By John Chen

Law is not a neutral instrument of governance. I hold this to be true in a society with strong democratic institutions or in an authoritarian regime. Furthermore, the statutory rights of working people are not bestowed on us through benevolence or even in the name of good governance. They are won via collective action on our part and a fear of wider social unrest on the part of our rulers.

The rule of law in perspective

The law is ultimately an expression of power. Within the framework of capitalist relations - and I include China in this framework - the mode of expression differs enormously. Where independent trade unions and parliaments have been won, the rule of law can sometimes be a limit on power. As the Marxist historian E.P. Thompson put it:
“ Rulers who make use of legitimating devices such as the rule of law may have to pay the price of letting their powers be fettered and constrained at least to some extent by legal rules and procedures. Such constraints are by no means worthless.”

I would argue that the law is not unbiased or separate from daily international, national, and local affairs. On the contrary, it is formulated, interpreted, fought for, and resisted by real people with conflicting interests and allegiances. In China, a one-party state with barely any room for workers to organise in, the rule of law remains a particularly tenuous and unreliable device. This is especially true in the area of labour law, which regulates – though by no means to the exclusion of all other law, a sphere of human activity absolutely central to our existence; a sphere where the interests of those involved are not only sharply antagonistic, but have the capacity to bring about dramatic, even revolutionary, social change.

Current scenario: theoretical complexities and real crisis

In theory, the Constitution is the highest legal authority in China and no law may violate it. In labour struggles, it has been the point of reference for both activists and government alike. In trying to legitimise their struggles and uphold their personal security, labour activists frequently refer to Article 35 of the Constitution which states, ‘[C]itizens of the People’s Republic of China enjoy freedom of speech, of the press, of assembly, of association, of procession, and of demonstration.’ But labour law operates within a particular political and ideological context. Article 1 of the Constitution sets the parameters of this context: ‘[T]he People’s Republic of China is a socialist state under the people’s democratic dictatorship led by the working class and based on the alliance of workers and peasants’. A theoretical conundrum emerges that has a direct impact on workers’ legal rights. Workers in struggle point to Article 35 of the Constitution while the authorities respond with Article 1 and justify arrests and imprisonment on the grounds that strikes and other forms of large-scale industrial unrest threaten the existence of the workers’ state and, more recently, to the implementation of the rule of law.

Clarification lies in practice. If nothing else, the reality of the last twenty-five years of market-orientated reform has at least clarified labour relations and diminished the legitimacy of what are essentially power relations dressed up in constitutional rhetoric. The reality is so stark – and labour unrest so widespread – that even state-run media labour media cannot ignore it: ‘Cruel exploitation must of necessity lead to worker resistance. Can strikes and appeals to higher authorities one after the other in recent years actually demonstrate anything other than a crisis in the conflict between labour and capital?’1 

But how have Chinese industrial relations and the laws that govern them arrived at this point of crisis?

Liberation: The People’s Republic

While China did not have a national unified labour law until 1 January 1995, the first set of formal nation-wide regulations in the new republic was entitled Model Outline of Intra-Enterprise Discipline Rules (MOIDR), introduced in 1953. As the title of the regulations suggests, these were more a set of rules aimed at enforcing industrial peace and increasing production than a definition of workers’ legal rights. A comparison of the MOIDR and a typical factory rulebook of the type that plagues the lives of migrant workers in today’s Special Economic Zones (SEZ) should help to dispel any misplaced nostalgia for the past: Article 17 relates to punctuality and discipline:
‘ Late arrival or early departure without good reason, or playing around or sitting idle during working hours shall be subject to proper punishment or dismissal as the case may require.’
And Article 21 gave workers – the ‘masters of the enterprise’ – a stern take on quality control:
‘ If due to non-observance of working procedures or irresponsibility, rejects are turned out or any facilities are damaged, the worker or staff member shall be held responsible for part or whole payment of compensation for the material loss as conditions may require, whether he is punished or not. The amount of compensation shall be decided by the management and deducted from his wages…’
Fifty years later in the ‘capitalist’ SEZ Shenzhen, Rule 2 from the ‘Hygiene Charter’ of a factory producing for Disney and Mattel takes a similarly high-handed line with its migrant worker employees:
‘Keep the toilets clean. It is imperative you keep the toilets clean, cherish the facilities, obey management and adhere to regulations. If you damage the facilities, you will be required to compensate according to the cost.’2 
Although the parallels are striking, to take them too literally would be to underestimate the complexities of post-liberation China. The 1950s saw unprecedented improvements in almost all aspects of life for the majority of Chinese people and the era up until 1958 has been described as a ‘golden age’ of law and legal system building by legal scholars. Few would dispute that the 1949 revolution represented progress. But this was no workers’ paradise and labour law and regulations of the time were primarily concerned with policing and increasing production.

The Reforms and Labour Law

It has often been argued that the latest manifestation of economic globalisation, which for simplicity’s sake I trace to the oil crisis of the early 1970s, has been accompanied by the revoking of existing and hard won labour legislation. This has certainly been the case in many parts of the world. In the context of China, we are looking at a slightly more complex situation. Contrary to the experience of other countries, the last two and a half decades have occasioned a flurry of legislation and local implementation regulations from the government, much of it concerned with labour. The following is a brief summary of the main themes of China’s 1995 national labour law:

Scope of Applicability

Article 2 states that the law applies to all employing units, state organs, and public institutions and labourers ‘who form a labour relationship’ with the employer. However, the law does not define the term labourer and in practice sections of the workforce are left outside the law such as domestic workers, sex workers, senior government officials, civil servants, and rural labourers.

Individual Labour Contracts

In 1986, the Provisional Labour Regulations introduced fixed-term contracts to cover employment of new recruits in state-owned enterprises (SOE). Such contracts were already a feature of foreign-invested and foreign-owned enterprises in China’s SEZs. However, the new regulations did not apply to workers already employed by SOEs. Nevertheless many older SOE workers hired before the 1986 regulations have recently found themselves subject to new contracts following a partial or total buy out by foreign capital. For example, when Danone and its Hong Kong subsidiary Amoy invested in a state-owned food-processing factory in Shanghai, workers who had been working there for as long as 30 years were put on annually renewable contracts.

Article 16 of the Labour Law defines the individual contract as ‘an agreement that establishes the labour relationship between a labourer and an employing unit’ i.e. it is the legal basis for labour relations. Case law to date has shown that if a worker can prove an actual ‘labour relationship’ with an employer, then the latter is legally bound to fulfil the obligations of the Labour Law even if no contract has been signed. Article 19 of the Labour Law states that contracts must include: the length of contract, type of work, labour protection, wages, disciplinary matters, conditions for contract termination, and responsibilities concerning contract violations. Of course, the existence of a contract does not guarantee compliance with its terms. Between 1998 and 2000, there were over 1,000 petitions to the authorities in Changchun city by workers claiming their contracts had been violated. Most of the complaints centred on early retirement, compulsory redundancy, contract alterations after restructuring or foreign investment, probationary period wage disputes, and arbitrary changes to the contract.3 

Article 20 states that non-fixed-term contracts are a voluntary option for those workers who have clocked up ten consecutive years with the same employing unit. It remains to be seen if in 2005, the tenth year of the law’s existence, employing units resort to widespread dismissals of employees approaching the ten-year benchmark.
Recruitment probation periods are limited to six months as stated in Article 21. As in other countries, dismissal at the end of a probation period has proved a focal point for labour disputes.

Collective Contracts

These are a particularly difficult area as a genuine collective contract can only be the result of consultation between independently organised workers and the employer, yet Article 10 of the Trade Union Law specifically outlaws freedom of association (see below). Article 33 of the Labour Law lists the areas that may be covered by collective contracts as labour remuneration, working hours, rest and vacations, occupational safety and health (OSH), labour insurance, and welfare. Article 35 states that the standards in individual contracts must not be lower than those in collective contracts. On approval by the workers’ congress, the draft is sent to the local labour bureau, which has 15 days to raise an objection. Article 35 implies that any violation of the legal process of concluding a collective contract shall render it invalid, but does not give any further explanation or detail as it does for individual contracts. Neither does it make any provision for changes or cancellation of a collective contract.
Recent All China Federation of Trade Unions’ (ACFTU) figures on the number of workers covered by collective contracts boast an inclusion rate of 95 percent of workers in urban SOEs, collectively owned enterprises (COE), and foreign-invested enterprises.4

However the rate is probably no more than an extrapolation from selected local statistics. Two months before the aforementioned national figures were published, a report in Workers’ Daily from Buji, Shenzhen also claimed a figure of over 95 percent of workers covered by collective contracts in the county’s 538 foreign enterprises. Given that Shenzhen has one of the highest rates of labour disputes in the whole of China, the report’s heading of ‘Collective Contract Rights - Bosses Happy, Workers Happy’ encourages scepticism on these figures.5 

Dismissal

Dismissal is dealt with via summary dismissal and dismissal by notice. According to Article 25, grounds for summary dismissal are: failure to meet recruitment benchmarks during the probationary period; serious violation of labour discipline or the company rulebook; causing great loss to the employing unit as a result of negligence or intentional damage; and the employee being the subject of a criminal investigation.

There are clear problems with these grounds for dismissal. The concept of labour discipline is neither explained nor defined.

Another issue is that an employee may be dismissed simply for being investigated for criminal responsibility. Leaving aside the fact that criminal guilt does not have to be proven before a summary dismissal, the question of the degree of criminal behaviour is ignored. For example in one case a worker was picked up and investigated by police on suspicion of prostitution simply for having condoms in her handbag. She lost her job as a result.6 

Article 25 also gives great scope for blacklisting militants. Thirty-seven-year old Wang Zhaoming is currently facing charges of ‘illegal assembly’ in Liaoning province. Although already out of work due to the bankruptcy of his enterprise in 2001, his employment chances will be severely limited even if he is found not guilty or charges are dropped.7 

Article 27 deals with the currently volatile issue of lay-offs. Since the Chinese Communist Party’s (CCP) fifteenth Party Congress in 1997, which gave a green light for widespread privatisation, millions of workers have been laid off under an arrangement known as xia gang – literally to be stepped down from one’s post. Mass lay-offs are covered by Article 27 of the labour law, which stresses that they must be a last resort and that the trade union must be given 30 days’ notice.

Article 27 also states that if the enterprise needs to re-employ workers within six months, the dismissed or laid off workers take priority.

Wages

Wages for most of China’s employees are determined by a mixture of market forces and government intervention. Article 48 of the Labour Law demands that the state implements a system of minimum wages set by local governments basing their calculations on local conditions as stipulated in Article 49. These conditions are: lowest living expenses of a labourer and the average number of family members he or she supports, average wage levels, productivity, the local labour market, and regional differences in employment. The divergences in minimum wage levels that result from this formula are spectacular and testament to the dramatic regional variation in wealth. In Shenzhen the minimum wage is over double that of Gansu.

Piece rates are increasingly common in various sectors, particularly labour intensive sectors. The author’s own research confirms various reports that the gradual privatisation of coal mines and the sub-contracting of shafts to private operators have led to widespread piece rates. There have been instances where state-owned mines have held back wages to regular employees who have refused to work as a result. The company has responded by employing untrained farmers on piece rates and this has been a factor in China’s high accident rate in the mining sector.

Working Hours

Working hours are limited to 40 per week with the normal working day limited to eight hours a day. Overtime is limited to three hours per day with a maximum of 36 hours a month. Overtime is fixed at 150 percent of the basic wage on normal working days, 200 percent on rest days, and 300 percent on annual holidays. Article 37 states that piece work quotas and remuneration should be set at levels that do not force workers to agree to excessive and illegal overtime.

However, there are a number of clauses in the law that allow management to extend working hours in ‘special circumstances’ as long as the trade union or workforce has been ‘consulted’ (Article 41). This loophole is enlarged by Article 39 that allows an enterprise to bypass stipulations ‘due to the special nature of its production’ as long as the local labour department has approved (Article 40).

A combination of investor-friendly environments, competition between local authorities to attract investment, state-run or non existent trade unions, low wages and the vulnerable position of migrants has led to an institutionalised culture of working time violations in China’s low-tech, labour intensive export sectors.

Social Insurance and Welfare

China’s social insurance policies are currently undergoing major reform. Pre-reform policy placed responsibility for insurance and welfare on the enterprise. For other sectors of the workforce, such as migrant workers, such benefits simply did not exist. The reforms to this system are basic contributory system of insurance to which both employers and employees contribute. Insurance is divided into five basic categories: unemployment, pension, sickness, industrial (workplace) injury, and maternity (Article 70). These reforms are aimed at eventually increasing the number of those covered by insurance via the pooling of funds and making all enterprises liable. While they have allowed a certain degree of labour mobility, the reforms have been plagued by embezzlement and misuse of pension and unemployment funds, limited pooling leading to a shortage of funds, and a crisis in health care. Moreover, they are still largely based on an enforced household registration (hukou) system, which effectively excludes migrant workers outside their home districts.

What About the Unions?

The Fifties
Constitutionally and legally, the ACFTU was required to enforce the MOIDR regulations. Conscious of the enormous potential of worker unrest to challenge the stability and legitimacy of the new regime, the CCP moved extremely quickly to monopolise working class organisation around the ACFTU. Within months of declaring the establishment of the People’s Republic of China on 1 October 1949, the Trade Union Law was promulgated.
Membership of a trade union came with the job if worker had a job in a city-based SOE.8  As China embarked on a programme of nationalisation during the mid-50s, union membership increased accordingly. In 1945 membership was 800,000, in 1955, 13 million, and by 1958, 16 million.9

This extraordinary growth was not based on the CCP’s militant model of bottom-up labour organising in cities like Shanghai in the years preceding liberation.

On the contrary, it was a top-down management backed policy that aimed at establishing union branches and organisations in newly established as well as newly nationalised SOEs.

The Trade Union Law itself made no concessions to trade union sovereignty. Unions were to: ‘[E]ducate and organise the masses of workers and staff members to support the law and regulations of the People’s Government ...’10 

The MOIDR and the Trade Union Law were uncompromisingly based on the Soviet-style notion of ‘socialist legality’. They reflected the government’s aim to build up a predominantly – but by no means exclusively – self-contained economy

The Nineties and Now
Two trade union laws later (1992 and 2001), the ACFTU remains dominated and hamstrung by the CCP. Battered – and effectively banned for ‘bourgeois deviation’ during the Cultural Revolution (1966-1976) – by the wild fluctuations in Chinese politics, it has become a complex organisation with a reported membership of over 120 million workers and a monopoly over trade union organising.

The ACFTU’s traditional role, as a largely unquestioning conduit from the CCP and government to the working class, has evolved into both its strength as well as its weakness. Direct links with the CCP and with SOE management give it some limited authority within enterprises and other work units, but, as in the fifties, workers criticise precisely those links as evidence that the ACFTU lacks independence.11 Suggestions to workers that they approach the trade union with complaints are frequently greeted with astonishment, even anger.12 

The economic environment in which the ACFTU now has to operate has changed dramatically following 25 years of reform. In 1982, the apparent convergence of workers’ interests with those of the State was used to justify eliminating workers’ right to strike from the Constitution.

A veteran legal scholar noted in 1982 that workers had no need of the right because ‘Chinese enterprises belong to the people’. Now, industrial ownership is far more diverse. In 2000, estimates on the private sector’s contribution to GDP start at 33 percent and private firms employ over 130 million workers. Yet Chinese workers still do not have the right to strike.

In 1998, Hu Jintao, the recently appointed General Secretary of the CCP articulated the Party’s line on trade union independence and the related right to freedom of association:
‘ Chinese trade unions are mass organisations of the working class under the leadership of the Party, act as a bridge linking the Party with staff and workers and play a role as a key social pillar of the state political power… I hope that all levels of trade unions will consciously accept the leadership of the Party while independently carrying out their work…[and] consciously submit to and serve the major tasks of the Party and the state.’
Clearly, the CCP’s position looks set to remain largely intransigent.

Occupational Health and Safety

OSH is an area of labour law where theory completely departs from practice. China has a large body of OSH legislation, recently synthesised into the national Work Safety Law that came into effect in November 2002 and aims at addressing the country’s appalling record in this field.

OSH falls under the management of the State Administration of Work Safety (SAWS). It is responsible for drafting OSH laws, regulations, technical standards, as well as overseeing compliance and safety management systems. China’s normally restrained media has spearheaded campaigns to improve work safety, especially in mines and there is no doubt that the central authorities are desperate to improve OSH in general. SAWS deputy director Zhao Tiechui recently admitted that the OSH system established in the coal mining industry existed in name only.
According to a report posted on the International Hong Kong Liaison Office Web site: ‘Documents issued from the centre are simply passed on to the next level down and ignored. Meetings are held but the safety measures they discussed never got further than the conference hall. He also stated that the problems were exacerbated by outdated machinery in state-owned mines, inadequate safety procedures, and a decline in fire-prevention facilities and fire-fighting equipment.’

It has been argued that China’s Work Safety Law could provide opportunities for organisation of at least semi-independent OSH committees that actually involve workers.

Article 19 states that work units producing, operating, and storing dangerous materials as well as mining and building work sites shall set up OSH management organisations or allocate full time OSH personnel to administer safe practices at work. Other work units with over 300 staff and workers must also set up OSH committees.
Article 45 stipulates that employees have the right to be fully aware of all hazards present at work as well as the associated preventative and emergency measures. They also have the right to make suggestions on OSH policy to their work unit. Article 46 stipulates that workers have the right to make criticisms, reports, take legal action, and can refuse orders that violate OSH rules or work in hazardous conditions. Crucially, Article 47 states that workers who encounter a situation that directly endangers their personal safety have the right to stop work and, after taking all appropriate measures, to leave the workplace.

It is too early to say if the new law will improve the situation; its content provides far from what are essential OSH tools: freedom of association and the right to strike. To be sure, effective OSH systems require not just technical knowledge and scientific research but dialogue and a level of trust with employers, but this has to be built on core rights.

Dispute Resolution

Article 70 of the Labour Law sets out a three-tier basis for settling disputes: mediation, arbitration, and courts. Enterprises with labour problems may set up a mediation committee chaired by the trade union and composed of workers’ representatives and the employing unit (Article 80). When this fails the dispute may be brought before a Labour Disputes and Arbitration Committee (LDAC) which is chaired by the local labour bureau and trade union representatives (or workers’ representatives where no union exists) and the enterprise. Applications for arbitration must be made within 60 days of the dispute and the LDAC has the same amount of time to reach a decision, with parties having 15 days to take the LDAC decision to court if agreement is not reached.

This system is in its infancy in China and still acquiring the expertise required, such as a sufficient national pool of labour lawyers and general awareness of how to effectively use the system among workers in order to render it effective. However, implementation will as always depend on power, which precipitates the sensitive issue of the right to strike. Crucially, although China is obliged by its ratification of the International Covenant of Economic, Social and Cultural Rights, she has still not passed legislation clearly guaranteeing workers the right to strike.

Conclusion

China’s emergence as a key component in the global trading system, its growing importance at the ILO, where it was recently elected to a deputy member seat on the Governing Body, and the continually expanding mass of labour regulations and case law are a result of policy decisions taken by the government. These decisions rest on the premise that there is no alternative to the market if the government is to achieve its stated goal of transforming China into a modern state, capable of competing with developed countries for markets. How workers fair in the ‘endless war’ that characterises labour relations will depend on their collective ability to defend class interests and fetter the power, be it expressed through law or straightforward violence, of China’s rulers and employers.

Notes
  1 Liu Yuanyan and Zhou Shan, ‘Blood and Tears: Migrant Workers go on Strike’, Zhuhai Laodong Bao Zhuhai Labour News, (24 October 1994).
  2 From a rulebook obtained by the author.
  3 ‘Guifan laodong hetong shi zai bixing Regulation of Labour Contracts is Imperative’, Gongren Ribao Workers’ Daily, (24 September 2001).
  4 ‘Pingdeng xieshang jiti hetong zhidu fugai 7600 wan xhigong Equitable Collective Contract System Covers 76 Million Workers’, Workers’ Daily (21 November 2001).
  5 ‘Buji zhen waiqi jiti hetong fugai lu da 95 percent Collective Contract Rates Among Foreign Enterprises Hit 95 Percent in Buji Township’, Workers’ Daily, (17 September 2001).
  6 Information supplied by Ziteng, an organisation for sex workers in Hong Kong.
  7 See HRW, ‘Paying the Price’, op.cit.
  8 Movement from the countryside to urban areas has been strictly controlled in China. This control centres on the concept of ‘hukou’ or household registration system formalised to keep starving peasants out of the cities during the famine that followed the Great Leap Forward.
  9 Nigel Harris, Marx and Mao in Modern China (p. 104).
  10 Ibid.
  11 Until recently SOE workers in urban areas belonged to work units. These units were usually organised according to industrial sectors; thus one unit covered several SOEs. By and large, the union’s responsibility within an individual SOE was confined to administering welfare benefits and organising labour competitions and entertainment.
  12 Based on interviews by the author.