5TH EDITION
INTERNATIONAL
& COMPARATIVE
EMPLOYMENT RELATIONS
Globalisation and change
Edited by Greg J Bamber,
Russell D Lansbury and Nick Wailes
CHAPTER 12
Employment Relations in China
Fang Lee Cooke
© Allen & Unwin, 2011. These slides are support material for International and Comparative Employment Relations 5th edition. Lecturers using the
book as a set text may freely use these slides in class, and may distribute them to students in their course only. These slides may not be posted on
any university library sites, electronic learning platforms or other channels accessible to other courses, the university at large or the general public.
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Lecture outline
• Context
• Development of the legal framework
• The changing roles of the actors
– The state
– Employers
– Unions
•
•
•
•
Collective bargaining
Industrial disputes and dispute resolution
Workers’ Representatives Congresses
Current issues:
– Labour market flexibility
– Employment agencies
– Working hours
Chapter 12:
2 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
The context of Chinese industrial relations
• China has a population of over 1.3 billion, 58% of whom
are in employment.
• There is an uneven rate of economic development
between urban and rural areas.
• Women have relatively a high employment participation
rate, making up 38% of full-time urban workers.
• Long-term government policy has promoted low wages
and full-time employment.
• Social security is rudimentary and is confined mainly to
urban areas.
Chapter 12:
3 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Phases of labour market development
The development of the labour market in China can be
divided into 3 phases:
• Post-1949 to late 1970s: highly restricted labour mobility
through the hukou system: individuals registered with local
authorities, and rural residents were not allowed to seek
employment in urban areas.
• 1980s to early 2000s: gradual easing of restrictions led to mass
migration from rural to urban areas. Many employees in stateowned enterprises (SOEs) were laid off (27 million between
1998-2002).
• Post 2007: re-regulation of the labour market to provide greater
employment protection, especially for workers outside the state
sector.
Chapter 12:
4 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
‘Employment relations’ under the planned
economy until 1979
• Employment relations under the planned economy were
characterised by the ‘three old irons’:
– Iron rice bowl: lifetime employment and cradle-to-grave
welfare, e.g. housing, pension, healthcare provided by the state
– Iron wage: centrally administered and fixed wages
– Iron chair: state-controlled appointment and promotion of
managers based on political orientation
• Almost all enterprises were state owned.
• Employment relations could be better described as a
labour administration system.
Chapter 12:
5 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Beginnings of the new system
• China adopted an ‘open door’ economic policy in late 1970s
to attract foreign investments and domestic private funds.
• There was also restructuring and downsizing of SOEs and
decentralisation of responsibility for personnel
management to enterprise level.
• New forms of ownership
– Foreign-owned enterprises (FOEs), including MNCs and joint
ventures (JVs)
– Domestic privately-owned firms and self-employed businesses
– Township and village enterprises
• China joined the WTO in 2001
• Development of a ‘socialist market economy with Chinese
characteristics’
Chapter 12:
6 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Changing labour laws and regulations
• There has been continuing reforms of labour laws since
1980s, including the landmark new Labour Law of China
(1995).
• Three major employment relations laws took effect from 1
January 2008:
1.
2.
3.
Labour Contract Law
Employment Promotion Law
Labour Disputes Mediation and Arbitration Law
• In addition, the government has issued a number of
regulations, e.g. Special Regulation on Minimum Wage (2004);
Regulations on Employment Services and Management (2008)
• The main objective of this legal framework is to achieve a
more efficient and equitable labour market.
Chapter 12:
7 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Characteristics of the Chinese labour laws
• The central government provides the broad framework
of laws and regulations.
• Local governments devise their own regulations, based
on the central government framework, to suit local
conditions.
• Flexibility is required as there is significant economic
disparity across regions.
• However, the decentralisation of interpretations and
enforcement of labour laws means uneven application by
local officials and authorities.
Chapter 12:
8 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Problems of labour regulation
• The most problematic aspect of Chinese labour laws is
the lack of effective enforcement.
• There are continuing limitations on freedom of
association, e.g. the right to form independent trade
unions.
• Laws are targeted at the formal employment sector and
not at workers in the informal sector.
• Employers tend to take advantage of regulatory
loopholes and seek exceptions.
Chapter 12:
9 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
The changing role of the state
• The legacy of state planned economy is embedded in
China’s political and economic system.
• However, there has been a decline of state sector
employment from 78% in 1978 to 23% in 2006.
• The reduced state sector is due to the privatisation of
SOEs, plant closures and downsizing.
• There has been encouragement of foreign investment
enterprises (FIEs) since the mid-1990s.
• Foreign investors from Taiwan, Hong Kong and Macau
have been given greater autonomy including wholly
foreign-owned enterprises (FOEs).
Chapter 12:
10 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
The role of employers
• Employer associations are not well-established.
• The China Enterprise Confederation (CEC) is the sole
recognised national employer body, but it plays a limited
role in IR matters.
• Nevertheless, employers exercise considerable influence
on the government through lobbying and pressure
groups, e.g. the ‘watering down’ of the draft Labour
Contract Law (2008).
• There are problems in private firms, FIEs and the informal
sector where many workers endure ‘sweatshop’
conditions and employment regulations are violated.
Chapter 12:
11 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Unions – organisation
• The All China Federation of Trade Unions (ACFTU) is the
sole recognised union body .
• Its historical ties to the Chinese Communist Party date
back to the 1920s, when grassroots union
organisations served as the Party member
recruitment bases and provided vital support to the
Communist Party by mobilising workers.
• In 2006, the ACFTU had over 1.3 million grassroots union
organisations with nearly 170 million members.
Chapter 12:
12 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
The role of unions
• The roles and responsibilities of unions are set out in the
Trade Union Law (1950, amended 2001), the Labour Law
(1995) and the Labour Contract Law (2008).
• The unions are effectively a ‘conveyor belt’ from the Party
to the workers.
• Traditionally, unions’ main function has been to organise
social events, take care of workers’ welfare, help
management implement operational decisions, organise
skills training, raise employee morale and coordinate
relations between management and workers.
• In recent years as SOEs have downsized, skill training and
assisting laid-off workers have become major union
functions.
Chapter 12:
13 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Issues confronting Chinese trade unions
• Attempts by ACFTU to gain greater power and autonomy have been
suppressed by the Party – as have autonomous workers’ unions.
• Despite increasingly conflictual relationships between management
and labour, union officials remain focused on their traditional role.
They generally lack the resources, power, skills and knowledge to
effectively conduct collective bargaining and defend workers’ rights.
• Although it is against regulations, union officials may be enterprise
managers or Party secretaries or may be appointed by local
governments.
• Union density in the private and informal sectors remains low.
Reasons for this are:
– Employer resistance
– Workers’ unfamiliarity with the concept of workplace representation
– Workers’ perception that unions are ineffective in advancing their
interests
Chapter 12:
14 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Collective bargaining
• The notion of ‘collective bargaining’ was first introduced into
Chinese ER after the Trade Union Law (1992) authorised unions at
the enterprise level to conclude collective contracts with the
employer.
• The term ‘collective consultation’ is preferred by the state as it
conforms with values of non-confrontation and conflict
avoidance.
• Local authorities facilitate collective consultation between unions
and employers.
• Most collective contracts are made without the direct
involvement of workers or any real negotiations.
• Collective contracts are more widely adopted in SOEs than in
private firms.
Chapter 12:
15 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Labour dispute resolution
• Official statistics reveal that the number of disputes referred to
arbitration rose from 48 000 cases in 1996 to 317 000 cases in
2006 (vastly underestimated).
• Disputes over pay and social insurance account for over half of
the annual disputes.
• Labour disputes appear to be increasingly confrontational and
antagonistic.
• The Labour Law of China (1995) established a new legal basis
for settling disputes.
• There are 3 stages in the labour dispute resolution system:
1. Mediation at the enterprise level through a mediation committee
2. Arbitration upon application by one of the 2 parties
3. Litigation: either party can appeal the arbitration ruling at the local
People’s Court.
Chapter 12:
16 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Workers’ Representatives Congresses
• The worker congresses are guided by the union.
• Their purpose is to facilitate worker participation in
decision-making at plant level.
• Like unions, they at times represent the management side
and have been ineffective in protecting workers’ rights.
• As such, despite this institution, there is no real
partnership between management and workers or
employee voice at the workplace.
• The rising number of disputes referred to arbitration may
be a reflection of workers’ lack of faith in unions and
workers’ congresses as organisations that will safeguard
their rights.
Chapter 12:
17 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Labour market flexibility
• The use of informal employment (e.g. temporary, seasonal,
casual, and hourly-paid work) has long existed but has expanded
recently.
• Chinese government officially recognised the existence of
‘flexible’ (rather than informal) employment in 1996.
• Displaced SOE workers and rural migrant workers comprise the
majority of informal workers – approximately 150 million in urban
areas.
• Informal workers have no employment contract, can be hired and
fired at will, are subject to mistreatment and have no job security.
• The government has tended to ignore informal workers in order
to provide jobs and reduce unemployment. But the problems are
increasing.
Chapter 12:
18 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Employment agencies
• There has been significant growth in recent years at the lower
end of the labour market. The number of agencies and the
number of workers registered with agencies is increasing.
• The Employment Agency Regulation (1995) stipulates that
employment agencies must be non-profit-making if established
by local authorities, but most growth is in private agencies,
which can be profit-making.
• Agencies can assist workers with information, training, job
placement etc, but many are criticised for lack of
professionalism, inadequate information and poor training.
• Immediately before the new Labour Contract Law (2008) took
effect and strengthened employment protection, many
employers dismissed their workers and rehired them under
temporary contracts, or hired new agency workers.
Chapter 12:
19 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Working hours
• According to official statistics, average working hours per
week in the urban area have risen from 45 hours in 2003
to 47 hours in 2006.
• Rural migrant workers and workers in sweatshop
manufacturing plants tend to work extensive hours.
• Often, such workers welcome overtime opportunities to
increase their income.
• Professional and managerial workers are also
experiencing work intensification.
Chapter 12:
20 China
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Conclusion
• China’s IR is now diverging across different forms of
ownership, industrial sectors and different groups of workers.
• The role of the state continues to be crucial in shaping IR. The
government desires to create a more humanistic employment
environment but the intended effect of IR laws are not always
achieved.
• Unions retain a welfare role in the public sector but have little
credibility among private sector workers where their impact is
weak.
• Many traditional characteristics of Chinese culture –
benevolent paternalism, collectivism and harmony – are
difficult to maintain in a more competitive market economy.
© Allen & Unwin, 2011. These slides are support material for International and Comparative Employment Relations 5th edition. Lecturers using the
book as a set text may freely use these slides in class, and may distribute them to students in their course only. These slides may not be posted on
any university library sites, electronic learning platforms or other channels accessible to other courses, the university at large or the general public.