The End of China’s Labor Regime?

by Kevin Lin

Workers at the First Affiliated Hospital of Guangzhou University of Chinese Medicine on a 2013 strike for higher pay.

Ed. note:  The New York Times Business Day section (10 March 2016) included a feature article entitled “Not the Chinese Dream” by Owen Guo, that highlighted the inability or unwillingness of China’s 257 million [internal] migrant workers to occupy the thousands of vacant urban apartments that are weighing down the Chinese economy.  Kevin Lin’s article poses the structural causes that underlie this socio-economic crisis.

A key ingredient of China’s Post-Mao economic “miracle” is a labour regime entrenched in the export-oriented consumer manufacturing sector and premised on despotic exploitation, institutional discrimination and political exclusion of labour. It is built on the back of massive rural-to-urban migration in the context of a stagnant agricultural sector and rising disparity in rural-urban incomes from the 1990s. The rural migrants are not only placed under exploitative labour relations under the Party-state’s market liberalisation, but also institutionally discriminated against by the urban household registration system that denies them of permanent urban residency and entrenches the transient nature of their labour migration, and politically excludes  them from organising autonomous labour unions and asserting as an organised social force. This combination, by no means unique in the history of capitalist development, produces an abundant and seemingly endless supply of not only cheap and disposable but disciplined, fragmented and atomised labour. However, having help propel China into a global economic power, the reproduction of this labour regime is becoming increasingly unsustainable.

One challenge springs from the changing nature of rural migration in China. At the core of the labour regime is the transient nature of rural migration in the 1980s and 1990s. In this early stage of migration, rural migrants and their families mostly retained land and agricultural production, and maintained social and familial ties to the countryside. They were not dependent entirely on wages and could draw on their rural resources when needed; and, as a result, they were able to live on meager wages in the city. But more recent migration has become less transient as millions found roots in the cities; many have simply lost agricultural skills and arable land to urban redevelopment. A growing proportion are therefore only notionally “migrants” due to the segregated residential system that keeps them from settling permanently; but they are for all intents and purposes urban dwellers. This severely criticised institutional discrimination against rural migrants is only sustained by the government’s concerns over costs of providing social services and welfare to the migrants and the possible formation of an urban underclass and slum. Efforts to ease and eradicate the institutional discrimination, already happening in some regions, are likely to erode the basis of the labour regime.

One consequence flowing from the changing nature of migration is workers’ challenge to wage repression built into the labour regime. Whereas the reproduction of migrant labour is partially subsided by their rural families, they are almost entirely dependent on wage labour today, and are thus compelled by higher urban living costs to demand higher salaries. The accumulated organising and mobilising skills over the last two decades have led to increasing numbers of autonomously organised strikes by migrant workers aimed at addressing wages and conditions. Coupled with a demographic transition that favours workers, it is posing a no small challenge to the sustainability of the low-wage regime. There is also wide recognition that wage repression militates against the stated goal of the government to raise people’s incomes in order to boast domestic consumption.

While economic strikes confined within factories are largely tolerated by the local authorities, any attempt to build lasting organisations has to confront the Party-state’s crushing repression. Against such odds, the nascent workers’ movement – yet a labour movement strictly speaking – is already giving headaches to China’s quasi-corporatist structure of industrial relations in which the state-controlled All-China Federation of Trade Unions (ACFTU) monopolises labour representation. Indistinguishable from other branches of state bureaucracy, the ACFTU has proved itself to be incapable of serious structural reforms necessary for it to stay relevant to workers’ concerns and grievances. Instead, migrant workers who go on wildcat strikes have sometimes turned to community-based workers’ centres that have emerged to fill the organisational void for legal and organising assistance. The upsurge of labour strikes and protest in recent years has alarmed the authorities. Particularly, concerned about the role of workers’ centres to aid workers’ mobilisation, the authorities have stepped up efforts to target these workers’ centres and criminalise labour organising. Ironically, the political exclusion of labour has likely sharpened strikes which for many workers are the only means to successfully address their concerns. How long can such political exclusion – “corporatism without labour” – continue?

A further challenge has arisen from persistent slow growth in the global economy. Having replaced East Asian manufacturing and become integrated into the Asian-centered global production chain, it is highly dependent on debt-fueled consumption in advanced capitalist economies. In the aftermath of the Global Financial Crisis, the export market contractions in North America and Western Europe have resulted in the faltering of China’s manufacturing sector. The initial shock in 2007 and 2008 created systemic factory closures in the export sector, only rescued by the massive injection of state bank credits into the economy since. But in the last two years, there remains continuing worries about the export sector. In 2015, China’s economy as a whole recorded its slowest growth rate of 6.9% since its takeoff in the early years of 1990s. The slowing manufacturing sector, with factory closures but also relocations both within and between regions often accompanied by layoffs, has fermented more protests and strikes.

The last several years have seen some of the most significant strikes in the country’s recent history: the Honda autoworkers’ strike in 2010 and the Yue Yuen footwear strike in 2014. Interestingly, these two strikes also mark a shift: whereas the Honda strike centers its core demands on wage rise and democratic union election, the Yue Yuen strike is instead focused on social insurance and severance payment following management’s plan to relocate its facilities.  At the same time as recent strikes widen the scope of demands, the economic space for workers’ wage demand is shrinking. In desperation, workers’ discontent can take a violent turn, as when a worker facing unpaid wages torched a bus full of passengers in January this year. The factory closures and layoffs further depresses domestic consumption of a large segment of the population.

From the standpoint of regional authorities in South China, the manufacturing decline – and the end of the labour regime – may in fact be welcome. Recognising the export model is not sustainable and desirable, the authorities have indicated their preference for high-tech and high value-added production instead of assemblage, emulating similar transitions in early East Asian industrialising states. The authorities allowed factories to close down or relocate. Migrant labour is disposable once again. The government’s hope is that the growing service industry will be able to absorb the surplus labour. While for now the unemployment rate remains low, it is questionable whether it is able to create sufficient employment; and it is hard to imagine this shift without massive social dislocation.

The labour regime is clearly in crisis. It is being challenged from multiple fronts. But this is not necessarily good news for workers: a rise in unemployment, and fragmented labour unrest without structural solutions is likely. We face two possible scenarios: 1) either workers’ conditions continue to degrade with more layoffs and unemployment, and the authorities brace for more labour unrest; or 2) workers will be able to organise unions and engage in collective bargaining.

The latter still fall short of getting to the root of the labour question, but it in the very least paves the way for better and fairer working conditions for China’s migrant workers.

Kevin Lin is a PhD candidate researching labor politics in China at the University of Technology, Sydney.   His article is reposted from Progress in Political Economy (PPE) at http://ppesydney.net/the-end-of-chinas-labour-regime/

 

2 Responses

  1. Immanuel Ness’s new book “Southern Insurgency” has much useful information about industrial working-class strike action in China over the last several years.

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