State Regulation, Labour Activism and Economic Crisis in China:

a Dawn of a New Worker's Movement?

Chris King-Chi CHAN,

Outline

• To review the socio-economic context of the changing labor policies in China

• To examine the scope and limit of state regulation in raising labor standards

• To evaluate the role of workers’ struggle in raising labor standard

Rising labour standard in China? • Indicators: wage (the example of Shenzhen Special Economic Zone)

• Year Minimum Wage (Yuan)• 2001-2002 574• 2002-2003 594• 2003-2004 600• 2004-2005 610• 2005-2006 690• 2006-2007 810• 2007-2008 850• 2008-2010 1000

Other indicators: • New labour rights protections: the Employment

Promotion Law, the Labour Dispute Mediation and Arbitration Law, the Labour Contract Law. (2007 and 2008)

• Better implementation of the labour laws: minimum wage and social insurance (Chan, 2009; 2010)

• Better environment in dormitory and factory (Pun, 2006).

• Unionisation campaign since 2006. (A. Chan, 2006)

Why rising labor standards?

• Rising FDI into China Changing Labor Market- escalating labor protests state intervention rising minimum wage; better enforcement of the labor regulations; legislation of new law regulations.

The Effect of Rising FDI and Export: 2004-2007

• The inflow of Foreign Direct Investment (FDI) into the country rebooted after China joined WTO: . the growth rate of FDI inflow returned to double digits after five years of single digits: 2001 (14.9 per cent), 2002 (12.4 per cent) and 2004 (13.3 per cent).

• China has surpassed the US to become the country with most FDI inflow in the world since 2003.

• Chinese export of goods and services in percent of the Gross Domestic Product (GDP) has jumped from 23 percent in 2003 to 42 percent in 2007 (World Bank 2009).

• Survey of the Guangdong Ministry of Labour and Social Security : despite the fact that thirteen per cent more migrant workers have been employed in 2004 than previous year (Nanfang Zhoumo, 15 July 2007), the province still lacked two million ‘skilled workers’ (Nanfang Ribao, 10 February 2004).

Years of labour shortage: 2004—2007

Years of Migrant Workers’ Strike in Pearl River Delta: 2004-2007

This book examines how wages are bargained, fought over and determined in

China, by exploring how the pattern of labour conflict has changed over time since

the 1970s. It focuses in particular on the city of Shenzhen where labour conflict and

workers protests have been especially prevalent. This book includes a detailed account of the transformation of labour

relations and labour policy in China more broadly during 2004 to 2009, a period when there have been significant changes in the

labour market, labour regulation and labour relations.

A wave of labour regulation legislation and unionization

• the Employment Promotion Law, the Labour Dispute Mediation and Arbitration Law, the Labour Contract Law. (2007 and 2008)

• Rising minimum wage • Unionization campaign (1324, 000 enterprise

union in20061845, 000 in 2009)• Remaining challenges: ineffective trade

unionism; internal relocation strategy of TNCs

Global economic crisis and recession: 2008-2009

• Export trade plummeted 17.5 percent year-on-year to US$90.45 billion in January 2009.

• External trade with the E.U. has dropped by 18.7 percent to US$27.93 billion while that with the U.S. has decreased by 15.2 percent to US$ 22.25 billion (The China Daily 2009).

• 20 million out of a total of 130 million migrant workers were laid off in the wake of the economic crisis (CLB 2009c; Wall Street Journal 2009; People Daily 2009).

Strategies of the capital: 2008-2009

• 1) Lower labour costs by slimming down the workforce.• 2) Pressure the government for assistance. For

example, the Taiwanese business association strongly requested the governments to waive employers’ contribution for workers’ social security, reducing taxes and land charges, as well as putting off the implementation of the Labour Contract Law

• 3) Shut down factories without paying due compensation to workers. For instance, a Taiwanese factory fled the country in November 2008 without paying his 2000 workers their two months salaries (IHLO 2009);

State during the crisis • Slogan: “maintain economic growth, people’s livelihood and social

stability”, with 4,000 billions yuan public expenditure. • Temporarily and selectively retreated from the legal regulatory

regime. • The central state advised local governments in February 2009 to

take temporary measures, such as suspension of social insurance premiums, reduction of social insurance rates and freezing the minimum wage rate, to lower firms’ labour costs (IHLO 2009).

• The Guangdong Province froze the minimum wage rate, put off the wage consultations in enterprises and reduced the enterprises’ contributions on social insurance .

• Shenzhen government revised the Regulations of the Shenzhen Municipality on the Wage Payment to Employees (Yuangong gong zi zhifu tiao li ) in October 2009 which has removed the punitive clauses on wage arrear.

Workers during the crisis • Legal system: The total number of labour disputes in the

country has gone up drastically by 30 percent in the first half of 2009. And a 41.63 percent, 50.32 percent and 159.61 percent increase have been recorded in the Guangdong, Jiangsu and Zhejing provinces respectively (CLB 2009).

• Protest: The state run Liaowang magazine said labour protests in the first 10 months of 2008 has increased 93.52 percent when compared with the same period of the previous year. And even more dramatically, a 300 percent increase in workers protests has been recorded in Beijing (IHLO 2009).

• Return to home village and get a temporary job.

On the road of economic recovery: 2009-2010

• 8% growth in 2009, 8.7% in 2009 and it is anticipation of d 9.1% growth in 2010 (xinhua net 21st January 2010).

• Housing market and automobile industries have experienced the greatest expansion, with a sales increase of 32.3% and 42.1 % (xinhua net 21st January 2010).

• Since the third quarter of 2009, the phenomenon of labour shortage has re-emerged . A total number of 2 millions workers are needed in the PRD and some production lines have been suspended due to the labour shortage (Chendu commercial daily 22nd February 2010 ).

A nation-wide workers’ strike ? • A reported wave of strike in the whole

countries: 18 strike cases from 29 April to 1 June (Asian Weekly, 23th Volume, 2010)

• Frontline of struggle from electronic (04 to 2007) to automobile factories (Honda, Toyota, Hyundai);

• From Pearl River Delta (2004 to 07) to other provinves;

• From foreign invested factories (2004 to 07) to state owned firms and service industry.

Trade unionists beat up strikers?

The Honda Case (1)

• The strike was well organized and involved over 1800 workers and lasted for 17 days; it caused disruption to the production not only in that particular factory, but also in three other Honda factories in other parts of China;

• They had clear and specific demands: 1. a wage increase that is beyond the minimum wage rate adjustment; 2. a democratic reform of trade unions as the existing trade unions could barely represent their interests.

Honda case (2)

• The enterprise was at first reluctant to have any negotiation with workers, but later it had to bow to pressure and facilitate the democratic election of 30 workers representatives.

• At the end, both parties reached an agreement of raising workers’ wages to 2044 yuan with a 32.4 % increase and intern students’ wages to around 1500 yuan with an increase of 70%.

Global protest againt Foxconn

Faxconn case

• Foxconn: employ over 400, 000 workers in the city of Shenzhen

• 13 workers’ suicides since January 2010 • Soaring pressure from international civil society • The factory owner agreed to increase workers’

basic salary from 900 to 2000 yuan (legal minimum is 1100)

• Relocation to Henan province ?

State response

• Upward minimum wage: e.g. a maximum of 21 % increase in some cities in Guangdong .

• ACFTU: exercise workplace trade union elections in Guangdong province.

• Strengthen up monitor on pro-labour NGOs and their activism.

Conclusion and implication

1) state strategy and capacity to regulate labour relations and improve labour standards are subjected to the pressure from workers and capital .

2) Workers’ struggle play a central role in raising labour standard in China’s export orientated industry in recent years by pressuring the government to improve regulations.

3) Civil society play a supplementary role in improving labour standard as we see in Foxconn’s case .