Paul French says some companies may be made examples of under China’s tough new employment laws
In March thousands of “delegates” gathered in Beijing’s Great Hall of the People for the Communist party’s annual jamboree, the National People’s Congress and the Chinese People’s Political Consultative Conference.
The two combined are China’s rubber-stamp parliament. This year there was the usual whiff of decisions having been made previously behind closed doors. All the while, the traditional wall-to-wall TV and media coverage showed a Communist party confident in power.
And, of course, this year there was absolutely no mention of the popular flower tea that if typed in an email or text in China sets alarm bells ringing at your local police station. No fear of a “jasmine revolution” worth discussing.
This year’s NPC saw much talk about “the consolidation of a socialist legal system with Chinese characteristics”.
This is a wide-ranging subject taking in everything from rooting out corrupt cops to reaffirming the imprisonment of human rights campaigner Liu Xiaobo on “sufficient legal and factual grounds”, according to Li Fei, deputy director of the NPC’s legislative affairs commission and the most vocal “legislator” on legal issues this year.
What appears to be happening is that China is creating what is referred to in Beijing-speak as a “comprehensive socialist legal system”. This puts many matters firmly within the Chinese criminal code. It effectively sets various misdemeanours, from being a dissident to being a bad employer, in stone. And this is where the ethical problems will lie for many outsiders.
Consider the following. Under an amendment to China’s criminal code (formally article 276(1) of the code), just adopted at the NPC, employers in China who withhold workers’ pay will face up to seven years in jail. The amendment targets those employers who conceal assets or (as has been the case with some overseas investors as the recession bit) flee the country leaving unpaid bills.
Now, leaving aside the problem of how exactly a stiffer jail sentence will deter people from skipping the country, this may sound positive from a workers’ rights point of view. It is good that China’s often ignored “floating” population of migrant workers have been specifically named as being in need of protection.
But it also adds an element of risk for managers should their company encounter financial difficulties and be unable to pay its workers. Your head office in Europe goes bust, no transfer of funds to China occurs, and you may end up doing a seven-year stretch in a Chinese jail. Not nice.
Power to the people
How this will all play out, we’ll have to see. In the past, disgruntled or unpaid workers, unable to strike or form independent trade unions, usually resorted to arbitration by the local government-linked labour bureau to resolve pay disputes. Now they will have the option of moving straight to seeking criminal charges that could result in fines or imprisonment for their bosses.
As well as potential problems for employers who find that their company is in financial difficulty, there is the issue that this amendment is one of a lot of new codifications that may leave some uneasy, among them the political subversion laws that have been used to imprison Nobel laureate Liu Xiaobo for 11 years.
And what do the Beijing-watchers, the people who try to read the tea leaves (non-Jasmine of course), make of this seeming clampdown on bad employers?
Most agree that this is really a message to workers that their benevolent government cares. Wages, salary rises and guaranteed payment are “hot button” issues, with China suffering under inflationary pressure and price rises.
Andy Rothman, veteran China expert for investment bank CLSA, based in Shanghai, says Chinese premier Wen Jiabao revealed no surprises during his annual speech to the National People’s Congress. “Inflation remains the top priority, but Wen did not sound worried and did not signal tighter monetary policy. With an eye on the Middle East, spending on social welfare will continue to rise rapidly, as will minimum wages,” Rothman predicts.
And employers will have to pay them. So, getting tough on non-payment and the causes of non-payment is a mantra now for the Communist party in the year ahead. The worry for some will be that in order to show that all this new law is not just hot air and posturing, some employers will find themselves up in court and subject to the full severity of the party-appointed judge.
As with human rights and Liu, examples must be made!
Paul French has been based in China for more than 20 years and is a partner in the research publisher Access Asia.