What’s new with China’s rural migrant workers?

China’s National Bureau of Statistics released its latest annual report on rural migrant workers for 2015. Putting aside of how trustworthy of official statistics, there are nevertheless some interesting and notable changes worth highlighting.

Broadly confirming what we have seen, the demographics of the labour force are shifting in several ways. While another 3.5 million migrants were added to the 277 million migrant labour force, the rate of migrant labor growth – currently at 1.3% – has been falling consecutively in the last few years. Also consistent with observations over the years, most of the growth has come from migrants moving and seeking work within their home province (2.4%), with the fastest growing region of migrant workers in central China.

Internally, there are some minor changes: the migrant labour force has also got slightly older by 0.3 year, but they are more educated with more workers with high-school and college education and have higher percentage of female participation. And, as expected from policy emphasis and economic shift, there is a slight decline in manufacturing and construction, and a slight increase in service-sector employment.

It is encouraging that the average wage (3,072 RMB) has increased by 208 RMB or 7.2%, but it is 2.6% slower than previous year. The highest-paid sectors are construction and logistics, and the lowest paid are community-based service/repair. Work hours slightly decreased. But still 39.1% work more than 8 hours a day, and 85% work more than 44 hours a week.

Meanwhile, the growing wages have been eroded considerably by rising living costs. For inter-provincial migrants, living costs grew by 7.2% or 68 RMB to 1,012 RMB, which is 1.4% faster than previous year. Among the expense items, housing costs grew by 6.7% and accounted for 46.9% of overall living expenses. And, both employer-provided free accommodation and subsidies slightly dropped (and 46% of migrant workers received no free accommodation or subsidies).

More migrant workers had problem with unpaid wages and they were owed more wages: 1% of migrant workers experienced unpaid wages, a 0.2% increase; the average unpaid wage owed to workers is 9,788 RMB or about 3 months of migrant workers’ average wages, representing a 2.9% rise. This is a growing problem particularly for intra-provincial migrant workers with a 6.4% increase.

Finally, even fewer migrant workers have signed a labor contract: only 36.2% and a decline of 1.8%. Apart from the decline, it is dismay that only a third of migrant workers have signed labour contracts.

Overall, China’s rural migrant workers had a difficult year in 2015: workers’ gains either slowed down or even reversed.

A tale of two state workers protests

There are – very broadly speaking – two kinds of state-sector protests in China. The first kind is in response to factory disputes related to privatisation – essentially a loose continuation of the state-sector restructure that started in the 1990s – which has been happening in relatively small numbers over the last decade. On April 4, some 5,000 workers at a state-owned distillery factory in Sichuan went on strike against what they saw as unfair treatment during privatisation. Similar to past disputes, workers were angered by the compensation plan: front-line workers were paid 2,000 yuan for per year of service, whereas the managers payed 8,000 yuan. So for a worker of 20 years of service, the compensation is only 40,000 yuan, or about what an average worker earns a year. Moreover, those on strike complained that social insurance and housing funds were not paid properly by the company. A few days later, on April 5 and 6, more than 1,000 workers at a state-owned steel plant in Hebei staged a protest in relation to the layoff of 4,000 workers as the plant cuts excess production, a second kind and a more recent development as a consequence of industrial overcapacity. Workers were not satisfied about healthcare and re-employment compensations, and on the first day blocked the road, a common tactic by workers. Interestingly, while these are *supposed* to be two kinds of state-sector protests, they are in many ways indistinguishable in terms of demands and tactics – and both have been met with police suppression.

Nothing wrong with left-behind children…

China will conduct a national survey on China’s more than 60 million migrant children left behind by migrant workers in their hometowns. It has taken many years for the authority to finally begin mapping the full extent of social and psychological impacts on these children – and what it will do with the result remains to be seen. Like many other social issues, it only comes to the surface following entirely avoidable tragedies such as left-behind children committing suicides. But it is an indication of how serious the the issue has become over the last decade when the government told migrant parents to take children with them if they can. The problem is: very often, they cannot. Children who travel with their parents to cities, for reasons of hukou and costs, may be excluded from the well-funded public schools. The privately operated migrant schools, despite often good intentions, lack teaching and classroom resources to provide migrant children with comparable educational opportunities to their peers in public schools; and these schools are frequently demolished by the authority. There is nothing wrong with it from the point of labour and class reproduction: employers are paying workers without the need of providing education for the next generation, and both the left-behind children and those living with their parents in cities may well simply become the next generation of migrant workers ready to take blue-collar or service jobs at low wages. But it is a widely recognised social issue – with one in five children in China being affected – it is by no means a marginal issue. And if the policy goal is to increase urban population to 70-75% by 2030 in order to avoid the “middle-income trap”, the authority has to be concerned about producing a semi-permanent underclass. Allowing migrants and their children to access social services and education in cities and relaxing and eventually abolishing the hukou-based segregation system will be a necessary first step.

Undermining workers’ security a few percents at a time

In the latest attempt to help business, 12 provincial and municipal governments in China have lowered the percentage of social insurance contribution that companies and employees have to make by a few percents. China’s social insurance scheme – which admittedly made some progress over the last decade (following the dismantling of work-unit based welfare regime from the 1950s to 1980s) although the Social Insurance Law only came into effect in 2011 – includes pension, healthcare, unemployment, injury and maternity plus a separate housing fund. Companies and individuals each contribute a specific percentage. To take one example, for pension funds the employer is required to contribute 20% and individual employees 8%. For years, social insurance has been criticised for being a financial burden for businesses, which accounts for close to 40% of the labor costs. While experts argue that workers will not be worse off as a result of the lower rate (the government is supposed to make up the shortfall) – in fact, they’d be better off for retaining cash in their hands, we are right to be more than a little skeptical. But the bigger issue is that many companies simply do not provide social insurance for their workers, especially for rural migrant workers. For China’s 270 million rural migrant workers, according to official figures by the end of 2014, the injury insurance covers 26.2% of migrant labour force, health insurance 17.6%, pension 16.7%, unemployment 10.5%, maternity insurance  7.8% and housing fund 5.5%. To be sure, sometimes migrant workers prefer having cash incomes over paying for social insurance because 1) wages are often too low and making more cash incomes (by not paying their individual contribution) becomes a pragmatic decision, 2) there are complex procedures and obstacles when migrant workers relocate and need to transfer their pensions, and 3) workers are worried about uncertainty over future social insurance reform. But this is not an argument against social insurance, but for higher wages, a better-designed and more accessible social insurance system, and enforcement. An aging labour force with a growing number near retirement and more awareness of legally-entitled labour rights have precipitated some large strikes in last several years to demand social insurance payment. This is more difficult in time of economic slowdown, but it is also precisely the time when social insurance is most important in protecting workers.

State-workers protests: a repeat of the late 1990s?

The upsurge in labour protest at China’s state-owned mines and steel plants reminds many of the tumultuous protest wave in the late 1990s/early 2000s during state-sector marketisation: in both cases, workers’ demands are centred on wages/severance/other forms of compensation related to layoff/unemployment/factory selloff or closure.

Is what we are seeing likely to be a repeat?

Here are a few things to consider.

In terms of the scale of the layoff, whereas in the late 1990s the Chinese state targeted SOEs across the board, the current layoff mostly affects two sectors: steel and coal mine. There is no evidence that the national government is interested in a radical overhaul of the state-sector like it did in the late 1990s under the then Premier Zhu Rongji.

The projected layoff ranges from 1.8 million (10% steel labour force and 20% of coal miners) to 5-6 million – a devastating figure – but pale in comparison to the 40-60 million last time; in fact, the entire state-sector (excluding public sector such as schools and hospitals) employs less than 40 million workers.

Will the layoff spread to other sectors? It is possible if China’s economy sharply deteriorates. But over the last decade and half, Chinese SOEs – thanks to state subsidies, access to state-bank credits, industrial protection and a considerable intensification of labour– are in a better position than two decades ago to absorb shocks and losses.

Moreover, the Party-state has learned its lessons: it has preemptively allocated $15 billion to resettle laid-off workers, although conflicts at the factory level are unavoidable.

The state-workers protests are happening at a particularly fraught time when tens of thousands of export-sector workers are also mobilising – a factor that was present in the late 1990s but on a much smaller scale than today.

But the geography of the state-sector protests may not overlap much with that of the export-sector, as coal mines and steel plants tend to be concentrated in inland and northern/northeastern China instead of the southern coast.

What about the state-workers? Who are they, and how do they differ from the Maoist state-workers? The generations who had any memory of Maoism and who witnessed the 1990s’ layoff have been largely replaced by a younger labour force who show more resemblance to their private-sector cousins than to their predecessors.

Is the eroding Maoist ideology/symbols/slogans over the last four decades – a pivotal part of protest repertoire for state-workers last time – a hindrance to their organising, or perhaps a liberation for state-workers to begin identifying with their counterparts in non-state sectors, thereby bridging the state-private sector labour divide?

Overcoming the division and moving toward a more unified movement are both difficult and highly risky – the Party-state has every reason to keep the labour movement fragmented.

China’s growing labour strife

To help make sense of the implications of China’s slowing economy for workers, a clueless provincial leader, more clueless national ministers, and ongoing state-sector layoffs and protests, here is a collection of useful reports (the New York Times, Wall Street Journal and the Financial Time have provided some of the best English-language reporting on Chinese labour issues):

Will the spectre of state-worker protests return?

A week-long strike at an ailing state-owned steel factory – formerly a Taiwanese-invested enterprise acquired by Ansteel in 2014 – in Guangzhou raised the spectre of state-sector protests. It has been more than a decade since the last major wave of state sector workers’ protests subsided. Right around the time when rural migrant workers in the export-sector grew restless in the early 2000s, state workers’ resistance to the state-sector marketisation was defeated by a combination of outright suppression, layoff payout and the winding down of the marketisation process itself that shut down and privatised a large number of state factories leaving 25-40 million workers unemployed. The same process also restructured labour relations and the production process and financially consolidated the rest of state sector, creating the conditions for a decade of rapid recovery and expansion – and a decade of relative industrial peace. Signs of stress appeared after Great Recession as growth of state-sector profit slowed; meanwhile, repeated calls were made to “reform” the state sector to make them more “efficient” and less intrusive of the private economy. But it is not until now that we are seeing the extent of the industrial overcapacity and declining profitability in the steel/coal sectors with expected massive layoffs estimated in the millions, again. Despite funds already earmarked to compensate laid-off workers, if the steel strike is any guide, managerial irresponsibility followed by workers’ protest and company and state intimidation are probably the more likely scenario.