The Effectiveness of Chinese Labour Law - Research Paper Example

The Effectiveness of Chinese Labour Law Name: Lecturer: Course: Date: OUTLINE 1.0. INTRODUCTION 2.0. FOUNDATIONS OF CHINA’S LABOUR LAW 2.1. The Labour Act (1994) 2.2. The Trade Union Act (1992) 2.3. The Employee Contract Law (2008) 3.0. IMPLICATIONS OF THE DEVELOPMENTS 3.1. Policy and Wages 3.2. Labour Welfare 3.2.1. A Comprehensive Worker Insurance System 3.2.2. Barring of Child Labour 3.2.3. Health and Safety 3.2.4. Terms of Employment 3.2.5. Role of Unions 3.2.6. Severence Compensation 4.0. STATE SUPPORT FOR THE LABOUR LAW 4.1. Administrative Laws 4.2. Facilitation of Occasional Bargaining Agreements 4.3. Provision of Supreme Court Guidelines 4.4. Deliberate Attempts to Improve Worker Welfare 5.0. OBSERVED SUCCESSES OF THE LABOUR LAW 6.0. LIMITATIONS OF THE LABOUR LAW Non-implementation Failure to Guarantee Employee Organization Instances of intimidation Some outright Insufficiencies in Protecting Labour Rights 7.0. OVERALL EFFECTIVENESS OF THE LAW 8.0. CONCLUSION 1.0. INTRODUCTION As soon as China entered the World Trade Organization (WTO) in 2001, many foreign businesses rushed in to take advantage of the opportunities presented by its massive domestic market, abundant and relatively inexpensive labour force (Chen 2011). China has the biggest transition economy globally, yet its employment protection laws have at times been criticized as being relatively weak, allowing unfair exploitation of its workforce and rather than offering support to the interests of workers, may be serving only the function of encouraging foreign investment at the expense of its worker’s well-being (Cui et al. 2013). Chinese labour laws comprehensively protect both domestic and foreign workers, but failures in implementation and enforcement leave workers vulnerable. This report examines the extent to which labour laws in China are able to protect labour interests. 2.0. FOUNDATIONS OF CHINA’S LABOUR LAW One of the major challenges that China has to deal with is its transformation from a socialist system into an effective labour market and developing legal institutions that will govern interactions amongst economic agents within it (Cui et al. 2013). According to Chen (2011), China for many years operated as a planned, socialist economy with a predominant socialist approach to labour management. However, as from 1979, the country started being keen on streamlining existing labor laws so as to gradually align them to other countries’ standards. The most significant legislations that arose are: 2.1. The Labour Act (1994). This set very high standards in worker’s rights. It effectively addressed child labour, minimum wage, forced labour, working hours, collective bargaining, women protection, group contracts, labour inspection, holidays and vacations among others. It is comprehensive and seeks to ensure the interests of labour are attained (Brown 2010). According to Shen (2007), it clarifies that every employer has to enter into contract with employees to determine the terms and conditions of their relationship. Apart from the labour contract, employees can also enter into bargaining agreements with foreign-owned firms. Employee rights to get into unions are also protected and collective bargaining agreements are anticipated to establish minimum conditions for every employee regarding working conditions, compensation, vacation, benefits, wages and rest periods. 2.2. The Trade Union Act (1992). This was responsible for facilitating a unitary and codified kind of trade unionism, where unions are granted a strong role in dispute settlement, enterprise management and collective bargaining. When enacted, China managed to create the broadest trade union network in the world to date. While membership is not mandatory, state employees have consistently been unionized by virtue of the law. The Law however allows only one trade union within an institution or company and all are to be under the ACFTU (Cooney et al. 2013). 2.3. The Employee Contract Law (2008). In this, an employee-employer relationship starts when the employee starts working. There has to be a written contract to that effect but if work begins before its signing, there is a one-month window to craft the agreement. If the deadline is not upheld, the employer is forced to give double the salary (Shen 2007). This was accompanied by creation of a policy that would henceforth favour “collective consultation” relating to working conditions and wages (Paraschiv 2012). 3.0. IMPLICATIONS OF THE DEVELOPMENTS 3.1. Policy and Wages. China’s Labour Law prevents employers from discriminating employees on any basis and prohibits the discrimination of females unless in cases where the task to be done has been stipulated by the government as being unsuitable for them. In addition, it presents an express policy in which it encourages the employment of minority groups, retired military personnel and the disabled (Daubler & Wang 2009). According to Cui et al. (2013), industrial wages are consequently on the rise, which is good for the Chinese workers and their families, and also for the country’s industrial competitors. For a long time, Chinese wages were suppressed because of absence of freedom of association. 3.2. Labour Welfare. The Chinese labour law covers every aspect of labour interest. According to Cooney et al. (2013), employees have entitlement to welfare and social insurance benefits that their employers are under obligation to provide, even if the employee himself is ready to waive them. Its main features include; 3.2.1. A Comprehensive Worker Insurance System. The law establishes a social insurance system at the national level, charged with offering employee pension or retirement benefit, compensation in case of work-related disease or injury, disability and medical care for non-occupational illnesses or injuries, maternity and pregnancy benefits and death benefit for a deceased employee. 3.2.2. Barring of Child Labour. Employment of minors aged below 16 is barred and anyone aged between 16 and 18 years cannot work in an underground mine or pit, handle toxic substances or take part in intense labour. Employers are obligated to arrange and pay for regular under age workers’ medical examinations. 3.2.3. Health and Safety. According to Brown (2010), maternity leave is set to at least 90 days and nursing mothers cannot work night shifts, overtime or strenuous work for a year after childbirth. Employers must also establish safety and health programmes at the workplace and implement steps to mitigate workplace accidents. Employers will have to be given safety equipment and training, while errant employees who do not follow safety regulations are to be punished. Employers have to facilitate medical examinations of workers regularly. Workers are granted the right to refuse any unsafe task and can seek redress from labour authorities in case they feel unsafe. 3.2.4. Terms of Employment. There is specification of a 5-day, 40-hour work week, although employers can extend this after consulting unions and employees as long as they provide overtime pay and the duration is not over 36 hours a week. Foreign firms are supposed to pay an average standard wage for the industry within a locality and this should gradually rise as the firm grows economically. Factories and workers are not allowed to arrange longer hours even if through mutual consent, as it is feared that employers might pressurize employees to work longer. Overtime has to be paid for anyone working over eight hours per day or 40 hours per week. 3.2.5. Role of Unions. Unions are granted the right to oversee employers’ activities and both domestic and foreign firms are exposed to the same regulations uniformly and objectively applied. In China’s contract law, employers have to offer prior notice to unions in case they want to terminate any employee unilaterally (Paraschiv 2012). Yao & Zhong (2013) explain that however because the law did not grant any penalties for failing to do this however, the Supreme People’s Court in 2013 clearly set failure as unlawful and entitles employees to damages amounting to double the statutory rates of severance compensation entitled to them if it was lawfully done. 3.2.6. Severence Compensation. According to Cooney et al. (2013), the amount one can be entitled to in such a case depends on how long the employee worked and is equal to a month’s salary per year of service. There are however cases where the firm is sold off or there is an internal reorganization and the employer fails to give severance pay while the new employer denies liability. In such instances, workers often lost their severance entitlement. However, the Supreme Court guidelines now require new employers to recognize all service of the employee to the initial employer. 4.0. STATE SUPPORT FOR THE LABOUR LAW 4.1. Administrative Laws. Labour Laws in China may fail to protect interests of labour at times, but administrative laws come in handy. According to Friedman & Lee (2010), these play a greater role as the economy is quickly changing. Statutory laws are lacking in some major policy areas, as a result of which administrative agencies are granted a greater role in formulating policies, regulations and orders. Many policies and measures are often executed first as administrative regulations, before some get qualified to be statutory laws. Administrative law also acts as an important way of emending existent statutory laws. For example, according to the law, the country’s official working hours per week are 44. The state council however through time reduced it to 40. A large number of the regulations also tend to be provisional, and easily subject to change. 4.2. Facilitation of Occasional Bargaining Agreements. While the law limits legal industrial protest, industrial action continues. According to Cooney et al. (2013), labour laws basically do not allow strikes and independent trade unions are barred from operating. Industrial workers have however for a while been making demands for better working hours, working conditions and wages through strikes that have largely been successful in ensuring bargaining with the employers. The industrial workers are basically establishing their own kind of industrial relations system not facilitated by existent institutions for labour relations or the law. Chen (2011) explains that the country’s workers are not able to choose their representatives in collective bargaining processes freely, and there are no laws that require employees to bargain collectively with their employees.  A majority of workers in mills, factories, warehouses, mines and docks for instance still do not have a say in choosing union representatives. They also lack a means apart from stoppage of work to force adamant employers to listen to their industrial grievances. 4.3. Provision of Supreme Court Guidelines. Some challenges in labour law are cleared by such guidelines. For instance, according to Cooke (2013), China’s law through the Supreme People’s Court offers guidance on the arbitration of labour disputes and will always direct lower courts on the best ways of applying employment-related law during disputes. As from 2013, the law also sought to protect workers from injustices through Supreme Court guidance Interpretation 4. In this, employers are required to grant workers monthly pay within any post-termination non-compete period so that the obligation becomes enforceable. According to Cooney et al. (2013), it fails to state the amount to be paid and parties are allowed to agree on it, yet there are no minimum set standards set forth by either practice or regulations. It also lacks the provision for addressing situations within which the worker and employer agree on such obligations. However, the Supreme Court managed to specify that in such cases, employees will be given 30% of their aggregate monthly pay every month in the post-termination non-compete period as long as he or she complies with non-compete obligations. 4.4. Deliberate Attempts to Improve Worker Welfare. The Chinese government has been trying to support the role of labour laws by acting to improve worker’s conditions. According to Cooke (2013), the Chinese State Council for instance in 2013 crafted policies aimed at reducing inequalities in income. Some of these could heavily impact on the workers’ economic status if implemented fast and fully. They include the raising of minimum wages, increase of interest rates in banks whole levels were then artificially suppressed, the enabling of people in rural areas to get permits to shift to cities and raising social program expenditure by a 2 point percentage of the government’s total spending by 2015. According to Cooke (2013), the law ensures employees hired through contracting agents are equal to regularly recruited ones hence sealing a loophole through which flexible staffing could be achieved. The 2013 amendment requires that hiring through agents can only be done for supplementary, backup or temporary jobs, a measure aimed at avoiding having of contracting by agencies as the main way of employment. 5.0. OBSERVED SUCCESSES OF THE LABOUR LAW The existing laws have not been entirely ineffective, as is indicated by the changes that occurred after their formulation. Implementation of the Labor Contract Law has ensured an improvement of the existing contract system, specification of the obligations and rights of parties and protection of the legitimate interests and rights of workers. Because of the legislation, employees under medical insurance rose by 94% between 2007 and 2010. Those with Employment Injury Insurance also rose by 32% while those having pension insurance grew by 28%, those with unemployment insurance by 15% and maternity insurance by 59%. Almost double the arbitration cases in 2007 were presented in 2008, and half of these were mediated successfully (Cui et al. 2013). Although new regulations and laws that balance the employee and employer interests in China are helpful, the existing laws are not really fully enforced. This is often due to absence of agency resources. In order to boost the workplace conditions therefore, China will need to boost the capacity of the labour bureaus that administer worker rights jurisdictions (Chen 2011). 6.0. LIMITATIONS OF THE LABOUR LAW Non-implementation. The country’s labour laws are quite well-written and are in line with international guidelines for protecting workers’ rights. Friedman & Lee (2010) explain that however, the real issues that arise are the absence of integracy tools and resources that would enable the proper implementation and enforcement of existing laws. According to Daubler & Wang (2009), China has comprehensive laws especially on general employment matters both for local Chinese who work for foreign and domestic firms and foreigners working for foreign firms in China. However, in practice, authorities would often not take action when workers raised complaints Failure to Guarantee Employee Organization. According to Brown (2010), one of the weaknesses of the Chinese kind of labour law is that workers are still not given the chance or right to get into and organize themselves in unions, and legal ones are compelled by regulations to affiliate themselves to the ACFTU be willingly subject to its control.  While systems for collective bargaining have been sought by many industries, the right to such bargaining as provided for in both practice and the law is quite restricted. However, in spite of the law’s inadequacies, the government will sometimes allows collective bargaining and even strikes at plant-level. Instances of intimidation. Employers have also reportedly continued establishing new ways through which they are able to circumvent the laws through intimidation. According to Cooney et al. (2013), there are instances where the lawyers who are trying to help the workers to seek justice end up harassed, detained or even imprisoned. For instance, there is the case of Zhao Dongmin, a lawyer from Xi’an, Central China dealing with industrial disputes who in October 2010 was imprisoned for three years. He was charged with mobilizing people to cause a disruption of social order. Zhao had tried to assist workers to draft an application for establishing a union that would seek fair compensation and monitor possible corruption in various state-owned firms as restructuring gained pace. State officials however considered such efforts as threatening social stability. Some outright Insufficiencies in Protecting Labour Rights. Some of the legal provisions provide considerable protection especially to rural workers. However, the Labor Contract Law fails in provision of penalty to employers that fail to ensure enough measures that would promote coverage of migrant workers with social security. The law requires labor administrative authorities to pay damages in case their inaction or action results in harm. The law’s effects depend mostly on enforcement and implementation (Paraschiv 2012). According to Cui et al. (2013), employers also use some tricks to evade the provisions. For instance, they at times craft contracts that cover a year or shorter. Some workers are also forced to sign contract papers that are blank, while even more sign contracts that do not have the workplace or employer’s name. Some contracts also do not have accurate information on the employer’s address, name or the worker’s working position yet the employee may not even notice 7.0. OVERALL EFFECTIVENESS OF THE LAW Considering the legal framework within which unions work, it becomes questionable whether unions have the ability to represent the independent interests of workers (Yao & Zhong 2013). According to Cooney et al. (2013), judicial independence alone is not well developed in China. The civil society is also quite tightly controlled. Because of this, even though the Labour Law assures them of democratic rights, Chinese workers are rarely able to marshal the necessary collective power to push for better enforcement of their laws. If someone becomes too outspoken about the rights, there is the possibility of them ending up in trouble. It remains illegal to establish independent unions in China. According to Friedman & Lee (2010), the ACFTU is the only legal union in the entire country, and it is run by the state. The union is on its part supervised by the ruling Communist Party and union representatives selected by local governments. Viewed this way, the union movement in the country is likely to be a complete sham, its leadership not really representing workers’ interests. 8.0. CONCLUSION China has a highly progressive labour law. Although it has struggled in its transformation from a controlled socialist to free market economy, it has managed to develop labour laws that can compete by international standards. However, the law does not appropriately serve the interest of worker’s rights because of its enforcement which is arguably uneven and weak. The unions in the first place are not entirely free by statute. Intimidation and trickery are also common strategies used by employers to evade their obligations. Quite some significant positive change has arisen due to the law, but still lack of resources and a few loopholes that remained have ensured it is never perfect. Lack of resources for enforcement only serves to worsen the weakness. 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