FAQ on Chinese Labor and Employment Laws

1. FAQ on Chinese Labor and Employment Laws Nathan Jackson, Staffer The University of Iowa Center for International Finance and Development

2. Why do China’s labor laws matter to you? China’s labor and employment laws affect your life in many indirect ways. China joined the WTO in 2001 and has since become a dominant trading partner . An important factor in: • Prices of goods and services • Investment location decisions • Social stability of China

3. Comparative labor and employment law China has labor and employment laws that are in many ways similar to those with which you are familiar. • Minimum wages • Child labor laws • Workers’ comp • Safety regs • National holidays/annual leave • National health insurance • Maternity leave • …

4. Comparative labor and employment law In fact, many of China’s labor and employment laws are more progressive than those in the U.S. • At-will employment abolished • Maximum hours legislation • Severe overtime minimums • Maternity leave: 90 days minimum • Pensions • Health insurance • Housing savings programs

5. The big caveats: enforcement, courts, and unions However, China does a very poor job of enforcing labor and employment laws; workers are often unaware of their rights; unions in practice do not have substantial bargaining power. • Few resources to enforce • State Council’s Work Safety Comm’n overloaded leaving enforcement to local levels • Conflict of interest in enforcement • Administrators are untrained, inexperienced, have little authority to enforce • Workers don’t use the courts • Few know their rights, no campaign to alert • Don’t trust courts • Workers often live at the work site

6. The big caveats: enforcement, courts, and unions Labor unions in China do not have independent power; workers rarely elect their own reps; national policy is to avoid strikes. • Chinese workers can unionize easily, but it is not like a typical union • All unions must be affiliated with ACFTU • Unions are not adversarial and they discourage shop-floor participation • Company unions are common and allowed

7. Where do strikes occur? Jan. 2009 - Present Labor strikes have been a hot topic in the past two years, but are still extremely rare. 11 8 8 4 29 Source: China Strikes Crowdmap

8. Migrant Workers – Why do they matter? Much of the inexpensive labor that is found in manufacturing and construction comes from migrant workers. • Abundance – 130+ million migrant workers out of a labor force of 800 million • Export manufacturing and infrastructure relies on migrants • Social stability – crowded cities continue to bring in the poor from the countryside

9. Migrant Workers – Where do they come from and go to? Capital and goods are free to move about China, but the hukou system places practical limits on the ability of workers to move to the coast to find work. • Other issues: • Environmental strains • Housing shortages • Broken families Beijing/Tianjin Shanghai/ Hangzhou/ Suzhou/ Nanjing Guangzhou/ Shenzhen/ Dongguan Source: Ronald C. Brown, Andreas Lauffas

10. How much do factory workers get paid? Wages vary dramatically by industry and region. Wages for experienced factory workers typically fall between $1 and $2 per hour. Living expenses in China are lower than in the West

11. Wrap-up Q & A