Employment & Labor

Following the most recent annual meeting of the National People's
Congress ("NPC") in March, the government has signaled in a variety
of ways that increasing the wage compensation for workers will be one
of the primary policy goals for this year. A key concern is the large and
growing income gap between the wealthy class and ordinary workers,
which the Chinese Communist Party fears may lead to increased social
instability. For example, statistics reported in the media show that
the gap between the richest 10% of the country and poorest 10% of
the country has risen from a multiple of 7.3 in 1988 to a multiple of 23
today. According to an official within the Ministry of Human Resources
and Social Security, surveys of ordinary employees indicate widespread
dissatisfaction with current income distribution.

One way in which the government is acting in relation to this issue
is to raise minimum wage standards. Shortly before and soon after
the NPC session, local governments across the country announced
increases in the minimum wage standards for this year, with local
increases ranging from 17%-21% in some of the major cities such as
Shanghai and Guangzhou.

Another tactic that may be used is to push for more collective
bargaining, particularly on the issue of wage levels and rate of wage
increases. While collective bargaining was not as prominently featured
in the national All-China Federation of Trade Union's ("ACFTU") 2010
"Working Points" Report as may have been thought, there are other
indications that collective wage bargaining will still be a focus. The
Shenzhen and Shanghai branches of the ACFTU announced in March
that increasing collective wage bargaining will be a major goal in
2010. A senior ACFTU official disclosed to the media that the ACFTU
will devote resources to training employees to become collective
bargaining negotiators.

The government also announced that it plans this year to pass new
national regulations regarding the payment of wages which, in part,
are meant to address the issue of growing wage inequality within
companies.

 

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