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.

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）

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.

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. 

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。

Simultaneous with efforts to close such loopholes, there are unofficial reports that officials are telling employers to ignore the more stringent aspects of the law (from Peter Ford, writer for the Christian Science Monitor in a Q&A at Danweivia Chinalawblog):

I have heard, though not been able to confirm, that provincial governments have been quietly telling employers for several months that if they do not abide by the provisions of the Labor Contract Law they need not worry, and this seems perfectly plausible.

A lot of employers have been complaining for a year or so that the labor law, along with the rising value of the RMB until last July, was a major factor in making them uncompetitive.

There is certainly a recursive relationship between reality and codification of the world that we might like – but the best laws are simply those that formalize informal relationships and agreements. Legislating the unenforceable leads directly to de facto non-compliance and exploitation of loopholes amid reform for rhetorical effect alone.

Again, nothing really new – this post from Freakonomics ‘Where Life Revolves Around Your Cellphone, the Factory Floor, and Forged Diplomas‘ features an interview with Leslie Chang, author of Factory Girls:

A major part of the curriculum involved how to lie your way through job interviews into an office position. This ultra-pragmatism is pervasive in Chinese society today; people are less concerned with abstract notions of right and wrong than with getting things done. In economic terms, this fosters a business climate in which companies copy each others’ products, steal employees and business plans, and compete ruthlessly over tiny profit margins. But with little trust or sense of long-term planning and investment, they find it hard to grow and develop their businesses.

This system also takes an emotional toll on individuals. Everyone I knew in Dongguan had stories of being cheated and robbed and lied to, and over and over people told me, “You can only rely on yourself.” But even though this is a world marked by corruption and deceit, it is at the same time highly functional. It just functions by its own set of rules.

And another migrant picture. These particular migrants (from elsewhere in Hubei) prepare a mean bowl of  delicious Wuhan specialty sesame sauce noodle:

This is new also – a guy who has set up four Xiangqi boards with various asymmetrical scenarios (like starting the game using only half of the pieces, or something else absurdly difficult). He challenges would be customers to beat him. He’s also playing a game of poker on the side.

Well, turns out it doesn’t really work, and that rule of law is still developing. This may seem obvious; let’s remember that I’m both young and naive. The past month has been spent establishing contacts, finding spots to return to (for verbal interviews), and trying to assess the feasibility of gathering information about different aspects of migration and growth, broadly between: 1) development of institutions (labor disputes, primarily over garnished wages or industrial accidents); 2) rural land reform (as it encourages even more urbanization); and 3) impacts of population movements on ’soft’ infrastructure in cities (schools, hospitals, legal system). 

I’ll probably focus on the third for the time – it will afford a strong reason to volunteer at a migrant school. This has myriad benefits: not only can I fulfill my dream of being like Edward James Olmos*; I need to strengthen the warm and fuzzy portion of the resume now that they’re in charge. Furthermore, English is my only real skill, and I’ve heard it could make the difference for some migrants between a job as a laborer and a service person; so there’s a definite chance of some realized benefit.

Actually it’s just that it seems the most feasible. Legal issues are tricky; and it would be exhausting to get a large interview sample. The interviews I’ve been conducting thus far often touch on legal disputes; and the story is usually the same. The other thing I’ve been noticing is that it’s fairly easy to get descriptions about rural reforms from people already here. You hear something like this quite often:

Well, I’m renting my land illegally right now. I’m not quite sure what the reforms mean. You know people have been doing this for years, I don’t know what’s different. It doesn’t provide that much money – if it did, do you think I’d be be <insert awful sounding menial task> here?

It also happens that there’s dozens of other (much more qualified / intelligent) white people researching land reform in China. It’s a very crunchy topic. Number of westerners researching or advocating solutions to primary education policy in China? Zero, as far as I know.

So, land reform going to be ancillary insofar as it is intimately linked with urbanization. Instead I’m going to focus on reforms that might allow cities to deal with the increases in population resulting from urbanization. I don’t expect to find anything substantial (“do this, and it will solve all your problems”) but rather hope to learn something new and interesting about how these changes might impact the future. 

Anything else I should consider? Also; anyone know where to find English teaching material… Like vocab words and lessons? I’ll be needing those soon. Also suggestions for names of students – like Megatron and Led Zeppelin. Quality names.

What is a migrant worker? The vast majority are rural residents who have come to cities to search for work. The Chinese is somewhat more descriptive – 农民工 – “farmer-laborer.” This is a paper I wrote in 2005 regarding a short research project on a shopping mall construction site in Shanghai, it provides a fairly basic overview, as well as trends present at that time.

Basic facts: women are primarily employed in textile factories or service industries. Male migrant workers are largely employed in basic menial labor – the more fortunate have some capacity in a trade – the fellows below are advertising electrician and plumber services. There are approximately 200 million migrants in China, with the number increasing rapidly every year (5-10 million).

]]> http://www.stillgoingnative.com/2008/11/09/chinese-migrant-workers/feed/ 0 http://www.stillgoingnative.com/2008/07/30/they-are-coming-to-the-city-to-take-our-rice-bowls-%e4%bb%96%e4%bb%ac%e8%bf%9b%e5%9f%8e%e5%bc%ba%e4%ba%86%e6%88%91%e4%bb%ac%e7%9a%84%e9%a5%ad%e7%a2%97%ef%bc%81%ef%bc%81%ef%bc%81/ http://www.stillgoingnative.com/2008/07/30/they-are-coming-to-the-city-to-take-our-rice-bowls-%e4%bb%96%e4%bb%ac%e8%bf%9b%e5%9f%8e%e5%bc%ba%e4%ba%86%e6%88%91%e4%bb%ac%e7%9a%84%e9%a5%ad%e7%a2%97%ef%bc%81%ef%bc%81%ef%bc%81/#comments Wed, 30 Jul 2008 19:03:06 +0000 tony http://tonyskriba.com/blog/?p=170 It’s a bit of a literal translation – ‘they’re taking our jobs’ is perhaps more colloquial. “Rice bowl” in this case means source of sustenance, as in the Communist ‘iron rice bowl’ (铁饭碗) which refers to the absolute standard of living assured by the munificence of a planned economy.

Regardless, some more background on migrant workers: I found the following passage interesting (from 中国农民工题与社会保护, pp.13-14). The monthly wage for most migrant workers (in large cities) is ~1000RMB per month; I’ll post more detailed income statistics at a later point. The survey in question was conducted by the authors over a number of years, starting in the late 90s, and the most recent iteration has ~2,000 respondents. Translation is my own, original follows:

… with regards to [migrant workers'] relationships with locals, 31.2% [of survey respondent's] felt that they had been discriminated against by locals, 57% felt that they had experienced no discrimination, and 11.8% did not answer clearly. With regards to [migrant workers'] relations with local government, 16.3% described their interactions as “very good,” 54.2% described their interactions as “average,” 11.3% described their interactions a “bad,” and 11.2% felt their interactions were “very bad.” These responses indicate that relations between migrant workers, locals, and local governments are far from ideal. Only 1.4% of respondents indicated that they would first turn to local government for legal protection, pointing to the importance of migrant – local relations.

 

With regards to respondent’s subjective interpretation of their economic well being in host cities, 41.8% felt that they were “lower class,” 32.6% felt they were “lower middle class,” 23.7% felt they were “middle class,” 1.7% felt they were “upper middle class,” and only 0.2% felt they were “upper class.” With regards to their own interpretation of the economic condition relative to their original homes, 9.2% felt they were “lower class,” 19.7% felt they were “lower middle class,” 51.9% felt they were “middle class,” 14.9% felt they were “upper middle class,” and 4.35% felt they were “upper class.” These results point a large difference in subjective perceptions of relative economic standing before and after migration, though on average subjective perceptions of these differences are worse in host cities…

 

… 79.2% of respondents did not agree with the statement, “a major reason for social instability [crime] within cities can be attributed to the influx of migrant laborers.” 66.5% of respondents did not agree with the statement, “migrant laborers are less well-mannered than city residents.” 89.8% of respondents did not agree with the statement, “migrant laborers are taking jobs from city residents.” [Awkward translation:] Such responses point to major issues of self perception among migrant laborers.

 

。。。在于当地的关系方面，31.2%的人认为初务工过程中受到了当地人排挤，57%的人认为没有受到排挤，11.8%的人说不清楚。在于当地政府的关系方面，16.3%的人反映很好，54.2%的人反映一般，11.3%的人反映不好，7%的人反映很不好，11.2% 的人说不清楚。这两组指标反映了农民工当地居民及政府的关系并不理想，因此，当问到被调查对象遇到困难时，只有1.4%的人首先会想到向下当地政府求助。 在自我评价方面，被调查者认为自己在当地经济地位居于下层者占41.8%，居于中下层者占32.6%，居于中层者占23.7%，居于中上层者占1.7%， 居于上层者仅占0.2%；认为自己在家乡经济地位居于层者占9.2%，居于中下层者占19.7%，居于中层者占51.9%，居于中上层者占14.9，居于 上层者占4.35%，居于上层者占4.35%；这一组织表反映参照系不同，农民工对经济地位的自我评价差别很大，普遍认为在当地经济地位居于中下层，而在家乡经济地位则居于中上层于以上。。。

。。。79.2%的被调查不同意:“城市社会生活变差的主要原因是由农民工造成的”，66.5%的被调查者不同意”农民工素质比城市人差”，89.8%的被调查者不同意：“农民工强了城市人的饭碗“，这些指标反映了现在的农民工自尊，自重，平等意识在增强。

Nothing earth-shattering here; it’s just interesting that over half (of their survey respondents) felt they had experienced no discrimination at all. This doesn’t jive with anecdotal reports of extensive discrimination by city locals. Of course, migrants would say they aren’t taking jobs. The conversation, insofar as it exists, is very reminiscent of the U.S. immigration debates – “no one would want those jobs anyway, someone needs to be doing them…” There are also significant restrictions on population movement (between provinces, and between rural / urban areas), though the extent to which these are well-enforced is still unclear to me.

At this point, my hope is to examine how information (regarding predation) is exchanged among migrant workers, since they are subject to an asymmetry problem (work-gang bosses know far more about their work contracts than they do). If this is in fact the case, is there a low-cost way to propertize information to allow for more rapid exchange? Would doing so speed growth in regions / cities that enacted such policies? If so, someone who could forecast it could get very rich.

China at present has approximately 130 million migrant workers,** defined as ‘laborers who move from rural areas to [relatively] industrialized areas in order to work’ [this includes more industrialized, other rural areas.] China is adding 5m – 8million people to this pool every year, a rate that is growing. By 2018 most estimates put the entire migrant laborer population at 210 million people. That’s about 60% of the U.S. population, entirely as a mobile (and relatively adaptable) labor force.

I’m therefore wondering how empirically analyze labor mobility in municipal level growth – it’s possible to look at ‘number of residential permits awarded,’ but that number is obviously linked to other sources of growth, in that it would also represent a demand for labor. Regardless, if some link could be conclusively demonstrated it would serve as an excellent starting point for more directed qualitative work.

* self aggrandizing photo posts will likely continue.

** from 中国农民工问题与社会把护 (Rural-Urban Migrant Workers in China – Issues, Social, and Legal Protection).