Archive for the 'Research Reports' Category

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

Executive Summary: “Suppliers Escaped: Disney Abandoned Mizutani Toy Makers Viciously”


Full report: “Suppliers Escaped: Disney Abandoned Mizutani Toy Makers Viciously”

This is an independent case report documenting a series of violations of labor rights in a manufacturer of Disney-branded products in mainland China, namely Mizutani (Shenzhen) Toy Factory Co. Ltd. This case demonstrates how Walt Disney has not been successful in fulfilling its corporate citizenship goals for managing a responsible supply chain. It is important for the public especially the customers to pay attention to the workers’ sufferings behind the Disney-branded products.

The primarily evidence collection and analysis of this report has been prepared by Worker Empowerment (WE) since the second collective dispute broke out in June 2015 and completed jointly with Hong Kong Confederation of Trade Unions (HKCTU). All the information on the labor disputes of Mizutani were compiled from first hand sources from Mizutani workers, official and public record on the company profile, laws and regulations as well as views from experts.

Major Findings

1. By underpaying social insurance contribution, severance compensation and unlawfully dismissing workers, Mizutani has violated China’s Labour Contract Law and Social Insurance Law.
2. The livelihood of 196 Mizutani workers has been severely affected by the sudden factory closure. Most of these middle-aged workers have served in Mizutani between 10 and 20 years and seeking new jobs would be a big challenge for them. Missing social insurance contribution would leave them no pension and this would create serious trouble when they retire.
3. Walt Disney Co.’s International Labour Standards Programme requires all its suppliers to follow local laws, they are specifically required not to threaten workers and respect freedom of association (including rights to organize and collective bargaining). However, it has ignored Mizutani’s grave violations of the above-mentioned labour rights. Those include:

a. Violations of Chinese labour legislations: Mizutani is moving to the Philippines and is financially sound. Yet, it deliberately violates Labour Contract Law and Social Insurance law and owes workers some 9 million Yuan.
b. Rejection of collective negotiation: since the announcement of the closure of the factory, workers had requested to negotiate with Mizutani but it refused.
c. Denial of workers’ rights to organize: out of desperate, workers launched a strike and road blockage. They were violently taken away by riot police and 23 workers were detained.
d. Refusal of paying severance compensation and threatening workers to “voluntarily resign”: when it announced to close its Shenzhen plant in June 2015, it forced workers to sign “voluntary resignation agreements”
4. Walt Disney Co. has been informed of these labour rights violations and the dispute at Mizutani through formal complaint and media exposure, yet it has only reacted to this dispute through emails, phone calls and a non-constructive meeting. Until now, no formal investigation has been seen and no solution has been provided to these violations.

Key Recommendations:

1. Disney must investigate the case and fulfil its commitment to workers’ rights across the supply chain and help the Mizutani workers reclaim their missing compensation in the wake of the company’s abrupt factory closure in June 2015.
2. Mizutani unilaterally terminated workers’ labour contracts. By law, it should pay double severance compensation and Disney should pay the missing part of the compensation, which should be calculated by wages payable.
3. Mizutani must pay the missing premiums of workers’ social insurance and housing provident fund since their dates of commencement.

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web admin on April 25th 2016 in Research Reports

Report Release: “Suppliers Escaped: Disney Abandoned Mizutani Toy Makers Viciously”



Mizutani (Shenzhen) Toy Factory Co. Ltd., a Hong Kong-registered enterprise producing for Tokyo Disneyland since 1997, announced its sudden closure and relocation to the Philippines in June 2015. A total of 9 million yuan of severance compensation, social insurance and housing provident fund payments covering 196 employees has been in arrears. The livelihood of Mizutani workers, among which a lot of them are middle-aged and find looking for a new job challenging, is seriously affected by the sudden change.

Worker Empowerment (WE) and the Hong Kong Confederation of Trade Unions (HKCTU) have been assisting Mizutani workers in their protests against Mizutani and Disney and subsequent rounds of negotiations. So far Mizutani simply agree to settle the dispute with one tenth of the compensation to which workers are entitled according to the Labour Contract Law and Social Insurance Law, and workers refuse to accept such an unlawful compensation. Disney in Japan and USA has remained silence since a symbolic meeting with WE and HKCTU in mid-July 2015, regardless of repeated demands for their intervention.

This case demonstrates how Disney has failed to fulfill its corporate responsibility. The report titled “Suppliers Escaped: Disney Abandoned Mizutani Toy Makers Viciously” jointly published by WE and HKCTU aims at disclosing how Mizutani and Disney violate Chinese labour regulations and its betrayal to frontline workers. It is important for the general public, especially customers of Disney-branded products, to pay attention to workers’ suffering behind them.

The full report is available here, with an executive summary.

Key findings include:

1. By underpaying social insurance contribution, severance compensation and unlawfully dismissing workers, Mizutani has violated China’s Labour Contract Law and Social Insurance Law.

2. The livelihood of 196 Mizutani workers has been severely affected by the sudden factory closure. Most of these middle-aged workers have served in Mizutani for 10-20 years and seeking new jobs would be a big challenge for them. Missing social insurance contribution would leave them no pension and this would create serious trouble when they retire.

3. Walt Disney Co.’s International Labour Standards Programme requires all its suppliers to follow local laws, they are specifically required not to threaten workers and respect freedom of association (including rights to organize and collective bargaining). However, it has ignored Mizutani’s grave violations of the above-mentioned labour rights, including:

a. Violations of Chinese labour legislations: Mizutani is moving to the Philippines and is financially sound. Yet, it deliberately violates Labour Contract Law and Social Insurance law and owes workers some 9 million Yuan.
b. Rejection of collective negotiation: since the announcement of the closure of the factory, workers had requested to negotiate with Mizutani but it refused.
c. Denial of workers’ rights to organize: out of desperate, workers launched a strike and road blockage. They were violently taken away by riot police and 23 workers were detained.
d. Refusal of paying severance compensation and threatening workers to “voluntarily resign”: when it announced to close its Shenzhen plant in June 2015, it forced workers to sign “voluntary resignation agreements”.

4. Walt Disney Co. has been informed of these labour rights violations and the dispute at Mizutani through formal complaint and media exposure, yet it has only reacted to this dispute through emails, phone calls and a non-constructive meeting. Until now, no formal investigation has been seen and no solution has been provided to these violations.

We strongly demand for the following actions of Mizutani and Disney:

1. Disney must investigate the case and fulfill its commitment to workers’ rights across the supply chain and help the Mizutani workers reclaim their missing compensation in the wake of the company’s abrupt factory closure in June 2015.
2. Mizutani unilaterally terminated workers’ labour contracts. By law, it should pay double severance compensation and Disney should pay the missing part of the compensation, which should be calculated by wages payable.
3. Mizutani must pay the missing premiums of workers’ social insurance and housing provident fund since their dates of commencement.


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web admin on April 25th 2016 in Organisational Updates, 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

Community report: Occupational Safety and Health in China

Community report: Occupational Safety and Health in China[1]

By Becky FUNG (LESN) and Francine Chan (WE)

1. Introduction

Over the past three decades, while China emerged as the “World’s Factory”, a large proportion of its workers have been increasingly exposed to occupational hazards. By the end of 2001, the International Labour Organization (ILO) estimated that China’s workplace fatality rate was 11.1 persons per 100,000 workers, compared with a rate of 4.4 per 100,000 in the United States. Industrial accidents rose by 27 percent between 2000 and 2001[2]. According to official Chinese government statistics[3] covering the years 2006 to 2009, industrial accidents increased by more than 15 percent per year. From 1949-2010, China’s State Administration of Work Safety (SAWS) counted 749,970 cases of occupational disease all over the country. In 2009, 380,000 incidents happened in the workplace that caused death or injury. Of that total, 83,196 people lost their lives in work-related incidents, meaning that 228 workers died every day that year[4]. In China, monitoring working conditions remains a great challenge, especially in small–scale enterprises, where most of the industrial accidents are not reported at all. In Asia in general, we have found that the official statistics and reports of occupational accidents and fatalities reflect only the tip of the iceberg, but not the real situation on the ground. Due to the legitimate reasons, and illegalities, exploitation for the underreporting of occupational disease and injury in the workplace in China, the situation of occupational safety and health (OSH) in China has also been found to be more serious than the official presentation.

The present report is the result of the discussions and common concerns raised at the 2010 Asian Network for Rights of Occupational and Environment Victims (ANROEV). These concerns were mainly the unreliability of the existing data on OSH conditions across Asian countries, which in turn obstruct the understanding of OSH conditions in these countries. During 2010 and 2011 Asia Monitor Resource Centre (AMRC), Worker Empowerment (WE), and Labour Education and Service Network (LESN) joined forces to produce this report on the OSH conditions in China. We trust it will contribute to the discussion and understanding of OSH conditions in Asia, and toward building the platform of NGOs striving for the rights of victims of occupational injury or disease.

In this paper, we first outline the current institutional framework concerning OSH in China, the laws and regulations, their enforcement and their effectiveness. Secondly, we analyze the available official data on OSH conditions in China and contrast it with data gathered by community-based organizations. In this way we will be able to obtain a clearer and truer picture of the actual OSH situation in China and analyze the causes for the gaps in the two sets of existing data. This study relies on two types of data. On the one hand, quantitative research has been done by reviewing desktop descriptive statistical data gathered from the following sources: China Statistical Yearbooks from 2003 through 2010, China Labour Statistics Yearbooks, and China Labour and Social Security Yearbook, published by the Ministry of Statistics and the Ministry of Human Resources and Social Security (MHRSS); and data collected by various community-based worker service centres[5], which include 409 cases from Shenzhen collected in 2009, 4,401 cases from Guangzhou collected between 2003 and 2006, and 1,560 cases from Dongguan collected between 2006 and 2009. On the other hand, this statistical data is contrasted with first-hand qualitative records of occupational accidents, injuries and fatalities produced by labour community service centres, which point out the causes of the gaps in official reports. Qualitative data gathered through workers’ group discussions, and individual and collective case studies are used to document the lives of the victims, and draw a distinct picture from the statistical reports, hence enabling a deeper understanding of workers’ situation and their lives on the ground. Despite the limitations of the data[6], which may only project some faint snapshots of current conditions and regulatory practices in China, it does identify key areas where further research and policy analysis is necessary. Our goal is to bring forward workers’ voices other than discount the official presentation. Finally, we outline NGOs’ strategies in relation to OSH and sketch our conclusions.

2. OSH Institutional Framework in China

2.1. Legislative and administrative framework

In this section we discuss the existing OSH laws and their implementation in China. Since the 1990s, the Chinese government has explicitly mandated the establishment of a socialist market economy under the rule by law, which is actually a set of rules pursuing the establishment of a “harmonious society” and increasing productivity, rather than a legal framework defending workers’ legal rights. Since the start of China’s economic transformation to a socialist market economy in 1992, labour conflicts have become more and more serious; hence, the Labour Law of the People’s Republic of China was promulgated on July 5, 1994, coming into effect on January 1, 1995. The Labour Law is the basic legal code for the adjudication of labour relations, and has provided a framework for the labour contract and collective contract systems, a tripartite coordination mechanism, labour standards, a system for handling labour disputes, and a labour supervisory system, basically shaping a new law-based approach to labour relations in consonance with the socialist market economy. Since the 1995 Labour Law, several important laws and regulations have come into force.

In China, OSH measures have been developed under a joint effort of the World Health Organization (WHO), the International Labour Organization (ILO), and the International Commission on Occupational Health (ICOH) to protect all employees including workers in small-scale enterprises or in the informal sectors. China signed the International Covenant on Economic, Social and Cultural Rights (ICESCR) on October 27, 1997, but still has not ratified ILO Convention 155, Occupational Safety and Health, 1981, and ILO Convention 161, Occupational Health Service, 1985. These two conventions are the main international occupational safety and health (OSH) conventions.

The ILO Japan-Asia Pacific Regional Seminar on Occupational Safety and Health Management Systems was held in Kuala Lumpur in May, 2001, with China participating as one of its eleven member countries. Soon after, in July, 2001, China held a tripartite seminar[7] to review the national laws and implementation practices, in conjunction with the provisions of the ILO Conventions mentioned above. The Law of the People’s Republic of China on safety production (hereinafter referred to as the Work Safety Law) was promulgated by the Ninth National People’s Congress on June 29, 2002, and went into effect on November 1, 2002; the Law on the Prevention and Cure of Occupational Diseases (hereinafter referred to as Occupational Disease Control Law), was promulgated on October 27, 2001, and put into effect on May 1, 2002. Two years later, the Work related Injury Regulation (hereinafter referred to as work injury regulation) set a legal framework for work injury compensation, which was promulgated by the State Council on April 27, 2003, and put into effect on January 1, 2004.

The aforementioned OHS-related legal framework stipulates basic principles governing the prevention and control of occupational diseases, protective measures, hazards monitoring and management in workplaces, diagnosis of occupational disease, health authority inspections, and the liabilities incurred by those violating the law. Moreover, these national regulations define workers’ occupational health rights, the obligations and duties of employers to protect the health of their employees, the responsibilities of the governments at various levels, and trade unions’ representation in workers’ health protection.

Nevertheless, OSH-related laws are only broad guidelines that the State Council decrees and passes downwards through a decentralized administrative structure to the People’s Congresses at the provincial level and local departments which are responsible for implementing them. However, lower level governmental agents can also issue their own local regulations at the local bureaus of Human Resources and Social Security[8] or at local People’s Courts. Due to the number of different authorities involved in legislating and administrating OSH matters, coordination among them becomes highly problematic, and the implementation process can be distorted. This situation may be the cause of the gap between the legal mandates and the practices on the ground, where in some occasions, no regulation applies, or even different and contradictory indications co-exist.

Above and beyond this administrative maze, the local regulations at different provincial levels can be highly influenced by the investors in the area, as local legislators tend to protect employers’ interests allowing them to save on costs, at the expense of worker’s rights. Workers’ rights are additionally vulnerable as the role of the All-China Federation of Trade Unions[9] (ACFTU) is a two-fold role: It acts as both an agent of the government and nominally of the workers, while additionally supporting enterprises. According to Article 7 of the Work Safety Law, “trade unions shall, in accordance with law, make arrangement for employees to participate in the democratic management of and supervision over work safety in their units and safeguard the legitimate rights and interests of the employees in work safety.” The ACFTU is supposed to monitor the enforcement of the law, and ensure that workers’ rights are not violated. Although in recent years, the number of trade unions under the ACFTU has increased their functioning is still severely limited by a top-down union structure and a weak membership base. In practice, the ACFTU only provides passive intervention if the worker requests its assistance.

Overall, although OSH-related laws and regulations are in place, due to a decentralized administrative structure and the conflicting interests of the different governmental agencies and actors involved in the implementation process, the protection afforded under the law is weakened, and workers’ rights are repeatedly violated.

2.2. Enforcement in a complicated administrative structure

As mentioned above, one of the fundamental reasons that cause the intricate problems in the Chinese OSH system is that the implementation mandate of OSH related laws is distributed between different government bodies. At the central level, the health and work safety administration authorities are, namely, the Ministry of Human Resources and Social Security (MHRSS), the Ministry of Health (MH), and the State Administration of Work Safety (SAWS). These actors and other related departments have overlapping roles and responsibilities, which cause the problems in the implementation and enforcement of OSH-related laws.

Firstly, the Ministry of Human Resources and Social Security is charged with enforcement of the law, and will issue mandatory ‘Notes for Compliance’ to factories that violate the regulations. It also investigates serious cases of occupational injury and accident, monitoring the factories with high occupational risks. It is responsible for handling the issue of work injury certifications, to arrange identification of disabilities, and to provide work injury insurance to the injured workers. The ministry relies on the Department of Human Resources and Social Security at the provincial level, which supervises the municipal bureaus of Human Resources and Social Security at the municipal levels.

The Ministry of Health relies on the Centre for Disease Control and Prevention (CDC) and the local Prevention and Treatment Centre for Occupational Diseases at various administrative levels as its key agents carrying out health inspections. The Prevention and Treatment Centre for Occupational Diseases also investigates the identification and therapy of occupation diseases.

The State Administration of Work Safety (SAWS) regulates and monitors the safety and health working environment, to prevent the workplace from developing sources of hazards or injuries, such as fire, dust, poisoning, harmful noise, radiation, etc. One of its duties is to visit factories and mines regularly and set up health and safety files on the workers. When the local Prevention and Treatment Centre for Occupational Diseases receives a case of occupational disease or complaint from a worker, the State Administration of Work Safety carries out an inspection of the factory and reports back to the local Prevention and Treatment Centre for Occupational Diseases to issue the occupational disease certificate.

The lack of co-ordination between the ministries and bureaux leads to very low efficiency in terms of implementation and monitoring, therefore prevention of accidents and injuries always seems to fail. Corruption and abuse of power by the authorities are the most common reasons for this. Although the local labour department or the local trade union under the ACFTU may try to carry out inspections, the labour department alone is not powerful enough to stop factories from violating safety standards and refusing to pay compensation to workers. Moreover, migrant workers are usually pushed back and forth between various departments when they seek the intervention from the authorities to resolve their occupational injury case, as this report from a benzene-poisoned worker highlights:

“I’m seeking compensation to pay for the treatment. The boss in the factory totally refused to discuss the issue with me. I went to the Bureau of Human Resources and Social Security to complain and ask for help. All this money should be paid by the boss first, and after he can claim the money back from the Ministry of Human Resources and Social Security. The officers in the Bureau of Human Resources and Social Security said they had called the factory already. They did their job. Since I am desperate for a result on the payment of the treatment fee, I just stayed in their office and refused to leave. They then suggested that I go to the trade union to ask for help. When I arrived at the trade union office, luckily I chatted with the newly-arrived trade union chairperson, who was a woman of about 30 years old. Maybe because she’s new and young, she didn’t know too much about the power struggle in the area, she agreed to fix the compensation fee within one week. The officer behind warned her: “Hey, that Taiwan investor is a big one, not easy to fight with, are you really sure you want to help this worker? It’s hard to fix it!” (Wu Zhigang, an occupational disease victim)

As Wu’s experience shows, trade unions, and the local government, tend to protect and coordinate with the enterprises to ensure good relations and that nothing will disrupt the revenues that come from the tax and rent income of the investors. This kind of local protectionism and conflicts of interests proliferate through inefficient monitoring and enforcement of the law. Hence, violations and non-compliance with the laws are a frequent occurrence

2.3. Complicated procedures to seek compensation

The formal procedures necessary to seek compensation for occupational injuries or diseases, as they governed by the aforementioned legal and administrative structure, are cumbersome and complicated. Hence, this section also highlights the difficulties encountered by workers that seek compensation and the reasons why so many of them give up in the middle of the process.

The procedure to seek compensation is regulated by the Work Injury Insurance Law, the Law on Prevention and Control of Occupational Diseases, and the Production Safety Law. In order to seek compensation, the Work Injury Certification is used to identify and confirm that the injury was caused by a job-related issue or accident; the Identification on Work Ability is used to identify the level of disability caused by the injury. There are four major steps in the process to seek compensation. First, workers must have their injury identified as an occupational injury, for which they need to apply for the Work Injury Certification within one year after the accident happened in the workplace. Second, workers must apply for the Identification on Work Ability and wait for the results of this evaluation.

To add to this painstaking and time-consuming legal procedure, there are a number of additional barriers, which include the labour contract, or the occupational disease diagnosis. Yet even before the compensation can be sought, the injured workers have to submit his or her labour contract to the authorities to prove the existence of a ‘labour relationship’ with the employer. Ironically, this is one of the greatest difficulties faced by the injured worker. This was vividly shown in the “Executive Summary of the China Labour Contract Law Implementation Survey, 2009”, a report on the Pearl River Delta region (PRD) conducted by a workers’ centre based in Shenzhen:

“The percentage of respondents having signed a written labour contract in the Pearl River Delta is 67.30 percent and in the Yangtze River Delta (YRD) it is 83 percent. The common contract period is one to three years, and only 8 percent of respondents have permanent contracts. Overall, about 75 percent of respondents report having signed labour contracts with their employer in the YRD and PRD. Enterprises with 100 employees or less were found less likely to have signed labour contracts at all (“Executive Summary of the China Labour Contract Law Implementation Survey, 2009”, Dagongzhe Centre).

In fact, there is a relationship between the size of the enterprise and the rate of occupational accidents. The findings of one workers centre show more than 50 percent of all accidents happen in factories with fewer than 250 workers.

Table 1. Relationship between factory size and occurrence of occupational accidents.

Factory size

(# of employees)

Occurrence of accidents


Less than 50








More than 1,000


Source: Data from workers’ services centre in Guangzhou. This workers’ centre reaches 20 hospitals and collected data on 4,401 cases of occupational injuries between 2003 and 2006.

In the case of workers with occupational diseases, it is more difficult to seek compensation, since in addition to submitting the employment contract to prove an established labour relationship with the employer, occupation disease victims also need to obtain an occupational disease diagnosis before they can obtain a work injury certification. The diagnosis process may take at least nine months, and it can be prolonged to several years. Many occupational disease victims have been trapped for years just in the process of obtaining the certification, before entering into the legal proceedings to seek compensation. Due to this lengthy process, some workers even die before they can obtain the work injury certification.

After obtaining the certificate, the injured worker will receive a notice from the Ministry of Human Resources and Social Security which will enable them to receive part of their compensation. The level of disability is divided into ten levels and compensation will depend on the level of the disability. The payment of compensation is divided into three major parts. The Ministry of Human Resources and Social Security provides one third of the compensation to the worker immediately after the certification is achieved. However, for the worker to achieve the other two thirds of the compensation, which is provided equally by both the MHRSS and the employers, he or she has to be dismissed or resign. It is not until this moment that workers are able to obtain the entire compensation payment.

Moreover, the calculation of the compensation is done using the average wage of the last twelve months before the accident happened. Thereafter, depending on the disability level, the average wage will be provided for a fixed period (calculated in months). Hence, workers have to provide evidence or proof of the average wage of his previous position in the twelve months before the work injury occurred. The worker’s difficulties do not end there. If the worker has not kept the pay sheets (pay slips) for the past 12 months – and many have not – he or she must get copies from the MHRSS or employer who may have understated payment in order to lessen the company’s social insurance payments. The Social Insurance Law requires that the employer and the worker share the payment of the social insurance, with specific proportions of the actual wages[10] paid by each to the Social Insurance Fund on a monthly basis. In practice, most of the employers use the minimum wage to pay their proportion to the Social Insurance Fund, which will affect the calculation of the compensation because when the worker has no proof of the real wages he/she has been receiving, the compensation is calculated with the average wages records of the MHRSS (records coming from the Social Insurance Fund) and that reflect a much lower average wage than the workers’ real wage. This makes the compensation lower than the actual amount workers should receive. To demand for a fair compensation workers have to enter into litigation following the legal procedures.

Nevertheless, the data show that seven out of ten workers are not willing to seek compensation through the legal procedure. A lack of legal knowledge, and the costly, time-consuming process are the major reasons that deter workers from seeking compensation. Usually, workers use informal methods to bargain with their employers, which lead to a much lower settlement, often 40 percent lower than the legally required compensation. Moreover, in most cases, workers that do informally bargain with the employer are immediately asked to resign or are dismissed:

As you can imagine, most of our income depends on the overtime pay. Once you get hurt, the factory only pays us a basic salary of Rmb1,200 a month as stipulated in the regulations, but it is not enough to support oneself in the urban area. What’s more, the legal procedures usually take more than half a year, and it is too difficult for me to understand those procedures, even appeal at the courts. I really can’t wait to get the compensation through the proper legal procedures. I am better off going back to my home village. Living in the city is too expensive for me.” (Li Changfu, a worker injured on the job)

3. Causes of the gap between official statistics and community reports

Below we analyse the existing OSH official statistics and contrast them with reports produced by community-based organizations, with the intention of highlighting the causes of the gaps between the two sets of data. .

Firstly, it should be emphasized that the statistics of occupational diseases and work injuries are largely under-reported by the mass number of undiagnosed cases among migrant workers. Particularly, official statistics are missing the figures on those migrant workers who return to their home village after they are dismissed by their employers due to their illness, and also those who give up in the tedious process of seeking compensation. In fact, the Centre for Disease Control and Prevention (CDC), the Ministry of Health, and the Ministry of Human Resources and Social Security admitted that these figures are only based on the number of diagnosed cases and those with work injury certifications. Moreover, the data available in the China Labour Statistics yearbooks only presents the number of workers that were beneficiaries of the social insurance scheme, hence, those that applied to the Social Insurance Law, and that were able to officially seek compensation and succeeded in getting it from the Ministry of Human Resources and Social Security (See Table 2 below).

Table 2. Compensation insurance and industrial injury insurance cases,2005-2009


Work injury insurance Contributors at end of year

Changeover previous year

People Beneficiaries of work insurance

Change over previous year

People Identified as disabled

Change over previous year


























Sources: China Labour Statistical Yearbook, 2007-2009, and China Labour and Social Security Yearbook, 2007-2009.

In contrast, reports by community-based organizations depict a different panorama. During 2009, one of our China-based partners, a migrant workers centre in Shenzhen, visited and monitored the victims of 409 cases of work-related injuries. Even with the support and legal consultation services provided by the centre, only half of the workers (232 workers) were willing to apply for the Work Injury Certification. From 2007 to 2009, another migrant workers centre in Shenzhen handled 2,131 injury-related cases, of which more than half had no injury insurance provided by the employer. In relation to the distribution of injuries per industry, data from the 409 work-injured cases show that 21 percent of cases were in the hardware industry, 14 percent occurred in the furniture manufacturing industry, 10 percent in the construction industry, 6 percent in the plastics products industry, 5 percent in services industry, 3 percent in the printing industry, and 33 percent in other industries[11]. A third report based on 1,560 cases from Dongguan indicates that 89 percent of those with occupational injuries were male and 11 percent female[12].

Analyzed in terms of the causes of occupational disease, it has been found that since 2001, the year when official statistics began listing the item of occupational disease, the main cause of occupational disease has been silicosis. In 2009, more than 91.89 percent of new cases were of silicosis: 14,495 people were said to be suffering from this occupational disease, and 748 died of it. Following pneumoconiosis, occupational poisoning is the second major cause of occupational disease and death: There were 2,184 affected victims and 21 deaths. Occupational poisoning occurs mainly due to three substances: lead (56.59 percent), benzene (10.88 percent), and arsenic (8.63 percent). Benzene poisoning has caused 22 cases of leukaemia that same year[13]. However, in 2009, an NGO in Dongguan followed up more than 50 workers suffering from leukaemia due to benzene poisoning:

“In 2010, there were more than 20,000 industrial and mining enterprises with occupational hazards problems in Dongguan (a city in Guangdong Province). They employed more than 5.5 million workers, but only 6,000 enterprises reported occupational hazards to the related government offices. The State Administration of Work Safety only monitored 280 enterprises out of these 6,000.. Moreover, only 58,000 workers out of 5.5 million workers have regular occupational health checks, less than 2 percent of the total number of workers who are required to have these checks” (Dongguan Daily, 2 Aug, 2011).

“Until this year (2010), there were only two hospitals in Dongguan with the qualifications to carry out occupational health examinations. Recently, the Health Department of Guangdong Province has issued the good news that five more hospitals were given occupational health examination qualifications to start conducting occupational health examinations in the coming year (2011). In total, there are seven hospitals with occupational health examination qualifications, which can provide services to 5.5 million workers in the area.” (Dongguan Daily, 2 Aug, 2011)

Due to the ineffective and inconsistent monitoring of the health and safety regulations and conditions, many enterprises simply ignore these regulations. Moreover, access to reliable information, as has been seen, is scarce. Local media coverage of occupational accidents is patchy. Although the media often reports the occurrence of serious accidents, information regarding more sensitive and serious accidents is blocked by the government, whether in the media or on the Internet. This results from the political pressure of creating a “harmonious society” and the government’s censorship of all the “inharmonious” reality and discussion. Therefore, we can only have snapshots of this reality taken from local community cases. In turn, this report can only estimate the existing gap in the information on OSH in China. By using the existing data, we try to map out the actual OSH situation, and call for further improvement in the future.

4. Looking into cases of occupational diseases and work injuries

4.1. An individual case of a benzene poisoned worker

Worker Ng, who worked in a leather factory in Dongguang, suffers from leukaemia due to benzene poisoning in 2010. After he was diagnosed with acute leukaemia in the hospital and was identified as a potential case of occupational disease, he approached his employer to demand that he take care of the medical expenses. But the employer refused. Like many other patients with occupational diseases, Ng had to overcome many difficulties in the long and tedious process to claim his rights.

Generally, the first problem is that the employer always refuses to pay for medical and living expenses during the application period of occupational disease diagnosis. Even if the employee is identified as a victim of an occupational disease, it is very difficult for him or her to claim back the medical and living expenses from the company. During the application period of occupational disease diagnosis, Ng’s employer did not provide necessary evidence of the use of toxic chemicals in the factory, which slowed down the entire process. After the Workplace Injury Identification was finally approved, the employer did not comply with the law and did not pay for Ng’s salary and other expenses during the treatment period. Ng was even forced to sign an agreement with the employer to reduce the cost of living payments that the company should pay.

Ng and his family made an attempt to file a complaint concerning these problems with the factory in different government departments such as the Health Inspection Bureau, the Labour Bureau, and the Petition Bureau, but none of the bureaux offered practical assistance to them and even discouraged their actions, which is a common response many workers receive when fighting for their rights. It is apparent that there exist great problems in the enforcement of the Work Injury Insurance Law at many levels of government, and patients with occupational diseases are not only unfairly treated under the existing system, but are also trapped in its tedious procedures.

4.2. A collective case of GP cadmium-poisoned workers

In 2004, an outbreak of cadmium poisoning cases occurred in four subsidiary factories of Gold Peak (GP) Batteries in mainland China as well as in Hong Kong. From that year until 2010, a total of 500 workers were diagnosed with excessive cadmium levels in the blood, and 22 workers were identified to have been cadmium poisoned. Gold Peak Industrial Ltd. is an Asian transnational corporation (TNC) based in Hong Kong and Singapore. GP’s customers include EverReady, Siemens, Panasonic, Nikon, Canon, Rayovac and Toshiba.

Cadmium is a chemical used to produce batteries. Workers affected with cadmium will face health problems for years even if they do not show symptoms of illness at the time of coming into contact with this chemical. Gold Peak (GP) which had been producing batteries since the mid-1980s, provided totally ineffective masks to their staff, which resulted in workers inhaling the fine cadmium powder. The company even ordered pregnant women to process cadmium alongside non-pregnant women. As a result, the children of these women were also found to have high-levels of cadmium in their bodies due to their mothers daily contact with the substance. In 2004, greatly suspicion of the official medical tests arranged by the management of the factory, some of these Gold Peak (GP) workers went to the Guangdong Provincial Hospital for the Prevention and Treatment of Occupational Diseases to have new medical tests done. The results of these tests were alarming and showed that the levels of cadmium in their body were much higher than the tests they had been done at the request of the factory management. The 500 workers were outraged and staged a three-day strike in June, 2004, demanding the Gold Peak (GP) management recognize the accuracy of the second set of test results performed by the provincial hospital and asked for financial coverage for proper medical treatment.

According to an interview with five Gold Peak (GP) employees who had been shown to have cadmium poisoning, they had been going through a long battle with the company to fight for their rights and compensation. Gold Peak (GP) at one point forced them to resign and sign unfair compensation agreements. The affected workers were under great pressure from the company and the local authorities, which included close surveillance of their actions and even violent assaults. In response, workers at the factories went on strikes, staged protests, met with government officials, and filed a lawsuit to exert pressure on the company. With the support from labour groups in Hong Kong, a number of demonstrations were held at the offices of Gold Peak (GP) in Hong Kong Worker representatives also visited trade unions in Europe seeking assistance. After six years of struggle, in September 2010, 152 former workers from the Huizhou factory of Gold Peak (GP), all with excessive cadmium levels in their systems, won their lawsuit against Gold Peak (GP). The court found in favour of the workers’ claim for RMB 6.03 million cash compensation. Workers were also granted nutrition fees and wages based on average monthly salary of the urban residents.

The success of the collective action of the Gold Peak (GP) workers proved that solidarity among workers and support groups is essential. In the case of Gold Peak (GP), the active involvement of NGOs in the process, lobbying work, media strategies, and pressure from foreign organizations all were positive factors that facilitated the success of the workers’ movement.

4.3. An individual case of an injured worker

Chen, a 45 year old male worker in the furniture manufacturing industry, suffered his injury on March, 2011. In the previous ten years, Chen had worked in eight different factories, seven of which producing furniture. In January 2011, Chen resigned from his position. After the Chinese New Year, Kanan, a furniture making factory recruited workers for their craft production line. This specific production process required very experienced and skilful workers as some tools with sharp edges are used to make the carved patterns on the wood furniture. Chen started working at Kanan factory on February 24, 2011, and signed a labour contract with Kanan which gave him a monthly salary of Rmb2,200-2,300 a month, two holidays per month, and a work schedule from 8am to 9pm. The manager made an oral agreement with Chen that work injury insurance would be provided at a later date.

Chen was sent to the production line with no training whatsoever, and the division manager just asked him to observe and learn how the other workers used the machines and the tools. As Chen had not worked in such a skilled carvers division before, the production process was new for him. Six days after entering the factory, on March 3, 2011, when Chen was carving the patterns on a wardrobe, he severely injured the palm of his left hand. The other workers at the workplace tried to stop the bleeding and immediately sent Chen to the hospital. At the time, Kanan paid a deposit (part of the treatment fees) to the hospital and agreed to pay an injury compensation without mentioning any specific amount.

As Kanan had not yet provided Chen with work injury insurance, it was actually obliged to pay the treatment fees and other compensation payments in full. For this reason, Kanan’s management was not willing to report the injury to the Bureau of Labour and Social Security. However, when Chen’s condition stabilized, he applied for the Work Injury Certification and for the identification of the level of disability, which was set at level 10. However, throughout this process, Kanan was not cooperative.

In July 2011, Kanan started to put pressure on Chen to resign, but he refused and reported Kanan’s behaviour to the Bureau of Labour and Social Security. The bureau initiated consultations and discussion with both Kanan and Chen individually, but failed to resolve the issue. Thereafter, Chen prepared the necessary material and applied for the Bureau of Labour and Social Security’s arbitration committee. At the end of July, the same day that Chen handed in the arbitration request to the bureau, Kanan informed the bureau of its willingness to discuss the issue again. Hence, Kanan’s management and Chen met up and Kanan offered Rmb15,000 in compensation to Chen. Chen initially refused. However, due to the anxieties over the length of the process and his housing and living expenses, Chen finally settled for Rmb20,000 in compensation. This, however, was only 59 percent of what he was legally entitled to as compensation. Had he decided to refuse this offer, he would have had to wait more than two months for the results of further arbitration to be concluded, in addition to having to deal with uncertainty of the outcome of this process.

Chen reached the Rmb20,000 compensation settlement after having bargained with Kanan management. The words from Kanan’s division manger during the bargaining process are still fresh in Chen’s memory: “You want to employ a lawyer? Haha… They (Kanan) also have a legal consultant. How long do you think you can play with them? Considering the time, the amount (Rmb 20,000) for us (workers) is almost decent!”

5. NGOs’ strategy

Our aim is to stimulate workers to defend their right to a healthy and safe working condition by themselves. To pursue this aim, NGOs employ the following strategies:

1) Provide hospital visits, legal consultation services, legal and paralegal assistance, and organization of workers’ support groups in the community;

2) Assist workers in organizing solidarity actions, such as media appeals and petitions to the authorities, and support during the litigation procedure;

3) Organize public events and action and alliance building with civil society organizations, to create a pro-labour support network;

4) Advocate for legislative changes in the OSH system in China, by collecting and analyzing a large number of cases and by building an advocacy platform that represents workers, mainland China and Hong Kong labour NGOs, Chinese academics and legal experts.

NGOs’ strategies have the common goal of empowering workers to self-organize and pursue their rights autonomously. However, some basic challenges remain for NGOs, including improving their access to workers and empowering them, especially migrant workers. For workers who usually have long shifts of nearly 10 to 12 hours a day), it is difficult for them to access OSH information, get legal training or set up contacts with the support network to start the empowerment process, let alone engage in self-organization.

6. Conclusion

The real statistics on occupational hazards and accidents in China remains unkown, which is believed to be highly underestimated and underreported due to poor enforcement and monitoring of OSH-related laws, cumbersome, lengthy process of verification of injury and degree of disability and a lack of an accountable and transparent mechanism to compile statistics. Worse still, the hidden problems are diffusing into other Asian countries.

In the process of global industrial relocation, enterprises seek locations with the lowest costs, and with lax and imperfect laws and regulations to reduce productivity risks (as avoiding raising production costs). In 2011, the relocation of enterprises settled in China has followed two paths: towards China’s hinterland or towards Southeast Asian countries. With the new industrial set-ups following the old models, these have incited the emergence of labour and OSH problems in other countries. In fact, the OSH problems in these new locations appear as serious as in previous location in China, and workers also face low wages and casualization of labour. The need for a hike in the minimum wage rate and the casualization of labour are common issues that workers across countries are protesting against.

We can assume workers in other countries in Asia are facing similar situations and problems as in China. Hence, we emphasize the importance of further investigating OSH conditions in China and elsewhere, not only because the data itself is unreliable, but also because it will provide the basis to further advocate for improvements of OSH conditions across the region. To better understand the situations on the ground, and to allow workers to better make claims and demand their rights and improvement of the labour conditions, further research is necessary.

The most critical challenge for most workers and labour NGOs in Asian countries is to find ways to contribute to the improvement of OSH conditions in a more open and sustainable way under authoritarian regimes. Indeed, if we have the strong conviction that OSH is a basic human right, NGOs should mobilise resources to demand these rights and seek spaces for workers to enjoy their rights in an autonomous and collective way. Of course, the sustainable strategy is to empower workers to demand their rights themselves. Workers must realise that they are the key actors, they must make themselves visible, and they should speak out, learn, and be actively involved in monitoring their working conditions with their employers.

[1] The report was originally presented at the annual meeting of Asian Network for the Rights of Occupational and Environmental Victims (ANROEV) in India in November 2011.

[2] Garrett D. Brown and Dara O’Rourke. “The Race to China and Implications for Global Labour Standards”. International Journal o Occupational and Environmental Health, 2003; 9, p.229-300.

[3] China Labor Statistical Yearbook, 2007-2010, and China Labor and Social Security Yearbook, 2007-2010.

[4] China Labor Statistical Yearbook, 2010.

[5] Data was collected by five community-based workers service centres through hospital visit and case studies. The five service centres are grassroots labour NGOs based in the Pearl River Delta, three in Shenzhen and two in Dongguan, which conduct regular visits to hospitals and provide free legal consultation and legal aid services to injured workers. For reasons of confidentiality and security of our sources, the names of the community-based organizations will remain anonymous throughout the report.

[6] The data are mainly from the local reports produced by different workers services centres. Figures come out from a limited sample of workers, highly related to the industries present in the areas near the centres’ locations. However, this data can provide the most reliable up-to-date information on the reality of OHS conditions.

[7] “The ILO consistently works with its tripartite constituents as represented by the Ministry of Human Resources and Social Security (MOHRSS), the All-China Federation of Trade Unions (ACFTU), and China Enterprise Confederation (CEC). The aim of such cooperation is to overcome the challenges in Chinese employment by working together.” The ILO in China:

[8] Even the name of regional offices of the government’s Department of Labour and Social Security is not unified in province and city level. After 2008, some offices of the Department of Labour and Social Security changed the name to Department of Human Resources and Social Security.

[9] The All-China Federation of Trade Unions is the sole national trade union federation of the People’s Republic of China. It is the largest trade union in the world with 134 million members in 1,713,000 primary trade union organizations. The ACFTU is divided into 31 regional federations and 10 national industrial unions. ACFTU has a monopoly on trade unionizing in China and the creation of competing unions is illegal. As a tool of the government, ACFTU has been seen as not acting in the best interest of its members (workers), bowing to the government pressure on industry growth and not defending workers’ rights. The ICFTU, noting that the ACFTU is not an independent trade union organization, concludes that it cannot be regarded as an authentic voice of Chinese workers.

[10] Commonly, the actual wages paid to a worker comprise three parts: around 40 percent is the basic salary (paid at the minimum wage), around 55 percent is overtime pay and less than 5 percent is subsidies.

[11] These figures are based on 409 cases collected in the hospital visiting program in Shenzhen during the year 2009.

[12] These figures are based on 1,560 cases collected by two workers service centers in 2006-2009.

[13] 2009 Report on Occupational Disease Prevention and Control, Ministry of Health, PRC

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web admin on May 7th 2012 in Research Reports

Executive Summary of the China Labour Contract Law Implementation Survey, 2009

The first survey on the implementation of China’s Labour Contract Law (LCL) in the Pearl River Delta region (PRD) was conducted by Dagongzhe Centre (DGZ) in April 2008. The DGZ conducted a follow up survey from 17 April to 20 May 2009. The survey this time extended the geographical coverage to Yangtze River Delta region (YRD) to explore the issues faced by workers of PRD and YRD respectively and in the hope that survey findings could contribute to effectively reviewing the provisions and execution of the LCL. This research aims to raise public and government concern for labour issues to strengthen review and monitoring of the LCL.
The survey covers six industrial zones in cities along China’s coastal region: Shenzhen, Dongguan, Huizhou, Suzhou, Hangzhou and Shanghai. 600 questionnaires were completed on the streets of the industrial zones by low level workers who were selected by the methods of convenience sampling. Among them, 537 valid questionnaires were completed. Of the cases observed during the survey, three typical labour disputes were selected for in-depth interviews. Only responses from workers employed at the time of the survey were counted in the analysis in order to reflect the views of actively employed workers. 80% of the respondents were low level workers. Among them, 57% are unskillful workers and 23% skilled; 327 male and 189 female. More than half of respondents are aged between 17-25 years old. The majority of respondents received only a junior high school or vocational school education. 75% of respondents have signed labour contracts while 25% have no written contract with their employers.
A significant finding is that the LCL is insufficiently implemented to comply with the law even though the superficial situation is improved compared to the similar survey by DGZ in 2008. In 2009, the superficial finding is that more workers have signed labour contracts than in 2008. But if we look deeper into the process of signing contracts and their content, both surveys reflect the imbalance of power in industrial relations and this needs to be addressed properly. Employer misconduct and efforts to escape the requirements of the LCL are increasing and contribute to ineffective enforcement of the law. Publicity and execution of the law by the government is insufficient. The result is that very few employers are penalized for violations of the law. It is no surprise then that survey respondents’ perception of the LCL’s effectiveness is low. This situation hinders workers’ efforts to know and claim their rights. The LCL is not fulfilling its intent to reverse the current imbalance in Chinese industrial relations.
Nonetheless, generally speaking, respondents are positive that the LCL improves their situation. Since economic development, the impact of the global financial meltdown and the development of civil society are different in the YRD and PRD, workers from the two regions face different situations. Working conditions in YRD were found to be better than those in the PRD, and this suggests the government of the former region is more able to implement the LCL. If local governments of the two regions were to share experiences and resources to effectively implement the LCL, Chinese labour rights could come closer to international standards of labour rights.

1. Employers avoid the LCL, disabling worker rights
1.1.    Increase of employer misconduct, soft tactics to force workers to resign and renounce layoff compensation
The survey reveals that there is a change of renewal contract with  the long working year workers since the LCL took effect. 42.07% of more senior workers in PRD and 66.67% in YRD were denied contract renewal. This is a serious violation of the law, since LCL requires employers to sign non-fixed term contracts (or “open-ended employment contracts” in LCL) with workers who’ve worked consecutively for 10 years with one employer. Among the forms of misconduct, 60% of respondents mention common tactics like employers moving to a new factory, not “re-hiring” existing employees but hiring workers from human resource firms with employment contracts set to expire upon completion of a specific job or developing new punitive rules to justify job termination.  All of these tactics contribute to shorter term labor relations.
1.2.    The percent of respondents having a written labour contract in the PRD is 67.30% and 83% in the YRD.  Few respondents have a permanent contract
On the whole, about 75% of respondents report having written labour contracts with their employer in the YRD and PRD. The common contract period is one to three years. 8% of respondents have permanent contracts. Enterprises with or below 100 employees were found unlikely to sign labour contracts at all.
1.3.    Employers manipulate the content and signing process of labour contracts while workers have no bargaining power at all.
In processing labour contracts, 65% of respondents are not informed and do not discuss the contents of the contract with their employer (This figure is 50% and 79% for YRD and PRD respondents respectively). Respondents reported that employers in PRD more frequently do not comply with basic elements of the LCL. Employers from the PRD required 30% of respondents to sign two different versions of their contracts and 56% of respondents from that region were not given a copy of the contract.
1.4.    Substandard contract: labour rights and occupational hazards are not stipulated in contracts
The LCL requires all employers to stipulate basic coverage in every labour contract. However, the survey reveals the content of contract is often vague and ambiguous. 50% of respondents who have written contracts in PRD said that there is no statement about the hazards of their work in the contracts. And 25% of PRD respondents were unaware of the occupational hazards and required personal protection equipment for their work. This poses a serious risk to occupational safety in the PRD. Some contracts list the items required by the LCL, but these items are left empty. The employer’s information very often only refers to the employer via abbreviations or a nickname; the employer’s address might not include a detailed address and only mention a district such as Shenzhen. Job descriptions are sometimes stated simply as, “according to the production arrangements of the factory”. Employees’ names are spelled vaguely. All these ambiguities have adverse effects for workers in the event of labour disputes over occupational injuries, layoffs, relocation of factories and so forth. Legal processing will be difficult even if there is written contract at hand.
1.5.    Real working conditions do not meet the conditions stipulated in written contracts, a tactic that most respondents tolerate
20-30% of the PRD respondents suggest their working conditions deviate from the conditions specified in their written contracts. 10% in YRD respondents reported similar arrangements.
Among 371 respondents, 20% respondents express tolerance for these differences; 5% of respondents opt to resign when situation gets intolerable. 35% will continue the job while seeking other alternatives: hunting for a new job and resign with a new employer (15%), complaint to upper officials (9%), complaint to the related government departments (6%), or contacting affected workers to lodge a collective complaint with the employer (5%). Most respondents’ tendency to tolerate violations of the law is reinforces employers’ willingness to violate the law.
1.6.    Using soft tactics to force termination of employment without layoff compensation
60-70% of respondents opted to resign when terminating their previous employment. 50% of the respondents in the two regions suggest their employers added new factory regulations since 2008. This left workers more vulnerable to termination on the basis of violating factory regulations, which permits the employer not to pay layoff compensation. This termination strategy is prevalent in the PRD, with 70% of respondents referring to such soft tactics were appeared in their working place. In the YRD, 85% of respondents did not get the statutory layoff compensation of one month of wages per year of service, while 12% got the payment. Many workers do not know they’re entitled to layoff compensation when a contract expires. Also, respondents do not know how to define “illegal dismissal”, and employers frequently use soft tactics to force workers to resign.
Below is one account from respondent, Mr. Lee:
“In April 2009, the factory closed for the holiday. The shop floor was locked and some 80 workers left at once. Wages were paid but not the layoff compensation! The factory in charge was found and we asked for the layoff compensation. He, on the contrary, scolded the workers. Workers took photos of the evidence and lodged a complaint with the Labour Department. The Labour Department asked workers to submit written evidence to process the case. It is impossible for workers to present written evidence, so they dispersed helplessly.”

2. Basic wages only represent half of the monthly income. Basic wages are insufficient to support family basic living
Basic wages in YRD are found higher than PDR. The average basic wage of former is 958 Yuan; 830 Yuan for the latter. The survey shows that the basic wages are close to the statutory minimum wages of the different districts.
The average income of respondents in the YRD is 1606 Yuan while it is 1417 Yuan in the PRD. The ratio of the basic wage to monthly income is 58% in the YRD and 55% in PRD. It can be inferred that half of respondents’ income is from overtime and/or other living allowances or benefits. Most respondents stated that their basic wages are insufficient to support basic living and family expenses, and their income largely depends overtime.

3. Workers have some but limited knowledge of the LCL
The majority of respondents know they are entitled to a copy of a labour contract. But many do not know that employers who refuse to sign written contracts are liable to pay damages of double the wage amount. In the YRD, only 39% of respondents know of this punitive clause, 25% do not believe it and 36% do not know about it. Workers’ knowledge of the LCL is stronger in the PRD with 61% of respondents knowing of the punishment for employers who refuse written contracts. 70% of PRD respondents know of the clause that requires employers to pay damages equivalent to twice a standard layoff compensation for illegal dismissal (twice the one month of wages for every year of employment). 65% of respondents in the two regions know that the LCL requires new factory regulations to be discussed thoroughly in the employee congress. 30% of respondents were not familiar or did not understand this clause. Almost half of respondents in PRD and YRD are not aware of the law’s requirement that “employees in employee congresses have the right to recommend the trade union to negotiate a collective contract with the enterprise”. Many respondents showed limited knowledge of their rights stipulated in the LCL.

4. Open lies to challenge the legal justice system, circumvent the LCL
The survey reveals some workers’ legitimate rights are rejected in the course of litigation. One presiding judge said, “Our superiors’ instructions are that the internal “new three rules” are applicable to all current labour dispute cases”.
“Liu has worked many years in a Shenzhen factory that never signed a labour contract with him. In January 2009, Liu finally learnt of his rights and sued the factory for double wages as stipulated in the LCL. In April 2009, the arbitration committee dismissed his claim. It stated the factory offered Liu a labour contract in August 2008 but Liu refused to sign it, and he should therefore bear the responsibility of having no written contract with the factory.”
In Liu’s case, we have to refer to the Articles 82 of the LCL and Articles 5 and 6 of the Regulation on the Implementation of the Employment Contract Law of the People’s Republic of China. If Liu refused to sign a labour contract, according to the LCL, the employer should terminate labour relations with Liu not later than the end of January 2008, rather than continually  employ Liu until January 2009. According to the LCL, responsibility for not signing a labour contract belongs to the employer, and not Liu. Liu is therefore entitled to economic compensation.
After the “three new rules” applied, according to the Article 21 of the “the Guangdong Supreme People’s Court [2008] No. 13 document”: “From the date of employment, for labour relations of more than one month but less than a year, if the employer has sufficient evidence to prove the failure to sign a written contract is exclusively the workers’ responsibility, and the employer is without fault, the employer need not pay double wages.” It is difficult for workers like Liu to fight for their rights in this unfavorable situation. The local courts only accept evidence from employers Furthermore, survey respondents report that employers seek out lawyers to help them “imitate workers’ signatures on fake labour contracts” to win lawsuits and avoid paying worker double wages for not having written contracts. DGZ has noticed from labour disputes in Shenzhen in the second half of 2007 that lawyers were employed to give false testimony to win lawsuits concerning overtime payments. Such illegal behavior is spreading as employers seek to circumvent their legal obligations. This is a serious challenge to China’s system of social and legal justice.

5. Conclusions and recommendations
Geographically, implementation of LCL in the PRD and YRD differs. The survey suggests that PDR working conditions are worse and the LCL is less effectively implemented than in the YRD. Likewise, PRD respondents show a higher rate of dissatisfaction to current working conditions than respondents in the YRD. Survey results do suggest that some workers have experienced improved working conditions including the ratio of workers having written contracts. However, employment conditions are worsening on a number of issues including the labour contract signing process (employers give no explanation of the content of the contract), contract contents (employers develop unreasonable additions to labour contracts, factory regulations, new punishments; and decreasing the basic wage which is explicit in the contract while increased less visible and less dependable allowances), incongruities between actual working conditions and contract conditions, terminating workers to circumvent statutory compensation, etc. Employers are deploying all kinds of methods to circumvent corporate social responsibility and labour laws. In response, workers tolerate the unfair situation on one hand, and seek alternatives to claim back the rights on the other by using other methods like sending complaints to upper officials (9%), complaints to relevant government departments (6%) etc. A minority of workers contact other affected workers to lodge collective complaints against their employer.
This survey reveals a number of problems in connection with the LCL. A number of factors affect the enforcement of the LCL and the defense of workers’ rights including economic development of the region, corporate social responsibility, the commitment of local government and NGO participation in labour law publicity and education. Tackling the problems mentioned here to fulfill the intent of the law will require all stakeholders’ attention and actions. Below, DGZ wishes to present the following recommendations and hopes to see a positive response on these issues in the future.
5.1    Strengthen education for factories and workers on the LCL and workers’ democratic participation; encourage civil society’s active participation in LCL monitoring.
The survey suggests that most LCL publicity and education is carried out by trade unions and NGOs. The government should encourage the organizations such as trade unions and NGOs to:
a) Regularly launch LCL publicity and educational activities in industrial areas to support official publicity. In turn, these organizations can inform the government and society of workers’ opinions;
b) Regularly launch union education in industrial areas to encourage workers’ democratic participation in unions and active monitoring employer misconduct.
A premise of the above recommendation is official recognition of NGOs’ legitimate role. The government should provide a reasonable registration procedure to encourage NGOs’ social function to complement the role of government bodies. NGOs are rooted in communities and have a good view of workers’ issues from the front line. Strengthening NGOs’ capacity in labour law counseling, labour education, occupational safety and health education will raise labour rights consciousness, enhance workers’ mutual help networks and build a more harmonious community.
5.2     Intensify LCL enforcement, heavy penalties against violations
The survey finds that respondents in the PRD show a low degree of satisfaction towards government’s enforcement of the LCL. On a scale of 0 to 8 (the lowest being 0; the highest, 8) 26.19% of PRD respondents give government departments a satisfaction score of 0; 74.21% give a score 4 or below. The low satisfaction rating is most definitely linked to poor execution of the law. Reforming the existing system to improve accountability is recommended.  Officials will become more directly accountable if they are delegated to a specific industrial area to carry out regular factory investigations and the officials and their departments bear full responsibility for any problems with  LCL enforcement that are unknown to them.
The PRD and YRD are densely populated with factories and workers. To implement the LCL effectively, governments in two regions are recommended to share experiences and resources to support one other’s efforts.
5.3 Drive social actors to promote collective contract and collective bargaining on wage
In Nov 2009, a seminar on “Collective bargaining: theory and practice” was hosted by Shanghai Federation of Trade Unions and Shanghai Federation of Enterprises. Wang Xiansen, the speaker from Labour Relations Department of Shanghai Federation of Trade Unions Management and Vocational Institute (Gong Hui Guan Li Zhi Ye Xue Yuan) said, “The most effective measure to balance the capital sided industrial relations and unregulated working relationships is the collective contract.” He further suggested, “A collective contract not only serves to protect workers, but also creates a reasonable system for workers amid tense and conflicting industrial relations.”
Government departments, trade unions and NGOs should intensify publicity and education on the subject of collective contracts and collective bargaining of wages among employers and workers. A system of collective contracts and collective bargaining of wages should be established with democratic elections of worker representatives and open factory/enterprise policies.

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web admin on February 9th 2010 in Newsletter, Research Reports