Reference ID: 06GUANGZHOU32263    

Created: 2006-11-13 08:28    

Released: 2011-08-30 01:44    

Classification: UNCLASSIFIED    

Origin: Consulate Guangzhou




DE RUEHGZ #2263/01 3170828


R 130828Z NOV 06















E.O. 12958: N/A


SUBJECT:  Labor Law Implementation and CSR Cynicism are Key

Problems, Say Labor Experts


REF: 04 Guangzhou 27525


¶1. (U) Summary:  Despite China's many international labor

commitments, migrant workers remain poorly trained, overworked and

underpaid, according to experts at a recent conference on Corporate

Social Responsibility (CSR) in Shenzhen.  Many legal experts said

that China's labor laws are theoretically sound but in need of

proper implementation through better monitoring and incentive

programs.  On the factory floor itself, many migrant workers are

eager for education, but the government provides little support for

such programs.  An official at a large Nike factory explained how

offering educational and recreational opportunities can greatly

lower turnover rates that have plagued other factories.  End



¶2. (U) On October 26-27, poloff attended a Corporate Social

Responsibility (CSR) Conference hosted by Shenzhen's Institute of

Contemporary Observation (ICO) entitled "Toward the Olympics:

China's Opportunities and Challenges."  Since its founding in 2001,

the ICO has audited over 1,000 factories in Guangdong Province's

manufacturing-intensive Pearl River Delta (PRD) and provided worker

training sessions in hundreds of others.  In March 2004 the ICO

started a Migrant Worker Community College, which teaches basic

computer skills, English, health care and labor rights. The ICO

conference included academics from China and abroad, private sector

CSR leaders and representatives from foreign governments, as well as

representatives from the United Nations International Labor

Organization (ILO).


Workers: Inexperienced, Overworked and Underpaid

--------------------------------------------- ---


¶3.  (U) ICO founder Liu Kaiming began the conference by presenting

troubling statistics on general migrant worker patterns and working

conditions.  Liu estimated that 200 million farmers have migrated to

urban areas.  Fifty-eight percent of migrant workers are in

manufacturing or construction and 82 percent of them work in the

eastern cities of Beijing, Tianjin, Shanghai or the provinces of

Zhejiang, Jiangsu, Fujian and Guangdong.  Guangdong alone has 40

million migrant workers (27 percent of the total).  On average,

migrant workers are 29 years old, 77 percent have never gone to high

school and 72 percent have no vocational training.  As labor rights

awareness increases in China, labor disputes have risen from 19,098

in 1994 to 226,000 in 2003.  Liu said China has 560,000 foreign

companies, which employ 80 million Chinese workers in the global

supply chain.


¶4.  (U) China's current "Gini" index is 0.49, which Liu said is

"dangerously high" (Note:  The Gini index measures a country's level

of inequality.  Many African countries have indices around 0.40.

End Note) -- while average wages in China have increased, minimum

wages remain relatively low.  According to Liu, the average monthly

minimum wage for workers in the PRD increased by only 68 RMB (USD

8.5) between 1992 and 2004.  Internationally, minimum wages are

typically between 40-60 percent of a region's average wage.

According to Liu, China has only one city with a minimum wage half

of the average wage, while Shenzhen and Guangzhou are the lowest

with minimum wages only 18 and 20 percent of the average wage.


¶5.  (U) Migrants tend to work long hours and some do not even

receive the minimum wage.  The National Statistics Bureau said that

in 2004, migrant workers worked an average of 6.4 days a week and

9.4 hours a day.  Recently, the ICO conducted a survey of 300

factories and found 50 percent of workers received the minimum wage,

30 percent did not, and 20 percent received wagers higher than the

minimum.  Liu said that such harsh conditions have led some PRD

factories to have turnover rates of 40 percent.


Chinese Law Sound, but Must be Better Implemented

--------------------------------------------- ----


¶6.  (U) Roger Plant, director of the ILO's special program on forced

labor, noted that in 1998, the international community (along with

China) adopted the Declaration on Fundamental Principles and Rights

at Work, obligating member-states to uphold four core labor

principles:  no forced labor, no child labor, no discrimination in

the work place and freedom of association and collective bargaining.

 Plant said that the key challenge for China is to guarantee the

rights of its migrant workers.  Plant believes that child labor is

less of a problem in China than in other Asian countries, but that

labor mobility is limited due to China's "hukou" (household

registration) system.


¶7.  (U) Guo Jianwei, director of Peking University's Women Legal

Research and Service Center, said that although China has signed 23

labor rights-related international conventions, China's biggest

problem remains implementing its international legal obligations.


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When advocating for labor rights, Guo said her group tries to view

the situation from the enterprise's perspective.  The problem is

that the Chinese government neither encourages nor punishes

enterprises that improve labor rights standards.  Guo said the

situation is different in other countries like the United States,

where companies receive tax breaks for CSR activities and penalties

for breaking the law.


Multi-National Companies Remain Cynical of CSR

--------------------------------------------- -


¶8.  (U) Renmin University's Chang Kai, one of China's leading labor

experts, admonished multi-national corporations (MNCs) because,

based on his research of hundreds of factory manuals, many MNCs

merely strive to meet the lowest labor standards allowed in China.

Kai urged MNCs not to rely just on the Chinese government to make

changes, but also to strive for higher international standards.

Moreover, CSR should increase benefits (such as higher pay) and

respect workers' rights, such as collective bargaining and

permitting dissent.


¶9.  (U) Kai also argued that MNCs in China have merely been public

advocates for CSR and have not tried to address systemic problems.

Kai pointed to the recent Foxconn (a Taiwan electronics

manufacturer) scandal as a "typical" example of MNCs views toward

CSR.  In June, two Mainland journalists published an expose on the

labor conditions of a Foxconn subsidiary in Dongguan, Guangdong

Province.  Kai said the reaction by Foxconn and local authorities

was excessive and "unnatural."  Foxconn immediately sued the

journalists for RMB 30 million (USD 3.8 million), making it the

Mainland's largest defamation case in history. In the pre-trial

motions, the Shenzhen courts decided to freeze the journalists'

assets.  In the end, Foxconn admitted it had labor problems and

dropped the libel suit.  Kai said that Foxconn then came out with a

CSR-type campaign that expressed its "admiration" for the media

coverage and "thanked" the journalists for their efforts.  Kai

argued that Foxconn never resolved its labor problems, but instead

focused only on good public relations.


Workers Want to Learn, but Government Won't Pay

--------------------------------------------- --


¶10.  (U) According to the research by Peking University's Wang Rong

on migrant workers in Shanghai, workers were willing to personally

pay RMB 2,000 (USD 250) a year for education.  Wang was surprised by

these findings, as the current tuition for adult education in

Shanghai is around RMB 3,000 (USD 375).  Wang highlighted the gap

between worker's demand and Central Government spending on

education.  In 2005, the Central Government allotted RMB 10 billion

(USD 1.25 billion) on education for migrant workers, but according

to Wang's research, the market demand from migrant workers is near

RMB 350 billion (USD 43.75 billion).  Wang said most workers do not

study because they lack access to information and transportation, or

they are simply too tired from working long hours.


Positive Examples from the Private Sector



¶11.  (U) Topy He, leader of a team of 28 CSR workers at Nike's Yue

Yuan Industrial Plant (YY) in Dongguan, described Nike's strategy to

improve worker conditions.  YY (reftel) is one of South China's

largest factories with over 90,000 workers.  Factory laborers work

six days a week, but are not allowed to exceed the maximum 36 hours

overtime per month.  When the workers approach the overtime limit,

the factory foremen are given a warning to ensure compliance.  Some

workers can earn up to RMB 1,300 (USD 163) per month, including

overtime pay.  In addition to fair wages, Nike also provides

training in English and computers skills, as well as access to

games, television, a library and a park.  As a result of these

benefits, Topy He is proud that Nike has kept its turnover rate to

around three percent annually.