Laborious Suzhou
December 28th, 2007 | by This is China! |
“They fired a Chinese girl who had parked her little electric scooter on a delivery ramp twice in a row,” one of the Western guys I was drinking with said. “The first time they warned her,” he continued, “the second time they fired her in front of everybody. She burst out in tears and ran out of the building.”
My mouth agape, I was only able to croak out, “That seems rather harsh.”
“Yeah, I thought so to,” the fellow replied, and took another drink of his Tiger Beer. “But Management’s looking for excuses to fire people right now.”
“It’s the new labor law,” one of the other Westerners at the table said. “They know it’s going to be more difficult to fire people after the new year, so they’re trying to address some outstanding staff issues now.”
The day before I flew out to Chicago I was in the Blue Marlin there in Suzhou Industrial Park drinking a few pints with the lads. As is often the case in any expat watering hole in China, talk drifts to labor issues. Sometimes it’s the rather stupid things staff unfamiliar with international standards will do; sometimes it’s the job hopping that gets us down; and sometimes it’s their sneaky ways of getting what they want. That evening, talk turned to the impact of the new labor laws and how companies were responding to them.
I mentioned an article I had read recently online in the China Economic Review.
“… Huawei, a domestic telecom equipment maker, has required thousands of employees who had worked in the company for more than seven years to resign with compensation and re-apply for their jobs as freshmen, while Wal-Mart has fired over 100 employees in China, citing economic reasons. The layoffs were seen as moves reduce labor costs and avoid risks associated with the coming labor law.”
It seems that the new labor law contract that comes into effect January 1, 2008 will make it more difficult to fire Chinese staff. Also, larger companies will have to take on labor unions that will have look out for workers’ – and the Communist Party’s – interests. Companies believe the unions will inflate salaries even more than they have been – at least in the Yangtze River Delta region – and will make it more difficult to fire employees that are not performing well or who may be up to no good in the company. “One of the good things about the company,” one of the lads said between sips of his Qingdao beer, “is that the unions will take some of the work of dealing with the Chinese staff.” I asked him what things. “Oh, dealing with disputes between individual staff,” he said. “Right now it can be such a drag on time and resources when the Chinese get into it with each other. Now the unions can deal with that headache.”
Mr. Qingdao said, “We’re right now negotiating exit packages with some staff. Some employees want to take the severance packages, and then re-apply at their old jobs at the same, latest pay scale.”
“That hardly seems right.” The point behind the larger companies asking the more senior Chinese staff to leave is that the new law would make it very difficult to fire them in the future. It’s the government’s attempt at re-fashioning the “iron rice bowl,” no matter how warped the new container may be.
“That’s what I said. Well, the trick is to keep them from using the packages to negotiate even higher salaries; and we don’t want to lose the good people. We don’t want them to take the packages and then go to another company; nor do we want to inflate their current salaries even more. It’s a delicate time.”
Delicate indeed. A Chinese friend told me that the Taiwanese factory in Suzhou in which she works in one of the administrative departments is going through a bit of a ferment of its own. Some two hundred Chinese operators refused to come to work at the Suzhou factory for a day in early December, forcing Taiwanese management into arguments with staff about long hours and pay that is lower than the legal rate of 800rmb per month. It seemed the company – one of the many Taiwanese concerns along Airport Road out toward Liuzhi town – was paying only 600rmb per month. Operators on average work twelve to sixteen hours a day. They do get paid a bit extra for the overtime, but not much. After a stand-off that lasted only a couple days, in which the GM had to get involved, the operators saw their salaries lifted an additional 100 RMB per month – an increase of over 15%, from one perspective.
Interesting days ahead in China’s labor market, and it’s impact on foreign investment in China.
Bill Dodson
SUZHOU, China
