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Labor Article

The View from China – The Players and The Issues


The Workers: When China embarked on a market-economy path 30 years ago, hundreds of millions of Chinese were added to the labor pool. China's labor workforce today has around 700 million workers,[1] but there are still hundreds of millions of rural Chinese peasants who haven't joined the modern labor force and are expected to in the coming years. Between 150 million to 200 million of Chinese workers are migrant workers who are usually farmers or people from rural areas going to cities and coastal areas to do jobs deemed too dangerous or dirty for urban residents. For example, 70% of construction workers and 68% of manufacturing workers are migrant workers.[2] Migrant labors have contributed hugely to China’s economic boom, something on the order of 16% of GDP in the last two decades.[3]

Wages: The average monthly wage in manufacturing establishments in urban areas is about $120, and even lower for those outside urban areas; after bonuses, and fringe benefits are factored in, the total average hourly labor cost in manufacturing in urban areas is about $1 compared to almost $30 in the U.S.[4] Many factory workers are migrants from the countryside who work an average of 11 hours a day, six to seven days a week, and take home around $100 a month.[5] Yet, many others have also had to contend with bosses who do not pay them or who expose them to dangerous equipment and toxic materials.

Working Conditions: With goals of saving up enough to return home after a few years, these migrant workers will often put up with harsh working conditions and workplace abuses as long as they are earning more than they would at home. This fact, unfortunately, increases their chances of being exploited in their workplace. Abuses have been well documented: toxins and health hazards are found in practically every industry including toys, furniture, clothing, shoes, auto parts, and electronic goods, with workers lacking in health protections such as protective masks and proper ventilation systems.[6] Old or malfunctioning equipment lacking safety guards have resulted in millions of limb amputations since 1995.[7]

Health and Safety Toll: Just how widespread workplace abuse is is difficult to gauge; certainly there are many factories that do abide by basic labor laws, but according to the Chinese Ministry of Health, at least 200 million workers were exposed to toxic chemicals and life-threatening illness in factories in 2005. 386,645 Chinese workers died that year from occupational illnesses. The International Labor Organization (ILO) reports that China has the highest per-capita rate for work-related deaths in the world.[8]

On the one hand, U.S.-China boosters argue that U.S. trade with China has helped improve the lives and living standards of many Chinese factory workers. And indeed, hundreds of millions of Chinese have been lifted out of poverty in the last 30 years of China's growth. But critics contend that the health and safety toll taken on the workers vis-à-vis work-related deaths, fatal diseases, and amputations raise the question - at what price, prosperity and growth?

To exacerbate matters, China's strict hukou policy (whereby one can only get benefits and services in the place one is a registered resident) has made it difficult for migrants to get access to healthcare and education for their children when they relocate to urban areas. Their sheer numbers have put pressure on urban localities and city governments, taxing local services; urban residents also tend to blame the rise in crime rates on the influx of migrants.

American and Multinational Corporations in China: Many of these migrant workers end up in factories that produce goods for foreign firms. American firms in China range from large corporations to small to medium size businesses, making everything from clothing to toys to shoes, furniture, and electronics, which are often exported back to America and to other parts of the world. These companies typically do not have their own factories, but pay local Chinese factories to make products for them.

The large multinational corporations drew attention from Western NGOs in the 1990s for the sweatshop like conditions of many of their suppliers' factories, and since then, they have introduced corporate social responsibility (CSR) and worker safety monitoring programs. While this has helped somewhat in reducing worker injuries, the fact remains that abuses still occur,[9] from Chinese workers being exposed for years to toxic cadmium batteries while making toys for companies like Mattel and Toys R Us,[10] to alleged instances of child labor being used at factories that supply goods for Wal-Mart.[11]

Small foreign companies usually do not visit their outsourcing factories, and large corporations that do sometimes find that the factories have been warned ahead of time, and that standards (or at least the temporary appearance of them) are not maintained after the inspectors or auditors leave. The problems are compounded as suppliers outsource to other suppliers. Even the most conscientious and vigilant of companies admit they need help from the Chinese government in enforcing the laws, as supply chains have become so complex and difficult to monitor.


The Chinese Government's Response


The Chinese government has been very sensitive to criticism of its labor laws and to the issue of workers’ rights. While it maintains its labor standards are consistent with international norms, and that products from child or forced labor are not exported to the U.S.,[12] it also points out the apparent hypocrisy in U.S. consumers being more than happy to buy low-cost Chinese products even as they blame China for taking away jobs.

China has theoretically agreed to many of the workplace standards promulgated by the International Labor Organization (ILO), and has labor laws on its books, including a 2002 Occupational Disease and Prevention Control Act, which strictly regulates workers’ exposure to workplace poisons, but experts all agree enforcement of most of these laws and standards has been lax at best.[13]

Enforcement of labor laws and standards is the duty of provincial governments, who often have a financial stake or interest in the businesses and in economic growth, so there is little incentive to enforce the laws. Health standards monitoring are also inadequate, with one inspector for every 35,000 workers.[14]

New Labor Law, 2008: On January 1, 2008, in response to widespread labor abuses of migrant workers, the Chinese government passed a New Labor Law that surprised many for being more pro-labor than many would have expected. Among other things the law requires employers and employees to sign a written contract for different employment scenarios: a fixed term contract, an open-term contract, or a task-specific contract. Employers are also required to pay social insurance, and severance pay, while employees can leave the firm with 30 days’ notice. The law is widely seen as shifting the balance of power to the worker, but it is also expected that with weak regulatory agencies and mechanisms, many firms will find creative ways to circumvent the new rules.[15]

ACFTU – China's Labor Union: The All China Federation of Trade Unions (ACFTU), controlled by the government, is the official trade union for all of China's workers, but its main purpose is to maintain labor discipline rather than to advocate for workers’ rights.[16] China's workers are not allowed to form independent unions or engage in collective bargaining activities outside of the official union; those caught doing it are usually arrested and incarcerated for lengthy periods. While labor activists may despair that this inability to form independent unions is the biggest impediment to improving workers' rights, some labor activists on the ground note that even the ACFTU is not monolithic and that there is a new generation of union leaders emerging that have been working with labor unions in Europe to learn more about the role and activities of unions in free market economies (See "The AFL-CIO and China").

Legal Recourse and "Citizen Agents": As China continues to develop its rule of law and legal system, more and more injured Chinese workers are in fact making use of the legal system to seek some redress. Injured workers without recourse often turn to others like themselves who have successfully sued their previous employers for compensation and have become familiar with the law and the legal system in the process. There are about 500 such paralegals — called "Citizen Agents" — in the Pearl River Delta area in southern China, but their successes have started to create a backlash among the authorities who have started to crack down on them.[17]

1 Loretta Tofani, "Salt Lake Tribune Special Report: Chinese workers lose their lives producing goods for America," Salt Lake Tribune, Special Report, http://extras.sltrib.com/china/ (accessed 12/7/07).

2 Alexandra Harney, "Migrants are China's 'factories without smoke'," CNN, February 3, 2008, http://edition.cnn.com/2008/WORLD/asiapcf/02/01/china.migrants/index.html (accessed 7/24/08).

3 Harney, "Migrants."

4 C. Fred Bergsten, Bates Gill, Nicholas R. Lardy, Derek Mitchell, "China in the World Economy: Opportunity or Threat?," in China: The Balance Sheet: What the World Needs to Know Now About the Emerging Superpower, New York: PublicAffairs™, 2006, 87.

5 Anita Chan and Jonathan Unger, "Blood, Tears, Toys and NGOs," Anita Chan and Jonathan Unger, "Blood, Tears, Toys and NGOs," YaleGlobal Online, December 13, 2007, http://yaleglobal.yale.edu/display.article?id=10094 (accesed 12/17/07).

6 Tofani, "Salt Lake Tribune Special Report."

7 Tofani, 'Salt Lake Tribune Special Report."

8 Tofani, "Salt Lake Tribune Special Report."

9 David Barboza, "Reform Stalls in Chinese Factories," New York Times, Business Day, Saturday 5, 2008, B4.

10 Jane Spencer and Juliet Ye, "Toxic Factories Take Toll on China's Labor Force," The Wall Street Journal Online, January 15, 2008, http://online.wsj.com/article/SB119972343587572351.html?mod=hpp_us_pageone (accessed 1/16/08).

11 Barboza, "Reform Stalls".

12 Committee of 100, "American Jobs Displacement," Committee of 100 Initiatives Publication, November 30, 2003-May 31, 2004, http://committee100.org/initiatives/publications_outsourcing.htm (accessed 7/22/08).

13 Tofani, "Salt Lake Tribune Special Report".

14 Tofani, "Salt Lake Tribune Special Report".

15 Donald Straszheim, "Commentary: China’s Tangled New Labor Law," Forbes.com, January 13, 2008 http://www.forbes.com/opinions/2008/01/11/straszheim-china-labor-oped-cx_dhs_0114straszheim.html (accessed 1/14/08).

16 Tofani, "Salt Lake Tribune Special Report."

17 Chan and Unger, "Blood, Tears, Toys."