Archive for the 'Policy Advocacy' Category

Job-seeking and Retraining needs for Middle-aged Displaced Workers in Shenzhen

Job-seeking and Retraining needs for Middle-aged Displaced Workers in Shenzhen
Executive Summary

Full report in Chinese is available for download here. Acknowledgement to Shenzhen Migrant Workers’ Centre and student interns for their contribution to the investigation.


Industrial upgrading in Shenzhen in recent years have resulted in closure and relocation of numerous factories in labour-intensive industries. With little savings and social protection, middle-aged workers laid off face difficulties in looking for a new job and satisfy survival needs of themselves and their families.  In this investigative report, we demonstrate that the situation of a group of former toy factory workers, who were laid off due to factory relocation, exemplifies the need of these workers regarding reemployment constantly ignored by the government and trade union.

Workers affected in this wave of layoffs are usually in their 40s, and have worked in the same industry for years. Their skill development has been highly dependent on production requirement of the factories. The toy factory workers, mostly female, are responsible for supporting the living costs of both their parents and children. Furthermore, due to the substandard practices of their employment in social security, they are not yet eligible for pension entitlements and are not ready to withdraw from the labour market.

These workers have substantial work experience in the toy industry. Many of them wish to fully utilise skills developed from their past work, but they face a variety of obstacles in job searching –

  1. Age limit – most factories only recruit workers below 40 years of age. Older workers find it hard to land a regular and permanent job.
  2. Insufficient unemployment insurance benefits – most workers are entitled to benefits for 1 to 2 months, but it is insufficient when it takes them 4 months to be re-employed on average.
  3. Worse working conditions – workers who manage to find a stable job report lower remunerations, lack of a labour contract and social insurance. Living needs of their own and their families’ cannot be fulfilled albeit living on a shoestring.
  4. Job precariousness – jobs in remaining toy factories in Shenzhen become more flexible. Most factories shrink in size and employ mostly temporary workers organised by foremen on commission. Duration of work in a factory ranges from 2 days to 1 month, making work highly precarious for workers.

Current unemployment-related policies in Shenzhen do not fit the situations of these middle-aged workers. For instance, most workers who quit their job against their will or fail to provide proof of involuntary unemployment are not eligible for unemployment insurance benefits. The rate of benefit is also inadequate to support them over the job-seeking period. Local officials are ill-informed of related regulations to assist workers in going through procedures for job matching and skill retraining services. Policies assisting start-ups are highly inclined towards young and highly educated entrepreneurs in new and hi-tech industries, which are inadequate for the needs of middle-aged former factory workers.

We hereby propose the following suggestions for improving existing policies regarding reemployment –

  1. The Unemployment Insurance Fund should be used to ease the burden of workers rather than enterprises

    In face of the current economic slowdown, the Guangdong provincial government cuts unemployment insurance premium for employers, whilst the Shenzhen municipal government pay enterprises subsidies with the abundant Unemployment Insurance Fund for the sake of stabilising employment. We argue that workers are equally in need as enterprises during this difficult time, and the operation of the Unemployment Insurance Fund should be more transparent to the public. It is suggested that all workers should receive unemployment benefits for a minimum of 3 months. The amount of benefit should also be no less than the local minimum wage and subject to adjustment at least once every 2 years.

  1. Strengthening of Reemployment services for workers with no local household registration accounts

    All services regarding reemployment – including job matching and start-up assistance – should be extended to workers of all ages, regardless of their household registration status. The Bureau of Human Resources and Social Security to take the lead to coordinate resources and experience from social organisations in providing specific reemployment services for workers of different ages, skills and education levels. Subsidies should also be provided to workers during retraining as a motivation.

  1. Forbidding age discrimination of enterprises during recruitment

    Explicit discrimination of age and gender by enterprises result in obstacles for older workers in search of proper regular jobs. The central government should initiate the legislative process of the anti-discrimination law, in order to better promote social equality and progress for all.

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web admin on October 17th 2016 in Policy Advocacy

Report Release: An Investigation on Wage and Living Expenditure of Workers in Shenzhen in 2015

Shenzhen Dagongzhe Centre, Worker Empowerment’s partner organisation in Shenzhen, has just released a report on the impact of minimum wage on workers in Shenzhen in 2016. The report is published in Chinese, and an executive summary in English is also available.

Full text of the report in Chinese:

An Investigation on Wage and Living Expenditure of Workers in Shenzhen in 2015 – Executive Summary

Shenzhen Dagongzhe Migrant Worker Centre
May 2016

As the only legally binding wage rate at the moment, not only does the minimum wage guarantee income for workers in regular working hours, but also narrows down the income gap in society. Shenzhen Dagongzhe Migrant Worker Centre has long been advocating for a minimum wage rate which guarantees decent living for workers and is adjusted in a more systematic and transparent manner. In the past few years, regardless of the promises that the government makes to adjust the minimum wage rate progressively and have it linked to the local average wage, the minimum wage still fails to cope with soaring living expenses that workers bear.

A questionnaire survey was conducted between August and December 2015 to investigate working conditions and living expenses of migrant workers in Shenzhen, complemented by a focus group session for workers to elaborate on how their living expenditure is associated with wage and working hours, as well as strategies deployed by employers to cut labour cost. 89 valid questionnaires were collected. Workers participated in the survey work in the electronics, toy, metal, plastics, sporting goods, furniture, cleaning and service industries.

From the survey and discussion with workers, the significance the legal minimum wage in determining workers’ income is confirmed. The basic wage adheres to the legal minimum wage for almost 70% of the workers, which means that the annual or biennial adjustment of the minimum wage is the rare chance when their basic wage is lifted. It shows that most of their employers merely fulfill the minimal legal requirement in remunerating workers.

The minimum wage rate can hardly cover living costs in Shenzhen for most workers, partly because it does not catch up with inflation. Some of them cannot secure the minimum wage level after social insurance premiums are deducted from their basic wage. It is not new for workers to expand their income by working overtime, which severely endangers work-life balance. Nevertheless, some of them suffer from overtime work being cut as well due to recent economic slowdown. With the basic wage hardly enough for survival, they resort to resignation, which sets their employers free from paying them the economic compensation required by law. Apart from overtime payment, the employers also play an upper hand on other variable components of workers’ wage such as bonuses and subsidies. For instance, some employers start charging workers on accommodation, and making bonuses conditional upon harsh conditions. Therefore, it is important for the legal minimum wage rate to satisfy needs for a decent living, so that workers can be shielded from the risks brought by the unpredictability of variable payment.

In the midst of the investigation, there has been widespread news about nation-wide economic slowdown and rising labour costs. The Guangdong provincial government took the move to freeze the minimum wage rate in the coming 2 years. We believe that among many factors of the economic slowdown, workers already living on a shoestring should not be held responsible for that. Freezing the minimum wage would only further widen the income gap and strengthen social inequality. In order to secure workers a fixed wage which covers basic needs under the uncertainties at work, we urge the government to:

  1. Adjust the minimum wage according to changes in the average wage. The minimum wage should reach 40%-60% of the local average wage and take the living expenditure of workers and inflation into consideration under a transparent and orderly mechanism.
  2. Set the minimum wage level of Shenzhen in 2016 at 2971 RMB, after the living expenditure of workers and inflation are taken into consideration.
  3. Impose stronger regulation on charges on water and electricity to prevent landlords from overcharging workers.
  4. Enact the Wage Law to stipulate wage components and specify that social insurance premiums are not included as part of the basic wage for workers.


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web admin on June 9th 2016 in Policy Advocacy, Research Reports

An Investigation on the Implementation of the Labour Contract Law in the Manufacturing Sector

Labour Contract Law 2014 cover

        The Labour Contract Law of China, which aims at regulating employment and protecting workers’ legally abided rights, has been in controversy since its implementation in 2008. Recent trends in industries, such as factory relocation from well-developed coastal areas due to industrial upgrade and the subsequent labour disputes, also the employment of dispatched workers becoming popular in factories, show the need to strengthen legal protection for workers. An amendment of the Labour Contract Law was introduced in July 2013 to serve this function, but the effectiveness is yet to be observed.

        As a grassroots labour organisation based in the Pearl River Delta, Worker Empowerment concerns about the welfare of workers in the manufacturing sector and supports their right-defending efforts. Therefore, following our long-time interest in the Labour Contract Law, a survey to investigate its implementation in the Pearl and Yangtze River Deltas was conducted in 2014, in order to have a better understanding of how the law works to protect workers, particularly the dispatched ones.

        The survey covers eight cities in the Pearl and Yangtze River Deltas, namely Shenzhen, Guangzhou, Dongguan, Huizhou, Shanghai, Nanjing, Suzhou and Jinhua. With the help of a number of labour organisations and university students, questionnaire survey and field study were conducted. 515 valid questionnaires were collected. Some case studies offered by the co-operating labour organisations were also adopted for analysis.

        Among workers who completed a valid questionnaire for us, 60% of them are male. 70% are below 36 years old. A significant proportion of them work in electronics factories. 80% of them are formal workers, and the rest are either dispatched or temporary workers.

        In general, 84.3% of the surveyed workers signed a labour contract with their employer. The proportion has increased in comparison with a survey of similar scale that we conducted in 2009, and is slightly lower than the figure officially announced by the Ministry of Human Resources and Social Security. However, it is shown that establishing an employment relationship in written form is still not a compulsory practice between enterprises and workers. A higher percentage of surveyed workers from big cities signed a labour contract, but the figure is significantly lower in lower-tiered areas. Enterprises of domestic capital are less inclined to sign a labour contract with workers.

        The rationale of the Labour Contract Law is to establish a legal framework for stable employment relationship between workers and their employers. Labour contracts should also be signed under the prerequisite that both parties are entitled to equal rights to negotiate on contract terms. From the survey, however, many workers are not protected as such. For example, contracts are often incomplete, and the terms are not the same as what workers are required to do in the workplace in reality. Due to a low risk in violating the law, employers still tend to act in expediency. Examples include making working overtime regular, signing fixed-term contract with workers continuously, propelling resignation of workers to evade from paying compensations, and many more. The workers’ lack of knowledge and confidence in the law, as well as low capacity to fight against the employer collectively become an obstacle to tackle the problems from the deep root. They are also discouraged to strive for better working conditions and remunerations by renewing the contract.

        In terms of employers’ malpractices related to labour contracts, some improvements are apparently shown over the years, but mostly in big cities. During the relocation of industries and labour power from coastal to inland areas, it is observed that the law is worse implemented in the latter, meaning that demonstrative effect of big cities is often limited. When improvements in coastal areas are achieved only after years of monitoring and supervision, whether inland regions would be benefited is still questionable.

        The amendment of the Labour Contract Law has been implemented since July 2013 to regulate labour dispatch. Measures include keeping the use of dispatch workers within the bound of temporary, auxiliary and substitutive positions; ensuring equal pay of formal and dispatched workers; and setting a higher bar for starting a labour dispatch business. The Interim for Labour Dispatch announced in April 2014 also restricts the proportion of dispatched workers in an enterprise to 10%. From the survey, it is found that many enterprises still use an exceeding proportion of dispatched workers. Most dispatched workers do not know how their work nature is different from formal workers, and they are also generally less well paid.

        Adding insult to injury, although more legal measures are introduced to regulate labour dispatch, the demand of enterprises on a flexible workforce remains high. Even if labour dispatch no longer works, hiring temporary workers and outsourcing still enable them to play down their role as employers. This makes it harder for workers to identify the party to be held responsible in case disputes arise in an employment relationship.

        To strengthen the enforcement of the Labour Contract Law to protect the legal rights of workers, we reckon that the labour department should make an effort in the following perspectives:

  1. Inputting resources in promoting and enforcing the Labour Contract Law, in order to increase the awareness of workers and understanding of their own rights;
  2. Closer supervision in inland areas and enterprises of domestic capital, to block transfer of bad practices by relocation;
  3. Increasing risks for enterprises by more proactive prosecution and criminalisation of repeated violation of the law;
  4. Monitoring labour dispatch and other forms of flexible employment which are out of the legal framework;
  5. Opening up rooms for workers to organise and negotiate with their employers on equal grounds.

         This investigation may have its own limitations due to restraints in resources, but surveys as such from a grassroots perspective should continue. It is hoped that the survey would keep going year after year and extend to more regions, so that more workers would be better informed of the Labour Contract Law, fight for their own rights and ultimately benefit from it.

The full report in Chinese can be downloaded here: Labour Contract Law_WE_2014-7

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web admin on August 7th 2014 in Policy Advocacy, Research Reports