China’s Labour Contract Law states that employers must provide economic compensation when they lay off workers or shut down factories.
However, March 2023 data from the China Labour Bulletin shows that workers are protesting due to companies relocating and avoiding their responsibility to fully compensate employees. Reports suggest that the practice of disguised resignations allows companies to bypass the law and not provide proper compensation.
Over a hundred workers at foreign shoe supplier go on strike in Hunan. On 16 February, Kaisheng Shoe Factory workers in Hunan province went on strike over layoffs and owed wages, and police were dispatched to the scene. Meanwhile, the local government had recently praised the factory for its “inspiration” to the city, and the local trade union organised empty International Women’s Day activities and political sessions rather than understanding the needs of workers and representing them in the face of ongoing layoffs. Kaisheng supplies international brands, including Nike and Crocs, which should take steps to understand workers’ conditions and concerns and operate their supply chains responsibly in light of China’s changing economic environment.
After heated worker negotiation at electronics giant Gome, union reveals it had no contact with ordinary workers. Workers at one of China’s largest electrical appliance companies, Gome, have been laid off and some were not paid wages since July 2022. About a hundred Gome employees went to the company headquarters in Beijing on 5-6 December 2022, blocking the office and leading to physical confrontations with management, which were mediated by police.
The incident at Gome reflects changes in China’s economy, as traditional retailers struggle in the new e-commerce landscape and with changed consumer behaviours as a result of the pandemic. China’s trade unions at all levels, from the enterprise up to the national level, should be prepared for an increase in labour rights grievances when massive domestic companies with holdings in various sectors face financial difficulties.
Migrant courier dies from overwork in Beijing, local unions cite jurisdictional constraints in helping platform economy workers. Zhao Wutao died from overwork in the lead-up to China’s annual November shopping holiday, delivering 566 packages in a single day. But the process of establishing this as a work-related accident for his family to receive compensation is an uphill battle, and none of the unions CLB reached out to were willing to help. In the midst of an expansion drive, China’s official union has said it wants to be the first stop for workers in difficulty, so that “when they have a problem, the first thing they think of is the union.” But for workers in the decentralised platform economy, the question is often far more basic: which union can and will take responsibility to help them? The answer is often, none.
Demographic and economic changes lead to labour market mismatches. In this edition: Demographic changes affect once-stable education jobs; food delivery rider job market is becoming saturated; drop in foreign trade creates manufacturing job shortage in China’s coastal regions; older, rural workers migrate to cities for work but cannot find jobs.
CLB data analysis
CLB’s Strike Map recorded 121 incidents in March 2023, up from 104 in February. Of the total, 29 percent were in the manufacturing industry, up from 25 percent last month and 12 percent in January. In 2022, less than 5 percent of incidents were in this sector, with construction accounting for almost half, and services and transport each logging about 20 percent.
CLB’s Strike Map collected 34 incidents by workers in the manufacturing sector, and our Calls-for-Help Map recorded almost 10 percent of cases by manufacturing sector workers, up slightly from 9 percent in February.
Pie chart: CLB Strike Map data by industry (March 2023) Collective actions by workers in the manufacturing sector were mainly concentrated in Guangdong province (20), followed by Zhejiang (4), Shanghai (4) and Jiangsu (3). The electronics industry (11) and the garment industry (5) recorded the most worker protests, and the remaining incidents were in the toy, automotive, machinery, metalworking and agri-processing industries.Factory relocation methods avoid paying workers proper compensation under China’s labour laws.
As we analysed in our newsletter last month, the closure or relocation of factories in China has led to widespread non-payment of wages and layoffs, provoking a rise in worker strikes and protests in the manufacturing sector. These problems have not let up, and we can see from this month’s data that mechanisms designed to force workers to resign allow companies to avoid paying economic compensation as provided under China’s Labour Contract Law.
Electronics giant Foxconn’s factories in Shenzhen and Chongqing saw multiple workers’ rights protests in March 2023. On 1 March, Foxconn workers in Chongqing protested over a change in their work duties. On 14 March, workers at Foxconn in Shenzhen also protested, saying the company was laying off workers in a disguised way by forcing them to resign. On 19 March, media reported that workers in an online video had said that Foxconn in Zhengzhou (the site of a major labour rights crisis last autumn) was diverting employees to factories in other cities and even to India, and that workers who refused to be relocated would be dismissed.
A similar situation occurred in Guangzhou at a Taiwan-invested electronics company, ITEQ. Workers posted online on 15 March that the company was relocating but calling it an “industrial upgrade” that required workers to submit to the arrangement for transfer or be “automatically separated from their jobs.”
The arrangement further specified that unwilling workers would be locked out of the factory but placed on standby for mandatory on-call work.On 3 March, a Taiwan-owned textile factory in Suzhou announced its relocation to a new site only 10 kilometres away. Although the distance is not far and the factory may not owe workers compensation for a nearby relocation, workers protested the decision, saying they did not want to move and would have to resign.
On 9 March, workers at a Hong Kong-owned toy factory in Dongguan, Guangdong province, gathered at the front of the factory and protested relocation. The workers were worried that after the company changed its business licence and registered under a new name, the current employees would face a situation that had happened to them before: their seniority would be zeroed out, which affects their wages, benefits, and severance pay.These types of techniques that essentially force workers to resign, rather than be laid off by the company, eliminates the statutory economic compensation companies are required to pay under the Labour Contract Law for the employer’s unilateral termination of the contract. Compensation is calculated based on each worker’s length of service at the company, and the Labour Contract Law specifically forbids change of corporate name or owners as a loophole preventing compensation.
With a drop in purchase orders from overseas, China’s factories – and particularly electronics factories currently in their off-season – are facing economic challenges and are downsizing and relocating to reduce their costs. However, China’s legal framework provides that these types of decisions must be discussed with workers or the trade union, and through this mechanism workers have a say in the negotiations over the process.
But in these incidents CLB has collected, workers’ interests were apparently not considered. Workers were not given a fair choice over whether to be laid off or to transfer employment, and the companies evade responsibility for financial compensation by forcing resignations. Moreover, workers lacked representatives to negotiate with the company, and they went online to seek help or resorted to protests.Where is worker representation in relocation procedures?
Where is China’s trade union in this process? Among the various incidents we collected, we only saw that the trade union was mentioned by factory management in Suzhou. Because of the concentration of incidents in Guangdong province, CLB takes special note of union activities there.
On 21 March, the Guangzhou Municipal Federation of Trade Unions held a plenary session, but the meeting did not mention ways to respond to the changing economic environment in the manufacturing hub. Rather, the meeting focused on improving skills of workers and promoting collective bargaining, but this was all on paper and does not respond to the protests and voiced concerns of workers in the region.
In fact, the work of the union is entirely theoretical. The Guangdong Provincial Federation of Trade Unions involved almost 800 people in forming 199 teams to participate in a mock collective bargaining competition on 31 March. The scenario for the simulation was traditional manufacturing enterprises relocating, and the teams had to negotiate on economic compensation and termination of labour contracts. The union said it hopes these exercises will create a shift in thinking among employers and workers to balance corporate development with protection of workers’ rights and interests.
But the fact that this massive negotiation exercise was in practice only invites disbelief, when workers at over a dozen factories in Guangdong in March alone were actively protesting conditions that urgently need worker representation. By only practising these skills in a neutral environment, the union missed many opportunities to practise them in the real world, thereby shirking the opportunity to improve conditions for thousands of real workers.