Chinese Industrial Relations - Case Study Example

Running Head: Chinese Industrial Relations Name Institution Course Professor Date CHINESE INDUSTRIAL RELATIONS ‘When it comes to industrial relations in Asian countries, China’s IR system is very different to the rest.’ Do you agree? Justify your answer. Introduction Since the year 1978, the Chinese employment and industrial relations have gone through marvelous revolution alongside the China’s decision to make a step in the direction of a market economy. The industrial relation system of china is by far different and sophisticated as compared to the industrial relations systems of other Asian countries. According to Chang and Li (2004), China has been considered as being the factory of the world for over thirty years now and the economic growth rate of china is a proof that the Chinese IR is not on the same level with that of other Asian countries. In the year 2008, the year that marked the 30th anniversary of China’s economic reform, a series of high profile social and labor legislation, for example the employment promotion law, labor contract law, and the labor dispute mediation and arbitration law were introduced by the Chinese government (Naughton, 2007). According to Naughton, (2007), such kind of a move signaled that the Chinese government made yet another step in social and economic expansion, following the tempestuous time of nineteen nineties’, the time when long-standing social agreement was thrown away while a completely fresh communal order was however yet to arise. The variations that have occurred since the beginning of the year 2000 are not restricted to the labor law regime. The Chinese government has since then fastened industrial relations foundation development, which comprises of the formation of three-way consultation parties from the central government down to district ranks, the publicity of wage collective bargaining and negotiation, and intensive union forming operation, according Mark, Peter, Cooper, and Macneil (2004). As a result of that the Chinese government now boasts one of the top level union densities. Since early 2000s, collective bargaining has been seen to have risen rapidly. This is subject to consideration that collective bargaining in China was virtually unknown until early 1990s; hence this is a remarkable progress (Liu, 2007). At the same period, however, labor conflicts of various forms – whether street protest, wildcat strikes, formal complaints to the arbitration councils – outside and within the official labor relations system have increased since the 1990s. The instantaneous growth of labor disputes/protest and collective bargaining coverage is a clear indication that the action of institutionalizing relations between management and workers by the formal industrial relations officers might not be generating the anticipated results of social accord (Chang, 2004). Framework of Collective Bargaining & Industrial Relations in China According to Balnave, Brown, Maconachie, and Stone (2009), since the beginning of the year 2000, Chinese people have witnessed an unexpected rush of intensive determinations to develop a totally fresh industrial relations practice. One can understand this appropriately beside the contextual of the social mayhems that were created by the step taken by the Chinese government towards a market economy at an extraordinary pace and scale over thirty years ago. The trade and industry reorganization changed China, from what was once considered a total separation from the world transaction system, to what is being referred to as “factory of the world” and also the 3rd leading economy existing on the globe. The Chinese trade and industry growth for the past thirty years is the main reason that helped Chinese government to intensely diminish insufficiency at the fastest pace and the largest scale that never been seen in the world. The economic transformation also came with sweeping changes to the economic and social structure (Gallagher, 2005) In the year 1978, the population that lived in urban centers was 17.9% only but rose up to 43% by the year 2005 In the year 1978, only 71% of the total employees were working in other sectors such as agricultural sector, but this changed to 50% by the year 2005 because of the tertiary and secondary industry which accounted for about 30% & 20%, correspondingly. In the year 1978, virtually all employees worked in rural collective farms or in the public sector in urban SOEs. By the year 2005, over eighty percent of the workforces were already working for non-government sector, comprising of sustenance farmers consist of about forty seven (47) percent of the entire workforce. According to Naughton (2007), in the 1980s the trade and industry transformations brought remunerations for the whole inhabitants, stimulating countryside economies, lessening rural-urban difference and elevating a bigger part of the inhabitants from hardship without clearly showing the failures in the process. Nevertheless, as the trade and industry growth of China became progressively reliant on the urban shipping sectors during early nineteen nineties and the trade and industry transformation reached the critical point of disturbing the community enterprise in the metropolitan regions, the trade and industry improvement began to clearly generate losers and also winners in the Chinese society, creating extraordinary social strains. Growing Inequality and declining Wage Share of GDP Not so long ago china was considered to be one of the most equal societies in the world, but for over thirty years ago that has changed and now China has become one of the most unequal societies existing on the globe, according to Kuruvilla & Erickson (2002). In the year 2005, the Chinese income distribution index constant extended to 0.46, outstanding Philippines and India, the countries that were widely recognized for their life-threatening intensity of unequal income distributions. Report obtained from the Asian Development Bank shows that there is an extreme growth of unequal distribution of income in China as compared to other countries in Asia. According to Lee (2007), in-equality in China has developed between industries, occupations and areas. After a short-lived era of non-urban trade and industry restoration in the early times of the trade and industry reforms in the 1980s, the non-urban trade industry lagged far much behind the city economy. The regionalized fiscal administration in China have a tendency of widening the regional gaps, as is demonstrated by the fact that the richest regions have more than 8 times per capita community spending than the poorest regions. Research has shown that real income development for employees – predominantly those employees with low techniques – felled behind others in general output advances and the Gross Domestic Product (GDP) growth (Chang, 2004). As an outcome, the salary share of Gross Domestic Product has declined from fifty two percent in the year 1999 to about forty percent in the year 2007, while the private consumption declined from 47% to around 37% of Gross Domestic Product during the same period. According to Arthur, and Rousseau, (1996), a mass of aspects are working hard to broadened income differences and deteriorating remuneration share of Gross Domestic Product, comprising of the Chinese government policy favoring urban industrial development geared toward export-oriented trade and industry development at the expense of rural population, dispersed fiscal procedure regime (which disciplines underdeveloped neighborhoods), artificial barriers between urban and rural labor markets (which puts rural workforces in an underprivileged position as compared to their urban counterparts), deranged bargaining power between bosses and workforces (due to pathetic labor market establishments such as collective bargaining and trade unions), and others (Armstrong, 1997). The ever growing wage/income gaps and the fast deteriorating remuneration share of Gross Domestic Product have become one of the top distresses of the country’s administrative leadership and rule makers for two main reasons; i) The decreasing remuneration share lies at the heart of the nation’s trade and industry disparity. The slow income growth has led to much sluggish private consumption development relative to general trade and industry development in china, instigating an incessant deterioration in the distribution of consumption in Gross Domestic Product while moving towards a rising reliance on investment and also export as the main drivers of the China’s economic progression (Armstrong, 1997). In turn, this generates the likelihood of international trade battles with most important trading associates. ii) The broadening wage/salary breaks, if unimpeded, can jeopardize social consistency and constancy. Explosion of Labor Disputes and Social Diferences Alongside greater inequality undermining maintainable trade and industry development, Chinese people have seen intense development in community struggles in overall and in labor disagreements specifically throughout the last two eras. According to Cooper (2014), the occurrence of collective protests of different natures rose to around sixty thousand in the year 2003 from around ten thousand in the year 1993. The fact that labor associated disputes accounted for about 47 % of the collective disputes in the year 2003 vividly shows that labor concerns have developed into a key birthplace of social fights and tension in China (Macneil, 2014). The sum of labor disagreements mentioned to local mediation committees across Chinese country has revealed major development (Arthur and Rousseau, 1996). In the early 1990s, the progression rate of labor disagreements was somewhere amid thirty and fifty percent. Even though there has never been a dependable data concerning demonstrations, it is generally believed that in China strike actions are always on the rise. The rapid development of several forms of labor battles between nineteen nineties (1990s) and early two thousands (2000s) is narrowly related to the reorganizations of the budget of Chinese government from centrally scheduled to a level of market economy, bringing about the commotions in the employment administration in both government and non-government sectors (Armstrong, 1997). Prior to the introduction of reforms, China sustained an extraordinary strict blockade between the rural and urban inhabitants, thwarting the upcountry inhabitants from migrating into city labor arcades where government-owned businesses offered a permanent job with substantial social remunerations such as housing, pension, and medical coverage attached to employment. The market improvements confronted both urban-rural detachments and unchanging employment associations in State Owned Enterprises. A cording to Kuruvilla, and Erickson, (2002), millions of Chinese people moved from their rural homes to the coastal towns where special trade and industry districts had been created to search for city employment that had been generated by non-government businesses. Even though there were some latest enhancements, upcountry immigrant workforce didn’t get the equal authorized rights and community welfares such as pension and medical coverage as their city colleagues did, according to Gallagher, (2005). The second class people in China gave the Chinese employers an opportunity to exploit migrant workers through involuntary overtime for extremely long working hours in hazardous working environments and often being subjected to non-payment of salaries as well. Almost at the same period, the restructuring of public enterprises – collectives, SOEs, and village and township enterprises entered a very decisive stage in early 1990s with huge scale lay-offs. The share of the public enterprise collapsed from twenty five percent of the labor force in the year 1996 to only seven percent in the year 2003. Research carried out by Lee shows that between the year 1990 and early 2000, over thirty million people lost their jobs in the government owned enterprises because of the state owned enterprises went bankrupt while there are some that made drastic decrease in their workforce in order to survive. Workers who lost their jobs together with those, whose future was not predictable, went into the streets to protest the move made by the enterprises owned by the Chinese government for failing to honor their responsibility in terms of medical, allowance and housing welfares. As Lee explains it, State Owned Enterprises employees in the rustbelt of China embarked on demonstrations due to anxiety over the unsatisfied state assurance to produce products of communal consumption, while rural immigrant labors in the sunbelt region of China carried out demonstrations in contradiction of differentiation over pays and working environments in afresh developing non-government subdivisions (Lee, 2007). The long-standing social agreement was rejected by the Chinese government, while the new communal agreement was yet to develop. This condition caused the remarkable development in labor battles in both the Sunbelt regions and also around the rustbelt regions of China in between nineteen nineties (1990s) and the early 2000s. References Armstrong, M.,(1997). A Handbook of Human Resource Management: London: Kogan press Arthur, M.B, Rousseau, D., (1996). The boundary less Career as a new Employment Principle: London: Oxford University Press Balnave, Brown, Maconachie, Stone (2009). Employment Relations in Australia: Australia. John Wiley & Sons Gallagher, M.E., (2005). Contagious Capitalism: Globalization and the politics of Labor in China: Princeton. Princeton University Press Kuruvilla, S., Erickson, L.,(2002). Change and Transformation in Asian Industrial Relations: Industrial Relations: China. Blackwell Publishers Lee, C., (2007). Against the law: Labor protest in China’s Rustbelt and Sunbelt: London. University of California Press Lee, C., (2009). Industrial Relations and Collective bargaining in China: Geneva. Liu, M.,(2007). “Bottom-up change? Reforms in Chinese regional unions”, Working Paper, School of Industrial and Labor Relations: Cornell University Press Mark, B., Peter, W., Cooper, R., Macneil, J., (2014). Employment relations: Australia. MacGraw-Hill Publishers Naughton, B., (2007). The Chinese economy: Transitions and Ggrowth. USA. Boston, MIT Press Chang, K., Li, Q., (2004). Industrial Relations in China: London. Edward Elgar Publishing Read More