Wage arrears: The problem that never seems to go away

China’s Minister of Human Resources and Social Security, Yin Weimin claimed during a 7 March press conference that the number of migrant worker wage arrears cases has been on a downward trajectory in recent years. The latest statistics from China’s official trade union tell a different story. A spokesman for the All-China Federation of Trade Unions (ACFTU) said in December that the number of wage arrears cases and the number of runaway bosses actually went up last year, despite the introduction of legislation making the malicious non-payment of wages a crime.

Minister Yin himself admitted that although more than 300 malicious wage arrears cases have been handled by the public security departments and 200 have been prosecuted since the revised Criminal Law took effect last February, sentences were passed in only seven cases. The figures were nominal compared to the total registered number of wage arrears cases, which involved more than five million workers with ten billion yuan in salaries overdue in 2010.

Beijing’s goal is to eliminate wage arrears cases by 2015. But many doubt this can be achieved. National People’s Congress (NPC) standing committee member, Gong Xinsheng, controversially claimed some of the worst culprits in wage arrears cases are in fact local governments. Gong claimed that many local governments embarked on large-scale vanity projects but then refused the pay the contractor. This was the main reason behind the pathetically low number of criminal court rulings, he said, namely the fact that local prosecutors and courts don’t want to prosecute their local governments.

Gong, who rose to fame as China’s Customs Minister during the Lai Changxing corruption and smuggling case, estimated that at least 30 percent of migrant workers still have difficulties getting their due salary.

There has been a wide-ranging debate on whether or not it is appropriate to use criminal sanctions to moderate labour relations, and whether it would play an effective role in preventing malicious wage arrears cases. Some local officials suggested that given the complexity of wage arrears cases, criminal penalties should only be imposed in the most discreet manner

Zhang Mingqi, vice chairman of the ACFTU and vigorous campaigner for criminal charges in malicious wage arrears cases, said during the just ended meeting of the Chinese People’s Political Consultative Conference (CPPCC) that the fundamental reason for wage arrears is the lack of effective enforcement. He suggested amending the 2004 Labour Protection and Supervision Regulations (劳动保障监察条例) by widening their scope, enhancing punitive measures, and strengthening the administrative powers of labour protection and supervision departments so that they can shut down factories or freeze boss’ bank accounts.

NPC delegate and Henan High Court Judge, Zhang Liyong, suggested the country should adopt legislation that codified the practice already established in many southern cities requiring contractors to hand over a certain percentage of the contract fee as a deposit to the labour protection and supervision departments before construction gets underway. Zhang also called for detailed judicial interpretations or guidelines to define a “malicious” wage arrears case, and for clear corresponding punitive standards.

In addition, Zhang called for construction workers to be paid a regular weekly wage, a call backed up by CPPCC delegate Qian Xueming, who suggested that construction companies should be forced to suspend work unconditionally as soon as it is proved that they are behind with wage payments. Any losses incurred, he said, should be borne by the company or company representatives.

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