China Labour Bulletin wrote the following Op-ed piece. Copyright remains with the original publisher.
China's labour trap
By Han Dongfang
South China Morning Post
29 July 2006
Local governments across mainland China have been raising their minimum-wage levels, this year, in response to growing labour shortages. In Shenzhen, the government passed a regulation on July 1 empowering Labour Department officials to impose fines of up to 50,000 yuan on companies that fail to pay the minimum wage.
There's no question that government action is needed to raise the minimum wage and strengthen enforcement in this area. But such steps fail to address several other key problems that contribute to excessively low wages - and hence to workers' inability to earn a decent livelihood.
For example, there are enterprises that withhold workers' wages for months on end, impose unlawful wage deductions and fail to pay legally specified overtime rates.
According to a report issued by the National People's Congress this year, cases of non-payment of wages and unlawful wage deductions accounted for as much as 41 per cent of all cases investigated by provincial labour departments around the country in 2004. In the 16 months before October last year, in one coastal city alone, there were 156 such cases in which the employers concerned went into hiding to avoid investigators.
As many as 76 per cent of migrant workers from the countryside receive no overtime pay for working on public holidays, or on rest and vacation days, according to a recent research report issued by the State Council. The All-China Federation of Trade Unions found this year that around 70 per cent of the country's 100 million or so migrant workers had experience of being paid either late or not at all.
The problem has clearly gone beyond the stage where it can be solved merely by raising minimum wages and strengthening law enforcement.
Indeed, the problem is getting rapidly worse. In 2004, Beijing's court system dealt with 12,462 cases where migrant workers had been paid either late or not at all, involving a total of 330 million yuan, according to figures from the Beijing High People's Court.
Last year, the same court system dealt with 25,987 such cases involving 619 million yuan - or almost double the amount of the previous year.
So serious has the situation become that, at a labour-law conference in March, legal experts proposed that the new crime of "withholding labour remuneration" should be added to the Criminal Law, as a deterrent.
It's not hard to see why so many mainland employers can afford to flagrantly defy the existing laws in this area: workers enjoy neither the right to free collective bargaining nor the right to strike as a measure of last resort. Therefore, they have no effective negotiating power in the workplace.
The one option they do have, when their basic labour rights are violated, is to vote with their feet - and, as we know, they are doing this in ever-increasing numbers.
China's Labour Law and the system of local minimum wages have been in place for about 11 years, and the great majority of mainland workers are well aware of their basic rights.
But even criminalising employers' delinquent behaviour is unlikely to change their ways as long as government inspectors fail to monitor workplaces effectively, and workers are denied any direct and organised involvement. Until that changes, the employers will continue to have little to fear.
Or so, at least, they still seem to believe. In fact, the labour shortage afflicting many southern and coastal areas is a direct consequence of their own harsh employment practices over the past 15 years.
As a researcher from the Fujian provincial labour department recently said: instead of responding to market forces, "enterprises invariably use the minimum wage standard as the basis for setting their general wage scales.
"This has created a vicious circle whereby labour-intensive enterprises in the province currently hit by the labour shortage are unable to hire new workers. The employers are reaping what they've sown."
The government needs to start thinking out of the box if it really wants to improve labour relations, create a healthy labour market and improve political and social stability - that is, if it wants to protect workers' basic rights. It should pass legislation affirming that workers henceforth have the right to engage in free, collective bargaining, and also the right to strike. Without those measures, even criminalising the worst abuses will not deter employers either from failing to pay wages, or from keeping those they do pay at an artificially low level.
In short, a policy of social inclusion must be adopted - one that allows rural migrant workers to negotiate a fair market rate for their labour. Without it, the labour shortage will continue to increase for urban enterprises in southern and coastal areas: more and more migrant workers will decide to opt for a quieter, and healthier, life on the farm.