China - labour relations in Guangdong
Published 30 January 2015
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This publication was archived on 4 July 2016
This article is no longer current. Please refer to Overseas Business Risk - China
Summary
The number of strikes across China continued to increase in 2014 – trebling in the final quarter. The lion’s share took place in the southern Province of Guangdong. Drivers of worker activism are diverse, reflecting increasingly complex demographic and social shifts. In response, the Guangdong Government has released new regulations on collective bargaining which set out a framework for dispute resolution.
Detail
Recently released data indicates strike action rose dramatically in the final quarter of 2014. A total of 569 incidents were recorded across China, more than three times the number in the same period in 2013. Guangdong – China’s richest and most populous province – accounted for 20% of the total. Recent strikes have included a walkout by 2,500 workers at a shoe factory and a city-wide strike by cab drivers on the first day of the Canton Fair.
Why Guangdong…?
Guangdong is home to around 60,000 factories. They produce everything from Nike trainers to iPhones. But to maintain output and competitiveness factory owners still rely on cheap, migrant labour. (45 million people have moved to Guangdong since the 1980s.) Many of them now work in manufacturing. Although factory wages have risen sharply, the average monthly salary was still only $424 in 2013, equivalent to half the provincial average and just one fifth of Shenzhen’s.
Why now…?
Rural migrants have always been paid a fairly low wage in China, so one of the big questions that analysts are pondering is: why the relatively sudden change in worker attitudes? There isn’t a single answer, but we can point to a number of trends that have impacted upon industrial relations in recent years:
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Growing worker insecurity: Slowing economic growth (down to 7.4% in 2014) has led to a drop in orders. Factory owners have responded by laying-off workers, cutting overtime, and in some cases withholding pay. This is affecting workers in their 40s or 50s who arrived in Guangdong as teenagers but who are now increasingly concerned about their pensions. (In China women retire as early as 50 and men still go at 60.) In addition, the use of temporary/dispatch workers remains common across many sectors. (There are an estimated 60 million across China on these contracts.) As a result workers of all ages and back-grounds, whether faced with the prospect of unemployment or pensioner poverty, are prepared to take greater risks to secure their legal rights, including chasing back-payments on social security benefits that date back several decades.
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A contracting labour market: There is growing evidence that China has reached the “Lewis Turning Point” of development. With the supply of under-utilised/surplus labour having dried up (figures from 2010 suggest the growth rate of the core 20-39 age group shrank to zero), wages are increasing and the structure of economic growth is being forced to change. This is a fundamental change in Guangdong’s (and China’s) labour market conditions, and has led to workers on the shop floor having a stronger bargaining position.
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Workers better understand their “rights” and are better organised: Local NGOs are operating drop-in centres, hotlines and other outreach activities to raise awareness of workers’ legal rights in relation to pay, overtime and social security. Many are also learning how to organise themselves effectively.
What’s the provincial government response, and how can the UK contribute?
New Guangdong provincial regulations brought into effect this month empower workers to enter into collective bargaining agreements with their employers. They place a greater obligation on (i) employers to honour minimum wage requirements, working hour directives and social security payments and (ii) the unions to play an engaged role in dispute resolution. However, for this new system to work, it will rely on the ability of the two institutions charged with implementing them being up to the job. These are: the provincial-level Human Resources and Social Security Administration (HRSSA) and the All China Federation of Trade Unions (ACFTU).
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