Cheap Labour In Essence, Students In Name: Vocational School Interns In China

Issue No : 78  January - March 2011

By Liang Shumei

Vocational School Development and Labour Shortage

As part of the industrial planning, vocational schools should fulfill the needs of economic development, and reflect the economic development situation of the country. Until 1949 China’s vocational education development was very slow, and then passed through two major peaks in its development, respectively, before the Cultural Revolution in 1965 and after the reform and opening up in 1978.

In 1965, there were various types of secondary vocational schools in China, totalling 60,000 schools with five million students, but after the Cultural Revolution in 1978, it had been reduced to 4,700 schools with 1.3 million students. Starting from 1980, in line with the reform and opening up of industrial development, the Chinese government reformed vocational education and increasingly promoted it, until 1999 by which time there were 17,106 secondary technical vocational schools, with students numbering up to 11.26 million. Since then, with the reform of the state ownership economy, a large number of publicly owned enterprises collapsed, workers lost their jobs and entered the job pool again, so employment of graduates became difficult. At the same time, a large number of the vocational schools operated by the state-owned or collective enterprises failed, bringing vocational school development to a halt.

In 2002, China joined the WTO, and began expansion of industrialization, making industrial workers in high demand, and the Chinese government again began to raise the importance of vocational schools, and increasingly dedicated budget to the schools. In the Plan of that period, it was very clear that the government wanted to ‘transfer the rural labour force’ to industry. A labour shortage emerged in 2004, so the government expanded the number of vocational schools, while also privatizing the vocational schools that were previously run by different government departments, expanding the number of private schools. During the 2008 financial crisis, as measures to address the decline in employment opportunities and ease the employment pressure, the government increased subsidies for vocational school students, as well as used school-enterprise cooperation and work-study programmes to reduce the costs of education . Entering 2010 and 2011, the economic recovery and the development of the western region of Chinahas brought another wave of industrial expansion, resulting in the worsening of the labour shortage in China.  In response, the local governments have committed to expanding vocational school places and related government funding, while at the same time manipulating the placement of student interns as short-term labour, to resolve business and employment needs. According to Education Bureau statistics, the number of students in secondary vocational schools rose from 12.56 million in 2003 to 21.95 million in 2009.

From 2006, the government began to encourage a large number of private vocational schools to be formed; by the end of 2008 they accounted for 10% of the overall number of vocational schools and by 2010 had risen very fast to 28.2%. However, the blind expansion of the vocational schools without any regular monitoring in place, has resulted in the quality of the schools varying greatly, and the lack of teachers has also led to a low quality of teaching, so that the reform of the educational courses has not met the standards that it should.

Table 1. Increased government promotion of vocational schools’ ‘school-enterprise cooperation’ to assist industry

Table by AMRC

Student-workers, cheap substitute labour force

Compared to the quality of vocational education in China, another trend is even more worrying, the student-workers are being widely used as a cheap substitute labour force. Since 2006, the government encouraged the so-called ‘factory in front, school at the back’, i.e. school-enterprise cooperation, or school-enterprise integration model, using the two ways of government subsidies and work-study internships to make the tuition free, conveniently opening the way for this trend.

Because of the rise of labour costs and the continuous shortage of labour in coastal cities, many enterprises began extensively using the vocational school students as their short-term workers. The students have no minimum wage, nor do they need to pay social insurance, and most of them are in low cost, low-skilled labour-intensive industries. Generally, students go to some labour-intensive electronic and toy industries. In the factories, they don’t get the minimum salary or any social security insurance. Based on this low-cost situation, the enterprises thus like to hire them. In the Honda strike in Foshan last year, 70% of the total number of workers were student-workers, which is far more than 30% maximum under the law. Some unscrupulous schools also made use of student workers to earn a rebate. Worse still, they even detained student wages, and it is exactly the way they take advantage of  students – by becoming the unregulated ‘black agents’ that export the labour. Labour concern groups have encountered one school in which the students had to do the training four times within three years, and the total training time was up to 24 months cumulatively. Deducting the training time, it means the students studied in school for around 6 months only. Thus during the three-year period, in fact, the students worked for the ‘school’ instead of learning.

These student-workers are not covered by labour laws or social security. In case, some incidents arise, say, a violation or occupational injury, normally, the local Labour Inspection Bureau would not handle it, nor would it go to monitor the enterprises. In fact, it is the Education Bureau that should monitor these matters. However, they, mostly, do not carry out their function, and would prefer to do nothing. What is more, the majority of the internships are in other provinces (than where the students are from). The related departments do not tackle the problems of rights violations of those from other provinces. It leads to a situation of overall neglect of the problems due to lack of monitoring. There are many students with occupational injuries’ cases in the Pearl River Delta; however, the statistics cannot be counted as these injuries’ cases are not treated as occupational injuries or diseases. Normally, the cases will be negotiated in private with inadequate compensation. Although the government demands that the schools buy private accident insurance for the students during the internship, the private insurance is not enough to fully protect the students, nor does the government monitor the situation to ensure that the insurance is sufficient.

Student interns listening to the instructions from a Foxconn staff before entering the factory in Chengdu, Photo: SACOM

Negative causes of the global supply chain

Many scholars in Chinaclaims that Chinais now undergoing a turning point, from a labour surplus to a labour shortage . The strikes in 2010 and the rise of salaries seem to reflect this reality. Under this situation, the balance of power between workers and management should tip in favor of the workers and lead employers to be willing to compromise, and the workers should struggle for their welfare; it is a good time for them to institutionalize the labour rights, such as the right of organizing trade unions, collective bargaining rights, etc.

However, as a low-end export processing zone of the global production chain, the Chinese industrial upgrading has not brought any substantive results; cheap labour is still the industry’s largest ‘essential advantage’ but last year, the collective aspirations and collective action of workers showed that the government could not suppress the dissatisfaction of the workers due to the unreasonable salaries. With the huge rise of land prices in the coastal cities, raw materials and transportation costs, China’s export processing industry is facing the pressure to make an industrial shift, just like what Hong Kongand Taiwanhave experienced. And this shift maylead the enterprises to also shift to cheaper countries; but on the other hand, due to China’s geographical span, more enterprises are trying to move into the central and western parts of the country, where the cost of production is cheaper. This shift has resulted in the severe competition among enterprises to get labour in different regions, as the majority of workers in the coastal areas are from the central and western regions.

To tackle the dual pressures of keeping production costs low and competing for labour, factory owners strongly request measures that will help keep their labour costs down; meanwhile, the Chinese central government, in order to maintain economic development, and local governments, for their local economic benefits, both try to meet the needs of capital, and have targeted a large number of technical school students for their use. In March, 2010 the General Office of the Education Bureau issued a notice, ‘Notice Regarding How to Improve the Work of Secondary Vocational School Training to Solve the Shortage of Skilled Workers’, which clearly shows that the Chinese government uses the vocational school students as a means to solve the needs of enterprises for labour.

At the central government level, it seems it is giving a helping hand to the enterprises by relaxing the regulations of vocational student internships. The local government apparently uses some administrative tools to intervene in the student internships. With the rapid urban industrilization in central and western China, the demand for labour has increased. In order to address the shortage of migrant workers to attract foreign investment, the inland provincial government forces students in vocational schools to go to the designated industrial areas and enterprises using administrative means. For example, some press reports have reflected that the corporation Foxconn has signed an agreement with Chongqing, Zhengzhou, Wuhanand other local governments respectively, to transfer student internships. The Chongqingmunicipal government has issued an executive order to all vocational schools, that 60% of the students must remain in the city to secure working internships in its high-tech industrial park; Wuhanalso has a similar provision. In the labour market, workers should have the ‘right to choose’ by whom they will be exploited (i.e. choose who they work for), but even though the government is not allowed to use any administrative means to directly force labour movement/mobility, it indeed can directly control the schools, but the students can not choose and can only be ‘chosen’ (by the government and school, to work in a particular place).

About 60 new student interns arrive at Foxconn’s new plant in Chengdu.           Photo: SACOM

Back to the interests of workers

To operate under a standard below the labour law, the trainee system nominally gives students the opportunities to learn. However, what China’s overall industries need is non-skilled workers only; the majority of secondary vocational school students, whatever their major studies maybe, finally get sent to the production line, where some students say that their work only takes a day to learn and did not need any professional knowledge. Therefore, the student internship, in essence, is just a way to exclude the students from being recognized as having a labour relationship to the enterprise, and thus without the protection of labour law, so that the enterprise can reduce its labour costs.

This phenomenon has not only deprived the students of their labour rights, but also affects the overall  labour market negatively. Many enterprises have used student workers permanently, some using them for even as high as 70% of their workforce, and the student interns are used to tackle the quarterly recurring high demand, on a temporary basis, in order to reduce the proportion of regular workers and attain flexibility in employment. However this undoubtedly leads to the labour market being recklessly expanded, and weakens the fight for the rights of workers. In order to regulate the student internships in the future, improve the protection of the students’ rights and stop the exploitation of the workers by the enterprises, this issue must be placed in the agenda of the struggle the labour rights.