The Ongoing Plight of Labour Rights in China
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University of Amsterdam MSc Political Economy Looking Beyond Economic Globalisation: The Ongoing Plight of Labour Rights in China Author: Yannick Walther Michael Heinrich (12449288) July 10, 2020 Supervisor and First Reader: Prof. Dr. Brian Burgoon Table of Contents TABLE OF CONTENTS .................................................................................................................................. 2 MOTIVATION AND ACKNOWLEDGEMENTS .................................................................................................. 3 ABSTRACT .................................................................................................................................................. 4 I. INTRODUCTION ................................................................................................................................. 5 II. RESEARCH QUESTIONS ...................................................................................................................... 7 2. LITERATURE REVIEW AND THEORETICAL FRAMEWORK ....................................................................... 9 2.1. LABOUR RIGHTS AND LABOUR MARKET ..........................................................................................................9 2.1.1. Labour rights definition ....................................................................................................................9 2.2. CALIFORNIA EFFECT? STAKEHOLDERS AND IMPORTANT FACTORS ...................................................................... 10 2.3. THE SITUATION OF LABOUR IN CHINA: LAWS AND REALITY ON THE GROUND ....................................................... 14 2.3.1. The role of labour movements in the promotion of worker rights ............................................... 14 2.3.2. The Chinese labour market, labour protections and labour market organisations ...................... 15 2.3.3. A brief history of the Chinese labour market: ............................................................................... 19 2.4. TRADING UP LABOUR? THE ROLE OF COMMERCE, THE WTO AND INTERNATIONAL ORGANISATIONS ........................ 23 2.5. CHINA AND GLOBALISATION: EFFECTS ON STATE, FIRMS AND SOCIETY ............................................................... 30 2.5.1. The Chinese State – implications of the authoritarian rule........................................................... 30 2.5.2. Firm-level governance: passive enablers or active change-makers for labour? ........................... 35 3.4.3. The Chinese society: the dispersion of collective power........................................................... 39 3. METHODOLOGY .............................................................................................................................. 41 4. ANALYSIS ........................................................................................................................................ 44 4.1. TESTING FOR A CALIFORNIA EFFECT IN CHINESE LABOUR RIGHTS ....................................................................... 45 4.2. CONTEMPORARY CHINA: THE PLIGHT FOR LABOUR RIGHTS, REPRESENTATION IN A RAPIDLY- CHANGING LABOUR MARKET 49 4.2.1. WORKER PROTECTIONS AND LABOUR PRACTICES .......................................................................................... 50 4.2.2. WORK CULTURE AND SOCIETY .................................................................................................................... 55 III. CONCLUSIONS ................................................................................................................................. 59 IV. REFERENCES .................................................................................................................................... 63 V. APPENDIX ....................................................................................................................................... 68 2 Motivation and acknowledgements My first time in China was in 2013 during my first exchange semester as a Bachelors student. The day I arrived in Beijing, I was struck by the sheer number of migrant workers I could easily identify in the metro and elsewhere. With what seemed to be their entire life packed in a dozen bags that piled onto their backs, these wrinkled, darker-skinned and modestly dressed men and women had arrived to a major city to once again work and send remittances back to their families that they so seldom saw anymore. It was clear that China was unique in that sense, given its large population of workers willing to work for little, far from their homes and under poor conditions. The image of these workers never left me, and as I started my career in China, I would visit factories and meet some of them, becoming increasingly aware of the strong inequalities permeating contemporary China, but most importantly also of the difficult work conditions many workers live under. These memories, alongside the wealth of the Chinese culture and the wonderful memories I forged in China, were the carrying undertones that led me to researching and writing about this thesis topic. I would like to take this opportunity to acknowledge the advice of my supervisor, Professor Brian Burgoon, whom I will remain indebted to for guiding me through the challenging amalgamation of having to change supervisors, the thesis writing under time pressure, and the general Covid-19 lockdown context. Furthermore, I would like to express my deepest gratitude to Max Beauroyre and Ella Werleman, for their unwavering trust and loving support. 3 Abstract Chinese labour standards have not significantly since China’s increased engagement with the world economy, despite improvements in work hours and wage levels. Continuous pressure on behalf of activists, has insisted on labour gaining better representation and mediation through independent trade unions. However, China’s economic growth seems only to have emboldened its authoritarian clampdown on worker activism. Research shows that trade and investment flows between developed economies and developing ones can lead not only to economic prosperity but also increases in regulations, tending toward the level set by the importing and investing markets. After reviewing the role of trade, globalisation and Chinese authoritarian rule, however, this thesis’ analysis shows that labour standards in China have not improved and why that is. In order to make this observation, measures of the quality of labour practices were regressed onto measures of globalisation, such as trade and FDI inflows, and a series of interviews with workers, managers and owners of factories in the Shanghai, Wuxi and Guangzhou areas were conducted. In combining these methods, this thesis hopes to shed light on the difficulties facing workers in China today, and why the current domestic and international institutions have failed them. 4 I. Introduction Recent work examining the impact economic integration has on regulatory standards has received particular attention from scholars studying how the advance of globalisation and markets has positively influenced regulations in spheres ranging from human rights all the way to environmental standards. Particularly influential has been the work of Vogel (1997), who coined the term ‘California effect’ to describe the positive effect economic integration can have on the ‘ratcheting up’ of environmental regulations. While the focus of his study was on environmental standards as applied to products and how trade could be a vessel by which such improvements could be ‘traded up’, other scholars have turned toward investment flows to see if a similar effect could be seen (Greenhill, Mosley, & Prakash, 2009; Mosley, 2010; Prakash & Potoski, 2007). The link between trade and labour protections (LPs) has been studied on a European level, focussing on the inclusion of LPs in Preferential Trade Agreements (Raess, Dür, & Sari, 2018), but far more attention has been paid to the relationship of economic integration with private industry, product source and environmental standards (see for example Sykes, 1995; Prakash & Potoski, 2007; Perkins & Neumayer, 2012). Due to complexities regarding data collection, transparency and the uncertain legal environment in China, little empirical work has studied the possibility of labour-related California Effect there. Greenhill et al.’s (2009) work is seminal in that it is the first to systematically study changes in labour standards and the relationship of these changes to economic integration to study a labour-focused California effect. However, despite these limitations, the International Labour Organisation (ILO), intrepid civil right activists, NGOs and a 5 handful of scholars have continued providing data that is essential to understand the advancements of labour standards in China (Chan & Nadvi, 2014; Friedman & Lee, 2010; ILO, 2019a). After China’s economy began its ‘opening up’ strategy it found itself in a position where it had immense supply of cheap labour that it could use to attract foreign capital looking to outsource production due to high labour costs in their home economy. China took advantage of this unique position by promoting its rapid industrialization on the back of a strong trade surplus, FDI inflows and the State’s aggressive lending policies. A few decades later, China’s economic growth has been marked as a historic success, pulling 800m people out of poverty, an effort described by the World Bank as “the fastest sustained expansion by a major economy in history”