New Labor Reforms in China Despite American Efforts

Posted on July 14, 2007
by Maureen Keene

The New York Times reports that labor reforms have passed in China despite strong opposition by American companies.

While the new law will do little to eliminate violations of existing laws, it does require that employers treat migrant workers as they do other employees. All employees will have to have written employment contracts that comply with minimum wage and safety regulations.

It also moves China closer to European-style labor regulations that emphasize fixed- and open-term employment contracts enforceable by law. It requires that employees with short-term contracts become full-time employees with lifetime benefits after a short-term contract is renewed twice.

Perhaps most significantly, it gives the state-run union and other employee representative groups the power to bargain with employers.

For years American companies have been talking out of both sides of their mouths when it comes to their manufacturing operations in China. While saying magnanimously that their presence is improving the lives of Chinese workers by creating jobs, they have in fact been exploiting cheap labor and taking full advantage of a system that favors the rights of employers over workers and offers none of the protections that we have come to expect in the U.S.

According to In These Times, when new labor laws were proposed by Chinese Premier Wen Jiabao last year, American companies lobbied hard to weaken them through their various representatives including AmCham, the American Chamber of Commerce in Shanghai.

Duh. Of course they did. Because if American companies have to pay Chinese workers a decent wage and provide humane working conditions and benefits and job security, well then what’s the point of having manufacturing operations in China? If American companies were willing to do those things, then they could have Americans making their goods in America.

“It will be more difficult to run a company here,” said Andreas Lauffs, a lawyer at Baker & McKenzie, which represents many of America’s biggest corporations in China.

Yes, laws that protect workers often do make it more difficult to run a company. Not to mention that doing the right thing by workers would put a crimp in profit margins and that of course would impact the bonus check to the CEO. Meanwhile, as the corners are cut and then cut some more to provide the cheapest materials and labor possible, eventually quality and safety are compromised. Thus American companies are complicit in the problem of dangerous goods being imported from China.

American consumers and American companies should be supporting reforms in China because it is right and because it is good for everyone in the long run.

Note: There was one A+ on this dismal report card for American companies — Nike broke with AmCham and supported the proposed labor reforms.

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