Working Conditions

Decent Work, Decent life: China, Hong Kong and Macau

Core principles: Wages and Working hours

Decent work has been defined by the ILO and endorsed by the international community as being productive work for women and men in conditions of freedom, equity, security and human dignity. Decent work involves opportunities for work that is productive and delivers a fair income; provides security in the workplace and social protection for workers and their families; offers better prospects for personal development and encourages social integration; gives people the freedom to express their concerns, to organize and to participate in decisions that affect their lives; and guarantees equal opportunities and equal treatment for all.

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IHLO has produced some figures and tables showing the differences between the minimum wage levels and the wage levels needed to adequately provide for a family. We also show how rising prices are making the prospect of decent work less and less accessible.

The Fast food Index: How long does is it take a migrant worker to earn enough to buy a MacDonald’s or local meal?

What’s the difference between the minimum wage and the ‘average’ wage?

What are workers earning in Dongguan and how much can they buy with this? How much do they need to afford a ‘decent’ life?

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While many fundamental aspects of Decent work remains strictly off limits and subject to censorship, such as the continuing lack of freedom of association and the failure of the government to ratify core ILO conventions 87 and 98, some aspects  of work relating to decent work are changing – and some rapidly. A new law passed in 2008, the Employment Promotion law laid the foundation for improved investment in on the job training and career development – at least on paper and at least for some. The 2008 Employment Contract Law specified penalties for the non provision of proper work contracts and the use (and abuse) of contract labour. A myriad of other legislation and l rules concerning social security provisions, pension reform (to an extent) have also been passed in recent years.

 All this is adding to an already impressive lawyer of labour related legislation governing working hours, minimum wage rates, working conditions, overtime rates ands limits etc etc…the problem is however that much of this is never ever implemented, and rarely monitored and enforced. For example, the Chinese labour law of 1994 put in place a national limit of 40 hours a week with overtime set at 3 hours a day (or 36 a month). Overtime pay must be at least 150 percent of an employee’s wage during normal work days; 200 percent on rest days, and 300 percent on national holidays.

While some aspects of labour legislation, as a result of local enforcement, national campaigns or the efforts of local workers and related labour groups, some issues remain largely unchanged. For example the gap between law and reality when it comes to calculating and obtaining the minimum wage for a migrant worker or the ease at which companies can use a variety of calculations designed at allowing companies to get around overtime limits. All this means that investigations into factory conditions – especially in the major manufacturing areas such as the Peal River Delta – continue to show time and time again, the same ‘sweatshop” conditions: low rates of pay and excessive overtime. For most migrants in the manufacturing industry – especially those at the lower end of the scale the amount of time they have to work in order to scrape together the legal minimum wage continues to far exceed the legal maximum working hour. This is in direct contravention of provisions which state clearly that the minimum wage is for normal working hours and does not include overtime payments.

Overly complex systems of wage calculations and piece rates mean that many migrants have difficulties knowing the exact wage they would get without overtime. Although domestic regulations specify that workers need to be informed of the minimum wage applicable to them, in the majority of cases workers are unaware of the minimum wage and when they may be more knowledgeable they are confused by various piece rate/hourly calculations (often deliberately). 

For many migrants, the minimum wage has become the maximum and bears little resemblance to the so called ‘average wage in a district. The institutionalised discrimination against workers from the rural areas (those with a rural residence permit (hukou) means that urban workers, even unskilled or semi-skilled, can earn up to four times their rural counterparts in the same city.

For more details on the requirements of the ILO on wage fixing and how the Chinese authorities are applying the conventions please see the then ICFTU Observations to the ILO Committee of Experts on the Application of Conventions and Recommendations on Convention No.26 on Minimum Wage-Fixing Machinery

Minimum wage too low

The national provisions on minimum wage states that when fixing the wage level, local governments must take into consideration cost of basic necessities as well as local consumer indices.  The methods of calculation in setting minimum wages have attracted some criticism from within China. According to the regulations there are three main ways of calculating the wage. Firstly by proportion of living expenses, secondly using the proportion of food expenses in the total living costs and thirdly set at 40 to 60 percent of the average monthly incomes. In practice however minimum wage levels are extremely low throughout the country, far below average regional wage levels. In 2004 in Guangdong province, the minimum wage was only 24 percent of the average wage level for the province and current wage rises are not enough to increase by far this percentage.  Figures from the National Statistics Bureau show that only five regions in China had achieved a minimum wage that was between 40 and 60 percent of the average wage level of the local community. Worse still, according to a high ranking official of the Labour Institution at the Ministry of Labour and Social Security, in 2006 not one single province had applied that third standard and reached that level. In Beijing and Shanghai, the minimum wage in 2006 was around 20 per cent of the average monthly wage with the gap between the average monthly wage and minimum wage being 2,703 yuan.  Only in two provinces, Heilongjiang and Xinjiang, was the minimum wage equivalent to the average standard of living (CLB: statistics: Minimum wages minus average monthly living expense ). 

By law, when the government  adjusts the minimum wage level it should take into consideration the payments made by employees to their pension insurance, medical insurance, unemployment insurance and housing funds. Many provincial regulations on minimum wages have also been revised to include social security, but the picture is confused. Although the revised regulations of 2004 were designed to help enforce minimum wage policies, only 18 of China's 31 provinces, autonomous regions and municipalities included workers' social security payments when considering the minimum wage level in their local areas. The inclusion of insurance expenses is designed to ensure that enterprises do not shirk responsibility to add insurance costs onto the basic wages but in reality the workers have sometimes found that their actual wages have not increased and that insurance costs are deducted from the basic wage without any explanation of how the money is being spent and sometimes in the case of illness such benefits are still refused. Many find it increasingly difficult to calculate exactly what the basic wage is.

The low level of minimum wage has come under increasing criticism as inflation continues to rise. Although the myth that wage levels are rising rapidly continues to spread, workers still find themselves unable to afford the basic necessities. While some increases – in the past five years – seem dramatic they are off set by the dramatic rise in the price of basic foodstuffs, rent and general expenses. Wages which have remained stagnant for many years are increasing simply to keep up with massive inflation and food costs. In downtown Shenzhen, the minimum wage reached a symbolic 1,000 Yuan per month last month (to start from 1 July 2008) but the average wage for urban workers in Shenzhen was over 3,000 per month in 2007.  Wage levels for migrants have in fact gone up extremely slowly compared to the rise in the average wage in the past few years. According to official media, “Sound corporate performances and raised lowest salary levels lifted the average salary of China's employees working in cities and towns approach 25,000 Yuan (3,561.3 U.S. dollars) in 2007, up 18.72 percent over the previous year, the biggest rise in the past six years” [Xinhua 2 April 2008]

In 2007, inflation reached an 11-year high of 6.9 percent in November- many state that official inflation rates in fact bear little relation to unofficial rates based on actual price increases, Food prices rose by almost 20 percent compared to 2006 while water, gas and electricity rose by almost 6 percent.  Already in mid 2007, in Shenzhen the price of pork went from 9 Yuan a kilo in April to 28-30 in May. Across China, the prise of pork rose 29.3 per cent in April 2007 from April 2006. The rise over 12 months in eggs was 30.9 percent.

Level not respected and not paid

Even if one can earn the minimum wage, many workers are simply not paid on time if at all. Wage arrears are a common problem, despite high profile attempts by government and party bodies, including the ACFTU, to combat the problem. According to a 2005 Survey by the ACFTU, which interviewed some 10,000 workers in 10 provinces, 12.7 percent of those interviewed received wages lower than the minimum wage level in their areas. Auditors hired by foreign brands often find that factory managers falsify time cards and payroll records to avoid paying the legal minimums. Some auditors estimate that managers at more than half the factories they visit in China alter at least some of their payroll records. Of the 142 factories audited by international social auditing firm Verité in 2002 and 2003, auditors reported that the regular wages of 45 percent of the workers audited were illegally low. Generally it was piece-rate workers (especially new and relatively-unskilled piece-rate workers) whose pay fell below legal minimum wages – the majority of workers in the private manufacturing sectors in the south and eastern parts of China are piece-rate workers.

Workers not covered by minimum wage regulations

The national regulations on minimum wages state clearly that the regulations cover all types of workers and apply to all forms of enterprises including private and state companies. However many workers are not covered by minimum wage regulations. Official statistics reported in 2004 stated that some 145 million workers worked without fixed hours, wages or other conditions in 2003. The revised 2004 regulations were aimed at covering workers who have not previously benefited from past policies on the minimum wage. However, the extremely high proportion of workers without formal contracts means that the great majority of those 145 million still do not benefit from minimum wage regulations, as only 10 percent had employment contracts.

Non-payment and underpayment

In practice, even those workers who are nominally paid above the minimum wage may find their pay reduced to below minimum levels due to non-payment, or underpayment (problems that affect those paid below the minimum wage as well). Many enterprises continue to withhold wages for periods of several months, while many, especially in the private manufacturing sector, continue to impose fines and deductions on workers which reduce – in some cases drastically – their monthly take home wage. Such fines or deductions include things like food and living expenses but also fines for taking too long a toilet break, being late, failing to meet a quota etc – in some cases basic health and safety protection (such as face masks) are also deducted from the workers wages. The National People's Congress reported that cases of non-payment of wages and unlawful wage deductions accounted for as much as 41 per cent of all cases investigated by provincial labour departments around the country in 2004. In the 16 months before October 2005, in one coastal city alone, there were 156 such cases in which the employers concerned went into hiding to avoid investigators.  As many as 76 per cent of migrant workers from the countryside receive no overtime pay for working on public holidays, or on rest and vacation days, according to a recent research report issued by the State Council.

The ACFTU in 2006 that around 70 per cent of the country's 100 million or so migrant workers had experience of being paid either late or not at all. Indeed, the problem is getting rapidly worse. In 2004, Beijing's court system dealt with 12,462 cases where migrant workers had been paid either late or not at all, involving a total of 330 million Yuan compared to a total of 25,987 cases in 2005 involving 619 million Yuan.The vast majority of labour related disputes occur over wage arrears.

Hong Kong

Rally for Minimum Wage in Hong Kong [Alliance Statment for Decent Work Day]

Hong Kong is a place of great contrasts, home to some of the world’s richest families and largest monopolies; Hong Kong is also a place where the poor remain extremely poor, with little welfare and little protection. Recent 2007 figuresshow inequality as measured by the Gini coefficient - high by international standards - has risen significantly in the past decade to a high of 5.33 while it has been shrinking in many other developed economies. The number of households earning less than HK$4,000 a month has also risen.  
Hong Kong has extensive labour legislation as well as legislation covering trade union formation and activities. However, Hong Kong is the only developed economy without legislation on maximum working hours. Working weeks of up to 60 hours and more are not unusual and yet the share of national income that goes to workers is among the lowest among the industrialised countries.  One report found the average working week was 55 hours, with some 80% of workers regularly undertaking unpaid overtime. Another recent survey in 2006 found that some ten percent of Hong Kong workers had no paid leave despite regulations giving seven days annual leave. While the government has moved towards a five day working week the majority of employers were making no moves to change from the current system of five and a half days work a week.

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A very recent survey of around 200 part-time and casual employees in the catering, logistics, retail and services sectors were underpaid and lacked job security – around half earned less than HK$30 per hour and did not have a stable monthly income; 80 percent were not employed under a written contract; more than 90 percent said they did not have paid sick leave; about 75 percent did not receive statutory holidays and nearly 80 per cent did not have annual leave.

How long does it take for various workers in Hong Kong and Macau to buy a MacDonald’s meal?

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Like many other developed countries, many employees are employed on short term contracts, which effectively deny them paid leave and adequate insurance benefits.  Many cleaners are employed by sub contractors to clean government buildings and estates. In a classic example of the lives of many of these cleaners, in November 2006 a newspaper ran a story on the lives of a group of 13 cleaners employed at a housing estate in Kowloon; the thirteen cleaning women each work three shifts a day. Each morning, they begin work at 7am and finish at 11:30pm at night.  They make between HK$6,000 and HK$6,500 a month. However, because the contractor states that the cleaners can earn money by recycling and selling garbage, each worker is obliged to pay back HK$500 to the company each month. They also have to "sell" their allotted four days of vacation per month or if they take the vacation they need to pay another HK$500. 

Minimum wages

There is no minimum wage in Hong Kong except for foreign domestic helpers.  In the past few years the Hong Kong Confederation of Trade Unions has been coordinating a campaign to fight for a minimum wage – the government has been resisting efforts and instead has formed a voluntary “wage protection movement”  (WPM), which calls on employers to sign up and pay for cleaners and security workers. Under the WPM, participating corporations are encouraged to offer cleaning workers and security guards wages not lower than the relevant average market rates and enter into written employment contracts.  Trade unions and labour groups argue rightly that this “movement” is a sham, offering employees little protection and that it allows the government to continue to resist efforts to discuss the introduction of a minimum wage amid the business sectors talk of a minimum wage “destroying Hong Kong’s “competitiveness”. Just recently the government has admitted the movement is a sham and has pledged to legislate on a minimum wage – however it wants the law to cover as few workers as possible- just cleaners and security guards.

A legal minimum wage (set at a level that would allow a decent standard of living) is both a fundamental right of working people and one of the measures necessary to reduce poverty and inequality. The refusal of the government to provide social welfare assistance and introduce minimum wage laws was condemned by the UN Committee on Economic, Social and Cultural Rights as a violation of economic and social rights of Hong Kong citizens. Indeed the majority of people living in poverty in Hong Kong are in employment – the primary cause of poverty in Hong Kong is not unemployment, but low wages. The absence of minimum wage legislation has allowed the growth in the number of working poor.

Migrant workers – discrimination and wage cuts

There are around 200,000 foreign domestic workers in Hong Kong (FDW) including mainly Filipino, Thai, Indonesia and Sri Lankan citizens. FDWs are estimated – conservatively - to contribute some 1 percent of Hong Kong’s GDP. This excludes the indirect benefit to the Hong Kong economy by freeing up both adult members of a family household to enter the workforce and reducing the need for government-subsidised child care. There is very little subsidised preschool and crèche care in Hong Kong – the majority of that work is done by family members or FDWs who also look after Hong Kong’s elderly and disabled persons. Despite some protective measures– including a standard employment contract and minimum wage – FDWs are vulnerable to extensive rights and contract violations. Concerns include the underpayment of wages, denial of rest days, non-regulation of work hours, sexual and physical abuse and excessive agency fees. At least 15% of all FDWs in Hong Kong are underpaid; this problem is much worse among Indonesian (46%), Nepalese and Indian FDWs. Around 27% of FDWs are verbally and physically abused; 22% are not given their weekly days off; and 2% suffer from sexual abuse.   In addition while other expatriate workers are entitled to residency in Hong Kong after seven consecutive years of working and the right to bring in dependants while working in Hong Kong, this right is specifically denied FDWs who are given two weeks at the end of their contract with the employer to find another contract or to leave, regardless of the number of years of residency.

Although FDWs are already among the lowest paid in HK, the government and employers have specifically attacked their wages and benefits since the Handover – through wage freezes and cuts. The first wage cut of around 5% was imposed by the government in 1999 which brought the wage to HK$3,670 a month while a second cut in February 2003 during the SARS epidemic further reduced it by HK$400 (11%). This cut was the result of a “levy” or tax imposed on employers of HKD400 with the same amount taken from the wages of the workers themselves -  essentially making FDWs bear the cost of the economic hardship that followed the SARS epidemic.

Discrimination

Neither of the ILO core conventions on discrimination (n° 100 and 111) applies to Hong Kong, despite the fact that China itself has ratified both of them (Convention 111 as recently as January 2006).  Hong Kong’s legislation prohibits discrimination on the grounds of gender, disability, and family responsibility, but no legal provision has yet been made to end discrimination against the large population of migrant workers or discrimination on grounds of sexual identity. After many years of stalling, a race discrimination bill has been passed which remains worryingly vague on many issues including education.

Women find it much harder to find work – especially with decent wages, as many of them are poorly educated. Discrimination against women remains a problem, especially with regards to pay and the representation of women in senior positions.  Women earn up to 30 percent less than men for the same work.   Women are also the main victim of the casualization of labour. Women also form the majority of the working poor. In 2006 it was estimated that one out of seven employed women workers fall below the poverty line - earning less than half of the median monthly wage.  

Migrants from neighbouring countries and mainland China continue to represent a stigmatised underclass. Ethnic minorities in Hong Kong are discriminated against in terms of recruitment and promotion. In general ethnic minorities in Hong Kong face severe problems in finding jobs, and the unemployment rate is significantly higher than for the indigenous population. A 2003 survey showed that while 42 percent of Nepalese construction workers were out of jobs by the end of 2003, the figure was 19 percent for Hong Kong’s overall construction labour population (while HK’s seasonally adjusted unemployment rate stood at 7.3 percent in the fourth quarter of 2003). Figures from other surveys, which include other minority groups, reveal the same tendency of a disproportionately higher unemployment rate among the minorities. Seventy percent of ethnic minorities in Hong Kong work in primary industries and current unemployment for the community as a whole stands at around 40 percent. 

IHLO
October 2008