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Younger generation of workers more willing to strike to protect rights – new Maplecroft Labour Standards Report on China

21/04/2011

According to a new in-depth report released by Maplecroft mass strikes in China are being led by a younger generation of workers that are increasingly aware of their rights and are not afraid to protest against low wages, long working hours and poor working conditions.

The Labour Standards Report – China asserts that the strikes, which gathered new momentum after the Foxconn suicides in 2010, are a reminder of China’s poor record in labour rights and protection. Maplecroft research reveals that strikes have been most common in the automobile and electronics sector in Special Economic Zones (SEZs), particularly in Guangdong, Jiangsu, and Zhejiang. The strikes also draw attention to the strategic, operational and reputational risks faced by multinational corporations, with supply chains and operations in China.

Younger workers that have migrated from rural to urban areas appear to be more willing to exercise their rights even if this puts them at risk of losing their jobs. Liu Kaiming, the executive director of the Institute of Contemporary Observation, a privately funded group in Shenzhen that focuses on labour issues, reinforces this view. In a recent interview with Reuters, Liu observes that this new generation “are more willing to speak out about their grievances and are less tolerant of long hours and tough conditions than the older generation.”

Of real significance is the fact that laws introduced in 2008 are effectively transforming China’s labour market; meaning the balance of power is moving away from employers. These laws are commonly referred to as the ‘law of 2008’ and include the Labour Dispute Mediation and Arbitration Law, the Employment Promotion Law and the Labour Contract Law, all enacted in 2007, giving workers more rights and protections. For example, all workers now have a right to a written contract and a cheap and easy mechanism to address disputes.

Significantly, the government appears to be allowing this change to occur and the authorities have refrained from taking a hard-line to prevent recent labour strikes even though they have been on the increase.

The government-affiliated All-China Federation of Trade Unions (ACFTU) is meanwhile working to implement a nation-wide collective bargaining system, which would give workers more rights. At present, 23 cities and provinces have already implemented rules and regulations on collective bargaining and another 13 are working towards this achievement.

Although SEZs offer attractive tax incentives and a large pool of cheap labour to foreign investors, they have also increasingly become associated with labour rights violations. The weak enforcement of labour laws in SEZs is the direct result of local labour departments not having the money or manpower to properly monitor workplaces. The lack of enforcement also derives from corruption amongst officials.

The recent strikes have also led to an increase in wages and better working conditions in many factories throughout the country. To some extent the balance of power seems to be shifting in favour of the workforce - impacting on the types of risks faced by MNCs wishing to source from China.

However, the competitiveness of Chinese suppliers might decrease as higher labour costs are likely to contribute to higher overall production costs. Companies may in turn consider moving to other countries with more competitive labour costs, although minimum wage rises in developing countries including Bangladesh, India and Pakistan may bring China back on par.

The Labour Standards Report – China offers in-depth analysis for all major labour issues, country scores, maps, key recent events and stakeholder viewpoints.

For more information contact info@maplecroft.com or call +44 (0)1225 420000

In-depth reports contain detailed analysis, country scores, maps, key recent events and stakeholder viewpoints. They are available for all countries, sectors and issues. Please contact info@maplecroft.com for more information.