Academic journal article Journal of East Asian Studies

The Impact of the 2008 Labor Contract Law on Labor Disputes in China

Academic journal article Journal of East Asian Studies

The Impact of the 2008 Labor Contract Law on Labor Disputes in China

Article excerpt

China's Labor Contract Law came into force on January 1, 2008. One of several important legislative acts aimed at improving the processing of labor grievances through mediation, arbitration, and litigation, and averting collective labor protest, it provides that all employed persons must work under written individual employment contracts. We evaluate the legislation's impact nationally and by province for the years before and after the law's adoption. Observing that the law's effect varied substantially across provinces, we estimate the effects of the law, controlling for time, development level, export intensity, and migrant labor share, on the volume of disputes by province using a cross-sectional time series design. We also examine the law's impact on the incidence of collective disputes and the grounds for disputes. We find that the law significantly increased the volume of labor disputes, raising questions about the relative costliness of the government's strategy for managing employment relations. Keywords: China, Labor Contract Law, labor relations, labor disputes, mediation, arbitration, litigation

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China's Labor Contract Law was adopted by the Standing Committee of the National People's Congress on June 29, 2007, and came into force on January 1, 2008. (1) The law represented a milestone effort by the government to shift the balance of power in employment rights away from employers and toward employees (Becker and Elfstrom 2010; Cooney et al. 2007; Li 2008; Zhao 2009). The new law went well beyond its predecessor, the 1994 Labor Law, in protecting workers' rights and enhancing their ability to seek adjudication of labor disputes. (2) Together with two companion laws also passed in 2007--a law on the mediation and arbitration of labor disputes, and a law on employment promotion (3)--it signaled the government's effort to extend and enforce legal protections to workers vis-a-vis state and private employers (Brown 2010; Cooney et al. 2007; Gallagher and Dong 2011; Josephs 2009). In this article we seek to evaluate its actual impact on employment relations.

Enactment of the Labor Contract Law was a response to a rapid rise in labor unrest in China in the 1990s and 2000s. A 2007 survey conducted by the All-China Lederation of Trade Unions, the official trade union organization, found that around 12 percent of surveyed workers had been involved in a labor dispute (Liu 2014, 491). Collective labor disputes (defined until 2009 as disputes involving at least three people) grew at a rate of 11 percent per year between 2001 and 2008 (Wang 2012, 3). From the standpoint of the Chinese government, collective labor disputes pose a risk of turning into politically oriented protest. We argue in this article that the Labor Contract Law represented an effort by the regime to reduce the incidence of collective labor actions by encouraging the orderly processing of individual contract disputes.

Broadly speaking, the growing incidence of labor disputes has been prompted by China's rapid shift from a command to a market economy. As contractual relations replace administrative terms of employment, the weakness of political rights for workers to defend their collective interests, the lack of independent judicial institutions, and the government's drive for economic growth hindered workers' ability to negotiate and enforce labor contracts. Competing to achieve high economic growth rates, many local governments preferred to back managers in disputes with workers (Cooney 2007, 677-678). Trade unions are also normally reluctant to support worker protests. As a result, workers often resort to spontaneous confrontational forms of collective protests to air their grievances. Lacking local residence registration, migrant workers are especially at a disadvantage in defending themselves against exploitative employment practices and participate extensively in overt collective protest to voice their demands (Kuruvilla, Lee, and Gallagher 2011; Solinger 1999; Wang 2005). …

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