Developing Harmonious Labor Relations While Dealing with the International Financial Crisis

From: English Edition of Qiushi Journal Updated: 2011-09-20 13:25
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 Harmonious labor relations are essential for the development of a harmonious socialist society.  

 Labor relations are fundamental to a modern society. Labor relations in a market economy have three basic features: they are both economic and social in nature; they require equality between the employer and employees while they involve subordination, and they involve both conflict and cooperation. Large numbers of workers are forming an employee-employer relationship at the workplaces where they are hired as China reforms its economic system and undergoes rapid industrialization and urbanization. So employment is becoming increasingly subject to market forces. For this reason the impact of labor relations on economic development and social stability is steadily growing, making labor relations a fundamental part of social relations in China.

 Developing harmonious and stable labor relations is an important part of building a harmonious society. The state of labor relations is an important yardstick for gauging the degree of harmony in a region or country. Carefully balancing labor relations and maintaining harmonious labor relations can promote economic and social development and, conversely, not working to balance labor relations can easily result in problems in labor relations and a variety of conflicts between labor and capital, thus affecting the development of enterprises and the stability of society. China is now in a critical stage of reform and development. Making labor relations more standardized and balanced and protecting the legal rights and interests of both sides through the law, particularly in terms of realizing, protecting and developing the basic rights and interests of workers, in coping with the international financial crisis, can effectively increase the factors promoting harmony and eliminate factors adversely affecting harmony, strengthen the foundation for social harmony and promote the development of a harmonious socialist society.

 History of labor relations development under the market economy has shown that relying exclusively on capital and labor themselves to maintain good labor relations has limitations, thus making government regulation essential to maintaining good labor relations. Governments at all levels in China have found that in building socialism with Chinese characteristics they have an increasingly growing responsibility to protect the legal rights and interests of the workers and balance labor relations.

 Changes and development in labor relations in China

 When China practiced a highly centralized planned economy, labor relations, wage distribution and insurance and benefits were all governed by unified state policies implemented from top to bottom. Labor relations in China have undergone several major reforms since China initiated the policy of reform and opening up and began the process of economic restructuring, in particular since the reform of state-owned enterprises was deepened and adjustments were made in the ownership structure of enterprises. These reforms may be roughly divided into three stages.

 In the first stage (1978–1991) the non-public sector, consisting of individual businesspersons and private companies, began developing, some rights to independently hire workers and determine wages were granted to enterprises and state-owned enterprises began signing employment contracts with employees, but the economy still bore obvious features of a planned economy.

 During the second stage (1992–2005) the reform of state-owned enterprises was constantly deepened and the non-public sector witnessed rapid development. The government granted full autonomy to enterprises in hiring workers and setting wages and the Labor Law was implemented, putting the establishment, operation and regulation of labor relations on a legal footing.

 A number of important laws were introduced during the third stage form 2006 to the present, including the Labor Contract Law, the Law to Promote Employment and the Law on Mediation and Arbitration of Labor Disputes, improving the legal framework for regulating labor relations. A new pattern in labor relations was gradually formed based on negotiations between capital and labor acting on their own initiative, the government, labor unions and enterprises working together to resolve disputes, and the government overseeing resolution of labor conflicts to ensure compliance with the law, ushering in a new phase in the development of harmonious labor relations with Chinese characteristics.

 In summary, labor relations reform in China has gone through three major stages, bringing about a number of changes. One, labor relations began to be subject to market forces. Labor relations changed from direct appointment by the government to mutual choice on the part of employer and employee in the labor market in accordance with the law. Labor relations changed from mainly being directly subject to government administration to being subject to market forces. Labor contracts are now concluded between the employer and employee, and the labor contract has become an important document defining the rights and obligations of both parties to the contract. Two, labor relations have become more varied in form. With the rapid growth of both the public and non-public sectors of the economy, the parties recruiting workers have become more varied and the scope of labor relations adjustment has expanded from state-owned enterprises to economic entities under all types of ownership. Three, the interests of the two parties in labor relations were clarified. As labor relations became more subject to market forces, the two parties in the labor relations have come to represent independent interests that are both separate and linked and must be balanced within the same entity. Four, the regulation of labor relations was put on a legal footing. A basic legal and policy framework based on the Labor Law, the Labor Contract Law and the Law on Mediation and Arbitration of Labor Disputes was formed, ushering in a new stage in the regulation of labor relations based on standards and laws.

 March 11, 2010, female employees of the Dexing Copper Mine of the Jiangxi Copper Corporation gather at the mine’s cultural square for a culinary competition. Over 200 women from the mine demonstrated their skills by creating a wide variety of delicious and appealing dishes that attracted large crowds of eager tasters.  / Supplied by Xinhua

 During the thirty-some years since China introduced the policy of reform and opening up, labor relations in China, generally speaking, have been stable and harmonious. On the other hand, there are still outstanding issues of labor relations left over from the restructuring of state-owned enterprises plus the problem of the diminished proportion of labor income in the primary distribution and the failure to fully implement the basic labor standards. The uncertainties facing labor relations have multiplied, particularly under the lingering impact of the international financial crisis, and the problems are still serious. Resolving these problems will require stepping up reform efforts and introducing new laws and policy measures or improving existing ones.

 The principal tasks and policy measures in the development of harmonious labor relations

 Taking into consideration the requirements and current conditions in China presented by the market economy, the key to developing harmonious labor relations is the independent coordination between the enterprises and their employees, because the enterprises and their employees play a fundamental role in resolving large-scale and general problems in labor relations. Negotiation and consultation among the government, trade unions and enterprises and other employers are important and play a unique role in resolving common and complicated issues in labor relations. The government formulates the regulations governing labor relations, plays an important role in mediating and arbitrating labor disputes, and takes control under special circumstances, thereby playing a leading role in formulating policies, overseeing enforcement of the law and dealing with major emergency mass disturbances. There are a number of tasks that now need to be accomplished to develop harmonious labor relations. We need to establish a sound labor relations regulation system suitable for China’s socialist market economy and develop a permanent mechanism for developing harmonious labor relations to create a new type of stable and harmonious socialist labor relations that is orderly and standardized as well as just and reasonable and will bring practical benefits to employees and boost enterprise performance, boost economic development and ensure social stability.

 We must steadily implement the Labor Contract Law and integrate efforts to ensure a dynamic labor market with efforts to standardize the employment practice of enterprises. We need to broaden the scope of employers under the labor contract system by organizing a campaign to include small enterprises under the labor contract system. We need to increase the number of migrant workers working in cities covered by labor contracts by introducing the use of simplified labor contracts in small and medium-sized enterprises that employ large numbers of migrant workers. We need to work out standards for household help and replace the many current oral agreements with simplified written contracts. We need to work out regulations governing Chinese labor sent abroad to promote standardization of labor services.

 We need to introduce collective bargaining for wages to combine a mechanism for increasing and decreasing wages with protection of the rights and interests of workers concerning their wages. Wages constitute the central issue in labor relations. The collective labor contract system guides enterprises with normal production and operations in determining an appropriate wage level and the rate for wage increases through collective bargaining and will gradually resolve the problem of the diminished proportion of labor income in the primary distribution. We should continue to guide enterprises whose operations are experiencing difficulty and their employees in adjusting wages through negotiation. In particular, we must help ensure the payment of wages by these enterprises in the period when arrears of wages are most likely to occur. We must implement the guidelines for standardizing the salaries of senior managerial personnel in state-owned enterprises so that the structure of their salaries is reasonable, salary levels are appropriate and administration of their salaries complies with set standards.

 We need to improve the special working hours system and link efforts to make working hours system more flexible with efforts to improve working conditions. Improvement of working conditions is an important part of the effort to develop harmonious labor relations. Focusing on the 20 service outsourcing demonstration cities, we need to guide enterprises in practicing a special working hours system and making the work schedule more flexible to cope with fluctuations in orders and changes in product demand. We need to work out labor agreements for household help and formulate standards for special working hours, remuneration and days off. We must fully implement regulations concerning days off and vacations to ensure decent working conditions for workers.

 We must find effective solutions to labor disputes by using both soft-touch mediation and high quality and high efficient arbitration. The general approach is to encourage accommodation, strengthen mediation, and improve arbitration and finally seek legal action, resolving labor disputes without seeking legal action wherever possible. We need to develop a network of enterprise mediation organs, rural community mediation organs and civil mediation organizations to apply the Chinese traditional soft-touch approach to mediation known internationally as the “Oriental Experience” to quickly resolve minor and simple labor disputes at the lowest level. The key is to resolve the differences between the two sides in a dispute. We need to set up more concrete arbitration organizations, improve the efficiency of labor dispute resolution and set up a working mechanism for rapidly handling collective labor disputes. We must make good use of the unique role of the tripartite mechanism for coordination of labor disputes in developing harmonious labor relations and work for harmonious labor relations in large-scale enterprises and industrial zones all the way down to small and medium-sized enterprises and urban and rural communities, and strengthen the foundation for harmonious labor relations.

 We need to strengthen oversight and enforcement of labor protection laws and combine protection of the legal rights and interests of workers with government service to enterprises. We should integrate government support and services with the enforcement of relevant laws and continue to guide enterprises in employing labor in accordance with the law and guide workers in voicing their demands in a reasonable manner in accordance with the law. We must strictly investigate major illegal acts that infringe on the rights and interests of workers such as cases of child labor, illegal employment agents and agencies, and failure to pay back wages to employees and fleeing to avoid paying wages to employees. We need to carry out the trial of administration through two networks, a responsibility network for overseeing and ensuring the rights and interests of workers and an oversight information network, and change from focusing oversight and enforcement efforts on urban areas to placing equal emphasis on oversight and enforcement in urban and rural areas and shift from reacting to violations to taking the initiative in preventing violations. 

 Protecting the legal rights and interests of migrant workers employed in cities is an important part of developing a harmonious labor relation in this new period. The work for some time to come in protecting the basic interests and rights of rural workers in cities can be boiled down to ten tasks: ensuring employment opportunities for them in the cities, ensuring that employers conclude employment contracts with them, ensuring that there are career training opportunities for them, ensuring that they are paid in full and on time, ensuring safe working conditions, ensuring they are able to obtain insurance, ensuring they have proper housing, ensuring they have channels to protect their rights, ensuring they have a cultural life and ensuring that they have goals for personal development.

(From Qiushi in Chinese, No. 4, 2010)

Note:  Author: Vice Minister of Human Resources and Social Security of the P.R.C

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