Chinese Workers Without Benefits

Abstract

Millions of workers in China are not afforded the rights and benefits of its labor and employment laws and thus are not "workers with benefits." China's labor reforms and worker "safety net" have come so far in the past 30 years, producing "workers with benefits." Why are there still millions of workers in the urban sector who do not have the protections of these labor and employment law reforms, who are the "workers without benefits," falling outside the labor safety net? They have been called precarious, atypical, irregular, contingent, and include casual, temporary, part-time, dispatch, and workers called subcontractors and independent contractors, which may include construction workers, students, domestic workers, and the many other workers in informal employment relationships. They fall outside the legal protections of the labor laws; or, they may be covered, but excluded or exempted or misclassified. This situation of precarious workers occurs not only in China, but globally, and it has not gone unnoticed by the International Labour Organization (ILO).'

Labor laws in China began in earnest in 1994 with the Labor Law, which defined labor rights and obligations in somewhat general terms, with local regulations sometimes more specifically supplementing them. This was followed in subsequent years with more specific labor rights and benefit laws, including for workers health and safety, work-related injuries, unemployment insurance, and other social security benefit laws. These laws are tied into and for the benefit of workers in the employment relationship of a labor contract. Outside this relationship is a contract for labor services, which is not eligible for the benefits of the labor laws, but rather is dealt with under the con- tract law, as a contract of employment, such as an independent contractor might have. There are legal definitions and issues arising under the various labor laws, national and local, as to how to categorize workers that this paper undertakes to explicate. The differences in consequences are the availability of the rights and benefits of the labor laws, as well as the right to resolve labor disputes under the Labor Mediation and Labor Arbitration Dispute Law.

Because as employers understand they can lower labor costs by hiring and/or classifying workers as contractors for services, there are a number of these worker categories for which legal interpretations will be discussed to test the language and the application of the law. These results will be compared with relevant ILO conventions and labor standards to evaluate how China's laws fit with those standards and identify any areas that might benefit from reform. In the end analysis, it is proposed some clarity will be provided on the issue of which worker in China should be an "employee with benefits."

Keywords: China labor and employment law, contingent workers, employee status

JEL Classification: K