China labour contract law – no teeth

I have been reporting on this blog China’s new labour laws. Here is one report ‘China’s New Labor Law Falling By Wayside Amid Financial Crisis.’
(U.S. Daily Labor Report, http://www.bna.com/products/labor/dlr.htm)
BEIJING—China’s much-vaunted labor contract law is losing its teeth amid the global financial crisis, labor rights groups have reported, as local governments back away from enforcement to try to appease businesses already operating on thin margins.

The problem, labor groups said, is especially prevalent across the Pearl River Delta, China’s main manufacturing hub.

Thousands of factories have been shuttered in recent months, and at least 20 million internal migrant workers across China have lost their jobs, the government reported. In many cases, workers have been let go with no prior notice and without final wages, let alone the severance required in accordance with the year-old law.

“There are indeed many such cases in Guangdong (province) now,” said Liu Kaiming, head of the Institute for Contemporary Observation, a Shenzhen-based foundation for migrant workers’ rights.

“In order to keep the employment rate up, some local governments have tried to suspend some parts of the law, and there has been lax enforcement of existing regulations.”

Marked by Controversy

The national labor law, passed in 2007 and taking effect Jan. 1, 2008 (127 DLR A-2, 7/3/07), was touted as the first tangible, nationwide law protecting workers’ rights across China.

Many companies already facing higher costs, including some American businesses, complained that provisions in the law making employee terminations more difficult, were too onerous. During its first year, the law reportedly increased business costs markedly across China.

But with world demand for Chinese-made goods down significantly amid the global economic crisis, local governments now are allowing the law to fall by the wayside.

Companies, strapped for cash, have been allowed in some jurisdictions to ignore the law’s protections to keep employees on their payrolls.

But labor groups have little sympathy for businesses trying to save costs by skirting the law.

“Since the beginning of the economic crisis, we’ve heard constant complaints from companies, and governments have made much effort to help them,” said Ivy Yu, a coordinator with the Dagongzhe Migrant Workers’

Center in Shenzhen. “But I think all this should never be done at the cost of the rights and interests of workers.”

Lax Local Enforcement

Yu is particularly critical of reports that some local governments have issued special guidelines to companies in southern China, allowing them to skirt particular provisions of the law when instituting layoffs and other employee terminations.

“The crisis is temporary, and it’s conquerable,” Yu said.

“But if the government chooses to sacrifice workers’ interests and rights, issuing some unreasonable ‘guidelines,’ and the interests citizens are not protected, then the price they pay will be very high … people will have doubts about justice.”

In response to widespread complaints, the State Council earlier this month issued a regulation requiring companies to give 30 days’ notice when implementing mass layoffs. The regulation urges local governments to keep an eye on companies that implement layoffs, to ensure that final wages and insurance benefits are paid.

But like other laws in China, the final say often rests with law local enforcement. One vice mayor of Dongguan, the heart of the southern manufacturing center, has even asked the central government to suspend the law entirely.

“That’s ridiculous but we know there must be many companies complaining to him about the new labor law,” Yu said. “Companies never really welcomed this law and have always had some kind of resistance to it.”

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One Response to China labour contract law – no teeth

  1. Wombo February 26, 2009 at 8:15 am #

    That this comes as any surprise depends upon whether you had any illusions that the Chinese state was dedicated to protecting workers’ rights in as serious way as their rhetoric might suggest.

    The DSP’s argument that China has indeed returned to capitalism over the last few decades is pretty convincing (certainly much more than the argument that it is socialist, or – heaven forfend! – “state capitalist”). It could probably be improved, but it’s a good starting point: http://www.dsp.org.au/node/119

    So – and this is becoming clearer and clearer in this capitalist crisis – the defining issue in China is going to be the Chinese working class’ ability to organise in defence of its rights. And that this struggle is going to have to take on a political nature that will fall largely (but – I’ll grant – not entirely) outside of the CCP.

    Laws are only as good as the realpolitik that enforces them, or fails to. As Marx pointed out in Capital, with regards to bourgeois law – the law of the market: “between equal rights, force prevails.”