Speakers' presentations
Dr Athar Hussain
Dr Athar Hussain spoke on the role of the Ministry of Labour
and Social Security in the promotion of workers' rights:
"China has plenty of labour legislation and the laws are good on
paper. The issue is one of implementation. One should also be aware of the
differences in legal rights which arise from differences in enterprise
ownership, although the government is moving to commonise labour entitlements.
However, China is a diverse country and there are differences at the central,
provincial and municipal levels.
To put laws into effect you need a legal infrastructure with an
adequate number of trained people and a legal tradition. China lacks a
sufficient number of trained people at the present time.
The Ministry of Labour and Social Security oversees a
consolidated system of social security for all urban dwellers, covering old age
and disability, maternity, health care and medical insurance and social relief.
Once again, the problems lie not in the design but in the implementation;
particularly in the fact that these schemes used to be funded at the enterprise
level, but many state owned enterprises are now insolvent and cannot make the
required payments. There is a recognition that the social security system needs
to be "socialised", but the staff are often not available at municipal level.
Safety standards have been poor in China by western standards.
While people take their safety seriously, they are not so attuned to what
safety means. Chemicals have been a particular problem area. The All-China
Federation of Trade Unions is now taking this more seriously.
China does not have a western-style trade union movement.
However, the ACFTU has grass roots branches and is to some extent trying to
defend workers' rights, particularly in foreign-owned ventures. There is some
acceptance of the need for an independent role.
Non-payment of wages and pensions is a serious problem, even
though illegal, as a result of the fact that forty percent of state owned
enterprises made losses in 1998. The maternity benefit used to be
enterprise-based but is now financed by a uniform levy. Therefore it is much
less discriminatory. In health care there has been a system break-down due to
lack of financial capacity, but a reform is due by the end of 1999."
Dr Jude Howell
Dr Jude Howell spoke on labour relations and trade unions in
China:
"The ACFTU is not like a western trade union. It has a monopoly
of representation and is linked closely to the party and the state and has
appointed officials. The trade unions are funded by a 2% payroll levy and fees
paid by members. Membership in the traditional state sector is almost
compulsory. The ACFTU unions can therefore be described as 'incorporated'
rather than as 'adversarial' institutions and reflect an official ideology of
the unity of worker/party/state interests. Unions are also supposed to act as
an information channel, reflecting workers' views upwards to the leadership.
During the post-1978 reform period, the private sector has
re-emerged in China in several forms: joint ventures, foreign owned enterprises
and township and village enterprises. As a result, there is considerable
variation in employment conditions and, during the 1990s, the existence of an
'employer-employee' relationship has begun to be recognised. The concept of
'worker' has become more complex and diverse. 'Contract employment' has emerged
(in place of the 'iron rice bowl' of lifetime employment). There are many
migrant workers, women and young people in the workforce. Trade union
representation is weak in the new private sector.
Violations of labour law occur, such as excess hours of work,
physical and verbal abuse, sexual harassment, sexual discrimination in hiring
and layoffs. In China, US and UK companies are seen as being better; those from
Korea, Taiwan and Hong Kong are seen as being the worst offenders. Enforcement
of the law is often weak, and China has few labour inspectors.
After the turmoil of the Cultural Revolution (1966-1976), when
the trade unions ceased to actively function, the ACFTU was re-established in
1978 and, since then, has been adapting to new conditions. It has established
new departments to deal with joint ventures and township and village
enterprises. It is training cadres to deal with dispute resolution. There is
continuing tension about its relationship to the Communist Party. This came to
the fore at the ACFTU's 1988 conference. Since Tiananmen, the Party has been
allowing greater autonomy to the trade unions, and allowed them considerable
input into the 1994 Labour Act which included provisions for collective
bargaining.
Key challenges for the Chinese trade unions include: deciding on
their appropriate role in a market economy (therefore needing new legal and
advocacy skills); responding to labour unrest (an estimated 700,000 disputes
over the last few years); responding to new forms of labour organisation (at
the moment, the government takes firm steps to suppress new labour
organisations); coping with being downsized (the unions are losing their
automatic funding and membership base).
The ACFTU monopoly is likely to continue over the next decade.
However, there is much variability. The ACFTU is not monolithic and is changing
in the face of new circumstances. Social stability is very important to the
Chinese government and it needs the trade unions to help maintain stability.
Foreign companies may be used as scapegoats, therefore it is important to 'get
it right'."
Dr Guy Liu
Dr Guy Liu spoke about the changing management system in
China:
"In the classical state-owned enterprise model, Chinese workers
were well looked after and had high status. They had regular pay, lifetime
employment, health-care insurance and free housing. In that model, the party
and the factory management were closely related and the factory worked to the
instructions of the Industrial Bureau.
In the 1980s, a contract relationship between the factory
manager and the industrial bureau was introduced, and the role of the party was
separated from that of the factory management. In the 1990s, the structure has
been moved still further towards that of the western business model, with
management responsible to a Board of Directors and shareholders (including
state equity) and operating on a market footing. The party secretary has no
further role in this structure and the trade union is subordinate to the
factory management, who appoint and pay the officials.
With these changes in management structure, the employees'
position has deteriorated. They now have lower social status, impermanent
employment and delays in payments of health care receipts.
One by-product of these reforms has been the creation of a more
active labour market with 'talent markets', graduate fairs, dossier management
by 'talent centres', job centres, head-hunting and some relaxation of rules on
internal migration and work permits for foreign workers.
To finance social security, a 'tri-wheel' system is being
developed, with contributions from the state, employers and employees. This
involves levies (on employers and employees) for pensions, health care,
unemployment pay, accidents and maternity benefit. This has led to a change in
the structure of labour costs, with cash pay now typically varying from
sixty-five to seventy percent of the total, while social security levies,
training and housing allowance account for 30-35% of the total. Actual labour
costs vary widely, with the private sector paying the most (national average of
£1108 per year) and townships the least (national average of £453
per year). Wages are lower than this in the textile sector. Labour costs can be
as low as two percent of the selling price of the products (e.g. 30p for a
cordless phone set).
Whatever the shortcomings of their working conditions, job
opportunity comes first for Chinese workers. With subsidised accommodation,
young workers are able to live and send money back to their parents in the
rural areas."
Questions & Discussion
After the speakers' presentations there was an active question,
answer and comment, session. Some of the questions and answers were:
Some companies have encountered local waivers from the 1994
Labour Law (e.g. to hours of work provisions). What is the status of these
waivers?
Athar Hussain: Local labour bureaux are responsible for
some of their own regulation. There are procedural inconsistencies. Provinces
are competing with each other for foreign investment. The waiver is probably
not legal.
Is there likely to be a move towards day contracts?
Guy Liu: This is unlikely, due to the travel time
involved in coming from rural areas. However, monthly contracts are quite
common, and the workers concerned lack social insurance cover.
What social security cover do rural people employed in
foreign owned companies have?
Athar Hussain: If a rural migrant has a permit they do
get covered. But if they are temporary or informal they won't be covered.
When someone is on piece rates, what happens to overtime
pay?
Athar Hussain: Time payment is still quite common. If
someone is on piece rates, the piece rate should be higher during overtime
hours.
Where do corporates face the greatest risk of bonded labour?
Athar Hussain: Where provincial recruitment is through
an agent. Commission is charged and there may be a penalty for early
termination.
How can we improve the labour share of items such as the
cordless phone mentioned by Guy Liu?
Guy Liu: Labour improvements must apply across all
companies so as to counteract competitive pressures. Therefore, a code system
is needed.
Is child labour a serious problem?
The speakers: Not in urban areas. This is because there
is an effective minimum wage and the Chinese Government is harsh towards those
who use child labour.
Given the political situation in China, what can we do to
further freedom of association? Is it possible to work with the All China
Federation of Trade Unions?
Various companies: There are practical difficulties in
working with Hong Kong based organisations. Try working with health and safety
committees. Take a gradual approach based on grievance reporting and
communication.
Guy Liu: The Chinese Government doesn't like any
organisation out of its control. Therefore, approach the top first and let them
know what you are doing to encourage worker expression.
What is the Chinese Government view of voluntary initiatives
like ETI and SA8000? Does it feel threatened:
Athar Hussain: There are many points of view within the
Chinese Government. Therefore there is a possibility of leverage. China does
accommodate foreign pressure in trade matters (e.g. in intellectual property
law). It depends on the approach taken. "Scientific human resource development"
is only just starting in China. Therefore the ETI could be expressed in this
way. Because the Ministry of Labour and Social Security has to make choices
within limited resources, action around a code has a chance of galvanising
activity that would not otherwise occur.
Jude Howell: Local governments are willing to overlook
bad shop-floor practices. The labour inspectorate lacks sufficient staff.
However, the Chinese Government is officially in favour of improvements.
Guy Liu: Government organisations may well be active
and enthusiastic, providing they see the value.
How do you verify labour standards when the Chinese
government is suppressing independent organisations?
Jude Howell: There are openings with the "Gongo"
associations (officially-sanctioned NGOs).
What do you do when you find local government breaking the
law?
Jude Howell: You should support the inspectorate
system. The Chinese press is aware of local government collusion. Therefore it
is an issue.
Guy Liu: The Labour Ministry has a system of inspection
and report-writing (e.g. on boiler safety). Try to make use of this system.
Would Chinese local government be open to a direct approach
from UK organisations?
Guy Liu: Establish a joint-venture local committee with
the Chinese Government.
Given the tension in China between fragmented economic
development and a supposedly centralised bureaucracy how do you work in China?
Has ETI left the government aspect out of its multi-sided approach?
Athar Hussain: I would strongly support the inclusion
of government. You would find allies there.
Jude Howell: Yes, you do need to work with government,
at the National, Provincial and Municipal levels. Also with the "Gongos"
(officially-sanctioned NGOs).
Next China Seminar
The next ETI seminar
on China featured speakers from the UK Department of Trade and Industry
and the Foreign and Commonwealth Office, and focussed on the British government's
China trade policy and how this relates to ethical trading.
See also:
Activities > Experimental
Projects (incl China Project)
[Note: The views expressed in
this seminar are those
of the individuals concerned, and do not
necessarily
represent the positions of their organisations, or
of the
Ethical Trading Initiative.]
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