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CHINESE LABOR AND EMPLOYMENT LAW

BY NATHAN JACKSON

April 2011

This FAQ is an attempt to answer questions that a foreign layperson may ask about

China’s labor and employment laws. China’s labor policy is often a politically charged issue in

foreign countries and much misinformation is frequently deployed in political debates. In

addition to providing an overview China’s labor and employment laws, this FAQ also attempts

to highlight relevant topics that may be unfamiliar to informed laypersons. The focus of this

document is on law, but as the FAQ will show, there is often a large gap between law and actual

practice. Where possible, comments are included that provide a practical perspective of China’s

labor and employment laws.

Why do China’s labor and employment laws matter to me?

China’s labor environment matters to you because changes in labor and employment laws

influence the prices of goods and services around the globe, the locations in which companies

and individuals choose to invest or move production, and the social stability of China. In

November 2001, China became a fully admitted member of the World Trade Organization and in

recent years the press has heavily covered China’s growing participation in international trade.

China has not only become a major export power, but also an attractive investment target for

international investors seeking to sell goods and services within China. As China’s share of

world trade and investment continues to increase, its labor environment will likely attract more

attention from outsiders interested in assessing the country’s economic competitiveness.

How large is China’s labor force?

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China’s labor force consists of more than 800 million workers, up from 500 million in

1980. At least 130 million of these are migrant workers who move from relatively poor rural

areas to urban and industrial centers to work. Many of these migrant workers remit portions of

their earnings back to family members in their hometown. Until recently, China has typically had

an oversupply of unskilled labor and a shortage of skilled and professional workers. However, in

the past several years, some companies in the major industrial hubs have begun to complain

about labor shortages. As a result, many companies now raise wages 10 percent or more annually

to retain workers, while others have closed their doors and moved to poorer inland areas or

countries with cheaper labor. Interestingly, salaries for new university graduates have stagnated

because of the sharp increase in the number of graduates from China’s quickly expanding

university system. While university graduates start their careers with wages comparable to a

factory worker, their salaries typically rise much more quickly than those factory workers.

How have China’s labor laws changed in recent years?

There has been a tremendous change in China’s labor and employment laws in the past

35 years. Prior to the early 1980s, nearly all jobs were allocated to citizens through an

administrative bureau. Employees could not choose their employer or terminate their

employment. Further, regulations set an expectation that the employee would work for the same

employer for her or his whole working life. Companies in this era could only terminate

employees for gross misconduct. This type of labor market and social safety net was called the

Iron Rice Bowl because the employer guaranteed job security and benefits to employees

regardless of their productivity or the employer’s profitability. In other words, the benefits could

not be taken away and were ―iron‖ clad.

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In 1983, the government introduced a contract system that attempted to address the low

productivity of the labor market by replacing the Iron Rice Bowl with short-term labor contracts.

At first, state-owned companies resisted this trend and the government succeeded only in

minimal reforms. In 1992, the National People’s Congress promulgated a Trade Union Law that

required all trade unions to be affiliated with the All-China Federation of Trade Unions

(ACFTU). This effectively brought labor unions under greater control of the government.

The Labor Law of 1994 liberalized the labor market. The labor law, when combined with

economic reforms, resulted in more than 40 million lost jobs in government and state-owned

enterprises. As a result of the reforms, the government shuttered inefficient businesses and the

formerly economically dominant northeast turned into a rustbelt. Meanwhile, Chinese

entrepreneurs and Hong Kong investors transformed the formerly weak southeast province of

Guangdong into the largest center of manufacturing in the world.

In 2008, the government introduced a Labor Contract Law that rolled back some of the

laissez-faire approaches to the workforce that the government introduced in the 1990s. This new

law abolished the system of at-will employment for most full-time employees and required

employers to provide employees with written contracts. Since 2008, the government has also

revisited its policy of tight control over the All-China Federation of Trade Unions (ACFTU).

While all unions must still be approved by and affiliated with ACFTU, it appears that the

government is allowing the ACFTU greater authority to advocate for the rights of workers than it

did just a few years ago. That said, the government continues to imprison workers who advocate

for the formation of independent trade unions.

WAGES

Does China have a minimum wage?

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Yes. There are two standards of minimum wage: monthly and hourly. Minimum wages

are set at the provincial and municipal level. The government prohibits employers from reaching

an agreement with employees for wages that fall below the local minimum wage standard

regardless of whether the employee is still in her or his probation period or internship. A

probationary period occurs at the beginning of an employment relationship and allows employers

to terminate employees without severance pay up to a maximum of six months, but usually just

two months. The probation period allows the employer to make sure the employee is a good fit

with the employer before being locked into the full term of the employment contract. Provincial

and municipal governments frequently adjust statutory minimum wages. For example, many

municipalities have raised their minimum wages twice in the past year alone.

How much is China’s minimum wage?

It depends on the locality. For example, Shanghai’s minimum wage for full-time

employees is RMB 1,120/month, or roughly $165. However, in the poorer inland city of

Chongqing, the minimum wage is RMB 870/month, or roughly $130. Of course, purchasing

power differences prevents these figures from being directly comparable with another country’s

wages. The relative cost of living in China is lower than in many developed countries, but even

when wages are adjusted for relative prices they remain much lower than in highly developed

countries.

How much do factory workers earn?

It depends on the locality, industry, skill level, and a host of other factors. However,

several sources keep broad indices of costs for general factory labor across many regions.

Although the indices are only rough estimates, they are helpful in gauging wage differentials

across the country. For example, a skilled manufacturing employee in Beijing can be hired for

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RMB 3,000/month, or roughly $445. A similar worker in the poorer inland municipality of

Chongqing can be hired for RMB 1,900/month, or roughly $280. To illustrate how important

geographic location is in determining wage rates, the average employee salary in Beijing is

nearly three times higher than in the poor inland province of Jiangxi.

Do Chinese workers get overtime?

They’re supposed to. Under China’s Labor Law, an employer must pay overtime

compensation to any employee who works more than 40 hours per week. As a general rule, an

employer cannot require overtime of more than one hour per day, or three hours per day under

special circumstances, and no more than 36 hours per month. As in many other countries, white

collar workers like managers and sales staff are often exempt from the overtime pay rules.

The following payment schedule illustrates the overtime pay requirements.

Extended Working Hours Minimum Overtime Pay (percent of regular wages)

Typical working day 150 percent

Rest day (min. one per week) (i.e.,

weekend)

200 percent

National holiday 300 percent

Many migrant workers desperate to earn quick money agree with the employer to work

beyond the maximum overtime requirements so they can send extra money home to their

families. This type of overtime work is frequently found in industrial hubs and is a contributing

cause of recent labor strikes because employees who agree to these arrangements place

downward price pressure on wages and upward pressure on hours. Employers are also able to

maneuver around overtime regulations by applying to the local labor authorities and asking for

approval to use an alternative system of working hours.

What are the wage levels for workers who are paid piece-rate?

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Piece-rate is a compensation system where the employer pays the employee for each unit

produced or action performed, not on the basis of time. Piece-rate wages are still a feature of

China’s manufacturers, but over the past decade, the government has developed rules to address

the exploitation of employees through piece rates. For example, workers were exploited when

employers paid workers at piece-rate, but then fined them for quality defects, tardiness, or no

reason at all. These penalties effectively left workers with wages far below what the employer

promised the workers during the hiring process.

The first principle of piece-rate wages is that employers cannot set a work quota so high

that it prevents an employee from completing the work within an eight-hour day or an average

40-hour week. Second, the employer must set piece-rates that reflect the amount of work

normally accomplished in a forty-hour week. For example, in the industrial hub of Guangdong

province, for an employer’s piece-rate to be valid, more than 70 percent of employees must be

able to achieve the work quota within the legal working hours.

SAFETY

How many workers are injured on the job each year?

Despite many safety regulations, China’s workplace safety record is still extremely poor.

According to the State Administration of Work Safety, more than 83,000 workers died in work

accidents in 2009, or roughly one out of every 10,000 workers. Of these, more than 2,000 of the

dead were coal miners. In 2006, government statistics placed the number of workplace injuries at

625,000. And in the manufacturing hub of Guangdong province, more than 40,000 fingers are

severed each year. The majority of injured workers are migrant workers and the most frequent

causes of injuries are carelessness and fatigue. Both of these causes persist because of

substandard job training and overly long work hours on repetitious tasks.

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Does China have a Workers’ Compensation system?

Yes. Each province in China has its own Work-Related Injury Insurance Regulations that

require employers to pay the medical expenses of injuries, disability, and occupational diseases.

The regulations cover all companies, including unregistered companies and those that illegally

avoid paying the premiums. The insurance fund is financed through employer-paid premiums

that the government determines by gauging the dangerousness of the workplace. For example, an

employer with low risk work like accounting pays 0.5 percent of total payroll expenses into the

insurance fund, while an employer with high risk work like shipbuilding pays 2 percent of total

payroll into the fund.

The law prohibits employers and employees from contractually opting out of the Work-

Related Injury Insurance systems. While coverage of employees has continued to increase, many

employees are unfamiliar with this worker’s compensation program and provincial level taxation

departments continue to under-enforce it. Similarly, employers continue to underfund the

insurance scheme by understating payroll, hiring employees without contracts, and paying wages

in cash.

What kind of safety regulations exist for Chinese workers?

China has a large patchwork of safety regulations, but workplace safety is still very bad

by the standards of highly developed countries. The Labor Law requires employers to inform

employees of occupational hazards during the hiring process. The law also requires that

employers provide workers with safe and hygienic working conditions. The Safe Production law

requires some large manufacturers to establish full-time safety supervisors and training for

employees. Other important safety regulations include the Occupational Diseases Law and the

Administrative Penalties for the Violation of Production Safety Laws.

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What are the penalties for safety violations?

It varies. First, the onus is largely on employees to report safety violations to the

authorities. Employees are allowed to refuse to perform risky work and they have the right to

resign summarily when the employer gives them an order to do unsafe work. In such cases

employers must pay the employee severance in accordance with the Labor Contract Law. For

many workers, especially migrant workers, this job protection is still insufficient to encourage

them to report safety violations. The civil courts impose punishments like warnings, fines, and

workplace closures on employers that violate health and safety regulations.

How much compensation do employees receive for workplace injuries?

The Work-Related Injury Insurance Regulations contain a disability scale that determines

the amount to be paid to the injured worker. For example, if a worker loses an eye in a workplace

accident, the employer must retain the labor contract with the injured worker, even if the worker

is unable to perform her or his job. As compensation for the injury, the worker will receive a

lump sum equal to a portion of the national average wage for the type of work and an ongoing

disability allowance equivalent to a portion of the average monthly wage.

In 2011, the government released a new Work-Related Injury Insurance Regulation that

eliminates some of the gaps in injury payments between poor and wealthy regions of China.

Under the previous regulation it could take an injured employee months or years to finalize a

settlement, but under the new regulation the authorities are to reach a decision on payment within

fifteen days of accepting the injured employee’s application for benefits.

In practice though, problems continue to persist in the payment of injured workers. The

law requires employers to pay employees while they are in the hospital recovering from work

injuries, but in one survey, only 33 percent of injured workers received their salary while in the

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hospital. To receive benefits, employees must confirm their employment relationship with the

company at which they were injured. Because employers in dangerous industries often ignore the

Labor Contract Law by not providing their employees with contracts, it is challenging for an

employee to prove that she or he is covered under the Work-Related Injury Insurance

Regulations. Further, the new regulation adds a provision that prevents employees from

collecting benefits if she or he is the primary cause of the accident. While this may seem logical,

the most common workplace injuries are caused by distraction and fatigue, both of which are

difficult to investigate because their causes can often be blamed on both the employer and

employee.

What kind of laws does China have against child labor?

China has several different laws to protect against the labor exploitation of minors. Under

the Child Labor Regulations, employers are not to recruit, employ, or facilitate the employment

of children under the age of sixteen. Exceptions exist for child entertainers, athletes, or

vocational training, but in these cases employers must ensure the health of children. These new

regulations also remove exceptions that allowed children to engage in labor for the family and

loopholes that previously allowed local authorities in poor areas to allow certain forms of child

labor.

Employees between the ages of sixteen and eighteen are classified as underage

employees and may not engage in mining, unhealthy or hazardous work, or highly labor-

intensive work. Employers of underage workers must arrange to have these workers receive

regular physical examinations.

Despite the regulations that prohibit employment of children under the age of sixteen,

exploitation of child workers persists in China, though the situation has dramatically improved

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from even a decade ago. Both employers and child workers desperate to earn a meager living

sometimes ignore the regulations. In 2007, the authorities ended one of the worst documented

cases of child labor abuse after 500 or more children and mentally disabled adults were

discovered working in the brick kilns in Shanxi province. Major lapses like these suggest that

China’s child labor problems stem from poor enforcement, not a lack of regulation.

UNIONS

Can Chinese workers unionize?

Yes. Establishing a union is easy— there is no need for employee balloting or employer

counter-campaigns. To establish a union, 25 workers simply join the union, and the employer

will usually be required to accept the request. However, unions in China differ greatly from their

counterparts in many other countries. First, the primary function of unions is to avoid labor

unrest, not to advocate for the interests of workers. Second, while many unions exist in China, all

unions must maintain an affiliation with the All-China Federation of Trade Unions (ACFTU).

The union discourages rank-and-file employees from airing grievances or striking. Some

labor experts have described Chinese unions as bearing a closer relationship to a European work

council than what is commonly called a union. This comparison is apt because in a work council

country, a national labor organization reaches agreements with employers at a national level

while the work council is just a local component of a national labor organization. In short, the

national labor organization largely shapes the local work council’s efforts. Unions in China may

best be described as intermediaries between workers and management who do most of their work

by negotiating behind closed doors.

Who runs the unions?

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It depends. Under China’s Labor Union Law, labor unions may only be established by

workers voluntarily. However, unions in China are mainly set up by employers, often to preempt

organization by workers. This type of organization is called a company union and they are often

prohibited in developed countries because they prevent the workers from organizing

independently and choosing their own advocates. In China, union officials are often members of

management and they are directly paid by the company, not by workers. In some instances,

employees are able to administer their own union, though they may only negotiate with the

employer under the watch of the local or national union.

Do Chinese workers collectively bargain?

Yes. In 2006, the ACFTU negotiated collective agreements covering more than 110

million workers. However, the unions that conduct collective bargaining are often not in an

adversarial relationship with management. Rather, the union acts as an intermediary who seeks

to maintain both the profitability of the company and prevent worker unrest. Union officials have

broader considerations than just the interests of workers. Unions must spread their efforts

between advocating for workers, maintaining a positive economic environment for employers,

and preventing industrial instability that could threaten broader economic policy.

As a matter of social policy, the government is now encouraging workers to engage in

collective bargaining. The Shenzhen Human Resources and Social Security Bureau and

Shenzhen All-China Federation of Trade Unions recently announced that they will target 120

large enterprises for collective bargaining with the hope that once industry-leading companies

collectively bargain, the practice will spread throughout the industries. The government is

adopting this approach in the hope that it will address the growing income inequality gap by

pressuring companies to use their profits to pay workers higher wages. However, even though

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collective bargaining has surged in recent years, collective contracts frequently ensure only legal

minimum labor standards and do little to improve employee wages or benefits.

How are union leaders chosen?

While companies frequently set up a union, the local branch of the labor union typically

appoints the workers’ representatives. Usually this means that the chair of the local trade union

will be the workers’ chief representative. In instances where the negotiating representative is not

assigned by the trade union, the representatives are chosen by democratic vote from the

employees.

How do Chinese workers and management settle disputes?

The law requires disputing employers and employees to work with each other through

mediation and arbitration committees. At the outbreak of a dispute, workers and management are

first required to consult with each other. Only after consultation fails can the parties seek

mediation. After mediation, the parties enter an arbitration committee. If this still fails to resolve

the dispute, the workers or the employer can bring the dispute before a judge.

In 1996, China’s arbitration committees handled almost 48,000 cases. By 2008, and after

passage of the Labor Contract Law and the Labor Dispute and Mediation Law, the number of

cases reached 693,000. Resolving disputes peacefully to ensure industrial stability is a top

priority of the government and labor law commentators largely give positive reviews to the

arbitration committees.

BENEFITS

How much holiday and annual leave do Chinese workers receive?

Employees with between one and ten years of work experience are to receive a minimum

of five days annual leave per year. Employees with between ten and twenty years of work

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experience receive a minimum of ten days per year. For more than twenty years of work

experience, the employee receives a minimum of fifteen days per year. These laws apply to all

employees, including managers.

Chinese workers receive many more days of holiday than in the U.S. Each year

employees receive eleven days of national holiday, and women receive an extra half-day for

Women’s Day. In addition, employers traditionally rearrange work schedules so that employees

can receive seven-day holidays during Spring Festival and National Day. In return, the

employees work during the following weekend to make up for the additional days of holiday.

Each year the week-long break during Spring Festival leads to the largest human migration, as

more than 150 million workers leave their jobs to visit family and friends in their hometowns.

During this time nearly all businesses close.

Do Chinese workers have a national retirement system?

Yes. Employers and employees must contribute to a basic pension insurance fund that is

administered at the provincial or municipal level. Some cities have also set up supplementary

pension insurance funds that employees have the option to join. Typically, employers contribute

roughly 20 percent of total wages and employees typically contribute roughly 8 percent of wages.

It should be noted that most pension amounts are insufficient to support retirees. For this reason,

the government offers and encourages workers to enroll in supplemental retirement plans.

The general retirement age for men is 60 and for women it is 55. Employees are not

allowed to make early withdrawals from their pension accounts, but the accounts are

transferrable when the employee changes employers or moves to a new city. Employer

contributions are subject to strong enforcement and employer defaults can be subject to very

large fines. When an employer defaults on pension payments, the local government is permitted

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to garnish the payments from the employer’s property. This is typically done through the largely

state-run banking system.

Do Chinese workers receive basic medical insurance?

Yes. A law passed in late 1998 requires most employers to participate in the national

basic medical insurance system. Under the system, employers contribute roughly 6 percent of

total staff payroll, and employees contribute 2 percent of their individual wages to a pooled

insurance fund and employee personal expense accounts. The employee’s contribution is placed

in his or her own personal medical expense account. The employer’s contribution is split into

two portions: 30 percent of the employer’s contribution is placed in the employee’s personal

medical expense account and the remaining 70 percent of the employer’s contribution goes to the

pooled fund. Supplemental medical insurance is also common among white collar workers.

Do Chinese workers receive maternity leave?

Yes. Female employees are entitled to a minimum of 90 days of maternity leave.

Employers are prohibited from discharging or discriminating against women because of

pregnancy or status as mothers. Employers may not subject pregnant women to overtime or

hazardous work. China also has a maternity insurance fund that compensates a woman for any

lost wages during maternity leave. The insurance fund is financed by employers that contribute

roughly one percent of payroll expenses. Men are not covered under the maternity leave

provisions, although most employers allow men several days off following the birth of a child.

Do Chinese workers receive unemployment insurance?

Some do. The current unemployment regulations only cover urban residents with a

proper hukou, or household registration. This means that for a worker to receive unemployment

insurance payments, she or he must be working in her or his place of official registration. To

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receive unemployment insurance, workers must fall within a working age range, be able to work,

and register with the government. These criteria filter the number of workers eligible for

unemployment insurance down to 120 million out of a total workforce of 800 million people.

Like other national insurance schemes, the unemployment insurance system is financed

by employers who must pay two percent of payroll. Additionally, employees must contribute one

percent of their wages to the fund. To receive unemployment benefits, the worker must be

registered for benefits, have paid premiums for at least one year, have involuntarily lost

employment, and be actively seeking work.

Do Chinese workers have other benefits?

Yes. Local governments in urban areas typically operate housing funds. Under these

programs, the employer and employee contribute an amount each month to a fund dedicated to

assisting employees in buying, refurbishing, or renting a home. The accounts are popular with

workers who are attempting to save for housing, as house prices have continued to skyrocket. If

the employees do not use the funds in their account for housing, they can only remove the funds

for retirement, a permanent move overseas, or several other scenarios.

CONTRACTS

Do Chinese workers have employment contracts?

The 2008 Labor Contract Law requires employers to provide full-time employees with

written contracts that contain the term of employment, job description, place of work, working

hours, rest and leave periods, wages, social insurance, labor protections, and description of

working conditions. Part-time employees must have at least an oral contract. Before the Labor

Contract Law of 2008 went into effect, it was estimated that 40 percent of full-time workers did

not have written contracts. The Labor Contract Law has been extremely successful in increasing

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the number of workers covered by written contracts. The government hopes that written

contracts will reduce the number of disputes between employers and employees and provide

employees with employer assurances that can be backed by contract law. That said, it is still

common for many workers, particularly migrant workers, to work without labor contracts.

Can Chinese employers use at-will employment contracts?

Not anymore. The at-will employment doctrine allows both the employer and employee

to terminate their employment contract for any reason or no reason at all. Under the Labor

Contract Law, employers may no longer terminate full-time employees’ contracts at will.

Employers may only terminate at-will during the probation period between one to six months at

the beginning of the contract. Likewise, a full-time employee must provide her or his employer

with 30 days notice before resigning from the company. The employer can unilaterally terminate

an employment contract, but only in cases where the employee "seriously breaches the

Employer's rules and regulations." In other words, a serious breach would require a violation

equal to dereliction of duty or graft.

Under the Labor Contract Law, an employer cannot terminate an employee for

incompetence alone. In an employee is incompetent, the employer must re-assign the employee

or provide further training before terminating the contract. To terminate an employment

relationship without cause, both parties must reach a severance agreement by negotiation. A

minimum severance in cases of termination for cause is calculated as roughly one month of

salary for each year of service. An employer may also have to pay severance to an employee at

the end of an employment contract. If an employer does not offer the employee a new contract

with equal or better terms, the employee is entitled to her or his standard severance payment.

How does an employer fire an employee in China?

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The process can be quite complex depending on unionization or the status of the worker.

If the company has a union, the union must be notified before the employer can terminate the

employee’s employment contract. The labor union is entitled to respond, and if the labor union

disagrees with the termination, the employer must consider the response and provide the union

with a written notification of how it will respond to the disagreement. Disagreements between

the employer and union are settled by negotiation.

Employers are also prohibited from firing workers who have been exposed to

occupational disease hazards before being checked by medical staff. Employers may not fire

injured workers during their period of medical care, those who are pregnant, ill, or nursing, and

those who are within five years of retirement.

How do employees quit their jobs?

Employees can quit by resigning unilaterally, by reaching a mutual agreement with the

employer, or by reaching the end of their labor contract. Under the Labor Contract Law,

employees must give 30 days’ notice to the employer before resigning unilaterally. However, the

employee may immediately resign if the employer has abused the employee, failed to pay wages

or social insurance on time, or compelled the employee to perform dangerous tasks.

Can employers have employees sign non-compete or confidentiality agreements?

A non-compete clause limits the ability of employees to compete with their former

employers. Chinese courts allow non-compete agreements, but the courts treat non-compete

agreements with suspicion and require employers to compensate former employees if they wish

to exercise the non-compete contract provisions. The 1994 Labor Law allowed businesses to

include provisions in contracts that prevent key employees from taking business secrets with

them after they leave the company. By 2006, these provisions could only be applied to directors

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and senior management. In 2008, the Labor Contract Law expanded the ability of employers to

use contract law to protect trade secrets and intellectual property. A non-compete agreement

binds only senior management, senior technicians, and key personnel with confidentiality

obligations.

Employers may only enforce non-compete agreements for a maximum of two years and

during that time they must continue to compensate a former employee to maintain the agreement.

The amount of money to be paid to maintain the non-compete or confidentiality provisions is

fixed in a contract. Courts have fined employees for failing to abide by non-compete agreements,

but only in small amounts. However, courts have given jail time and fines of nearly $1 million to

employees who breach confidentiality clauses and cause serious damage to their employers.

Regardless of the regulations, employers, particularly among technology companies, complain

that employees steal their intellectual property and trade secrets and then take that knowledge to

competitors or establish their own companies.

ENFORCEMENT

Who enforces labor and employment laws?

Health and safety regulations are enforced by the State Council’s Work Safety

Commission. However, the Commission has many other functions that dilute its ability to be an

effective enforcement authority. As a result, enforcement is often left to local safety boards that

lack training or independence from government officials whose job it is to attract investment.

Because the central government rates and promotes provincial and local leaders on their ability

to grow the local economy, there is a conflict of interest in that these same authorities are left to

oversee the enforcement of safety laws. Wage and hour violations are also in most cases

enforced by local government administrations.

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Are they frequently enforced?

It is difficult to quantify, but commentators agree that the laws are increasingly enforced.

First, employees have been bypassing their unions and taking their disputes to court in increasing

frequency. After the Labor Contract Law of 2008 was passed, the number of labor disputes in

court jumped by more than 90 percent over the previous year. In some developed cities, the

number of labor-related court hearings tripled. Further, the government has gradually allowed the

ACFTU greater leeway to intervene on behalf of worker interests.

That said, the authorities tasked with enforcing labor and employment laws are frequently

understaffed and undertrained to adequately enforce China’s labor laws. Further, China’s courts

are not independent and equal branches of government. Instead they are responsible to the

National People’s Congress, the same body that decides economic policy. Again, this is

significant because there is a conflict of interest in that the National People’s Congress can

attempt to maintain economic growth by preventing courts from taking an aggressive stance in

enforcing labor laws. China’s legal system does not treat court decisions as precedents that are

binding on lower-level courts. This adds to the struggle of the Supreme People’s Court to

improve enforcement of labor laws at the local level.

EQUALITY

Does China have laws against workplace sexual harassment and gender discrimination?

Yes to both. The laws against sexual harassment were passed in 2005 and have seen

increased prosecution in courts. Gender is a protected status under the Labor Law. The law

provides that women cannot be denied employment by reason of gender. Nor can women have

their employment standards raised above those for men except in the most physically demanding

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work conditions. The gender provisions do not say anything on the status of transgender

individuals.

Does China have equal pay for equal work laws?

Yes. Under the Labor Law, there are three tests used to determine if an employer is

providing employees with equal pay for equal work:

1. Equal pay for employees holding the same position with the same work assignment;

2. Equal pay for employees holding the same position with similar expectations of work

volume; or,

3. Equal pay where the same working volume achieves the same performance.

Employees may bring a civil claim against their employer if none of these three tests are met. If

the employer meets even one test, it has satisfied the requirements of the law.

MIGRANT WORKERS

Why do so many workers migrate to cities to find work?

Several reasons. Urban companies pay better wages and provide workers with better

working conditions because there is more competition among employers. Migrant workers

became a prominent feature of China’s labor market in the 1980s after economic liberalization

led to tremendous growth in some regions while others remained dominated by agriculture and

resource extraction. Since that time, the Chinese government has allowed workers greater

freedom to move throughout the country to find work. As a result of the changes, China has

experienced history’s quickest rural to urban internal migration. In 1978, only 18 percent of the

population lived in urban areas. Currently, 46 percent of China’s population lives in urban areas.

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Who are the migrant workers?

Of China’s more than 130 million migrant workers, seventy percent are between the ages

of fifteen and thirty-five. China’s last census showed that in the manufacturing province of

Guangdong, more than 60 percent of factory migrant workers were female. In Shenzhen, this

number is 70 percent. The construction trades are dominated by men. Most migrant workers

come from relatively poor rural areas. Sixty-five percent of migrant workers stay within their

province to find work, while the rest typically move to industrial hubs near the coast.

Why do workers often live in factory dorms?

Efficiency. Factories often include dormitories for workers to live in as part of their

compensation package. These factories also typically provide a canteen at which the workers eat

their meals for a small fee, often between 30 to 50 cents per meal. Workers usually share a small

dormitory room with one or more other workers. Because factories are often located far from city

center, there are few acceptably-priced living quarters nearby. Living in the dorms saves workers

money and reduces commute time while giving the company extra production flexibility in

having labor on-site at all times. A secondary benefit for employers is that because workers rely

on their employer for housing, the workers may be less inclined to argue with management or

seek other jobs.

Why don’t migrant workers move their families to where they work?

Some do, but most realistically cannot for combination of reasons. First, the travel and

living expenses would be too high for most migrant workers to bring their families with them.

Second, China’s hukou or household registration system, prevents migrant workers from

obtaining residential status in the city where they work. In other words, a worker’s residential

status is set at the place she or he came from and the worker cannot change the status easily.

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Without residential status in the cities where they work, migrant workers cannot receive social

benefits like unemployment insurance payments or schooling for children. Workers who cannot

change their residential status and benefits are more likely to be victims of labor exploitation,

discrimination, and abuse.

Why doesn’t China allow migrant workers to permanently move themselves and their families to

cities?

This is a bit complex. First, many migrant workers and their families are able to move to

urban areas without changing their registration location. There are no borders to stop the

migration and many migrants can find low wage work legally and relatively easily. The Chinese

government uses the registration system to slow the already massive migration from rural to

urban areas in an effort to preserve social stability. The government’s fear is that sudden influxes

of rural families to the cities will lead to greater unemployment, lower wages, and ultimately

violent frustration among poor workers. Further, by not allowing workers to change their

registration easily, the authorities ensure that most migrant workers will send a portion of their

earnings home, hopefully spurring economic development in poor regions.

Do migrant workers receive the same treatment as local workers?

China’s Employment Protection Law prohibits employers from discriminating against

migrant workers and states that migrants are entitled to the same labor rights as local workers.

However, migrant workers are more likely to experience unpaid wages and poor working

conditions. According to one survey, more than 70 percent of China’s migrant workers were

owed some form of back pay by their employers. Migrant workers often work without contracts

despite the new Labor Contract Law and migrant workers are often unaware of their legal rights

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despite the efforts of some labor lawyers. As a result, employers disproportionately assign

migrant workers to dangerous jobs with low pay.

RECENT LABOR NEWS

What caused the outburst of labor strikes in China in the summer of 2010? Did the workers

receive any benefit from their strikes?

Workers in China do not have the right to organize independently and strike. However, in

the summer of 2010, workers at several factories in Guangdong province organized

independently and went on strike for better wages and working conditions. This is significant

because although the workers did not have the right to take such actions, the government sided

with the employees and allowed their organization and strike to continue. The strikes of the

summer of 2010 were a break with previous labor unrest because until that point, most labor

disputes were settled without strikes and were not covered in the media. Ultimately, the strike

continued without an intervention by the ACFTU and the workers won wage increases of 24-34

percent.

What was the result of the 2010 labor strikes? Why are they still mentioned in newspapers?

Several other events occurred during the summer of 2010 that pressed the government to

alter labor policy. First, after the successful independent strike early in the summer, strikes

spread to other nearby factories. Second, a string of worker suicides at the contract electronics

manufacturer Foxconn led to intense international media coverage. As a result of the

embarrassment from the international coverage of worker strikes, Foxconn raised wages by 30

percent for tens of thousands of its workers. After these events, the government then intervened

by significantly raising minimum wages in many of the major industrial centers of the country.

As an example of the scramble to meet worker expectations, the Beijing city government raised

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its minimum wage twice in a six- month period. In March of 2011, the southern manufacturing

hub of Shenzhen announced it will raise its minimum wage by 20 percent. This will be

Shenzhen’s eighteenth minimum wage rise since 1992.

CONCLUSION

China’s economy has achieved tremendous growth over the past 30 years and overall

working conditions have improved at a similar rate. Fewer workers are dying on the job each

year, wages continue to rise, and more and more of the country is able to take part in economic

activity. China has also promulgated a tremendous amount of legislation that is modeled on labor

and employment law of many developed countries. In fact, in comparison to the U.S.’s labor and

employment laws, China’s law appear much more progressive. However, promulgating laws is

much simpler than creating governance structures to enforce them. China’s labor law

enforcement record is spotty and depends greatly on the region, industry, or individual case at

hand. This gap between law and enforcement is a theme that has dogged China for centuries.

There are signs that this situation has improved in recent years, but it remains to be seen how

long it will take to standardize enforcement across the country.

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