Return to the 2006 Annual Report Home Page

The CECC has prepared the following HTML version of its 2006 Annual Report for the readers' convenience. If you would like to view the official Government Printing Office text of the Annual Report, please refer to the Adobe Acrobat PDF or Plain Text Format versions.

• The Chinese government does not respect the internationally recognized right of workers to organize their own unions. The All-China Federation of Trade Unions (ACFTU), a Party-led mass organization, is the only legal labor federation in China. It controls local union branches and aligns worker and union activity with government and Party policy. The ACFTU began a campaign in March 2006 to establish union branches in foreign enterprises doing business in China. Chinese workers who attempt to form independent workers' organizations, or whom the government suspects of being leaders of such organizations, risk imprisonment. The government secretly tried labor rights activist Li Wangyang and sentenced him to 10 years' imprisonment in September 2001 for staging a peaceful hunger strike. Li had previously served most of a 13-year sentence for organizing an independent union. In May 2003, the government sentenced labor activist Yao Fuxin to a seven-year prison term for peacefully rallying workers to demand wage and pension arrearages from a bankrupt state-owned enterprise. Li and Yao remain in prison.

• Weak protection of worker rights has contributed to an increase in the number of labor disputes and protests. According to ACFTU figures, the number of labor disputes rose sharply in 2005. The ACFTU reports that there were 300,000 labor-related lawsuits filed, a 20.5 percent increase over 2004 and a 950 percent increase compared to 1995. Strikes, marches, demonstrations, and collective petitions increased from fewer than 1,500 in 1994 to about 11,000 in 2003, while the number of workers involved increased from nearly 53,000 in 1994 to an estimated 515,000 in 2003. Poor workplace health and safety conditions and continuing wage and pension arrearages were the most prominent issues resulting in labor disputes during the past year. Chinese industry continues to have a high accident rate, with death rates in the mining and construction industries leading other sectors. According to official statistics, 110,027 people were killed in 677,379 workplace accidents through December 2005, and more than 10,000 workers died in the mining and construction sectors during 2005.

• Forced labor is an integral part of the Chinese administrative detention system. Authorities sentence some prisoners without judicial review to reeducation through labor (laojiao) centers, where they are forced to work long hours without pay to fulfill heavy production quotas, and sometimes are tortured for refusing to work. China's Labor Law prohibits forced labor practices in the workplace, and authorities have arrested employers who trap workers at forced labor sites. In 2002, the Chinese government began to cooperate with the International Labor Organization on broad issues of concern regarding forced labor, including on potential reforms to the reeducation through labor system, and on improving institutional capacity to combat human trafficking for labor exploitation.

• The use of child labor in some regions of China is reportedly on the rise. Labor shortages in the economically developed southern and eastern coastal provinces are causing employers to turn to child laborers, according to NGO reports. This development coincides with intensified efforts by the Ministry of Justice and the Ministry of Labor and Social Security to fight the illegal employment of children, suggesting that the government is more concerned about such abuses than before. Government authorities consider statistics on child labor that have not been officially approved for release to be "state secrets," and this policy thwarts efforts to understand the extent and causes of the problem.

• In 2006, the U.S. and Chinese governments continued to conduct a series of bilateral cooperative activities on wage and hour laws, occupational safety and health, mine safety and health, and pension program oversight.

Internationally Recognized Labor Rights

The Chinese government is committed through its membership in the International Labor Organization (ILO) to respect a basic set of internationally recognized labor rights for workers: the freedom of association and the right to collective bargaining, the elimination of forced labor, the abolition of child labor, and non-discrimination in employment and occupation. The ILO's Declaration on the Fundamental Principles and Rights at Work (1998 Declaration) commits ILO members "to respect, to promote and to realize" these fundamental rights based on "the very fact of [ILO] membership."¹ China is a founding member of the ILO, and has been a member of the ILO Governing Board since June 2002.²

The ILO's eight core conventions provide guidance on the full scope of worker rights and principles enumerated in the 1998 Declaration.³ Many ILO members have not ratified all of these core conventions, but each member is committed to respect the fundamental right or principle addressed in each.⁴ China has ratified four of the eight ILO core conventions, including two core conventions on the abolition of child labor (No. 138 and No. 182) and two on non-discrimination in employment and occupation (No. 100 and No. 111).⁵ The ILO reports that the Chinese government is preparing to ratify the two core conventions on forced labor (No. 29 and No. 105).⁶

Chinese labor law generally incorporates the basic obligations of the ILO's eight core conventions, with the exception of the provisions relating to the freedom of association and the right to collective bargaining.⁷ The Chinese government's failure to implement existing labor regulations, however, and the general lack of awareness regarding worker rights among citizens, renders most of the protective aspects of Chinese labor law ineffective. The administrative detention system prescribes forced labor as a punishment for those accused of "minor crimes" [see Section V(b)--Rights of Criminal Suspects and Defendants--Administrative Detention],⁸ in contravention of the 1998 Declaration, relevant ILO conventions,⁹ and Article 8 of the International Covenant on Civil and Political Rights (ICCPR).¹⁰

In March 2001, the Chinese government ratified the International Covenant on Economic, Social, and Cultural Rights (ICESCR), which guarantees the right of workers to strike, the right of workers to organize independent unions, the right of trade unions to function freely, the right of trade unions to establish national federations or confederations, and the right of the latter to form or join international trade union organizations. The Chinese government took a reservation to Article 8(1)(a) of the ICESCR, which guarantees workers the right to form free trade unions. The government asserted that application of the article should be consistent with the Chinese Constitution and the Trade Union Law. The Trade Union Law does not allow for the creation of independent trade unions.¹¹

Freedom of Association

The Chinese government does not respect the internationally recognized right of workers to organize their own unions. Article 22 of the International Covenant on Civil and Political Rights guarantees that "[e]veryone shall have the right to freedom of association with others, including the right to form and join trade unions for the protection of his interests." The All-China Federation of Trade Unions (ACFTU), a Communist Party-led mass organization, is the only legal labor federation in China. It controls local union branches and aligns worker and union activity with government and Party policy.¹² The Trade Union Law requires the ACFTU to "uphold the leadership of the Communist Party."¹³ Wang Zhaoguo, the current ACFTU chairman, is a Politburo member, and the Party, not union members, selected him as ACFTU chairman.¹⁴ Article 10 of the Trade Union Law establishes the ACFTU as the "unified national organization," and Article 11 mandates that all unions must be approved by the next higher-level union body, giving the ACFTU an absolute veto over the establishment of any local union and the legal authority to block the formation of independent workers' associations.¹⁵ Article 15 of the ACFTU constitution stipulates that the establishment of an ACFTU branch in a factory "must be endorsed by its general membership or membership congress."¹⁶ Most workers, however, do not vote in union elections and most officials are appointed to their union posts.¹⁷

Since 2004, ACFTU and Party officials have made major efforts to expand their control over non-unionized groups of workers. In 2004, the ACFTU announced the target of recruiting 6.6 million workers per year from 2004 to 2008.¹⁸ It also launched a major recruitment drive aimed at migrant workers.¹⁹ Authorities permitted migrant workers to become union members for the first time in 2003, but ACFTU officials announced in 2006 that only 13.8 percent of the total migrant workforce has been "unionized."²⁰

The ACFTU began a campaign in March 2006 to establish unions in foreign enterprises doing business in China, including Wal-Mart, Kentucky Fried Chicken, McDonald's, and Samsung.²¹ ACFTU officials noted in July that some 60 percent of the 500,000 foreign enterprises in China have not established ACFTU branches,²² and made the promotion of unions within foreign enterprises a priority for the second half of 2006.²³ ACFTU Chairman Wang Zhaoguo proposed an amendment to the Trade Union Law on July 5 that would specifically require foreign enterprises to establish ACFTU-affiliated unions.²⁴ ACFTU pressure has led to the creation of some local branches in foreign enterprises doing business in China. In July and August, unions were established in 17 Wal-Mart stores in China.²⁵ The ACFTU's campaign to establish unions in foreign enterprises followed a March directive issued by top Party leaders ordering the establishment of Party committees and trade unions in foreign enterprises as a means to counter social unrest.²⁶ Labor experts have noted that the ACFTU's 2006 efforts to expand the number of local branches in foreign enterprises is an effort to respond to declining ACFTU membership, increasing labor protests, efforts by Chinese workers to organize independent unions, and an increase in the percentage of the workforce composed of non-unionized migrant workers.²⁷

Some local authorities have experimented with using direct elections to choose the leaders of union branches, but Party authorities and higher-level ACFTU officials retain control over the selection and approval of candidates.²⁸ ACFTU officials in Hubei province began an experimental program of direct elections for union officials in 2004, and issued a directive in July 2005 to implement the program on a province-wide basis by 2009.²⁹ The Hubei regulations provide that higher-level ACFTU officials and Party authorities are responsible for choosing the electoral leadership groups that determine candidate eligibility. These authorities also approve the specific proposals of individual union branches about how to conduct their direct elections.³⁰

Chinese workers who attempt to form independent workers' organizations, or whom the government suspects of being leaders of such organizations, risk imprisonment. The government secretly tried labor rights activist Li Wangyang and sentenced him to 10 years' imprisonment in September 2001 for staging a peaceful hunger strike. Li had previously served most of a 13-year sentence for organizing an independent union.³¹ In May 2003, the government sentenced labor activist Yao Fuxin to a seven-year prison term for rallying workers to demand payment of wage arrearages and pension benefits from a bankrupt state-owned enterprise in Liaoning province.³² Yao reportedly suffers from serious medical problems resulting from his imprisonment.³³ Li and Yao remain in prison.

Right to Collective Bargaining

Chinese labor law does not prohibit collective bargaining, but the absence of independent unions to represent worker interests makes the concept of bargaining with employers on behalf of workers incompatible with the Chinese labor system.³⁴ Trade union officials at the enterprise level function as part of the enterprise management structure for whom, according to three Western and Chinese labor experts, "the idea of representing and protecting the legitimate rights and interests of their members in opposition to those of the employer is something unfamiliar, if not totally alien."³⁵ Although collective bargaining does not exist, trade union officials are permitted under Article 20 of the Trade Union Law to facilitate a process of "equal consultations" between workers and employers that can result in a "collective contract."³⁶ The Provisions on Collective Contracts, issued by the Ministry of Labor and Social Security (MOLSS) in January 2004, detail the specific content which may be included, and the procedures for negotiating, such contracts.³⁷ Once concluded, the collective contract is legally binding on both employer and employees, but the contract generally includes only the "bare-boned reflections of labor statutory minimums," according to one Western scholar.³⁸ Another group of Western and Chinese academics examining collective contracts and the consultation process concluded in 2004 that trade unions defer to the employer on any contentious issue. Both the union and the employer are reluctant to include any provisions in the collective contract that "might subsequently provide grounds for a grievance or dispute."³⁹ Collective contracts covered more than 103 million Chinese workers at the end of September 2005, out of a total urban labor force of around 250 million.⁴⁰ The majority of collective contracts are not actually negotiated, but rather model agreements endorsed by the employer and union without the direct involvement of workers.⁴¹ In addition, most collective contracts are "single-issue" agreements, usually pertaining to wages, rather than comprehensive agreements covering all aspects of labor relations.⁴²

The Chinese labor dispute resolution process does not provide workers with meaningful union support to address workplace grievances. Labor disputes in China are channeled through the government's three-stage labor dispute resolution process: mediation, arbitration, and litigation.⁴³ Workers enter the first stage of dispute resolution without union representation. Article 80 of the Labor Law designates the union branch chief to serve as chair of the labor dispute mediation committee.⁴⁴ As chair, the union official mediates on an equal basis between employer and employee, and does not represent the employee in the dispute. If mediation fails, either party may apply to an arbitration committee for a hearing.⁴⁵ The high cost of arbitration discourages workers from applying. According to one National People's Congress (NPC) delegate, labor arbitration typically costs 420 yuan (US$52.39), about half the average monthly wage for Chinese workers.⁴⁶ Workers who choose to arbitrate face other obstacles to achieving a fair outcome. Article 81 of the Labor Law designates a "tripartite structure" for the arbitration committee: the employer's representative, the union's representative, and the government's local labor bureau representative, who serves as chair.⁴⁷ In effect, the local labor bureau representative, in consultation with two representatives from the enterprise management team, decides how to rule on a worker's complaint.⁴⁸

Chinese authorities currently are experimenting with reforms to the labor dispute resolution system. The Supreme People's Court issued a judicial interpretation on August 14 that allows workers seeking to recover back wages to bypass the labor arbitration process and sue directly in court.⁴⁹ Some authorities have supported the creation of arbitration tribunals, which are specialized sub-divisions of arbitration committees, to resolve labor disputes. Chinese news media reports note that the creation of these tribunals is an effort to make arbitration determinations "more neutral" by separating the administrative functions of the arbitration committees from hearing and deciding cases.⁵⁰ These tribunals also conduct mediation in addition to their arbitration work. Shenzhen authorities created the first such tribunal in 2001,⁵¹ and the MOLSS reported in May 2006 that Chinese authorities have since established 116 of the tribunals throughout China.⁵² Descriptions of the work responsibilities for some of the provincial tribunals emphasize that they should handle "major," "cross-provincial," or "emergency" events, suggesting that the tribunals may be focused on handling specifically designated, high-profile cases.⁵³

The courts are the final recourse for resolving labor disputes, pursuant to Article 83 of the Labor Law.⁵⁴ The All-China Federation of Trade Unions (ACFTU) reports that there were 300,000 labor-related lawsuits filed in 2005, a 20.5 percent increase over 2004 and a 950 percent increase compared to 1995.⁵⁵ Like arbitration, litigation costs are high, which "results in many workers being unable to afford a lawyer or to even bring the case to court," according to one Chinese legal scholar.⁵⁶ The scholar recommended in December 2005 to the NPC Standing Committee that the NPC should enact a labor dispute resolution law that would allow courts to hear labor cases with simplified, less expensive procedures that better protect worker rights. The law should include evidentiary rules that do not discriminate against workers, the scholar said.⁵⁷ She criticized the current three-stage process for labor dispute resolution as "more complex than the procedure for resolving regular civil disputes," and recommended that parties to certain types of labor disputes be able to choose to litigate directly without meeting the current precondition that parties first complete arbitration.⁵⁸

Draft Labor Contract Law

The National People's Congress (NPC) circulated a draft of a new Labor Contract Law for public comment in early 2006,⁵⁹ the first law that would govern exclusively the establishment, revocation, and termination of labor contracts, and the rights of workers and employees who sign them.⁶⁰ During the one-month period for public comment, the NPC received over 190,000 comments, and claimed that over 65 percent of these were submitted by Chinese workers.⁶¹

Current Chinese law mandates labor contracts, but implementation and enforcement of this mandate have been poor. Chapter 3 of the Labor Law outlines the requirements and procedures for individual and collective labor contracts, and Article 16 mandates labor contracts between workers and employers.⁶² A recent NPC survey found that less than 20 percent of small- and medium-size private enterprises use labor contracts.⁶³ According to a survey published in 2006, 46 percent of migrant workers did not have labor contracts with their employers.⁶⁴ Current law is deficient in that the contractual relationship between enterprises and workers hired though labor contractors is not defined. The widespread use of both legal and illegal labor contractors results in numerous cases of non-payment, underpayment, or late payment of wages, especially in the construction sector. Moreover, when labor contractors fail to give contracts to the workers they hire and assign to enterprises, the workers often cannot prove a contractual relationship with the enterprise, which is the principal employer for whom they have performed the work.⁶⁵

The State Council compiled the draft Labor Contract Law for NPC consideration to increase the formation rate for written labor contracts. The draft law provides for a "contractual relationship" in situations where employers do not sign written contracts with their employees,⁶⁶ and it standardizes labor contract rules and procedures in a way that "tilts more toward workers," according to an All-China Federation of Trade Unions official.⁶⁷ The Ministry of Labor and Social Security began a three-year effort, concurrent with consideration of the draft law, to compel all employers to sign labor contracts with their workers, as required under the existing Labor Law.⁶⁸

Some companies that have complied with Chinese labor contract regulations are concerned that the draft law includes provisions that would be both expensive and cumbersome to business owners,⁶⁹ and would take away market-driven flexibility in hiring and firing.⁷⁰ These provisions include a requirement that workers receive severance pay if fixed-term contracts expire and are not renewed, and a mandatory payment equaling an employee's annual salary to enforce non-compete agreements.⁷¹

One article in the Chinese state-controlled media criticized portions of the proposed draft for being too weak, pointing out that it does not cover part-time workers or students engaged in work-study programs, that it fails to provide definitions for key terms such as "technical" and "non-technical" positions, and that the sanctions it applies on employers who withhold workers' wages in bad faith do not exceed the requirements of existing labor regulations.⁷²

ACFTU Role in Protecting Worker Rights

The careers of union leaders are tied to their rank in the Communist Party, and local union officials generally are recruited from enterprise management. This system compromises the ability and willingness of unions to defend worker rights when they conflict with Party or employer interests.⁷³ Article 6 of the Trade Union Law calls on unions to "represent and safeguard the legitimate rights and interests of workers,"⁷⁴ but in practice this directive means that unions help workers only in ways that do not conflict with government and Party policy, such as by managing welfare assistance programs for workers and organizing social events. Some local unions, however, have developed innovative programs to help workers, within the limits of government and Party policy. For example, the Tianjin Trade Union Council has developed new procedures to aid unemployed workers, monitor safety problems and accidents, and resolve employee-employer disputes.⁷⁵

Some national-level All-China Federation of Trade Unions (ACFTU) programs have had a positive impact on worker rights, while also maintaining consistency with government policy goals. ACFTU efforts in the past year to expand the availability of legal aid services to workers, and to improve worker knowledge of the dispute resolution process, are part of the central government's policy responses to Party concerns about growing social unrest⁷⁶ [see Section VII(c)--Access to Justice]. According to news media reports from early 2006, nearly 4,000 legal aid offices were established by ACFTU branches in 2005. Provincial branches must establish a legal aid office by the end of 2006, but county branches have three years to do so.⁷⁷ In 2005, the Shenzhen Federation of Trade Unions' legal aid efforts included outreach to ensure that workers understand their rights in cases of unlawful discharge, occupational injury, and compensation arrearages.⁷⁸ In June 2006, the ACFTU and the State Administration of Work Safety began a program to inspect mining, construction, and manufacturing worksites to ensure safe conditions for migrant workers.⁷⁹

Elimination of Forced Labor

Forced labor is an integral part of the Chinese administrative detention system [see Section V(b)--Rights of Criminal Suspects and Defendants--Administrative Detention]. Authorities sentence some prisoners without judicial review to reeducation through labor (RTL, or laojiao) centers, where they are forced to work long hours without pay to fulfill heavy production quotas, and sometimes are tortured for refusing to work.⁸⁰ Prisoners in RTL centers have suffered physical injuries from extended periods of repetitive labor, and former prisoners report that fainting from exhaustion is common.⁸¹ The Chinese government continues to deny the International Committee of the Red Cross access to such centers.

China's Labor Law prohibits forced labor practices in the workplace,⁸² and authorities have arrested employers who trap workers at forced labor sites. Article 96 of the Labor Law prohibits employers from "compelling workers to work by the use of force, threat or by resorting to the means of restricting personal freedom,"⁸³ but only specifies light penalties for violators including a warning, fine, or 15 days in custody for the person in charge.⁸⁴ Chinese press reports over the past year, however, have described some instances of overseers coercing workers to remain in factories or fields for work without pay, and beating or torturing those who try to escape.⁸⁵

In 2002, the Chinese government began to cooperate with the International Labor Organization (ILO) on broad issues of concern regarding forced labor, including potential reforms to China's RTL system, to prepare for the eventual ratification of the ILO's two conventions on forced labor.⁸⁶ Since September 2004, the ILO's Special Action Program to Combat Forced Labor has been working with the Chinese Ministry of Labor and Social Security to improve institutional capacity within China to address the law enforcement aspects of the trafficking cycle, and to assist employers' and workers' organizations in identifying cases of forced labor⁸⁷ [see Section V(e)--Status of Women--Human Trafficking].

Prison Labor Products

Section 307 of the Tariff Act of 1930 prohibits the import of goods made by prisoners into the United States.⁸⁸ The United States and China signed a Memorandum of Understanding in 1992 to prevent the import into the United States of prison labor products. A subsequent agreement in 1994 permits U.S. officials, with Chinese government permission, to visit prison facilities suspected of producing products for export to the United States.⁸⁹ The U.S.-China Relations Act of 2000 created a Prison Labor Task Force to monitor and promote enforcement of U.S. law in this area.⁹⁰ In 2005, the Chinese government cooperated with the Task Force to resolve a number of alleged cases of prison labor products being exported to the United States.⁹¹

Although goods made in Chinese prisons probably do not constitute a large percentage of overall Chinese imports into the United States, the types of products produced by prisoners, and the commercialization of the Chinese prison system, make prison labor products difficult to detect. Many prison labor goods are produced under abusive conditions,⁹² and Chinese prisoners cannot refuse to produce goods for the commercial market.⁹³ Although the term laogai, or reform through labor, has been expunged from the Criminal Law as a term describing one form of criminal punishment, Western and Chinese experts estimate the number of commercial prison factories in China to be in the thousands.⁹⁴ One senior Chinese official expressed concern in 2004 about the commercial use of prison labor as a source of official corruption, and noted instances of prison administrators mixing prison-made goods with those from ordinary commercial enterprises.⁹⁵

Abolition of Child Labor

The use of child labor in some regions of China is reportedly on the rise, according to analyses over the past year by NGOs with expertise on Chinese labor issues.⁹⁶ State-controlled media reported in June that the Ministry of Justice and the Ministry of Labor and Social Security intensified their efforts "to fight illegal employment of child laborers," suggesting that the government is more concerned about such abuses than before.⁹⁷ Article 15 of the Labor Law prohibits employing children under the age of 16, and Article 94 provides for punishment of businesses that employ children, including revocation of their business licenses.⁹⁸ Chinese law bars employers from hiring juvenile workers between 16 and 18 years old to engage in mining, or highly strenuous or hazardous work, and requires employers to provide such workers with regular health inspections.⁹⁹ The State Council issued a rule in September 2002 requiring employers to check identity cards to verify age, and imposing fines of 5,000 yuan (US$625) a month for each child laborer employed.¹⁰⁰ Government authorities consider statistics on child labor that have not been officially approved for release to be state secrets, and this policy thwarts efforts to understand the extent and causes of the problem.¹⁰¹

Labor shortages in the economically developed southern and eastern coastal provinces are causing employers to turn to child laborers, according to NGO reports.¹⁰² Hong Kong news media has reported on employers who exploit child labor by recruiting underage students to work in factories as "interns." In one press report, teachers at a school in Shaanxi province arranged for about 600 students to be employed in a joint venture electronics factory in southern China. At the time of the report, more than 240 students were working on the factory's assembly lines for up to 14 hours a day of "practical training."¹⁰³ Although factory owners may legally employ interns, employers abuse internship programs when they rely on students as a large percentage of their workforce and do not pay them fairly for work performed, according to one publication on corporate social responsibility issues in China.¹⁰⁴

Hong Kong based experts have asserted that the Chinese education system is partly to blame for the problem of child labor because insufficient state funding, expensive local surcharges, and an excessive focus on college entrance exams leads many students to drop out of school.¹⁰⁵ Poverty also leads to child labor abuses. Some poor families send children, frequently girls, to find work as a means of support.¹⁰⁶ Other children work because their families cannot afford to pay school tuition fees, or because schools have hired them out to fill budget shortfalls.¹⁰⁷

Non-discrimination in Employment and Occupation

The Constitution, Labor Law, and Law on the Protection of Interests and Rights of Women all contain provisions that guarantee women non-discrimination in employment and occupation¹⁰⁸ [see Section V(e)--Status of Women]. The Rules on Collective Contracts issued in December 2003 contain "special protections" for women, including provisions on pregnancy and breastfeeding in the workplace.¹⁰⁹ The Chinese government has also begun national development programs to improve the status of women.¹¹⁰ Despite these efforts and legal protections, both urban and rural women in China have limited earning power compared to men, and women lag behind men in finding employment in higher-wage urban areas.¹¹¹

Some local authorities provide job training and reemployment services for women,¹¹² and civil society groups may advocate for women's rights within the confines of government and Party policy [see Section V(e)--Status of Women--Gender Disparities]. For example, the Center for Women's Law and Legal Services at Peking University submitted a petition in March 2006 to the National People's Congress (NPC) Standing Committee requesting constitutional review of a regulation that requires women workers to retire five years before men.¹¹³ The petition recommended that a future Chinese Pension Law include a provision for a flexible retirement system that allows both men and women to retire at or around 60 years of age.¹¹⁴ As of August 2006, the NPC Standing Committee had not responded to the petition,¹¹⁵ and it has no legal obligation to do so [see Section VII(c)--Access to Justice--Constitutional Review].

Article 4 of the Chinese Constitution prohibits ethnic discrimination,¹¹⁶ and Article 12 of the Labor Law forbids discrimination in job hiring on the basis of ethnicity.¹¹⁷ Nevertheless, ethnic discrimination continues to exist throughout China in both private and governmental hiring practices. Some Han Chinese entrepreneurs in ethnic minority areas recruit Han workers from other areas rather than hiring local minorities.¹¹⁸ Tibetans have reported discrimination in job hiring.¹¹⁹ According to the head of the Qinghai-Tibet railway construction project, 10,000 of 100,000 workers employed were Tibetan,¹²⁰ and most of the Tibetan workers were employed in menial labor positions.¹²¹ In the Xinjiang Uighur Autonomous Region (XUAR), personnel decisions in 2005 and 2006 explicitly favored Han Chinese over minorities. In April 2005, for example, the government specified that 500 of 700 new civil service positions in the southern XUAR would be reserved for Han Chinese.¹²² In June 2006, the Xinjiang Production and Construction Corps announced it would recruit 840 civil servants from the XUAR, designating almost all of the job openings for Han Chinese and reserving 38 positions for members of specified minority groups.¹²³

Conditions for China's Workers

Weak protection of worker rights has contributed to an increase in the number of labor disputes and protests. According to All-China Federation of Trade Unions (ACFTU) figures, the number of labor disputes rose sharply in 2005. The ACFTU reports that there were 300,000 labor-related lawsuits filed, a 20.5 percent increase over 2004 and a 950 percent increase compared to 1995.¹²⁴ Strikes, marches, demonstrations, and collective petitions increased from 1,482 in 1994 to about 11,000 in 2003, while the number of workers involved increased from 52,637 in 1994 to an estimated 515,000 in 2003.¹²⁵ Participants in all labor disputes rose from 77,794 in 1994 to nearly 800,000 in 2003.¹²⁶ Poor workplace health and safety conditions and continuing wage and pension arrearages were the most prominent issues resulting in labor disputes during the past year. Workers in all parts of China have difficulty collecting the wages that they are owed for work performed. Workers in the construction sector have the most problems with wage arrearages,¹²⁷ and the continuing building boom, along with new construction for the 2008 Olympics in Beijing, will challenge central and local governments to ensure that workers are paid promptly.

Workplace Health and Safety Conditions

Workplace health and safety conditions in China remain poor, despite central government statements about the need to improve safety and despite efforts at the enterprise level to cut the rate of industrial accidents. Chinese industry continues to have a high accident rate, with death rates in the mining and construction industries leading other sectors. According to State Administration of Work Safety (SAWS) statistics, 110,027 people were killed in 677,379 workplace accidents through December 2005, and more than 10,000 workers died in the mining and construction sectors during 2005.¹²⁸

The government has continued to take steps to address China's poor workplace safety record. In February 2006, SAWS ordered the closure of 35,842 companies that failed to meet a requirement to obtain safety licenses by the end of 2005, warning that it would ensure compliance by cutting off electric power to the companies' facilities.¹²⁹ SAWS also announced in February 2006 that the government is drafting legislation that would hold top provincial and city government and Party officials responsible for fatal accidents that result from lapses in workplace safety.¹³⁰ Criminal Law amendments passed in June 2006 strengthen punishments for work safety violation, including new penalties for personnel who hinder rescue efforts by covering up or failing to report accidents.¹³¹ In July, the government ratified a safety plan for the 11th Five-Year Program aimed at addressing major problems in workplace safety.¹³² In August, the government announced it would dedicate 467.4 billion yuan (US$58.81 billion) over the next five years to curb workplace accidents.¹³³

The Ministry of Health implemented a plan in May 2006 to improve rural migrant worker health that includes a number of goals for improving workplace health and safety conditions for migrant workers. These goals include implementing health and safety training and instruction programs in mid- and small-scale businesses, and undertaking collaborative efforts with the World Health Organization and the International Labor Organization.¹³⁴ Many migrant workers are employed in industries in which they are exposed to occupational diseases and other workplace safety hazards, according to an expert with the Chinese Center for Disease Control.¹³⁵

Occupational Health

Occupational diseases and injuries are widespread in many Chinese industries. Estimates of the incidence rate of occupational diseases and injuries caused by chemicals, toxic fumes, and machinery vary and are difficult to confirm. For example, one Chinese press report estimates that 200 million workers suffer from occupational diseases.¹³⁶ The SAWS officials who provided the estimate note that the number of workers suffering from occupational diseases is increasing, and describe the victims as mostly younger, poor workers.¹³⁷

Coal Mine Safety

Deaths in the coal mining sector totaled 5,938 in 2005, according to official Chinese statistics,¹³⁸ but some NGOs estimate that the number of deaths is much higher.¹³⁹ A political scientist at the Chinese Academy of Social Sciences offered the view that "China is so hungry for energy that safe coal produced by safe mines is not enough to quench its thirst."¹⁴⁰ Press reports suggest that Chinese coal mines are the world's deadliest.¹⁴¹ Fires, explosions, and floods occur in Chinese mines almost daily.¹⁴² The government has set the modest goal of reducing coal mine deaths during 2006 by 3.5 percent, but one workplace safety activist believes that "even this will take a great effort to realize."¹⁴³

Chinese officials have ordered the closure of dangerous mines, most of which are small, privately run mines, in an attempt to control the number of coal mine accidents.¹⁴⁴ Small mines produce one-third of China's coal output, but are responsible for two-thirds of coal mine deaths.¹⁴⁵ The government deems mines that produce under 30,000 tons per year as most vulnerable to accidents, and intends to close all such mines by the end of 2007.¹⁴⁶ Most of these small mines are expected to merge administratively with larger mines with better safety records.¹⁴⁷

Pervasive official corruption impedes implementation of coal mine safety programs. Local officials often receive income from mines, and therefore are reluctant to enforce safety regulations that will affect production.¹⁴⁸ In an August 2005 circular, the State Council ordered the managers of state-owned enterprises and government officials to divest themselves of all financial interests in coal mines other than stock of publicly listed companies.¹⁴⁹ By January 2006, official news media reported that more than 7,000 officials had given up investments in coal mines.¹⁵⁰

The government has prosecuted officials responsible for serious coal mine disasters. A December 2005 State Administration of Work Safety announcement described the prosecution and punishment of over 200 officials involved in six large coal mine disasters in 2004.¹⁵¹

Wages

Article 8 of the Provisions on Minimum Wages, issued by the Ministry of Labor and Social Security (MOLSS) in January 2004, charges provincial MOLSS authorities with drafting minimum wage rules in cooperation with provincial-level unions and industrial associations.¹⁵² In July 2006, the Shenzhen Special Economic Zone, which is not a provincial-level government, raised its minimum wage to 810 yuan per month (US$101).¹⁵³ The previous minimum wage rate in Shenzhen had been the same as Jiangsu province and Shanghai municipality: 690 yuan per month (US$86).¹⁵⁴ At the lower end of the minimum wage scale are Gansu province at 340 yuan per month (US$43) and Jiangxi and Jilin provinces at 360 yuan per month (US$45).¹⁵⁵

Provincial governments in China are reluctant to review their minimum wage levels every two years, even though the 2004 provisions require it.¹⁵⁶ In March 2006, at least four provincial governments were out of compliance with the two-year rule, according to the MOLSS.¹⁵⁷ Official news media suggests that provincial officials fear that higher minimum wages will force companies to relocate manufacturing facilities to provinces where wages are lower.¹⁵⁸ A Xinhua editorial recommended that the central government develop a more clearly defined method to determine that the minimum wage is not artificially low, and monitor how local governments apply this method. An All-China Federation of Trade Unions official said in May that the minimum wage levels set by most provincial-level governments did not meet national guidelines."¹⁵⁹

Wage Arrearages

Employers illegally withhold or refuse to pay wages earned by millions of Chinese workers.¹⁶⁰ Employers owe millions of migrant workers more than US$12 billion in unpaid wages, a problem that is particularly acute in the construction industry, which employs many migrant workers.¹⁶¹ Some employers make only minimal wage payments through the year in addition to providing room and board. Others withhold payments over the New Year holiday as a means of compelling workers to return.¹⁶² A State Council report estimates that employers do not pay about half of migrant workers on time.¹⁶³

Despite central government pledges beginning in 2003 to clear up wage arrearages for migrant workers in the construction sector, the problem persists. In some cases where the government has reported success in clearing arrearages, the workers have, in fact, accepted less than full pay in order to get any cash at all. Many wage arrearages also go unreported, and new arrearages continue to accumulate, despite the creation of programs to discourage them.¹⁶⁴

Some local governments have taken steps to help workers recover wages. In February 2006, the Shenzhen Labor and Social Security Bureau sanctioned 1,300 companies and imposed 47 million yuan (US$5.8 million) in fines for not paying wages owed to workers. The Bureau reclaimed about 70 million yuan (US$8.6 million) in unpaid wages.¹⁶⁵ Since July 2006, employers in Shaanxi province who have not met time limits set by the provincial government for paying back wages have been subject to fines totaling 50 to 100 percent of the arrearages.¹⁶⁶ In 2005, the Guangdong Provincial Labor and Social Security Bureau began posting the names of companies that continued to default on wages after "repeated education, warnings, or even heavy punishments."¹⁶⁷ Although these programs are positive developments, they have not been highly successful.¹⁶⁸

Benefits

Employers in China rarely comply with laws and regulations on benefits.¹⁶⁹ In one 2004 study, a Western auditing firm found that only 5 of 80 Chinese factories surveyed were in compliance with benefits laws.¹⁷⁰ Compliance problems included failure to grant workers paid vacations and failure to enroll workers in the social security system (including pensions).¹⁷¹ Companies also have failed to provide workers with medical benefits, including treatment for workplace injuries and maternity benefits.¹⁷² Some employers circumvent their obligation to provide benefits by refusing to sign labor contracts.¹⁷³

The State Council adopted a decision on basic old-age insurance in December 2005 with the stated goal of shifting Chinese pensions from an enterprise-based system to a market-oriented system with personal accounts.¹⁷⁴ The decision also seeks to address the underfunding of personal accounts, guarantee the short-term availability of pension funds, and expand coverage of the funds.¹⁷⁵ One U.S. expert said, "For this patchwork [of pensions], covering perhaps a sixth of the total Chinese workforce, the net present value of unfunded liabilities is estimated to exceed current GDP--perhaps substantially."¹⁷⁶ Problems in the pension system spurred large-scale worker protests in 2005 and 2006.¹⁷⁷

The government announced plans in 2006 to expand coverage of on-the-job injury insurance to 140 million people by 2010¹⁷⁸ and said it would take compulsory measures to promote employer participation.¹⁷⁹ As of April 2006, 87 million workers were covered, the government reported.¹⁸⁰ In June, the Shanxi province government announced that all employers must provide injury insurance to migrant workers.¹⁸¹ By the end of July 2006, 18.7 million migrant workers nationwide had such insurance, according to government figures.¹⁸²

U.S.-China Bilateral Programs

The U.S. Department of Labor (DOL) and two Chinese government agencies continued to conduct cooperative activities during 2006 on wage and hour laws, occupational safety and health, mine safety and health, and pension program oversight.¹⁸³ The DOL-sponsored mine safety program provided training to 55 Chinese mine managers and over 400 miners. Under the Labor Law Cooperation Project, four legislative drafters participated in internship programs in the United States to learn about legislative and labor law systems and enforcement practices. The project also produced information, education, and communication materials on labor law that were distributed to tens of thousands of Chinese workers. Under the project, 2,437 migrant workers received labor law training, 380 workers received counseling services, and 24 were provided with legal assistance.¹⁸⁴

The DOL, in cooperation with central and local Chinese government agencies, completed five baseline surveys on labor dispute resolution that served as references for drafting a new Dispute Resolution Law, scheduled for consideration in August 2006. In addition, the Project selected 15 diverse enterprises (including joint venture, foreign-owned, state-owned, small, medium, and large enterprises) to participate in a pilot project to improve labor relations. Training for some 80 individuals began in April 2006 to establish and operate in-plant labor-management committees. Trainees include officials from district labor dispute tribunals, company human resource directors, and workers from the enterprises.¹⁸⁵

Migrant Workers

Official statistics suggest 120 million rural migrants worked in China's urban cities in 2005.¹⁸⁶ These migrant workers often face discrimination and violations of their legal rights. Over 81 percent of rural migrant workers currently work outside of their place of residence for more than six months out of the year, an increase of 6.4 percent compared to 2002, according to a State Council research report.¹⁸⁷ Since many local regulations limit the ability of poor migrants to obtain local hukou (household registration) in the urban areas where they live and work, migrant workers are often unable to obtain public services such as health insurance and education for their children on an equal basis with urban residents [see Section V(i)--Freedom of Residence and Travel].

Migrant workers also frequently have difficulties protecting their legal rights under China's labor laws. Fewer than 54 percent of rural migrant workers have signed labor contracts with their employers. Excessive work hours and unpaid wages are common problems.¹⁸⁸ Over 35 percent of rural migrant workers report "sometimes" having difficulty being paid on time, while nearly 16 percent say they "frequently" have problems being paid.¹⁸⁹ Seventy-six percent of migrant workers report that they have not received overtime pay owed to them.¹⁹⁰

Chinese authorities have attempted to address the problems of migrant workers. The Ministry of Health announced a plan in May 2006 to improve the health of rural migrant workers. The plan includes goals for preventing and controlling the spread of HIV/AIDS among rural migrants, improving infectious disease monitoring capabilities in large urban areas with migrant workers, as well as improving workplace health and safety conditions for migrant workers.¹⁹¹ The central government has also included in its 2006 rural development campaign for a "new socialist countryside" such components as reform of the hukou system, protection of the legal rights of migrant workers, and the elimination of discriminatory regulations that restrict urban job opportunities for migrants.¹⁹² In 2005, both Beijing municipal authorities and national Ministry of Labor and Social Security officials eliminated rules that limit employment in cities for migrants.¹⁹³ Chinese authorities also have called for creating better mechanisms for addressing workers' claims for unpaid wages and for expanding workers' compensation insurance programs to cover migrants.¹⁹⁴ The State Council's research report on migrant workers notes that despite central government policies regarding the abolition of discriminatory permits and fees for rural migrant workers, "the phenomenon of illegal charges continues to exist" in some areas.¹⁹⁵