Evolution of Industrial Relations in China: From State to Employer

This essay provides a comprehensive analysis of the evolution of industrial relations in China, focusing on the transition from a state-labor relationship to an employer-labor relationship. It explores the impact of market reforms, ownership diversification, and the introduction of new institutional frameworks on China's labor market. The essay examines the roles of the state, employers, workers, and trade unions in shaping industrial relations, highlighting key regulations such as the Labour Law of China and the Trade Union Law. It discusses the development of labor laws and the impact of employee involvement and participation (EIP) on worker well-being. The essay also addresses challenges such as worker strikes, dispute resolution, and the influence of the Chinese Communist Party on industrial relations, offering insights into the complexities of China's economic and social transformation.

LABOUR AND THE STATE IN CHINA
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Topic: "The system of industrial relations has developed from one based on state-labour
relations to one based on employer-labour relations."
Introduction
Diversity, rather than the uniformity, uses to characterise the experiences gathered by different
nations in relation to industrial relations. The current study is developed for focusing on the
system of industrial relations in China which has developed on the state-labour relationship and
employer-labour relationship. The industrial relations in China have been developed over the
past few decades. The labour market of China has experienced remarkable alterations in the field
of industrial relations and employment, specifically after its transition to a market economy.
China has experienced a significant change in relation to the landscape of its industrial relations
over the past two decades. According to the comment made by Lee et al. (2011), the changes in
industrial relations in China has emerged as a result of ownership diversification for which
proliferation of workers categories with different expectation and needs arises those are neither
officially recognized nor represented. The dismantling administrative regulation associated with
labour relations by Party–the state was accompanied with the introduction of a new institutional
framework for the industrial relations-related regulation. The industrial relation in China is based
on state-labour relationship and employer-labour relationship whereas labour relations have
played the central role in helping China to achieve extraordinary economic growth. China’s
extraordinary economic growth was accompanied by internal migration, urbanization, and its
people’s rising income level. The rising level of income in China has brought a dramatic increase
in workers’ aspirations and has forced the government to restructure its relationship with both
workers and employers. As a result of this, employer-labour relationship and state-labour
relationship build up which strengthened industrial relations in China (Poole, 2013).
Discussion
Since the year 1978, China has been engaged in a large-scale overhaul of the country's economy
where marketisation has played a vital role in making decisions in relation to products of service
allocation. Industrial relations rooted from the industrial society which includes separation of
factory owners and workers those who engaged in productive activities in exchange for wages
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and there is a relationship between owners (employer) and workers. The basic focus of industrial
relations is to set labour price between employer and worker which is determined by
environmental and institutional factors (Page, 2017). The participants of industry relations in
China are the employer, worker, state, and trade unions. In China, there were no arrangements,
institutional in nature, for bargaining over labour price but marketisation led the country to adapt
fix price for labour. The government of China has changed its role from acting as a labour
administrator to the market-based pattern. This change reflected in two ways, one the Chinese
government has transferred the primary authority of labour allocation (termination and
recruitment both) to the company's management by retaining supervisory power on it and the
second was the government removed its direct control on the system of the income distribution
(Taylor, 2012). The second change led the management to decide the wages rate and ways to
make payment of wages to workers. At that time, the partial withdrawal of government from
labour relations in China within enterprises, it has formulated regulatory laws for managing
labour market and to adjust the country’s labour relations (Taylor et al. 2003). The ownership
reforms in China has improved the country's industrial relations, and its flourishing state-owned
enterprises has reshaped state-labour relations in the country which is one of the two factors or
bases onto which china's industrial relations are developed. Moreover, the collusion and
cooperation between workers and managers were confining the potentiality of development of
the state-owned enterprises of China. It was recognised that the constraint of the soft budget had
operated at a specific point in the industrial reform programme of China, and in 1986 August, the
introduction of labour contracting has initiated the division of individual interests between
workers and the managers of factories that was also flourished along with the state-owned
enterprises.
Development of labour laws for developing industry relations in China
The emerging trend of the legalization of work and documentation of labour relationship, instead
of only relying upon informal agreement and psychological work contract in China stands as a
result of its changed landscape of labour market and the changes in organisational forms. The
diversification in the ownership forms in China has accelerated growth in the private sector,
emerging labour market, and rising number in laid-off workers and unemployment. For
managing the entire labour market and its movements, and for tackling these issues, a number of
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employment regulations are issued by the state. The aim of the labour regulations also includes
regulating the Chinese labour market, its industrial relations, and providing employment
protections to the workers (Taylor, 2015). As a response to this, during the past 20 years in
China, the majority of employment-related regulations are issued includes major labour-related
regulations such as Labour Law of China, 1995 (designed for providing the main framework of
the country’s employment regulations), Trade Union Law, 1950 (amended 2001), where the
scope of trade unions’ responsibilities were set out. Another major regulation was Provisions
Concerning the Administration of the Labour Market, 2000 which was set out on the
fundamental principles for labour market governance. Besides these, some other labour-related
regulations also formulated such as for employee training regulations to improve their
performance and ‘Temporary Provision for Collective Wage Negotiation’ which was issued by
the end on 2000 by the Ministry of Labour and Social Security of China. Moreover, regulations
associated with gender for improving gender equality in workplace and employment, regulations
on minimum wage are issued in the year 1993. The above-mentioned labour-laws were
introduced by the Chinese government to strengthen industrial relation which is based on state-
labour and employer-labour relations. In support of the comment made by Wang and Cooke
(2017), a set of labour legislation was issued by the Chinese government for improving its labour
relations.
Though, the government of China has formulated regulations for protecting Chinese workers
while it becomes a question of strikes of workers as most of the time it is found that the majority
of decisions were taken by the court made in support of the employers and on the dismissal of
the strikes and strikers (Chen, 2010). The disproportionate adoption of principle in cased where
collective action was taken by the court indicates the dominance of formalist approach on legal
reasoning that is underpinned by professional conservatism of courts and political duty of the
government in relation to the present politico-economic environment of China (Taylor, 2017). In
China, the Labour Law, 1995 was made to specify that employers need to establish and improve
workplace along with labour-related rules and regulations for ensuring that the workers enjoy
their labour rights while fulfilling labour obligations. However, in present days, the existing
labour law of China stipulates on the disputes of rights only. In the country, the procedure of
resolving labour dispute is also framed with the aim of protecting the individual rights of
workers. Thus, when the employers of Chinese companies fail to provide the required amount of
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wages to workers and violate rights of the workers, then workers could down tools as well as
seek for legal remedy/protection (Kai and Brown, 2013).
According to the statement of Cheng (2014), in transitional China, there is a relationship build
between EIP (employee involvement and participation) and subjective wellbeing. As per an
econometric analysis, it is seen that some elements of EIP are significantly related to the self-
perceived satisfaction of employees with their work-life, personal life, protection of benefits and
rights, and the reforms in state sector while controlling personal characteristics. This employee
involvement and participation elements consist of consultative and participative management,
effective discussion and consultation between supervisors and their subordinate employees,
freedom of individual expression, and participation in workplace reforms by understanding it is
in a better manner (Tang, 2011). For improving the wellbeing of Chinese employees as well as
the conditions of their workplace, EIP needs to develop further in a more effective way. During
the pre and early era of reforms in China, most of the working urban residents used to work in
state sectors like governmental agencies, and SOEs (state-owned enterprises) without a job
contract. Thus, in China, the industrial relations were characterized in accordance with the
features those are common to the socialist systems of the state like an economy which is
dominated by the SOEs, trade unions those are controlled by the state, relative harmony in the
labour relations, and dependencies of workers on work-units. When the reform era began, the
Chinese government has started establishing a new labour management system, and in the mid-
1990s, SOEs were reformed under national reform system.
Moreover, as per Taylor (2002), the privatisation of enterprises in China, is not only about
transforming the state–business relations, peripheralising and suppressing workers, destroying
their trade unions, and cutting down their wages but also for transition of China's economy to
market economy where the CCP (Chinese Communist Party) tried to remain dominant.
Privatization of enterprises has definite but limited impacts on reconstitution of China's industrial
relations in the privatized firms. However, considerable external and internal pressure against the
process of privatization of enterprises has resulted in dramatic changes in China's industrial
relations. The career of union cadre was still decided by the party to a large extent, workers have
the own opinion on the cadres performance, and materials, as well as the market, was still
determined by the SOEs and state to a large extent. It is also mentionable here that in China it is
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not possible to form trade unions established outside ACFTU which is used by the Communist
Party as a vehicle of preserving stability and as a transmission belt. Though the objective behind
unionisation in all Chinese companies and implementation of collective negotiation or
bargaining of wages was set by ACFTU, it seems mere window-dressing as it has no such impact
on the working conditions because representatives of workers' are generally appointed instead of
being elected by the workers themselves (fidh.org, 2018). The labour system of China which is
solely controlled by the state was reshaped by China to a more diversified, less state-controlled
labour market than before. Against this particular background, a few significant events related to
labour have raised attention to the present circumstances of the urban workers of China. For
example, since 2010, a series of workers' strikes have taken place in the country which has also
spread its arms to the country's coastal provinces. Through these strikes, the representatives were
requested to not only for pay rises but also for the representation through trade unions.
All the labour-related events have demonstrated that the Chinese workers are not only
demanding for economic benefits, but they are also demanding improvements in labour
management practices of organisations. In accordance with the comment made by Taylor et al.
(2003), the three processes imposed by the Chinese government to resolve workers’ grievance
includes participation in management, labour conflicts, and settlement of the same, and
negotiation of the collective contracts (Song, 2012). The major section of workers falls outside
these processes, confronting private employers as isolated and powerless individuals. The formal
procedures of dispute resolution became heavily weighted against the workers, and a very small
amount of workplace or labour-related disputes are pursued and resolved through these
procedures. Moreover, a major segment of workers in China continues to find the government as
ultimate responsible and liable for the situation they used to face in relation to labour-related
rights at their workplace (Park and Cai, 2011). For improving state-labour and employer-labour
relations in China Labour Dispute Mediation and Arbitration Law in 2008 that specifies the
procedure of dispute resolution which has been established in 1993 under some previous labour-
regulations. After that, in 2011, Social Insurance Law came into existence for providing medical
insurance, retirement insurance, unemployment insurance, work-related injury insurance, as well
as maternity insurance to the Chinese workers which have reshaped the industrial relations in
China which is solely based on employer-labour and state-labour relations (fidh.org, 2018).
Furthermore, to resolve disputes and manage militancy at the workplace, the monolithic official
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trade-unions became more internally flexible. The trade unions of China have started relying on
themselves instead of relying on the government support to deal with workers unrest while
employers have started forming their own organisations rapidly (Brown and Chang, 2017).
According to Compa (2008), CSR (corporate social responsibility) programs and codes of
conduct related to CSR now almost include the right to organise, freedom of association, and
right of collective bargaining for workers. In China, the monopoly of trade unions of China
under ACFTU (All-China Confederation of Trade Unions) creates a threshold problem. The
Committee on "Freedom of Association," ILO has identified that monopoly of ACFTU and its
role as "transmission belt" prevents the establishment of trade unions which are independent of
from China's ruling party and public authorities. ILO uses to deplore criminal proceedings
against workers those who use to protest against their employers' abusive treatment. For building
strong industrial relations in China, the ACFTU has also conducted widespread practices for the
managers of companies, sometimes even the HR managers who used to hold leadership posts in
the trade union. The trade unions in China were developed for presenting demands of workers' to
the management to resolve workers grievance and workplace disputes which become a part of
CSR activities of Chinese companies, and it has strengthened industrial relations in China by
strengthening employer-labour relations. As per Zajak (2013), in China, domestic NGOs (non-
governmental organisations) communicate norms associated with emergent regulatory and
extend the same into the domestic domains for redefining the way codes of labour are developed
as well as instantiated in the contexts of local policy and throughout the globalised value chains.
It was analysed that the engagement with CSR norms uses to transform labour-support of
organisations along with their individual roles in labour-regulation, negotiations, and oversight.
As per Lee (2009), in 2007, a new pattern has emerged in China which resulted in developing the
interaction between the government policy of China and the practice of collective bargaining in
workplaces at the local level. The government of China has developed a number of policies on
wage instruments for influencing trends of wage in the Chinese labour markets that include
fixing of minimum wage at local level, wage-related information system, along with guidelines
for a non-binding wage at the local level. In accordance with Hendrischke (2011), in the
workplaces of China, institutional arrangements and changing legislative have domestic as well
as international implications that affect the lives of Chinese people. After 30 years, since China
has broken the communist paternalism and abandoned labour regime, three major labour
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legislation were came into existence in 2008 for protecting a few urban workers’ interests in the
industrial sector owned by the state which reshaped and improved industrial relations in China
(Gallagher and Dong, 2011).
Conclusion
During economic globalisation and the procedure of market reform, in China, labour institutions
are in transition. The labour laws introduced by the Chinese government are aimed to resolve all
kinds of labour-related disputes in Chinese firms under a formal system of labour dispute
resolution consists of arbitration, mediation, and litigation which has strengthened industrial
relations in the country. At the end of this study, it is quite relevant to states that the industrial
relations in China has developed during the past few years and the worker's rights in the country
are now mush protected than the previous times. At present, workers' representation in China
become diversified, and they become able to conduct movement for sustaining the balance of
power between ACFTU, the state, firms, individual workers, and international market-related
forces in the long term. Since the past few years, industrial relations which are based on state-
labour and employer-labour relations is improved and more diversified which is expected to
build a stronger relationship between state, labour, and employer in the future.
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