By Zhang Xiangdong and Jiang Yunzhang (张向东, 降蕴彰)
News, Cover
Issue No. 533, Aug 22, 2011
Translated by Zhu Na
Original article: [Chinese]
Opposition from businesses has stymied a three-year-old attempt by the employment ministry to raise the status of China’s poorest workers, highlighting the government's difficulties in delivering on its pledge to distribute national income more equitably.
The draft Regulation on Wages, which was drawn up in 2008, envisages steadily increasing minimum wages and fairer treatment for workers on temporary contracts. Its implementation would have marked an important step towards realizing the 12th Five-Year Plan goal of transferring wealth from producers to households. The stalemate instead reinforces the impression, most recently voiced by Eurasia Group, that the country’s leaders “lack the political stomach” to fulfill their pledge.
“At the moment there is not the slightest sign that the Regulation on Wages will be adopted,” a person familiar with the proposal told the EO. The draft was put together by the now-defunct Ministry of Labor and Social Security, the State-owned Assets Supervision and Administration Commission, or SASAC, the All China Federation of Trade Unions and the China Enterprise Confederation.
Minimum monthly wages in China are set differently in each province, but current levels are around 30% of the average for urban workers according to data from the government, which says that the lowest salaries will have to increase by around 15% annually if they are to reach half the urban average by 2015, as mandated in the five-year plan.
The Ministry of Human Resources and Social Security, which superseded the Ministry of Labor and Social Security, wants to insure that wages increases keep up with corporate income and that businesses don’t widen the wage gap between their worst paid workers are the rest.
Officials also hope to close the gap between growth in gross domestic product - 9.6% in 2010 - and growth in real disposable income - 7.6% for urban residents over the same period.
Privately-owned businesses, represented by All-China Federation of Industry and Commerce, have complained that they can’t afford to raise wages unless taxes are cut.
Raising minimum wages is less of a problem for the state-owned enterprises, whose opposition to the draft regulation has instead focused on its implications for workers employed through employment agencies.
Around 60 million Chinese are employed through such agencies, with around two thirds of that total working at state-owned enterprises. These arrangements enable state-owned enterprises to circumvent the limits on employee numbers imposed by SASAC.
By using workers employed by the agencies, companies are also able to pay less for their labor and avoid contributions towards social security plans.
SASAC has proposed the principle of ‘equal pay for equal work,’ whereby workers employed through agencies would be paid the same amounts as though employed directly.
The trade union federation was responsible for the section of the draft regulation related to collective wage negotiation. One person familiar with Chinese labor laws said that regular wages increases and employer abuses can’t be addressed without stronger representation for workers in negotiations with employers.
The National People’s Congress in June began an assessment of workers compensation in six provinces - Heilongjiang, Guangdong, Liaoning, Zhejiang, Fujian and Henan – and is due to report at the end of August.
Links and sources
Enterprise Wage Regulations
People's Daily: Wage increase in China to be pegged to CPI
World Bank: State-owned enterprises in China: How profitable are they?
The New York Times: As China\'s Wages Rise, Export Prices Could Follow
China nudges companies towards collective wage negotiations
New Chinese law to turn \'lose-lose\' labor disputes into \'win-win\' negotiation
South China Labor Conditions Report - Introduction
