cao an) http://www.law-lib.com/fzdt/newshtml/20/20060320231100.htm
12