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The level of protection provided by Chinese labour law

©2007 Diplomarbeit 88 Seiten

Zusammenfassung

Inhaltsangabe:Abstract:
The Thesis „The level of protection provided by Chinese labour law compared to German labour law as a stimuli for western investment in the People’s Republic of China” describes the Chinese Labour Law and traces back the sources of the Chinese Labour Law regulations. In the first section the German Labour Law and some of the most important clauses are explained. In further sections the Chinese Labour Law itself and its coherent development, the main landmarks and the similarities to the German Labour Law, with its Romanist Tradition, are reflected. In particular the situation of the unions and their influence on management polices are named.
In further sections, this thesis displays the current situation in the Chinese corporate world and its relation towards the Chinese Labour Law. With the elaboration of three chosen cases, this thesis highlights the enforcement level and the core aspects of Chinese Labour Law that are frequently violated within Chinese joint-ventures and their partners from abroad, either from Asian and Western developed nations.
In addition to that, this thesis focuses on the situation in Taiwan and Hong Kong in respect to their Labour Law systems and gives a brief overview about their core aspects and its future perspective and likelihood to keep its sovereignty under the increasing influence of China mainland.
One of the main aspects of this thesis is discussed in the sections dealing with the New Chinese Labour Law of 2007 and its upcoming implementation on the 1st of January 2008. Issues concerning the development and core improvements are evaluated and precisely explained. Furthermore, it will be discussed about the ramifications and main changes that are probably to emerge in the near future. This thesis will also shed some light on the reactions of the work force in China and multinationals in general. The fears and hopes that go hand in hand with implementation of the new draft.
Last but not least, this thesis will give proposals and suggestion to German and Western companies how to deal with labour law related issues that are planning to enter this viable and fast growing market. Moreover, this dissertation will give an overview about the main aspects in terms of Chinese Labour Law regulations that should be considered in order to establish a successful business in the People’s Republic of China. Inhaltsverzeichnis:Table of Contents:
I.Table of Figures
II.List of […]

Leseprobe

Inhaltsverzeichnis


Sergio Maurizio Moccia
The level of protection provided by Chinese labour law
ISBN: 978-3-8366-1031-5
Druck Diplomica® Verlag GmbH, Hamburg, 2008
Zugl. Fachhochschule Hof, Hof, Deutschland, Diplomarbeit, 2007
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I
Table of Contents
I.
Table of Figures
II.
List of Abbreviation
III. Executive
Summary
1. Introduction ... 1
2. The German Labour Law ... 2
2.1 The Contract of employment ... 2
2.1.1 Probation... 3
2.1.2 Termination of employment ... 3
2.1.2 Extraordinary dismissal ... 4
2.2 Trade union and employers' association regulation ... 5
2.2.1 Trade unions ... 6
2.2.2 Employers' associations... 6
2.3 Collective Bargaining and Agreements ... 6
3. The Development of the Chinese Labour Law ... 8
3.1 The Contract employment system and its position in the Labour Code ... 8
3.2 Difficulties and scant attempts to alleviate the situation ... 10
3.2.1 Reward based on status rather than performance ... 10
3.2.2 Skills did not meet the job requirements ... 11
3.2.3 Disequilibrium of Labour and Supply ... 12
3.3 The Way to the Contract Employment System... 12
3.3.1 The Ministry Notice... 13
3.3.2 The Contract Employment Regulations ... 14
3.4 The Chinese Labour Law from 1994 ... 16
3.4.1 Legal Bases... 16
3.4.2 Foreign employees... 17
3.4.3 Representative office ... 18
3.4.4 The justification of a working relation ... 18
3.4.5 Duration of the working relation... 19
3.4.6 Dismissal by the employer ... 20
3.4.7 Resignation by the employee... 23
3.4.8 Compensation ... 23
3.4.9 Working Time, recuperation days and vacation ... 25

II
3.4.10 Wages ... 28
3.4.11 Illness and accident... 29
3.4.12 Non-competition clause ... 31
3.4.13 Particular protection for female and minor employees... 32
3.5 Labour disputes ... 32
3.6 Unions and Collective agreement ... 33
3.6.1 Trade Union Law from 1992 ... 33
3.6.2 Collective contracts of employment ... 34
3.6.3 The Union Law from 2001 and its practical experience ... 35
3.6.4 Conclusion ... 38
3.7 The Local Implementation of the Employment Contract system ... 39
3.7.1 National Objectives vs. Priorities of Local Government... 39
3.7.3 The Contract Employment System and its local implementation ... 41
3.7.4 Conclusion and current situation ... 44
4. Cases... 46
4.1 Shanghai Otis Elevator Company Ltd. ... 46
4.2 Li Kai Di Chang shoe manufacturer ... 50
4.3 Beijing Olympics ... 52
4.4 Commentary... 56
5. Labour Law in Taiwan ... 57
5.1 Historical background ... 57
5.2 Comparisons to Continental China ... 58
5.3 Future perspective ... 59
6. Labour Law in Hong Kong ... 60
6.1 Historical Background ... 60
6.2 Current situation... 61
6.3 Future Perspective... 61
7. China's New Labour Contract Law ... 62
7.1 Development ... 62
7.2 Controversial points of view and the altered regulations... 62
7.3 Résumé and Expectations ... 66
8. Chinese Labour Law and its implications on companies ... 68
8.1 Domestic Employees and the Chinese Labour Law ... 68
8.2 Foreign Employees in China and the Chinese Labour Law ... 71

III
8.3 Ramifications on German and FDI enterprises... 72
9. Conclusion... 76
IV. References

IV
I. Table of Figures
Page
Figure 1: Working time period and cancellation period ... 4
Figure 2: Duration of contracts and probation ... 20
Figure 3: Relation between working time and treatment period ... 30
Figure 4: Continuation of payment I ... 30
Figure 5: Continuation of payment II... 31
Figure 6: Working day schedule ... 54

V
II. List of Abbreviations
FDI
Foreign Direct Investment
BDI
Bundesverband der deutschen Industrie
BDA
Bundesvereinigung der deutschen Arbeitgeber
ACFTU
All-China Federation of Trade Unions
CCP
Chinese Communist Party
FESCO
Foreign Enterprise Service Company
PRC
People's Republic of China
SEZ
Special Economic Zone
GDP
Gross Domestic Product
FIE
Foreign Invested Enterprise
USA
United States of America
RMB
Renminbi
IOC
International Olympic Committee
LSL
Labour Standard Law
ITUC
International Trade Union Cooperation
HR
Human Resource

1
III. Executive summary
The Thesis "The level of protection provided by Chinese labour law compared to German
labour law as a stimuli for western investment in the People's Republic of China" describes
the Chinese Labour Law and traces back the sources of the Chinese Labour Law regulations.
In the first section, the German Labour Law and some of the most important clauses are
explained. In further sections, the Chinese Labour Law itself and its coherent development,
the main landmarks and the similarities to the German Labour Law, with its Romanist
Tradition, are reflected. In particular the situation of the unions and their influence on
management polices are named.
Further more, this thesis displays the current situation in the Chinese corporate world and its
relation towards the Chinese Labour Law. With the elaboration of three chosen cases, this
thesis highlights the enforcement level and the core aspects of Chinese Labour Law that are
frequently violated within Chinese joint-ventures and their partners from abroad, either from
Asian or Western developed nations.
In addition, this thesis focuses on the situation in Taiwan and Hong Kong in respect to their
Labour Law systems and gives a brief overview over their core aspects and its future
perspective and likelihood to keep its sovereignty under the increasing influence of China
mainland.
One of the main aspects of this thesis is discussed in the sections dealing with the New
Chinese Labour Law of 2007 and its upcoming implementation on the 1
st
of January 2008.
Issues concerning the development and core improvements are evaluated and precisely
explained. Further more, the ramifications and main changes that are likely to emerge in the
near future will be discussed. This thesis will also shed some light on the reactions of the
work force in China and multinationals in general. The fears and hopes that go hand in hand
with the implementation of the new draft.
Last but not least, this thesis will give proposals and suggestion to German and Western
companies how to deal with labour law related issues that are planning to enter this viable and
fast growing market. Moreover, this dissertation will give an overview over the main aspects
in terms of Chinese Labour Law regulations that should be considered in order to establish a
successful business in the People's Republic of China.

1
1. Introduction
China's transition from an unproductive rural economy to a manufacturing powerhouse has
been referred to as the "Chinese miracle". Growth has skyrocketed, exports have boomed and
incomes have improved. For many in China, the transformation of the last 20 years has
resulted in rising standards of living along with unprecedented consumer choice. For
businesses around the world, this miracle has given them access to new markets and to a
cheap and compliant work-force. Indeed China's export success has been led by industries
paying unnaturally low wages ­ from 1985/ 95 to 2002 total accumulative inflows of FDI rose
from 11.7 billion Dollars to 52.7 billion Dollars
1
.
In China's trade relationships with more advanced East Asian economies, such as Japan,
Taiwan, Hong Kong, and Korea, entire industries are relocating to China, typically those
which have high labour-input requirements. In addition, China is participating in multi-stage
production arrangements with its neighbours, whereby China adds value by providing labour
in the assembly of finished machinery and high technology equipment. Its main imports
include aircraft, spacecraft, machinery and fertilizer.
But what does Chinese Labour Law have to do with the emergence of the future economic
superpower and how important is this fact for China, the Chinese workforce and the investors
from Germany and other western societies? There is still a prevalent opinion among western
societies that Labour Law is non-existent in the People's Republic of China. Certainly,
pessimists would agree. But there is a Chinese Labour Law Code, and in fact, it is strongly
comparable to those of western societies. In particular, the German Labour Law Code
functioned as a basis for the Chinese Labour Law regulations and has thus had a great
influence until today.
In addition, the new draft of 2007 and its implementation in January 2008 has attracted
worldwide interest and triggered a lot of controversial opinions. The Chinese Labour Law
Code is gaining significantly in importance and especially overseas co-operations have to
reconsider their operations policies in China. We have to be aware of the fact, that foreign
direct invested companies and their Chinese partners accounted for 65 % of all measured

2
exports in 2003 and the figure has been growing ever since
2
. This is the reason why German
companies and their western competitors in particular have to face current legal developments
and might have to start switching their mind-set, concerning their employment policies in
China.
This thesis will highlight the landmarks of the Chinese Labour Law development, from the
early beginnings until the present day. It will display a sharp overview over the German
Labour Law which functioned as a role model for the Chinese Labour Law in several
occasions. By discussing some selected cases, this thesis will display the most frequently
violated labour laws and give suggestions how companies from Germany and other key
source countries of FDI should conduct their business in China and its viable and fast growing
economy.
2. The German Labour Law
This section will deal with the German Labour Law in order to give an overview over the
most important aspects of this labour code. Many of the regulations given below formed the
basis for the development of the Chinese Labour Code. The Chinese Labour Law is
substantially influenced by the Civil Law system and derives from countries with a Romanist
tradition, Germany in particular
3
.
2.1 The Contract of employment
As a rule, the contract of employment is concluded for an unlimited period
4
. The employer
and the employee are allowed to clinch a contract for a limited time period.
The duration of fixed-term contracts must be set according to objective conditions such as a
specific termination date, the completion of a specific task, or the occurrence of a specific
incident
5
. In general, it also has to be based on the justifications which comprise motives such
1
http://www.tdctrade.com/econforum/boc/boc030101.htm; See Arbeitsrecht07.pdf; p. 7
2
http://www.laborstrategies.blogs.com/global_labor_strategies/files/behind_the_great_wall_of_china.pdf ;
See Arbeitsrecht21.pdf; p. 7
3
http://www.nyulawglobal.org/globalex/China.htm
; See Arbeitsrecht01.pdf; page 1
4
cp. German Civil Code; sec. 620 para 2
5
See Wörlen Kokemoor; Arbeitsrecht; p. 43

3
as the temporary requirement of a certain type of work, a limitation in order to make the
worker's access into professional life easier or the replacement of a sick employee.
2.1.1 Probation
When concluding a labour contract the parties often agree upon a probationary period of up to
6 months. During this period, the employee can be dismissed with a two weeks notice
6
.
Alternatively, the parties may enter the employment relationship by agreeing on a contract
that is limited up to 6 months.
7
.
2.1.2 Termination of employment
The major sources of regulation in this matter are the Civil Code and the Protection against
Dismissals Act. However, the latter applies only to establishments regularly employing more
than five full-time employees.
Also, a worker must have completed a qualifying period of six months work without
interruption to be eligible for protection under this law
8
.
German labour law makes a distinction between ordinary termination (with notice), whereby
the employment relationship is ended when the period of notice expires, and extraordinary
termination (without notice).In the latter type of termination, the notification effects the
immediate cancellation of the employment relationship
9
.
In both cases, termination at the initiative of the employer is limited by law. Periods of notice
are stipulated by the law. The minimum statutory period is four weeks, and it is increased by
one month each time the worker has completed the following working periods for one and the
same company.
6
cp. German Civil Code, sec. 622 para. 3
7
http://www.info-arbeitsrecht.de/Kuendigungsschutz/kuendigungsschutz.html; See Arbeitsrecht02.pdf
8
See Rüdiger Krause; Arbeitsrecht I; Individualarbeitsrecht; P. 299
9
cp. German Civil Code; sec. 622 & sec.626

4
Figure 1: Working time period and cancellation period
Working time or period
cancellation period
Two
years
one
month
Five
years
two
months
Eight years
three months
Ten
years
four
months
Twelve years
five months
Fifteen years
six months
Twenty
years
seven
months
However, years of service before the employee has reached the age of 25 years are not taken
into consideration to calculate his/her entitlement to notice
10
. Collective agreements may
specify longer or shorter periods of notice, whereas individual contracts of employment may
only specify longer periods of notice
11
. As of May 1, 2000, notice must be given in writing in
order to be legally binding
12
.
2.1.2 Extraordinary dismissal
There are certain cases in which it is actually possible to terminate an employment
relationship prior to the end of the notice or the end before the work contract expires. This is
the case, if it is unacceptable, in good faith, for the company to employ the employee any
longer as it is the case with serious misconduct. When ever the employer notices a serious
misconduct, the employer has to react within two weeks
13
.
In case of existence of a work council, the employer is obliged to consult it during a dismissal
procedure, even though the council's response is not binding for the employer. The works
council has a period of three days, in case of summary dismissal and one week in case of
ordinary termination to agree or declare reservations in writing; otherwise an agreement is
10
cp. German Civil Code; sec 622 para. 2
11
cp. German Civil Code; sec 622 para. 4
12
http://www.info-arbeitsrecht.de/Kuendigungsschutz/kuendigungsschutz.html; See Arbeitsrecht02.pdf
13
See Wilfried Berkowski; Die Personen- und verhaltensbedingte Kündigung; p. 266/267

5
presumed by law. The termination of a contract without proper hearing of the works council is
ineffective
14
.
Special rules apply to mass lay-offs in establishments employing more than twenty
employees, which call for the consultation of the works council and the drawing of a social
plan. Some groups of employees benefit from particular protection against ordinary and
extraordinary dismissal due to certain individual circumstances including disabled workers,
pregnant women and work council members
15
.
A worker who intends to fight his/her termination must file a submission before a labour court
within a time limit of three weeks as of the date he/she has received his/her notice. If the court
is not convinced that either the ordinary termination is socially justified, or the extraordinary
dismissal is for important reasons, it may order the worker's reinstatement, with back pay,
unless it feels that such a measure is impractical, in which case it may order the employer to
pay compensation, normally equal to one month pay per each month of service, with a
maximum of twelve months, or eighteen months if the worker is more than 55 years old and
has twenty or more years of service
16
.
2.2 Trade union and employers' association regulation
Freedom of association of both workers and employers is guaranteed as a basic right under the
Basic Law. This includes the right of individuals to form associations, to join an existing
association, to participate actively in an association, to leave an association or to not belong to
any association. It also contains the association's protection against any influence of the state
or any attack of an individual
17
.
An association within the meaning of the Basic Law is a voluntary permanent joining
together, which must not be limited to one company. Additionally, any association must
consider itself as a representative of either the employees or the employers and must explicitly
work towards the conclusion of collective agreements.
14
See Kittner & Zwanziger; Arbeitsrecht; p. 1522
15
ibid; p. 1536/1537
16
ibid; p. 1553
17
cp. German Basic Law; Art. 9

6
2.2.1 Trade unions
There is no trade union law in Germany. Even though trade unions are generally defined as
associations with no legal capacity, they are legally entitled to collectively bargain as well as
to take legal action or to be taken to court
18
. The duties and rights of trade union members are
laid down in the relevant trade union's constitution. Even though the constitutions may vary
between different trade unions, they traditionally establish similar essential duties and rights.
Members are obliged to pay union dues, of which the amount is based on the individual wage
level. At the same time, they are entitled to support in labour disputes as well as to receive
legal advice
19
.
2.2.2 Employers' associations
Employers' associations are generally defined as associations with legal capacity.
Many of the regional associations are industry-based and the same branch is finally merged in
an association at federal level. The federal associations of the different branches are unified in
the two most important central confederations, the Federal Union of German Industry (BDI)
20
and the Confederation of German Employers' Associations (BDA)
21
. The BDA represents the
enterprises' interest as an employer, whereas the BDI seeks to further their economic and
political interests. However they are increasingly working together and try to benefit form
their synergies. This progress peeked into the establishment of a common steering
committee
22
.
2.3 Collective Bargaining and Agreements
Collective bargaining is regulated by the Act on Collective Agreements, which, however,
does not mandate a given structure of collective bargaining. The legal capacity to collectively
bargain is possessed by the trade unions on the one hand and the employer's associations as
well as the individual employer on the other
23
.
18
cp. Act on Collective Agreements; sec. 2 para. 1
19
http://www.dgb.de/mitglied_werden/index_html
; See Arbeitsrecht06.pdf
20
http://www.bdi.eu/de/bdi/72.htm
; See Arbeitsrecht03.pdf
21
http://www.bda-online.de/www/bdaonline.nsf/id/AufgabenundZiele
; See Arbeitsrecht04.pdf
22
http://www.manager-magazin.de/koepfe/artikel/0,2828,446123,00.html; See Arbeitsrecht05.pdf
23
cp. Act on Collective Agreements; sec. 2 para. 1

7
In fact, collective bargaining mostly takes place at the branch level, even though, in some
cases, trade unions may also bargain with the individual employer, provided that it is
permitted by their constitutions. A prohibition of the employer's organization against
individual collective bargaining of its members does not affect the validity of the collective
agreement but results in the employer's duty to pay damages
24
.
Collective agreements have three characterizing functions:
x
the protective function which manifest itself in setting minimum labour standards;
x
the rationalizing function that puts working life in order and alignment;
x
and the peacekeeping function, in other words, that as long as the collective agreement
remains in force new demands and labour disputes about included topics are
absolutely banned (industrial peace).
Any collective agreement is a contract, which entails two parts. The first part, part under the
law of contracts, deals with rights and duties of the contractual partners. The two main
obligations of the partners are industrial peace and the duty to use all possible means to make
sure that their members stick to the agreement. The second part of the collective agreement
sets rules related to labour contracts, to operational questions and to the works constitution
within the meaning of the Works Constitution Act. This distinction is important for the
collective agreement's period of validity
25
. Generally, a collective agreement ends when the
period of time expires for which the agreement was concluded. It may be terminated earlier at
one party's legal initiative or by mutual agreement. In any case, the part under the law of
contract necessarily ends at the same time
26
. Unlike this, the legal norms setting part stays in
force until it is replaced by either an individual contractual agreement or a works agreement
or in particular by legal norms of a new collective agreement
27
. What personal validity is
concerned, a collective agreement is generally binding for those who are members of the
relevant trade union and employers' association at the time when the collective agreement
came into effect. Its rules are hence applicable to the individual employment relationship.
24
See Wörlen & Kokemoor; Arbeitsrecht; p. 201
25
ibid; p. 203/ 204
26
ibid; p. 208
27
cp. Act on Collective agreements; sec.1 para.1 & sec. 4 para. 5

8
However, the employer's commitment is sufficient for the application of legal norms related
to operational questions or to the works constitution
28
.
3. The Development of the Chinese Labour Law
This section will focus on the Contract Employment System and its implementation in 1995.
It is interesting to see how similar the content of the German Labour Code actually is,
compared to Chinese one. Later sections will highlight this matter of fact.
However, the creation of a Labour Law Code in China has been a rocky road that went
through more than 40 drafts until it came into effect. One of the major supporters of the
reformation of the Chinese Labour Law was the ACFTU, the umbrella organization of all
unions in China
29
. This state-directed organization has extremely lobbied the central
government and has insisted on initiating the Chinese Labour Law from 1994
30
.
Further more, the emergence of the particular term "socialist market economy" (Chinese term:
shehui zhuyi shichang jingji) which became part of the official lexicon in 1992, at the 14
th
congress of the Chinese Communist Party (CCP) led to the adoption of a new approach to
economic development that triggered changes in the legal system, including the field of
labour and employment law. Perhaps the most significant development was in the realm of
labour mobility, both for rural and urban populations. Peasants were permitted to seek
employment outside of agriculture, beyond the confines of their villages. Urban residents
were no longer assigned to jobs in a system of bureaucratic allocation, and thereafter,
prevented, by the legal and economic disincentives, from seeking alternative job
opportunities.
31
3.1 The Contract employment system and its position in the Labour Code
The successive chapter will elaborate on the most significant labour-related aspects of the
economic reforms in the People's Republic of China. In 1980, first actions were undertaken,
as a central government initiative. Further down the road, the geographic scope of the actions
was amplified; from local to national regulation. This development took place in 1986. Until
28
cp. Act on Collective agreements; sec.3 para.1 & sec. 3 para. 2
29
http://www.weltderarbeit.de/bericht2.htm
; See Arbeitsrecht25.pdf
30
See Der chinesische Arbeitsmarkt,; Jutta Hebel Anita Chan; p. 252
31
cp. Labour Law in China; Hillary K. Josephs; p. 1/2

9
recently, in 1994, the contract employment system became part of China's first labour code.
The so-called Labour Law Act represents the most important legal source in this field.
The other actor besides the ACFTU that pushed the establishment of the contract Employment
system was the Chinese government itself whose main concern has been to promote economic
development and greater participation in the global economy. The introduction of a "socialist
market economy" should be the backbone of this development. Its key objective was to foster
productivity in the agricultural and industrial sectors
32
.
In the past, Labour allocation was undertaken by administrative assignment, until reforms in
the early 1980s became finally effective. Sources indicate that the so-called "unified
placement system" (Chinese term: tong'yi fenpei) controlled more than 50 per cent of the
hiring of workers and staff. The Ministry of Labour and its local bureaus were responsible for
the allocation of workers. "Unified placement" was mainly applied to graduates of higher
education. It prevailed until the mid-1990s.
One major downside of the administrative allocation of labour was its practical lack to
guarantee employment for all job-seekers. In the early 1980s, guaranteed work for all was not
doable under the inherent circumstances.
By implementing the dual planned-market approach in the agricultural sector, it also
undertook reform of the urban industrial economy, particularly state enterprises in order to
create a more viable environment.
State enterprises were responsible for a large share of industrial output. Quadrupling annual
industrial and agricultural output value by the end of the twentieth century was the core
objective of the Central Government. The share of industrial output by state enterprises
plummeted from 77.6 percent in the late 1980s to 25.5 percent at the present day
33
According to figures from the year 2002, state-owned enterprises account for 27 percent of
the Gross Industrial Output Value, and equals 300 Billion Euros. Although most of the state-
owned enterprises remain in operation only because of governmental subsidies (the number of
32
cp. Labour Law in China; Hillary K. Josephs; p. 12/13
33
cp. Labour Law in China; Hillary K. Josephs; p. 14/15

10
companies has declined to 67119 in 2002 compared to 76412 in 2001)
34
, their output still
accounts for a significant proportion of total production.
By allowing workers to switch jobs, the contract employment system would promote
diffusion of technical knowledge, reduce overspecialization, and respond to changes in
individual attitudes towards work.
35
3.2 Difficulties and scant attempts to alleviate the situation
Talking about labour-reforms and the draft of the contract employment system in 1994, it is
essential to shed some light on the situation of China in terms of its economic situation, the
power of state-owned enterprises and prevalent customs that were and are even today widely
accepted among the Chinese work force.
3.2.1 Reward based on status rather than performance
Historically the labour force of state enterprises was subdivided into two basic groups, the
permanent work force and the temporary workforce. By starting the employment the status
was fixed. Only a minority of highly skilled employees were able to access permanent status.
Permanent status allowed such workers to benefit from the full range of fringe benefits
provided by the employer, including subsidized medical care, housing, and educational
facilities. Such workers enjoyed immunity from dismissal. Only in cases of outrageous
misconduct such as chronic absenteeism or criminal conviction (corruption) could lead to a
dismissal. Even in case of bankruptcy; permanent workers were normally relocated to other
permanent job locations.
36
.
Temporary workers did not capitalize on the benefits mentioned above. In the 1980s, state
enterprises were allowed to hire great amounts of temporary workers from rural areas.
Management preferred temporarily migrant workers more because they were willing to
endure hardship and showed more commitment for their tasks. Managements of state-owned
enterprises would have hired more of them, if there were no restrictions on hiring and
34
http://www.chinapolitik.de/studien/china_analysis/no_45.pdf ; See Arbeitsrecht09.pdf; p. 21
35
cp. Labour Law in China; Hillary K. Josephs; p. 16

11
coherent administrative costs. However, in many cases, temporary workers were hired simply
because no one else was willing to do the work. At that juncture, the official opinion was that
temporary workers and permanent workers were not suitable for one another and occupy
different strata in the occupational hierarchy of the firm
37
.
3.2.2 Skills did not meet the job requirements
In the late 1950s, government labour and education bureaus filled vacancies in state owned
enterprises through a system of administrative assignment. As already mentioned, the so-
called "unified placement system" was responsible for the allocation of the job-seekers. The
whole process was never questioned. As a practical matter, both, the employer and the
employee could not refuse the job allocation.
The individual's interest, aptitude, or training, was not taken into consideration during the job
allocation process. Once assigned for a job, a worker was not allowed to quit and look for
another position. The enterprises had no possibility to dismiss a worker on the ground that the
worker was "unsuitable" for the job
38
. In other words, job positions requiring skilled workers
could be filled by unskilled or not suitable employees.
But not only had the administrative assignment adverse knock-on effects, state enterprises had
to cope with difficulties arising from the so-called "substitution system" (Chinese term: dingti
zhidu). Under this system, a retiree from a permanent job in a state owned enterprise could
designate one of his children to succeed him as a permanent employee in the same enterprise,
although not necessarily in the same position as held by the parent.
This right was widely accepted by the Chinese population beginning starting in the early
1950s. Enterprises did benefit from this habitude in certain occasions. Companies could
reduce their efforts to recruit new working staff. Moreover, because of the personal ties
between the potential worker and the future retiree, the designated successor felt obligated to
perform well in the job
39
.
36
cp. Labour Law in China; Hillary K. Josephs; p. 17
37
ibid; p. 19/20
38
ibid; p. 20/ 21
39
ibid; p. 22

12
The first steps to encounter this situation were undertaken in 1986. Advertisements of
positions in state owned enterprises were initiated, mandating examination of prospective
hires. By doing so, the State Councils were hoping to allocate more qualified and skilled
workers for the appropriate positions. But until the present day; the "substitution system"
could not be abolished completely. There are still many regions that abide by this system
40
.
3.2.3 Disequilibrium of Labour and Supply
Chinese labour force could be characterized during the 1970s by an oversupply of unskilled
labour and an undersupply of skilled workers and professional manpower. To face this
development, a score of strategies were amended to encounter this issue.
For instance state enterprises were overstaffed, forcing of the substitution system, the
expansion of employment in the light industries and services, and the removal of the ban on
self-employment were the most significant steps
41
.
3.3 The Way to the Contract Employment System
First steps ever reported were already undertaken in 1979, when the Sino Foreign Joint
Venture Law was introduced in order to promulgate new ways of labour recruitment and
remuneration. This was the basis for a multitude of national and local labour law
regulations
42
.
In this Section we will limit the amount of landmarks by focusing on three major sources of
the contract employment system:
(1) The 1983 Notice of the Ministry of Labour and Personnel on Active Trial
Implementation of the Contract Employment System
(2) The 1986 State Council Provisional Regulations on the implementation of the
Contract Employment System in State Owned Enterprises, as amended in 1992;
(3) The Labour Law of 1994, promulgated by the Standing Committee of the National
People's Congress
40
cp. Labour Law in China; Hillary K. Josephs; p. 24
41
ibid; p. 25

Details

Seiten
Erscheinungsform
Originalausgabe
Jahr
2007
ISBN (eBook)
9783836610315
DOI
10.3239/9783836610315
Dateigröße
493 KB
Sprache
Englisch
Institution / Hochschule
Fachhochschule Hof – Wirtschaft
Erscheinungsdatum
2008 (März)
Note
1,7
Schlagworte
contract china labor hong kong taiwan
Zurück

Titel: The level of protection provided by Chinese labour law
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