As Unrest Rises, China Broadens Workers' Rights

As Unrest Rises, China Broadens Workers' Rights

By JOSEPH KAHN and DAVID BARBOZA

NewYork Times, BEIJING

29th June 2007

China's legislature passed a sweeping new labor law on Friday that strengthens protections for workers across the booming economy, a response to increasing signs of restiveness among tens of millions of migrant laborers.

The law, enacted by the Standing Committee of the National People's Congress over the objections of foreign investors, requires employers to provide written contracts to their workers, restricts the use of temporary laborers and helps give more employees long-term job security.

The law, which is to take effect in 2008, also enhances the role of the Communist Party's monopoly union and allows collective bargaining for wages and benefits.

It softens some provisions that foreign companies said would hurt China's status as the leading low-wage manufacturing base, but retains others that American multinationals had lobbied vigorously to exclude.

In the past, workers have had to negotiate wages with their employers individually, and China's state-run union has had almost no involvement in setting wages and benefits.

"This is the biggest change in Chinese labor law in the reform and opening period," said Qiu Jie, a labor law expert at People's University in Beijing. "It gives legal protection to the vast majority of workers, who had no way to protect their rights under the old system."

In recent years, President Hu Jintao and other leaders have sought to increase worker protections because discontent among migrant workers has contributed to a surge in social unrest and violent crime.

But the new measure may not improve conditions for low-wage workers unless it is enforced more rigorously than existing laws, which already offer protections that on paper are similar to those in developed economies.

Urban workers may also see little change unless the state-run union, which in the past generally represented management over workers, decides to play an active role in defending worker rights, which many analysts consider unlikely.

Passage of the measure came shortly after officials and the state news media unearthed the widespread use of slave labor in as many as 8,000 brick kilns and small coal mines in Shanxi and Henan Provinces. It was one of the most glaring labor scandals since China began adopting market-style economic policies a quarter century ago.

The police have freed nearly 600 workers, many of them teenagers, held against their will in factories owned or operated by well-connected businesspeople and local officials.

Abuses of migrant laborers have been endemic in China, where millions of temporary workers have faced unpaid wages, unsafe working conditions and collusion between factory owners and local officials.

Party-run courts and local labor bureaus often fail to enforce the legal rights of migrant workers, many of whom never seek remedies.

While the new law will do little to eliminate violations of existing laws, it does require that employers treat migrant workers as they do other employees. All will have to have written employment contracts that comply with minimum wage and safety regulations.

It also moves China closer to European-style labor regulations that emphasize employment contracts. It requires that employees with short-term contracts become full-time employees with lifetime benefits after a short contract is renewed twice.

Perhaps most significant, it gives the state-run union and other groups representing employees the power to bargain with employers.

Many multinational corporations had lobbied against certain provisions in an earlier draft of the new labor law. An early draft gave unions greater powers and made it more difficult to fire workers.

Companies argued that the rules would substantially increase labor costs and reduce flexibility, and some foreign businesses warned that they would have little choice but to move their operations out of China if the provisions were enacted.

International labor experts said several of the most delicate clauses had been watered down. But lawyers representing some big global companies complained that the new law still imposed a heavy burden.

"It will be more difficult to run a company here," said Andreas W. Lauffs, head of Baker & McKenzie's employment law group, which represents many of America's biggest corporations in China.

The National People's Congress released only a summary of the legislation, and officials did not detail how they had changed it from the many earlier drafts.

The summary said companies must "consult" the state union if they planned layoffs, suggesting a softening from earlier drafts that would have given unions the right to approve or reject layoffs before they could take place.

But the summary retained language that limits the "probationary contracts" that many employers use to deny employees full-time status. It tightens conditions under which an employee can be first, while requiring severance packages for the first time. High salaried workers would face caps of severance, however.

Moreover, the law empowers company-based branches of the state-run union or employee representative committees to bargain with employers over salaries, bonuses, training and other benefits and duties.

The Communist Party's monopoly union, known as the All-China Federation of Trade Unions, is a legacy of China's socialist planned economy. It is an official state organization charged with overseeing workers, that in practice has tended either to play no role whatsoever or to help managers monitor and control workers. The state union rarely if ever presses for higher wages or enhanced benefits. It does not permit strikes.

Workers are not allowed to form independent unions.

But as Mr. Hu has pressed the state union to take a more active role, it has demanded greater representation in private Chinese and foreign-financed companies. Some foreign company executives say that if the union takes part in wage and layoff negotiations, that could greatly complicate labor relations.

Foreign executives said they were especially worried about new labor regulations because their companies tended to comply with existing laws more rigorously than some Chinese competitors do. This disadvantage could increase sharply, they said, if the new rules produce fresh burdens that local counterparts ignore.

Chinese legislative officials said Friday that such concerns were overblown, and that many local governments bent the rules to favor foreign investors over local companies.

"If there is some bias in the application of the law, it would tend to be in favor of foreign investors because local governments do so much to attract investment," Xin Chunying, deputy chairwoman of the legislature's law committee, said at a news conference announcing the new measures. "The only people who will suffer under the new law are those who violate the law."