The company vanishes: workers chase shadows in search for wage arrears

31 October, 2013

Wage arrears have been one of the most common causes of labour disputes in China for well over a decade. And despite new laws criminalizing the malicious non-payment of wages, there is little evidence that the situation for workers is improving. It is still relatively easy for company bosses to use stalling tactics or simply disappear in a bid to avoid paying the wages they owe employees.
In July 2013, China Labour Bulletin Director Han Dongfang talked to Zeng Biping, a technician at a small energy-saving equipment factory located in Dongguan, southern China’s manufacturing hub, which employed about 20 workers. Zeng, a relatively well-paid, skilled worker, and two colleagues were owed a total of 180,000 yuan in back pay but after nearly two years of legal battles, all of which the workers won, the company was still only willing to offer about a third of what it owed.
Zeng Biping told Han that the problems with the non-payment or delayed payment of wages at the company started back in 2011:

They would pay for one or two months, then there would be nothing for a few months. Some workers even went without pay for up to six months straight. I personally am owed four months’ wages. We did not understand why they didn’t pay. Eventually, we went to the Labour Bureau to complain about the situation, but were told that mediation would not work in this case. We were urged to go to arbitration.

Delaying tactics
In late 2011, Zeng and his two colleagues did just that. It should have been an open-and-shut case but the arbitration committee took six months to reach a decision. The Lunar New Year holiday disrupted proceedings and they had to wait until late February 2012 for the case to resume. Two months later, the panel found in Zeng’s favour, and the company was told to pay out 160,000 yuan in total. After the award, the three workers went back to the Labour Bureau to demand enforcement.
But at this point, the company produced a double whammy. It appealed the arbitration ruling to the civil courts and in addition counter-sued the workers, claiming they had not attended work or carried out their duties as instructed. Zeng reasoned that the company did not have the cash to comply with the arbitration award and as such had decided to litigate as part of a strategy of procrastination.
The appeal judge however upheld the arbitration award and added another 20,000 or 30,000 yuan to the total bill to include an element of compensation for the termination of employment contracts. The company appealed again, and the second ruling also went against them. With both rulings basically upholding the decision of the arbitration committee and legal victory under their belts, it simply remained for the three colleagues to try again to obtain enforcement. Here, things went more seriously awry. The company tried a new ploy. It disappeared, leaving no details of its location or any record of assets.

The court told us they could not get hold of the company. There were no assets and no way of enforcing the decision. Then the court wound things up and stopped working on the case. So in December 2012 we went to the police to report a case of malicious wage arrears, and early in 2013, around the Lunar New Year, the police managed to track down the company in its latest guise.

They said they would respond to our demands. But not all of us were around at the time. Later, when we were all together again, we went to the police, and called company representatives over to discuss things, to see if they would give us a one-time payment or some other settlement. But they went back on their word. They said that they could only pay a small amount. They said, ‘you three are trying to get 180,000 yuan. If you accept 10,000 or 20,000 yuan per head we will pay up and that will be an end of it. But if you insist on 180,000 yuan, that is not on.’

Criminal charges
Zeng and his colleagues did not agree to this deal and all they got was a written pledge from the company at the police station, to “respond” to the arrears issue, though no figure specifying the amount owed was ever written down.
Given that this was a clear case of malicious non-payment of wages, as stipulated in the 2011 amended Criminal Law, Han asked Zeng why the police had not filed criminal charges against the company. Zeng explained that when they went to Dongguan Public Security they were told the matter had been complicated greatly by the company’s repeated changes of identity. As long as they could not be sure of the identity of the company, the police were reluctant to get involved.
During this entire process Dongguan Fuguang changed its legal identity three times. It also stopped production on the grounds that “they could not find premises.” The management then claimed they had in fact been swindled by a previous management and were involved in their own litigation. In light of these circumstances, the court backtracked from its 180,000 yuan ruling, and urged the three former employees to accept 30 percent for the time being; adding that they could try to get the rest at a later stage, using the “squeezing the toothpaste tube” method.
At this point, Zeng and his colleagues realized they had no option but to make some concessions.

If we get 80 percent of what is owed, we will be happy with that, but if the court says that enforcement is impossible, we are going to have to think about other ways of recovering the money.

The three workers came from different parts of China, making it difficult for them to develop a coordinated plan of action: Zeng was from Hunan and his two colleagues were from Sichuan and Guangdong. The Sichuan guy, Zeng said, ran out of money and had to go back to his home, while the other one is working in the construction industry. Both are pursuing the litigation while working. Zeng is now unemployed.
In retrospect
Looing back, Zeng said, the main problem was that initially they did not understand how the arbitration and legal process worked and how to really push their case forward. Asked by Han what they would have done differently if they had the chance, Zeng said:

We would still have gone through arbitration but it would have also been worth kicking up a fuss with the local government, because if you don’t do that, nobody cares. I called up a newspaper, the Dongguan Daily, aiming to use the media to get more publicity for our cause but if I’m honest we did not do enough. Petitioning came to nothing. I know that some things are illegal, like blockading the road for example, but sometimes you cannot avoid doing it, otherwise it is hopeless. If we had done that perhaps we would have got our money within two or three months. Now, it has dragged on for over one year. It is nearly two years.

Throughout this process, Zeng found lawyers to be of little use.

We used a legal aid lawyer in the first trial but later we felt that his advice had been inadequate. For the appeal, we did not bother with a lawyer. We felt that if we had spent our own money on a lawyer, we would have cleaned ourselves out.

What was particularly galling for Zeng was the subsequent discovery that the company was actually receiving 500,000 yuan in government subsidies designed to promote the energy efficient industries. “Had we known this, we could have asked them to freeze the company’s assets pending a ruling,” he said.
Zeng said it felt like the dice in their case had been loaded against them from the outset:

I have all the documentation, my own and that of my colleagues, I have looked through all of it, and my impression is that the arbitration committee basically sided with the company. They did not want us to create a fuss.

Moreover, the inability of the courts to enforce the judgments in their favour gave Zeng the impression that the legal system was basically worthless.
Han suggested that the establishment of a small claims court dealing specifically with wage arrears cases might provide a solution. Because such a court would not be bogged down with other civil cases, it could process complaints quickly and ensure payments are made while the employer still had accounts receivable coming in.

This interview with Zeng Biping was first broadcast on Radio Free Asia's 劳工通讯 in six episodes in July 2013.

Frustrations lead to confrontation as workers take to the streets

 

6 November, 2013

Frustrations with low pay, wage arrears and poor, often hazardous, working conditions led to an increase in strikes and worker protests last month.
China Labour Bulletin recorded 52 incidents on our Strike Map in October, up from 40 in the previous month. These protests sometimes spilled over into conflict with police and security forces. A police presence was reported in 15 cases, with at least nine protests leading to confrontation and arrests.
When 300 shoe factory workers in Dongguan took to the streets demanding the payment of wage arrears on 8 October, the local police used dogs to disperse the crowd and several striking workers were reportedly bitten. In another incident in Jiangsu, riot police reportedly beat and arrested numerous workers who were on their way to the local government to petition for the payment of wage arrears.
Guangdong continues to be the forefront of worker protest in China, accounting for 33 percent of the incidents recorded last month. A major factor in labour unrest in the province is the transformation and restructuring of the manufacturing industry, leading to the closure, merger or relocation of inefficient and failing businesses there. For example, more than 500 workers at a Japanese-owned electronics factory in Zhongshan staged a strike when they realised management was preparing to close the factory and sell off equipment and machinery.
There were however strikes and protests across the whole of China last month with one of the most prominent occurring in the capital Beijing on 21 October. Around 5,000 workers who had been laid-off from China’s four big state-owned banks protested outside the headquarters of the Industrial and Commercial Bank of China, demanding reinstatement and financial aid. Many of them had seen their standard of living decline significantly while their former co-workers had flourished. According to some reports, nearly 1,000 police were present at the protest and several workers were either beaten and or arrested.
One of the more unusual protests occurred on 28 October in the Zhejiang city of Wenling when up to 1,000 doctors and healthcare workers took to the streets to demand improved safety measures for hospital workers. The protest was sparked by the killing of a senior doctor at the No.1 People’s Hospital in Wenling. This was just one of several violent attacks on hospital staff in China in the last few months.
However, there were some positive developments for workers last month. On 10 October, a group of 96 workers at a moulding factory in Guangzhou signed a collective agreement that forced management, for the first time since the factory was set up 20 years ago, to give workers proper severance pay. The agreement followed four months of collective action and demonstrated remarkable conviction and solidarity on the part of the workers.

Undercover students expose sorry state of factory trade unions in Shenzhen

 

29 October, 2013

In May 2012, the Shenzhen Federation of Trade Unions launched a high profile campaign to hold direct elections in 163 enterprise trade unions in the city by the end of the year.
In the summer of 2013, a group of students from nine universities went undercover to assess the actual state of enterprise trade union reform in the city. They investigated five factories and found the trade unions there to be of little or no use in protecting workers rights.
The students sent their findings to the Shenzhen Federation of Trade Unions on 26 October 2013 and called for a face-to-face meeting to discuss the failings outlined in the report.
The 12 investigative students posed as job-seekers and managed to find work at five Shenzhen factories that were supposed to have good trade unions. Three of the five unions had in fact received national awards for their work, including one lauded as a star of the 2012 democratic trade union election movement.
The investigation found that the trade unions in these factories played no effective role in representing the workers or in upholding their rights. Violations of workers’ rights, such as excessive working hours, basic pay lower than the municipal minimum wage of 1,600 yuan per month, poor working conditions and insufficient protective gear, were discovered at many of the five factories. The only factory that had reasonable pay and working conditions, as well as a high union recognition, was the Japanese-owned Epson factory.

In all, the students interviewed 211 workers and found that while 59 percent of them knew there was a trade union at their factory, only 17 percent knew what a trade union actually was, and 15 percent knew if they were a member of that union or not. At the Baitai jewellery factory, for example, none of the 33 interviewees knew if they were a member of the union.

There were no democratic union elections in the five factories. The report revealed that none of the workers representatives or union chairs at these factories had been elected from the rank and file of ordinary workers. In most cases, the factory simply assigned senior management staff to these positions. The report also revealed that factories sometimes forced workers to provide false statements to the municipal trade union when it investigated.

China Labour Bulletin Deputy Director Cai Chongguo suggested that a deeper engagement with civil society and the use of social media could help counter attempts by management to control and manipulate the trade union:

To prevent the company from manipulating the election process, the trade union should, prior to the election, work with non-governmental labour organizations to provide training sessions on election organizing, union operations and collective bargaining. During the election, civil society organizations, journalists, and local trade union officials should be present, and workers could also broadcast the election process live on social media.

Developing a blueprint for collective bargaining in China

 

Developing a blueprint for collective bargaining in China

Labour rights groups and worker activists have, for the first time, jointly devised and published a grassroots blueprint for collective bargaining in China.
The aim of the Code of Collective Bargaining (劳资集体谈判守则), issued on 11 October, is twofold: To give employers and employees a practical guide to collective bargaining, and provide a possible template for collective bargaining legislation in China in the future.
On the same day that the Code was published, the Guangdong People's Congress issued its revised Regulations on Collective Consultations and Collective Contracts (广东省企业集体协商和集体合同条例 [修订草案稿]); also designed to develop a mechanism for the peaceful resolution of labour disputes through collective negotiations.
The Guangdong government, like the province's workers and labour groups, clearly recognises the need to improve labour relations. However, while the Regulations are an improvement on earlier drafts, they fail to take into account important new developments in collective bargaining over the last few years and still promote the largely discredited idea of collective consultations, in which stability and harmony are prioritized over worker engagement.
The Code, by contrast, is based entirely on the first-hand, practical experience of workers and labour organizations in conducting bargaining on the ground in Guangdong. The 65-article Code acts as a step-by-step guide to initiating, preparing for, conducting and concluding collective bargaining in the workplace and supervising the implementation of the resulting collective agreement.
The Code is based on the fundamental principle of good faith bargaining and outlines the rights and obligations of both the employer and employee bargaining representatives. It seeks to create a bargaining process that is equal, open and fair, one that ensures the personal safety and integrity of all bargaining representatives, and offers practical options for the resolution of deadlock.
Unlike the Guangdong Regulations, the Code recognizes the fact that strike action is already commonplace and should be seen as an integral part of the overall collective bargaining process. The Code sets out the conditions under which workers should take strike action and stresses that strikes should only be used when all other means of breaking a deadlock have been exhausted.
The Code also recognizes that not all factories have a trade union, and as such it sets out a detailed procedure under which employees can inform the nearest district trade union of their actions and provide it with the opportunity to get involved in the bargaining process if necessary. It is also stresses that even in workplaces that do have a trade union; the employees themselves should be directly represented in the bargaining meetings.
CLB believes that the strength of the Code lies in the fact that it is rooted in the day-to-day reality of Chinese labour relations. The Guangdong Regulations by contrast seem to exist in a parallel universe where all labour laws and regulations are adhered to and government and trade union officials actively promote workers' interests.
CLB argues that instead of simply publishing draft regulations for a limited period of public comment, the Guangdong government should extend the consultation period for the Regulations for at least a year in order to gather sufficient practical experience and information for future legislation. The authorities should observe and study the actual practice of collective bargaining in the province, including strikes, the recall and re-election of enterprise trade union officials and the role of non-governmental organizations in assisting workers during the collective bargaining process.
In conclusion, CLB Director Han Dongfang stressed that, despite the limitations of the Regulations, the Guangdong government was at least now in step with workers and civil society in understanding the need for change:

We should recognise that workers, labour groups and the Guangdong government are all taking important steps towards the creation of a stable and effective collective bargaining system in China and we hope that further concrete steps can be taken in the future.

China's labour market faces tough challenges ahead

China's labour market faces tough challenges ahead

China's labour market is in a state of flux. The needs of employers and the demands of employees are increasingly out of sync, and this dislocation is only likely to worsen as growth continues to slow and the economy moves away from a reliance on exports towards greater domestic consumption.
Although the working-age population will almost certainly decrease in the coming decade, the kinds of jobs that have driven China's economic growth in the past could decrease at an even faster rate. Many low-cost, labour-intensive industries have already shifted substantial numbers of jobs to Southeast Asia, while the creation of the value-added jobs the Chinese government covets has been constrained by the limited skills the labour market can currently provide.
In a new report on the employment situation in China, CLB examines the latest official data on the regional and age distribution of workers, looks at the industrial sectors and types of ownership that have seen an increase in employment over the last five years, and at the groups of workers that have experienced the most difficulties in finding employment.
The report analyses the problems faced by college graduates, a record number seven million of whom will be looking for work this year, as well as elderly and disabled workers who have long been discriminated against in the job market. It also examines how demographic changes have created labour shortages in some areas, forcing employers to reassess their hiring practices.
In order to address China's deep-seated and complex employment problems, CLB recommends that the government and employers:

• Tackle the widespread and widely-accepted practice of employment discrimination, which is currently one of the biggest obstacles to an open and healthy labour market.
• Provide more on-the-job training. Employers routinely complain that they cannot find suitable candidates but at the same time set unrealistic requirements and are reluctant to provide training for new workers or retrain older employees.
• Ensure job-seekers understand and have realistic expectations of the job market. The education system needs to be consolidated and restructured so that students better understand their job prospects.
• Ensure that all workers have the social insurance they are legally entitled to. As the population ages, the need for decent pensions and healthcare will become ever more pressing.
• Give workers greater say in their pay and working conditions through collective bargaining with management. Ultimately, the best way to ensure that workers get the right pay for the right job is to give the workers themselves a more prominent voice in the regulation of the labour market.

CLB's study on Employment in China is published today in the Resource Centre, a section of the website designed to give readers a comprehensive overview of the key labour issues in China. Other topics include migrant workers and their children, wages, social security, employment discrimination, the labour dispute resolution process and the system of work-related injury compensation.