How the Communist Party of China Safeguards Workers’ Interests During Crisis

The following is the contribution of the Marxist Institute – Academy of Social Sciences People’s Republic of China, Prepared by Enfu Cheng and Shuoying Chen, researchers at Marxism Institute, Chinese Academy of Social Sciences, P.R. China, to the nineteenth International Communist Seminar on “The consequences of the economic crisis and the intervention of communist parties,” Brussels, 14-16 May 2010.

Since the global financial crisis broke out, the Communist Party of China has let government and trade unions play their full role in safeguarding workers’ interests with regard to employment and social security, etc.

Ⅰ  The measures CPC and its government have taken to safeguard workers’ interests

1. The All Federation of China Trade Unions (AFCTU) has adopted three major measures: 

Initiate “co-operation agreement” on “no layoffs and  fewer layoffs, no pay cuts and less pay cuts, and payment consultation”. Till the end of 2009, 631,000 enterprises have joined the initiative covering 84 million workers.  Carry out “Migrant workers aid operations.”

In 2009 AFCTU put in 1.1 billion yuan for 13.93 million migrant workers [i.e., migrating between village and city] business guidance, rights safeguard service and life helping. AFCTU was involved in the formulation of rights safeguard regulations. For example, in August 2009, AFCTU issued a notice on “further strengthening the democratic management in enterprise closure, bankruptcy and restructuring” which stipulates that restructuring scheme is subject to scrutiny by trade unions before implementation.

2. Raise the level of the basic pension by 10% (120 yuan per month) for enterprise retirees. This is the fifth consecutive increase in corporate pensions since 2005.

3. Economically developed areas have increased the minimum wage. The minimum monthly wage in Guangdong, Jiangsu and Zhejiang Province all increased by more than 10% in the first quarter of 2010, reaching 1,030, 960 and 1,100 yuan respectively.

Ⅱ  Problems faced by China in safeguarding workers’ interests

Under the effect of various measures, China’s registered urban unemployment rate was controlled at 4.3% in 2009. The number of China’s trade union members grew to a new record high. By the end of 2009, the total reaches 226 million, with an increase of 14.173 million, of which 7.983 million are migrant workers.

Despite these achievements, China still faces many problems in safeguarding workers’ interests, as the global financial crisis will not be over in the foreseeable future and there’s long way ahead for China’s urbanization.

1. As workers’ wage remains low relative to other kinds of income, the percentage of total wages in national income keeps declining. Currently total wages accounts only 30% or so of national income.

2. Many employers do not sign labor contract with workers or refuse to abide the contract. 30% -40% of urban employment personnel are “disposable workers”. 60% migrant workers do not have labor contracts. Random dismiss and wage arrears phenomenon is prevalent.

3. The legitimate right to leave hasn’t been effectively implemented and compensation for working overtime is low. Among the 145 million migrant labors working outside their neighborhood in 2009, 89.8% worked more than 40 hours. Workers working overtime can only get 20% -30% of the statutory compensation.

4. The ratio of employees covered by social security insurance is low. Insurance premiums comprised of basic pension, medical and unemployment insurance account for an average 28% of total wages, with 11% paid by individual worker. The rate is too high for enterprises and workers to take part in the insurance scheme.

5. Corporate safety and health conditions do not meet national standards. As a result, workers are frequently injured and suffer from occupational diseases.

6. Coordination mechanisms of labor dispute have not been established or incomplete within most enterprises. Among 13 million companies in China, more than 10 million small and medium enterprises have not established collective bargaining mechanism for wages.

Ⅲ China’s strategy to safeguard and promote workers’ interests

It is proved by practice that, in a capitalist market economy based on private property, the government, as the representative of capitalists’ interests, will not stand in the position of the working class and actively participate in the protection of workers’ rights. As a result, workers’ interests can only be maintained and improved through improving the bargaining power of workers, ongoing strikes and other kinds of struggle initiated by trade unions.

In socialist China, the ruling party CPC, as the representative of the fundamental interests of the working people, should be conscious of standing in the position of the working people and take the initiative to safeguard and promote workers’ interests.

At the macro level, the Government should safeguard workers’ rights from the standpoint of legislation, economic structure upgrading, the establishment of the ownership structure conductive to labor, and so on.

1.  Revise and improve relevant provisions of the Constitution and other important laws. Protection for worker’s survival and development rights should be written into the Constitution. Workers’ rights should not only be protected by the Labor Law, but should also be recognized by the Constitution, by company law, and by other important laws.

2.  Adhere to the ownership structure dominated by public ownership. In China, the protection of workers’ interests in general, is better in public enterprises than in non-public enterprises. Adhering to the ownership structure dominated by public ownership lays the foundation for CPC and its government to safeguard worker’s rights.

3. To promote industrial upgrading to seek breakthrough of “comparative advantage trap” featured by low-cost labor force. The competitiveness gained by suppressing workers’ benefits is not sustainable. In contrast, it will only lead to a lack of upward mobility of labor and thereby into a “comparative advantage trap” where Chinese companies are locked in low-end of the global value chain.

At the micro level, it is urgent to build three-facets-workers-rights-protection-system which is led by the state (the People’s Congresses and governments at all levels) with active participation from trade unions and workers,  and with cooperation from employers.

1. The Government should play a leading coordinating role.

2. Trade unions should be truly representative of the interests of workers and pursue better organization.

3. The Corporate social responsibility should be strengthened to regulate and guide the organization of enterprises. Trade union congress, worker director/ supervisor system and the employee stock ownership system need to be improved to ensure workers’ participation in decision-making and supervision and their share of the revenue.

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