Yasheng Huang’s much praised Capitalism with Chinese Characteristics has a short section in the update about China’s 2008 Labor Contract Law reforms:

On January 1, 2008, China put into effect a new labor law that requires businesses to offer permanent employment to workers with more than 10 years of employment. This new labor law will be very damaging to the economy. Labor market rigidity will reduce the incentives of entrepreneurs to create businesses and will drive away existing businesses to countries such as Vietnam and India. Aggregate employment may drop and thus further exacerbate the weaknesses of domestic demand, even though the intention of the law is to provide relief to China’s long suffering labor…

… There is little recognition that many of the social problems in China today are a result of a malfunctioning economic process, such as the blockage of small-scale entrepreneurship, and that the right recipe to correct these distortions is further liberalization. The 2008 labor law is one of many examples.  (Huang 2008, p. 297)

Throughout the book Huang is very critical of the constraints placed upon local entrepreneurial activity, as well as the pro-government and pro-foreign bias of many of the investment policies promoted in the 1990s and early 2000s.  He acknowledges that Hu Jintao has been a positive force in reversing some of these trends, though using the same set of state-centric tools to support rural development.

The interviews I conducted in Wuhan were primarily concerned with whether the 2008 labor law succeeded in providing basic contract enforcement to workers, regardless of permanent or non-permanent status (personally I’m not sure what the legal distinction is between the two categories; presumably the former are much more difficult to fire.) One of the justifications given for the labor contract law was that, prior to 2008, a large number of migrant workers would not even be given copies of their contract. This obviously meant that they had little recourse in the event of a labor dispute. Still need to write more about that. In general, most of those I interviewed were positive about the impacts from the contract reform, and would use the normal dispute resolution process in the event of a problem. Admittedly I only talked to those who didn’t yet run into any problems, though many indicated they were familiar with someone who had (garnishment of wages being the most common.)

“China is too pro-foreign” and “policy changes risk shipping Chinese jobs overseas.” Both true; not things one hears much as of late.

Hangzhou’s migrant workers differ markedly from those in Wuhan both in terms of salaries, and industries that they are employed in. This is unsurprising – Hangzhou’s GDP / capita is approximately ~70,000RMB, almost twice as much as Wuhan’s (~40,000RMB). In Hangzhou, migrants are employed in jobs slightly higher in the wage chain (notably, tourism – taxi and bus drivers, masseuses, cooks…) Locals tend to occupy higher wage positions – the same pattern is true in Wuhan, but much less pronounced, due to a fewer relative number of high wage opportunities.

One of the biggest problem that faces migrants everywhere in China is that of delayed or unpaid wages. Either as a result rapacious bosses, or problems with payment systems (for example, it is common for construction projects to begin before complete financing has been secured), many migrants have at one time or another been faced with illegally garnished or held wages.  This has been as much a problem of enforceable contracts (often employees simply weren’t given any – I’m told the situation has improved) and with the knowledge of, and means to proper legal recourse.

Hangzhou is notable among mid/small cities in China in being fairly proactive towards issues of migrant labor. Here’s an unsurprisingly glowing report about Hangzhou’s naturalization policies towards migrants, from 2005. Hangzhou also has a fairly well developed ‘account prepayment’ regulatory system, whereby firms employing migrants must pre-furnish a bank account to automatically pay out to migrants in the event of financial difficulties for the firm.

Such wage payment schemes were first introduced in the Pearl River Delta. Mandating ‘reserve salary accounts’ for firms may discourage investment that might otherwise take place, since operating costs are higher (commensurate with however secure local officials want workers to be). This argument, however, ignores whatever path dependency the migrants themselves might be engaged in. To the extent that migrants count on having a particular job, there are certain sunk costs in travel and arranging their households while they are away, which most commonly means renting out whatever agricultural land they have. These sorts of commitments would seem to make short term transitions more difficult – if you’re pay is getting garnished, you could return home (and do nothing on your rented farm), or remain in the city hoping your garnished wages will come to you. If you’re laid off, better to find almost any job than return home to idle.

These costs are likely more significant when migrants come from a greater distance, as is the case in wealthier cities like Hangzhou and Shanghai, where labor needs are greater than the local populace can support. In Wuhan, the vast majority (87%) of migrant laborers come from within Hubei province, and many are seasonal rather than year round, and as such do not rent out their land, or if they do, do it for shorter terms (3-6 months) rather than a full year.*

Conjecture: it makes sense that more prosperous cities have more rigorous rules on wage prepayment schemes – the firms that are entering these areas are more likely to be able to afford it, and labor tends to be much less fluid insofar as it is more difficult for these migrants to find profitable means to return home.

The effectiveness of wage prepayment laws for firms employing migrants therefore would seem highly dependent upon the particular context, with special consideration for labor mobility in that area. To the extent they help, they provide a context wherein workers can be assured of wages, and thus better form long-term plans; but also introduce a barrier in the form of higher costs to firms seeking to employ them.

Whether these systems can be easily exported from 1st tier cities like Shanghai and Hangzhou to poorer, developing areas is a very relevant question, and one that (so far as I’m aware) there is sufficient, available data to address. More inquiry required.

* From 民权与民生：中国农民权益实证调查，一西安 ：西北大学出版社，2008.5 （中国农村调查书系）

Interesting Southern Weekly article – 找工作难，找工人也难 (‘It’s Difficult to Find Work; It’s Also Difficult to Find Employees’) as part of their special ‘Employment Survey of Migrant Workers.’ The article explains that for many migrants it has become especially difficult to find jobs in recent months, and that wages from the jobs that are available is often not enough to cover finder fees for many labor gang organizers; and that many are also unwilling to take jobs with extremely poor conditions, which at present are the only ones available.

Prior to the crisis, there was some discussion about whether migration patterns would result in dissemination of cultural norms, from urbanites to rural migrants. Articles like these point to some revision of expectations by what is generally considered China’s underclass.

So I’m going to a conference. Here’s my ‘excerpt.’ Probably need more content. Someone give me some conclusions, fast:

My field research consists of recorded verbal interviews with migrant workers in Wuhan, and focuses on the relationship between national level policy reform with actual on-the-ground enforcement of these rules. So far results are inconclusive. Of particular interest are China’s recently implemented Rural Land Reforms and Labor Contract Law Reforms. The former, implemented at the beginning of the financial crisis, seeks to formalize de-facto land right usage arrangements that migrants use when moving into cities. My understanding is that the policy is little more than tacit acknowledgment of urbanization trends already well underway within China. The Labor Contract Reform Law, implemented at the beginning of 2008, seeks to provide numerous classes of workers with additional rights in the event of a labor dispute. Amid a worsening job situation, there is considerable anecdotal evidence that authorities are being told to look the other way during these disputes. 

The original research proposal sought to document case studies of employee-employer disputes, although thus far I have not had the opportunity to explore this issue given the sensitivity of such topics. Any advice for how / whom to approach would be appreciated. By the end of the grant, my hope is to be able to elucidate some of the interactions of these complex forces as they relate to China’s urbanization and demographic shifts. 

ChinaSMACK has a post about charities giving train tickets to migrants to head home for the Spring Festival (this year starting January 26, but people here have already started leaving). Not quite sure what I’ll do for those two weeks – probably background reading. Here are some migrants, in Hankou:

Does crisis provide an opportunity and impetus for reform, or instead encourage reactionary tendencies to preserve security and the status quo? This obviously depends on the particulars – but there’s growing evidence that the financial crisis is stifling efforts to implement land and labor contract reform in China.

With regards to the latter, this Southern Weekly article (劳动合同法期待完善 ”Hopes for Perfecting Labor Contract Law”) describes how loopholes in China’s Labor Contract Law (implemented  Jan 1, 2008) are being exploited by “dispatch companies” (派遣公司 – essentially a large temp agency). These institutions can skirt many of the provisions of the new law, since (by the terms of the law) there exists no direct relationship between dispatch company employees and the main employer. If the problems get out of hand, the dispatch company can simply shut-down, and the original employer seek another such entity to provide labor.

The Labor Contract Law allows workers to seek legal redress for grievances against their employers, which had previously been much more difficult. This is most commonly pursued for delay or non-payment of salary, but also addresses numerous other worker rights issues. Chinalawblog has an excellent overview here and here. 

Prior to implementation, it was widely regarded that the new laws would increase labor costs, potentially making low-skill industries more expensive than other export dependent countries. This fit well with China’s long-term strategy: move up the value chain, a la Singapore. There was at the time, however, no acknowledgment of the financial crisis, and (especially in China) its potential effects on the “real” economy. From the Southern Weekly article: 

As of October 2008, upon being impacted by the international financial crisis, the woes of domestic enterprises continued to increase. Cases of employers delaying salary payments were even higher, as well as an increase in cases where employers failed to meet their contributions to social security payments. In some areas, there have even been instances of enterprises shutting down, and their bosses [illegally] fleeing elsewhere. Instances of labor disputes have increased rapidly.

Perfection of [the problematic] legal clauses is imminent, but this economic winter has caused policy makers to be filled with misgivings [about further reforms].

2008年10月份以来，受国际金融危机影响，国内企业经营困难加剧，企业欠薪情况增多，企业足额缴纳社会保险费的难度加大，有的地方还发生企业主欠薪逃匿事件，劳动争议案件大幅上升。

法律条款的完善迫在眉睫，但这个经济冬天的现实却让决策者畏首畏尾。

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She’s a “street sweeper,” employed by the city to walk around and sweep up trash. The practice is simultaneously an easy way for the municipality to employ lots of people, and relatively useful in a nation where certain sanitary habits (throwing trash in a can) haven’t quite caught on as extensively as one would like. That and there are just a lot of people = lots of waste material. I salute you, trash sweeper lady, for making the streets walkable.