China drafts plans to publicly shame organisations that flout labour laws

Author: Wang Fangqing | Date: 27 Jul 2016

Businesses in breach would have names and addresses published by local media

Organisations in China that do not comply with the nation’s labour laws will be shamed in public, according to a new planned regulation drafted by the country’s Ministry of Human Resources and Social Security (MHRSS).
 
The draft law lists a range of incursions that could spark public shaming by the government. These include wage arrears, not paying social insurance, using child labour (anyone aged under 16), violations of work time and vacation rules, as well as breaking laws protecting the rights of women workers and juvenile workers (aged between 16 and 18) and those leading to “serious results” such as strikes, disabilities and death.
 
Under the regulation, an organisation in breach of such rules would have its name, address, registration number and legal representative’s name published on the website of the local office of the MHRSS, and by local major media outlets including TV and newspapers. The MHRASS will also choose major violations to highlight on its website. The draft rule was released for consultation on July 22; it is not clear when the official version will be put into force.
 
To ensure local government officials take the regulation seriously, the MHRSS would require its provincial offices to publish such violations at least once every six months, and once per quarter for four major municipalities - Shanghai, Beijing, Chongqing and Tianjin.
 
The plan reflects concern in the Chinese government that as the country’s economic growth is starting to slow, labour disputes are on the rise. An example of problems that could lead to blacklisting is the early July reports in Chinese local media of a shoe and handbag manufacturer called Jun Ma, in Ji’an, Jiangxi province, which had failed to pay wages to more than 150 workers since January. After the local government intervened, the company’s owner, Huang Yijiang, admitted poor sales over the past six months seriously hurt cash flow, but he promised to pay everything that was owed by the end of this year.
 
In June, Chinese media reported that New Hongtai Electrical Technology – a Wuxi-based electronics manufacturer whose clients include ABB and GE – had refused to pay social insurance for its migrant workers. The company said in a statement that it acknowledged this was wrong, but said migrant workers prefer cash to insurance.
 
China’s current policy only allows the insured to enjoy local social benefits, including healthcare insurance. Paid social benefits in one city will not be acknowledged in another, causing inconvenience for migrant workers moving frequently between different cities for higher paying jobs.
 
In April, in Foshan, Guangdong province, a boy aged 14 was found dead in his dorm room of a lingerie factory, where he had been working for about 12 hours a day, local Chinese language newspapers reported.
 
“Child labour is rarely seen in big cities like Beijing and Shanghai, but in smaller cities the phenomenon still exists,” says Qiu Houmu, a Shanghai-based lawyer for the Beijing Anbo Law Firm. Shirking social insurance payments is much more ubiquitous, he said.
 
“Honestly, social insurance could be a huge cost for start-ups and small and medium enterprises (SMEs). Therefore they tend to pay less, but usually that is consented to by staff, to make sure no one will report the companies,” he says.
 
However, as China is paying more attention to compliance with labour law, Qiu suggested foreign startups and SMEs hire professional third party HR consultants to ensure they do not fall foul of Chinese labour laws.
 
“Foreign organisations in China who wish to operate smoothly cannot risk violating China’s labour laws,” he said.