Asian Labour Law Review 2008 Ii Asian Labour Law Review 2008 ASIA MONITOR RESOURCE CENTRE

Rights for Two-Thirds of Asia: Asian Labour Law Review 2008 ii Asian Labour Law Review 2008 ASIA MONITOR RESOURCE CENTRE

The Asia Monitor Resource Centre (AMRC) is an independent non-governmental organization which focuses on labour concerns in the Asian region. The centre provides information, research, publishing, training, labour networking, and related services to trade unions, labour groups, and other development NGOs in the region. The centre’s main goal is to support democratic and independent labour movements in the Asian region. In order to achieve this goal, AMRC upholds the principles of workers’ empowerment and gender consciousness and follows a participatory framework.

Rights for Two-Thirds of Asia: Asian Labour Law Review 2008

Published by Asia Monitor Resource Centre 2008

Editorial Team: Doris Lee, Apo Leong, Rene Ofreneo, Anoop Sukumaran

Steering Committee: Dae-oup Chang, Doris Lee, Lucia V. Jayaseelan, Apo Leong, Rosalinda Ofreneo and Irene Xavier

With grateful acknowledgement of the teamwork and contributions of all AMRC staff to this project in diverse ways, from identifying chapter writers to editing and fact-checking, and all the necessary work in between and beyond until the publication could be completed: Sally Choi, Omana George, Ah-king Law, Apo Leong, Annie Luk, Sanjiv Pandita, Anoop Sukumaran and Winnie Wo. Also deep thanks to our interns who contributed during this time: Diana Beaumont, Agung Hermawan and Sri Wulandari.

With grateful acknowledgement of copy-editing/translation assistance from: Suki Chung, Carol Dyer and N. Jayaram

Layout by Clear-Cut Publishing & Printing Co. Cover Design by Clear-Cut Publishing & Printing Co.

For more information contact Asia Monitor Resource Centre Flat 7, 9th Floor, Block A Fuk Keung Industrial Building 66-68 Tong Mi Road Kowloon, Hong Kong Tel (852) 2332 1346 Fax (852) 2385 5319 URL http://www.amrc.org.hk

Cover photo: Background photo: Asian Women Workers’ Center – part-time women and youth workers marching for part-timers’ rights Foreground photos, top to bottom: Asia Monitor Resource Centre – Rally of Indonesian migrant workers in Hong Kong Hong Kong Women Workers’ Association – home-based garment worker; sub-contracted street cleaner iii

Introduction

Rights for Asia’s Invisible Majority, Social Justice for All Working Women and Men

Rene E. Ofreneo, Ph.D.

Asia’s Jobless Growth and Ever-Expanding Informal Economy

n its 2006 Human Development Report for the Asia-Pacific, the United Nations Development I Programme (UNDP) wrote that the fast-growing region has embraced free trade. Then it asked rhetorically: Has free trade embraced Asia’s poor?

The answer by the contributors to the 2008 Labour Law Review is a uniform ‘no’. While much has been written about the relative success of the Asia-Pacific region under globalization, the reality is that growth has been unequal and exclusionary in most countries. The majority in society have not benefited from the growth process even in the new dragon economies of China and India. As the UNDP has observed, growth in the Asia-Pacific region is a ‘jobless’ one. Which is the reason why International Labour Organization Director-General Juan Somavia, in his Making Decent Work an Asian Goal1 remarked that there is a huge ‘decent work deficit’ in the region, with employment creation lagging behind Asia’s vaunted trade openness. The observation on the jobless growth pattern is further corroborated by the lengthy statistical analysis made by Jesus Felipe and Rana Hasan of the Asian Development Bank, who documented the steep decline in employment elasticities in Asia in the globalization decade of the 1990s.2 For example, China’ s employment elasticity went down from 0.33 to 0.129.

This jobless growth phenomenon, reflected in the high unemployment and underemployment rates in the individual Asia-Pacific countries, is fuelling another startling phenomenon – the swelling army of informal workers or ‘informals’ everywhere. The large informal economy covers a galaxy of ‘unregistered’ and usually ‘unregulated’ economic activities taking place in agriculture, industry and in the rapidly-growing service sector. Workers in the vast informal economy include self-employed farmers, seasonal agricultural workers, home-based producers, ambulant peddlers, unregistered migrants, backyard mechanics, informal construction workers and others doing all kind of jobs unregulated by any protective labour laws. In their 2002 International Labour Conference, the ILO tripartite members approved the Resolution adopting the more all-encompassing term ‘informal economy’, instead of the term ‘informal sector’, in order to capture ‘all economic activities that are in law or practice not covered or insufficiently covered by formal arrangement’.

Statistics on the informals vary and the statistical methods of counting them also vary in the Asia-Pacific.3 In Bangladesh, formal employment applies only in establishments with 10 or more employees, meaning jobs in enterprises with less than 10 employees are by implication iv Asian Labour Law Review 2008 considered informal. Similarly, in Pakistan, the measurement for formal employment is in terms of the number of employees – 20 or more for non-industrial and 10 or more for industrial establishments. In India, informal employment is simply any employment outside the ‘organized sector’ consisting of the public sector, recognized educational institutions and enterprises registered under the Indian Factories, Co-operative Societies and Provident Fund Acts. In Indonesia, the informals are the own-account workers, self-employed assisted by family members, farmer employees and unpaid family workers. In the case of the Philippines, informal employment includes the self-employed, unpaid family workers and those employed in enterprises with less than 10 people. Thailand, on the other hand, has introduced a more nuanced definition: ‘informal sector’ includes enterprises operating with a low level of organization on a small-scale, with low and uncertain wages and with no social welfare and security. China defines the informal sector as the totality of small-scale economic units that are not legally established or registered, consisting mainly of microenterprises, family enterprises and independent service persons. Malaysia’s informal definition is focused on the individual workers – the unprotected workers who are not covered by the social security system or the Employees Provident Fund and the self- employed, including unpaid family workers.

The ILO estimates informal employment in the Asia-Pacific region to be around ‘65 per cent of non-agricultural employment, as compared with 48 per cent in North Africa, 51 per cent in Latin America and 72 per cent in sub-Saharan Africa’ (ILO, 2007).4 This the ILO said is one reason why 50 per cent of Asia’s work force, roughly 900 million, subsist on $2 or less a day.

The India country paper in this Review gave the highest rate of informal employment in Asia—a whopping 93 per cent of the total employed work force. This means the well-publicized two million jobs in the ‘sunshine’ ICT-enabled BPO sector of India are just a drop in the country’s 400-million labour market bucket, composed mostly of informal workers in the urban areas and landless rural poor in the countryside. Other country papers reported high informal employment – Cambodia, 85 per cent of the work force (or 6.8 million); Indonesia, 63.8 per cent (60.7 million); Pakistan, 82.7 per cent (39.7 million); Philippines, 76.34 per cent (24.6 million workers); Thailand, 67.8 per cent (22.1 million); and Vietnam, 77 per cent (33 million). Statistics on informal employment in Bangladesh, Myanmar, Nepal and Sri Lanka are unclear; however, all these countries are known to have high percentages of informal employment.

China, Laos and Mongolia, which, like Vietnam, have shifted to a market-oriented management of the economy, have no precise statistics on formal-informal employment. However, these countries are known to have large ‘floating populations’ consisting of workers leaving the countryside and those displaced by the restructuring/privatization processes taking place in the state-owned enterprises (SOEs), which used to provide employment for the majority of workers. China alone has the formidable task of looking for jobs for the xiagang workers or ex- SOE employees and the more numerous rural migrants, estimated at one time to be around 100 million, endlessly streaming into China’s booming cities (Pringle, 2006: 13). These xiagang and rural migrants are augmented annually by the entry in the labour market of around five million young Chinese workers.

As to Japan and the Asian NICs (Hong Kong, Singapore, South Korea, Taiwan and Malaysia), the expansion in informal employment is happening through two major routes — the absorption of a large number of overseas migrant workers with short-term employment contracts and the increased hiring of workers on a non-regular status (see discussion below), especially those deployed in their growing service sector. The ILO Regional Office in Bangkok (2007) estimated that there are at least 5.3 million overseas migrant workers eking out a living Introduction in the labour-receiving countries of Singapore, Malaysia, Brunei and Thailand. These migrants literally constitute the ‘reserve army of labour’ for the Asian newly industrialized countries (NICs), occupying the ‘3D’ jobs (dirty, dangerous and difficult) in the host countries.

The ‘Irregularization’ Mania Sweeping Asia

A third and related labour market phenomenon in Asia is the massive ‘informalization’ or ‘flexibilization’ of work in the formal sector in both developing and developed Asian countries. The ‘regulars’ or ‘standard’ employees are now outnumbered by the ‘irregular’ or ‘non-standard’ agency, temporary, casual, part-time, migrant and subcontracted workers.

In a survey of the labour flexibilization processes in East Asia, Ofreneo (forthcoming) came up with the following major findings:5

. Despite differences in their levels of economic development, the East Asian countries are all moving towards increased downward or ‘external flexibility’ in labour hiring and deployment in their formal labour markets. External flexibility means ease in the hiring and firing of workers, including flexibility in wage and labour standard setting. In contrast, ‘internal labour market flexibility’ means increased investments by corporations on skills and new work arrangements to develop a multi-skilled, versatile and productive work force. Internal flexibility usually leads to a very lean and mean work set-up, while external flexibility encourages firms to outsource work to agencies using short-term workers variedly called ‘casual’, ‘contractual’, ‘irregular’, ‘non-standard’, ‘dispatched’, etc. . The use of old labour flexibility measures has been widespread. Per an early study by Gus Edgren (1990) of the Asian labour market, these include the following:  reducing the core of permanent workers and increasing the proportion of temporary and casual workers;  increasing the use of women, apprentices and migrants;  subcontracting the production of components previously manufactured within the factory;  subcontracting services such as transport, packaging, maintenance and security that are carried out on factory premises;  increasing the number of shifts per day or use of overtime;  replacing pay systems based on working time and length of service by systems based on piece rates and bonuses;  introducing internal training systems that facilitate redeployment of workers within the factory or enterprise; and  reducing influences from external trade union organizations by either eliminating unions or establishing a controllable (company) union.

. The informalization process in the labour markets of Japan and Korea has been massive and dramatic from the 1990s onward.

o In Japan, a 2003 government survey shows that more than 70 per cent of companies ‘hire part-timers, contract employees, temporary workers or other irregular employees’. As a result of the programme of labour market deregulation, the ratio of ‘non-standard’ to regular employees surged to 1:3 in the 1990s, and in 2003, to 1:2, meaning one in every three Japanese employees was a non- vi Asian Labour Law Review 2008

standard worker. The part-time workers, numbering 11 million in 2004, include over two million ‘freeters’ (from the English word ‘free’ and the German ‘arbeiter’ for worker), young workers who do either temporary or part-time work. The ‘dispatched workers’, or those under contract to a dispatching agency, also number more than two million. In addition, Japan has more than two million ‘guest workers’ coming from Asia and Latin America. Overall, the old Japanese notion of ‘lifetime employment’ is now becoming a historical footnote.

o In Korea, both the Korean Confederation of Trade Unions and the Federation of Korean Trade Unions have been waging a campaign against ‘irregular employment’. The government’s labour market deregulation policies in the 1990s, including the relaxation of rules on employee dismissals, led to a massive shift in the hiring patterns, with the ‘irregular’ workers outnumbering the ‘regular’ workers since 2000. South Korea has around 2.7 million ‘temporary workers’, 2.9 million ‘contingent workers’ and 1.8 million part-time, dispatched, ‘temporary agency’ and ‘independent’ contract workers. In addition and like in Japan, South Korea allows overseas migrant workers to work in the guise of apprenticeship or traineeship.

. The transition economies of Cambodia, China, Lao PDR, Mongolia and Viet Nam are all exhibiting signs of increased labour market flexibility. As mentioned earlier, China and other formerly socialist-managed economies have a large ‘floating population’ of rural migrants and displaced SOE workers. The old ‘iron rice bowl’ policy (i.e. guaranteed lifetime employment) of Communist China is gone. So is the concept of bien che or work for a lifetime in the case of Viet Nam. In the latter, one study indicates that 4.5 million Vietnamese changed place of residence in 1994-99, a clear indication of intense rural-to-urban job-search migration. The paper in this Review also mentioned that many Vietnamese workers log long hours of work, some working as much as 91 hours a week or participating in a 13-hour shift schedule with no rest days.

. Hong Kong, Malaysia, Singapore and Taiwan are big employers of overseas migrant workers, who are a big source of labour flexibility in business operations. Malaysia has over two million overseas migrants workers, the majority coming from Indonesia, while the migrants in Singapore constitute as much as 30 per cent of the total work force. The hiring of migrants to do the 3D jobs is complemented by the hiring of non-regular workers in the service sector of these countries as discussed in the various country papers contributed to this Review.

. The use of flexible labour is even more widespread in the formal labour markets of the three big middle-income ASEAN countries of Indonesia, Philippines and Thailand, all of which have large informal economies. In all the three countries, the direct hiring of non-regulars is complemented by the outsourcing of work to agencies engaged in providing short-term workers.

The Unending Race to the Bottom

The informalization mania taking place in the labour markets of both developed and developing countries of the Asia-Pacific region is clearly a response of firms to the globalization and economic liberalization processes. This has fuelled a ‘Race to the Bottom’ not only within the individual countries but also across the region, with transnational capital hopping from one cheap labour platform to another, usually in enclave export processing zones (EPZs), under their global production chains. Introduction vii

Asian trade unions, generally weak and covering less than ten per cent of the employed workers in the formal labour market, are further weakened by the obsession of both global and national capital to outsource work, by the union inability to organize the ‘non-regular’ workers for collective bargaining purposes and by the overt and covert anti-union policies in place in most countries. With flexible hiring arrangements, employers are able to pit the non-regular workers against the regular workers and threaten the latter with dismissal for any slight mistake, or in extreme cases, closure of the business itself. Minimum wage and other labour standards are routinely ignored by employers and subcontractors who have easy access to flexible and replaceable labour. Thus, overall, the trade unions, under the deregulated labour market of Asia, have become a movement for a distinct and shrinking minority in the formal labour market, even as the ‘informalization’ process is disempowering the majority in the said formal labour market through all kind of flexible contracting arrangements which subvert the rights of these workers for tenure, unionism, bargaining and better working conditions.

The search by formal employers for flexible labour is further extended through the utilization of even cheaper labour in the vast and unprotected informal economy. This is best illustrated by the export-oriented global garments industry, where part of the work is done by home- based producers, mostly women and even children, under a complicated system of multi-level subcontracting at the national and global levels, as documented by the different country papers for South Asia and Southeast Asia. The industries covered by this formal-informal production chain nexus are usually the labour-intensive ones and include the garments, leather, bag, toy, rug, shoe and fashion accessory industries.

As to the labour situation in the informal economy itself, Asian governments pursuing a deregulationist labour market programme are hardly able to provide a modicum of social protection to the informals despite populist rhetorics on welfarism uttered by some leaders. The different country papers in this Review paint a bleak picture of informal work—abysmal working conditions, super-low wages and incomes, long hours of work, abuses and maltreatment of women workers, absence of OSH standards and so on. The informals are often beyond the reach of traditional unionism, which is governed by formal labour laws based on well-defined employer-employee relations. In fact, employers have been resorting to varied ‘non-standard’ hiring arrangements—and utilizing part of the informal economy (via subcontracting)—partly to obviate the influence of trade unionism, which is usually built around a collectivity of workers enjoying regular tenure.

Overall, the Race to the Bottom penalizes virtually everyone in the labour force, particularly those in the informal majority—in both the formal and informal economies. The informals clearly deserve a modicum of social and labour protection, including social insurance as articulated by most of the country papers. And yet, by and large, most of these informals are invisible before the law. They are not getting the protection mandated by the United Nations, which 60 years ago adopted a ‘Universal Declaration of Human Rights’, which provides under Article 21 that ‘Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international cooperation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality’.6 Similarly, they are not enjoying any of the ILO Conventions on minimum labour standards which are supposed to be enjoyed by all workers. After all, human and labour rights are supposed to be universal in character and should be applied universally. viii Asian Labour Law Review 2008

All this is not happening in globalizing Asia, partly due to the deregulationist character of labour market and economic policy regimes in place. What then can be done?

Industrial Relations Reforms and Safety Nets for All

The country papers in this Review contain a long list of particulars on labour reforms and safety net measures which need to be adopted and enforced in the different Asia-Pacific countries.

The labour situation in many countries is abysmal and dysfunctional: low and declining levels of unionism, protective labour laws covering a distinct formal minority, subversion of the rights of the informal majority in the formal labour market and absence of social protection for the large number of informals belonging to the informal economy. These realities are at the roots of endemic and deepening mass poverty in the region despite rosy statistics on economic growth and export expansion.

It is abundantly clear, therefore, that no less than a radical overhaul of the existing labour law regimes is in order, if governments want to embrace society’s poor. One direction of reform is to strengthen existing protective labour laws and upgrade/modernize the labour laws in countries with underdeveloped regulatory regimes. Another must-do is to extend unionism and the application of protective labour laws for the informal majority in the formal labour market. There are some positive developments in this regard.7 For example, Japanese trade unions have registered increases in membership in recent years when they are able to negotiate with principals for the collective bargaining rights of ‘non-standard’ employees. China, responding to massive pressures from people from all walks of working life, enacted in 2007 a Labour Contract Law which seeks to minimize tenure abuses affecting the short-term or temporary workers.

However, such measures are never enough. For the challenge is how to make labour laws, especially laws favouring unionism and collective bargaining, truly universal. In the era of segmented labour markets under globalization, this will require reform coordination as well at the international and regional levels. In particular, this requires international unity on the setting up of firm global standards of behavior for transnational corporations operating in various countries based mainly on cheap labour incentives. This is one necessary step in halting the global and regional Race to the Bottom.

As to the workers in the vast informal economy, the various papers in this Review have extensive outlines on the importance of social protection or safety nets for these modern- day ‘precariats’, holders of precarious and unprotected jobs. For example, there are successful initiatives to organize and empower women in the informal economy such as the SEWA self-help drive in India, which Homenet Southeast Asia is trying to replicate in the ASEAN region. SEWA itself has succeeded in acquiring formal membership in the international trade union movement. Thailand has also shown that a government, regardless of the level of development, can make health insurance coverage a universal entitlement for all citizens, rich and poor.

But obviously, the wish list of the various paper contributors for meaningful social protection and safety nets for the most numerous but unprotected informals can only happen if governments have the fortitude to adopt their recommendations and go against the neoliberal advice of technocrats and international financial institutions (IFIs) for a programme of economic and labour market deregulation. For heavily-indebted Asian countries, this will entail a renegotiation of their heavy debt service obligations and postponement of debt servicing a la Argentina so that unfunded social protection and safety nets are given priority in the national budgeting processes. Introduction ix

As it is, most of the policy interventions being made by governments in the informal economy are programmes entailing minimum government subsidies such as the promotion of ‘micro banking’ or microfinance, which can alleviate the credit requirements of poor women in business but cannot fully eradicate poverty.

The ILO, in a programme dubbed as Rolling Back Informality (2007), outlined six major ‘decent work strategies’ for the informal economy, namely: local rural-urban development strategies, organization and representation of informal workers, extension of social protection and social security, business and market assistance, labour standards and growth strategies for quality jobs. These strategies are more or less reflected also in the various country papers included in this Review and are consistent with the above discussion.

On local rural-urban development, ‘the first level of engagement’ in dealing with informal employment is indeed at the community, village or town/city level, for the truth is that many local government councils are unable to address the concerns of the informals, much less understand their situation. On organization and representation, this is a critical one as the best way to further a development and empowerment agenda for the informals is to help the informals organize themselves and push collectively for the advancement of their common interests as illustrated above in the examples of SEWA and other self-help initiatives across the region. On the extension of social security, this requires political will on the part of the national government as this entails a certain amount of subsidy, which is easily offset by the greater stability society and the economy gain. The same positive social and economic impact can arise out of the development and enforcement of labour standards.

On business and market assistance, this is fine and is being done by a number of non- governmental organizations as well as public institutions. There are some success stories on business skills development and market expansion. However, by and large, such assistance is unable to make a substantial dent on the large informal economy. For the reality is that many in the informal economy are not in the business of becoming and remaining informal workers. Most are in the said economy as a ‘coping mechanism’, as a means of somehow getting by or subsisting on a day-to-day basis given the stark absence of better job and income opportunities in the small and shrinking formal sector of the economy. Such a reality, therefore, requires a more rigorous analysis of the growth and employment strategies being pursued by Asian governments.

Towards a Programme of Full Employment and Balanced Development

In the final analysis, the most important decent work strategy for the informal economy is to have a programme for full employment for all based on a balanced, equitable and inclusive development strategy. This will require a radical overhaul, if not recasting, of the dominant neoliberal policy regime in place in most countries, which has deepened the Race to the Bottom and has consequently contributed to the tremendous expansion of the informal economy in these countries. This also requires an overhaul of the architecture of the global economic order based on this neoliberal thinking favouring unregulated laissez-faire markets everywhere.

It should be noted that part of the neoliberal job creation recipe is the outright reduction of regulations on labour market, including the removal of rules on employee dismissal. This is based on the neoliberal belief that institutions such as unionism, collective bargaining and protective labour standards, including social security, constitute ‘rigidities’ in the labour market and in the larger economy, thus preventing the flow of the so-called job-creating foreign and domestic Asian Labour Law Review 2008 investments. In this connection, the Pakistani country chapter citing the World Bank’s advice on job creation is instructive:

‘The World Bank has advised the government to reduce regulations on labour market, cut down hiring and firing costs and allow redundancy as fair ground for dismissals as it believes the tight regulation is resulting in lack of investment in the work force and reducing regular jobs.’

Based on the foregoing World Bank advice, the Pakistani government came up in 2006 with an Employment and Services Conditions Act, which allows greater business flexibility in the hiring and firing of employees, eliminates time limits on employment contracts, and increases the hours of work from 48 to 60 hours per week. And yet, this draconian law has failed to invigorate job creation in Pakistani and has instead ignited labour and social unrest.

This World Bank neoliberal thinking on a deregulated labour market is clearly a throwback to the situation of the 18th and first half of the 19th centuries when no labour rights were legally recognized anywhere in the world. And yet, the World Bank is still pursuing this kind of thinking as reflected in its annual publication project entitled Doing Business, which rates countries’ capacity and readiness for job creation. In this international benchmarking project, countries with minimal labour regulations, with flexible hiring and firing policies and with long hours of work are considered the most prepared for job creation. Thus, in the 2006 issue of Doing Business, Palau and Marshall Islands rated highly because these countries happen to have minimal or no labour rules. If one pursues the World Bank argument to its logical end, unemployment and informal employment are endemic because of protective labour laws and assertive organizations of workers!

This is why a programme for full job creation requires confronting neoliberal fundamentalism.

In this connection, the present global financial meltdown now washing mightily into the Asian shores provides a historic opportunity for leaders of the Asia-Pacific region to abandon neoliberalism and institute instead bold social and economic reforms in support of full employment. The meltdown—and the earlier 1997-98 Asian financial crisis—have shown how utterly wrong and disastrous for society to accept the neoliberal assumptions of growth automatically fueling more growth in unregulated or unfettered markets. One undeniable root cause of the Asian financial crisis and the present global financial meltdown is precisely the irrational exuberant belief in the so-called growth-creating potentials of free financial, goods and labour markets sans regulations.

Today, the United States and Europe, which preached to East Asia a decade ago for governments not to intervene in the market, are doing the exact opposite, that is, intervening decisively through all kind of bailouts and using job preservation as their main argument. However, it is important for unions and civil society organizations to challenge the direction that this Keynesian-style interventionism is taking. Interventionism should not be pursued to safeguard the assets of a few and preserve an unequal global social and economic order.

Rather, it should be interventionism guided and tempered by the requirements of the working people, formal and informal. Interventionism should be in support of a new global social contract which recognize and enforce the rights of all workers. Interventionism should be used to give developing countries maximum flexibility to calibrate trade and development priorities based on their level of development and capacities in order to achieve full employment and balanced development. Introduction xi

REFERENCES

Asia Monitor Resource Centre (2000) Asia Pacific Labour Law Review 1999, Hong Kong. Asia Monitor Resource Centre (2003) Asia Pacific Labour Law Review: Workers’ Rights for the New Century, Hong Kong. Bangasser, P. E. (2000) The ILO and the Informal Sector: An Institutional History, Employment Paper 2000/9, Geneva: ILO. Deyo, F. (1989) Beneath the Miracle: Labor Subordination in the New Asian Industrialism, Berkeley: University of California. Edgren, G. (1990) ‘Employment Adjustment and the Unions: Case Studies of Enterprises in Asia’, in International Labour Review, Vol. 129, No. 5, Geneva: ILO. Felipe, J. and Hasan, R. (2005) ‘Labor markets in Asia: Promoting Full, Productive, and Decent Employment’, in ADB Key Indicators 2005, Mandaluyong City: ADB. Higashino, D. September (2005) ‘Japan’s Changing Labor Market: Special Report’, in JETRO Japan Economic Monthly, Tokyo: JETRO. International Labour Conference (2002) ‘Conclusions Concerning Decent Work and the Informal Economy’, Resolution adopted in the 90th session of the International Labour Conference, in Provisional Record, No. 25, Geneva. International Labour Organization (1998) ILO Declaration on Fundamental Principles and Rights at Work and its follow-up, Geneva. International Labour Organization, Regional Office for Asia and the Pacific (2007) Rolling Back Informality, Bangkok. Kaufman, B. (2004) The Global Evolution of Industrial Relations: Events, Ideas and The IIRA, Geneva: ILO. Leong, A. (2006) ‘A New Class War is Brewing in China’, in Asian Labour Update, Issue 59, Hong Kong: Asia Monitor Resource Centre, April-June. Ng, C. and Ofreneo, R. (2000) Contesting Globalization: Trade Union Reflections and Strategies on GATS and WTO, Singapore: UNI-Apro. Ofreneo, R. E. (2008) (forthcoming). Industrial Relations Challenges in Globalizing Labour Markets in East Asia, Bangkok: ILO Regional Office. Pringle, T. (2006) ‘The Informalization of Work in China’, in Asian Labour Update, Hong Kong: Asia Monitor Resource Centre, pp. 10-15 (January-March). Rasiah, R. and Hofmann, N. eds. (1998) Workers on the Brink: Unions, Exclusion and Crisis in Southeast Asia, Singapore: FES. Social Watch International, (2007) Social Watch Report 2007: In Dignity and Rights, Montevideo: Instituto del Tercer Mundo. Somavia, J. (2005) Making Decent Work an Asian Goal, Report of the Director-General, 14th Asian Regional Meeting, Geneva: ILO. United Nations Development Programme (2006) Asia-Pacific Human Development Report 2006: Trade on Human Terms, Colombo: UNDP. World Commission on the Social Dimension of Globalization. (2004) A Fair Globalization: Creating Opportunities for All, Geneva: ILO. World Bank (2006) Doing Business in 2006: Creating Jobs, Washington: World Bank. xii Asian Labour Law Review 2008

ENDNOTES

1. Somavia (2005), presented at the 14th Asian Regional Meeting of the International Labour Organization, Busan, Korea, October 2005. 2. Felipe and Hasan (2005) 3. Felipe and Hasan (2005) 4. International Labour Organization (2007) 5. Ofreneo (2008) forthcoming. 6. United Nations Human Rights Declaration, cited in Social Watch International (2007) 7. Ofreneo, (2008), forthcoming. xiii

Reclaiming Labour Law and Beyond

Dae-oup Chang

he introduction to the previous Labour Law Review, published by AMRC in 2003, stated T that ‘labour laws and their capability to protect workers are under threat across the region. New forms of work, increased mobility of capital and labour, the rising influence of FDI are all changing the terrain upon which labour law functions’.1 Five years have passed since then. Have labour laws gotten any more effective during the last five years?

As all contributors of this book would strongly agree, labour laws have become more effective mostly in terms of mobilizing labour ‘flexibly’ in correspondence to the need of mobile capital, but not as effective in terms of protecting workers’ livelihood in the region (with some exceptions). We have been witnessing that more flexible labour arrangements have been invented and have allowed, if not encouraged, more and more informal and irregular workers to be excluded from protection by labour laws for the last five years.

In this chapter I try to reflect points made by following country chapters, however with some more strategic points highlighted. The first part of this chapter deals with the intrinsic contradiction of labour law in which labour features as a commodity to be protected from market despotism, but nonetheless a commodity. The second part discusses the relations between formal/ informal labour and labour laws by tracing the historical trajectory of modern labour law and the forms of ‘formal labour’ as a reference point for all the discussion about the informalization of labour. The third part addresses the uneven development of the informalization of labour in Asia, with particular focus on its impact on women workers. The last part of the tries to draw some strategic implications of the informalization of labour on the future of the labour movement in Asia.

Intrinsic Contradiction of Labour Law

Labour activists often believe that labour law is by nature good and is basically ‘for’ workers. Many argue that a major obstacle against the realization of the good nature of labour law is its implementation. If put this way, labour law becomes an inherently good thing and the problem is perhaps either economic, i.e. lack of resource to train and pay labour inspectors or corruption that allows local or national governments not to strictly monitor individual capitals to comply labour law at the workplaces. This analysis has truth in it as labour laws are the most commonly violated laws in Asia, perhaps only second to traffic regulations. However, the nature of labour law may not be that simple. It is important to recognize that labour law itself, implemented or not implemented, has dual aspects and an inherent contradiction even without corruption or ‘resource’ problems. On the one hand it is ‘the’ law which constitutes labour in modern society as a ‘private property’ and labour relations as private property relations of buying and selling. Therefore it is not simply a bunch of regulations and rules over the workplaces and ‘industrial’ relations, but it is xiv Asian Labour Law Review 2008 at the core of organizing capitalist society the way it is: commodity-production and consumption by workers who sell their labour power to capitalists for money income and purchase products made by some other workers in some other places with the money paid for their labouring activities. On the other hand, labour law reforms toward more protection and collective labour rights of the workers shows the ultimate challenge, often imposed by the workers movement, to labour being framed as a pure commodity exchanged through pure market relations.

There, we are able to see the clearly distinguished two poles of labour law: as a law that defines labour as exchangeable and buyable private property just like any other property, on the one hand; and on the other hand, labour as a particular quasi-commodity that is attached to human body and soul and therefore cannot be completely subjected the rule of the market. The pendulum of labour law reform swings in between those two aspects of the law and it reflects power relations between labour and capital. Yet even if, after much effort made by labour, increasing number of workers came under the protection of labour law, it could only be done by their labouring activities becoming increasingly commodified in doing so. This intrinsic contradiction of labour law is well reflected in the historical development of labour law. In this, a formal form of capitalist labour, finally became established (and survived very briefly as a dominant form of capitalist labour) in contrast to informal labour that is our concern in this book.

Labour Law, Formal and Informal Labour

If reforms in the last quarter of the 20th century and the early 21st century witnessed capital claiming back labour laws as laws making labour into a property for sale, it was the early 20th century’s labour law reforms, mostly in developed countries, that had made many ‘real’ concessions to the working class Needless to say, it was the early labour movement that changed the focus of labour law toward more protection for labour, so that labour would not to be treated as merely an object for exchange, but as more of a quasi or ‘fictitious’ commodity that cannot be entirely subjected to the rule of money and market. The early labour movement did so by turning the area of ‘production’ into a frontline of struggle for political, economic and social rights of ordinary people.

Factories became the most important arena of power struggle for labour, political and human rights. The labour movement often put the reproduction of capital relations to a halt by turning labour relations, which were supposed to be individual economic relations of exchange, into collective and political relations, by challenging and testing the existing legal and political boundaries and system. During this period, workers saw many illegal activities that could have brought the death penalty to those involved become legal rights of workers.

The natural and technical outlook of capitalist social relations then needed to be compensated for by the modern liberal-democratic state, which offered one vote to one person, without regard to the property owned by the individual (While this was a gain for citizens who gained the vote, it also effectively meant that workers’ only source of revenue, labour power, was recognized as a kind of property). Political parties whose strength was based on organized labour soon grasped or at least heavily influenced the state through class voting and then the state introduced more protective labour legislations for worker-voters. It was this time that ‘modern’ labour laws started being shaped.

With this modern labour legislation and socio-political rights which were enforced by the state and treated labour as a ‘commodity’ but not as a ‘pure’ commodity, we saw the emergence of ‘formal capitalist labour’, elements of which include regular hours and pay, the provision Reclaiming Labour Law and Beyond xv of a designed workplace, pensions, sick leave and payments, minimum wage, right to join a trade union, right to collective bargaining, workers’ councils, tripartite committees, and most importantly right to strike. In other words, labour became ‘formal’ with the introduction of these legal and institutional protections that were described in labour laws and guaranteed by the democratic state. The recognition of workers’ collective rights, especially the right to strike, was nothing but the recognition of the stark difference between the ideal free-contractual relations between property owners and labour relations in reality. While the rights earned were certainly a great achievement of the labour movement as they really improved workers’ livelihood, these institutional regulations were, importantly, ultimately backed by the solidarity-based power of industrial trade unions. ‘The formal form of labour’ was thus ultimately a result of the power of solidarity that involved not only industrial actions but also political and social alliances for democratic control over capital.

It might seem as if it was only the working class which had made a great leap forward by the mid-20th century. However, this was not the case, insofar as labour remained nonetheless a commodity, whether protected or not protected. The irony of this period was that labour was increasingly regarded as a ‘fictitious’ commodity with increasing protective legislation, but at the same time work was becoming a ‘commodity’ more than ever before as more social services were industrializing, livelihood commercializing, and circuit of capital expanding with the economic boom.

Over the first half of the 20th century, capital also made great progress by continually introducing organizational and technological innovations thereby subjected labour worldwide to a greater degree of the control of capital. Capitalists in advanced economies introduced Taylorist labour processes by which workers became deskilled and lost their control over the labour process. Subsequently, so-called Fordist production made human labour an appendage to machinery. By standardizing and fragmenting the labour process, these innovations enhanced capital’s control over the labour process, if not over the society and politics, and promoted geographical movement of capital within and beyond borders. Workers might have gained more income and job security but not much control over work processes.

Although factory workers were increasingly becoming appendages to the Fordist labour processes, most formal rights of the established unions were respected. Their efforts were more firmly materialized later in the welfare state that guaranteed the rights to a certain degree of human dignity without regard to one’s economic ability. The labour movement enjoyed its heyday with more political, civil and social rights within capitalist social relations. This was the social basis of the post-war boom then: a consensus, often disputed but more or less reasonably managed, between institutionalized labour (trade unions), capital, and the state, for better productivity (from union to capital) and distribution through welfare (from capital and the state to workers). While the deal between more social rights for workers and more productivity for capital may have been expensive, it soon turned out to be not a bad deal at all for capital. Impressed by its own achievement for workers’ rights, the labour movement was increasingly limiting its activities to ‘democratizing and dignifying capitalist social relations’.2 In doing so, it reaffirmed that labour was a commodity, however much protection it needed, rather than challenging the commodity nature of labour itself. The labour movement which had initially manifested the incomplete nature of capitalist social relations began to function as an example of the sustainable and democratic nature of the same relations.

Furthermore, the traditional labour movement, once having achieved a protected and secured formal form of capitalist labour in the core industrialized countries through labour xvi Asian Labour Law Review 2008 legislation, began to concentrate mainly, if not exclusively, on securing industrial workers’ interests by regarding only ‘factory labour’ as ‘normal’ capitalist labour. Consequently, labour rights never became universal rights but remained rights for some part of the working population only. Protection for non-core members of the working class, often mostly women and migrants, was either ignored or rendered to the state without social alliances supporting it. These workers were permanently kept as ‘to-be-organized’.

While the union was gate-keeping the interest of industrial workers whose labour rights were protected by labour laws, capital was going beyond the factory gates with increasing mobility, which was perhaps the best way to get around increasing world-scale competition and expensive deals with trade unions in the developed countries. In doing so, individual capitals started utilizing more ‘fluid’ forms of labour outside the core industries, effectively isolating protected formal labour. This trend accelerated in the late 1970s when the post-World War boom was deemed to have reached an end and many individual capitals lost not only the willingness but also the capacity to afford the deal between productivity and welfare.

Informalization did not start with the flexibilization of the core part of traditional industrial workers in developed countries - therefore by the time they felt it, it was too late to stop. While workers in the core industries were still enjoying much of labour protections, workers in services and other peripheral industries had been experiencing employers using indirect forms of employment, creating grey areas between employment and self-employment and detouring protection of the labour law. More importantly, largely unorganized workers in those sectors could not enjoy their rights even if they were ‘legally’ entitled to them as they have no power to enforce it. This was all done amid the massive expansion of the (inter)national circuit of capital during the post-World War economic boom period, during which almost all aspects of human livelihood became commodity-dependent. This brought a lot more population into the expanding circuit of capital, working directly or indirectly for the profit-making process. The direct consequence of it was that increasing numbers and portions of population came under the control of capital not only as manufacturing workers, but also as service providers, emotional labourers, and then as mass consumers. At least in developed countries, society itself was already becoming a factory where the entire population was subsumed to profit-making and the realizing process of capital. With this, the distinction between factories and society or between working and living spaces has been destroyed to a critical extent.

Another crucial fact was the informalization of ‘world labour’, i.e. the increasing portion of the world population doing capitalist labour without labour protection. This had started well before the late 1970s with the more serious industrialization of developing countries where ‘imported’ labour legislations lacked the most important element in establishing formal labour: democratic alliance controlling and challenging capital. In those countries, labour laws and the state in general merely had the function, if they had any, of incorporating local labour forces into the world of capitalist labour and exposing local labour forces to market despotism often through state violence. This was then accelerated by the widening international circuit of capital that led to what we called the international division of labour on the basis of which some developing countries, such as Korea, Taiwan and Hong Kong, initiated export-oriented industrialization. This was possible based on what we have mentioned above: a fragmented and simplified labour process for mass production that could be easily relocated and copied. Now, the more people in developing countries were integrated into the domestic and then world market, the faster informalization of world labour developed at the global level. An increasing number of workers without clear employment relations and/or protection of labour law, entitled or not entitled, was undermining the entire basis of formal form of labour and with it the modern ‘labour law’ Reclaiming Labour Law and Beyond xvii world-wide even during the heydays of formal labour in the West. What allowed this was indeed the disintegrating social alliance for the democratic control over capital: capital expanded but not the social alliance and support. Capital became increasingly mobile, internally and externally, but the labour movement had become increasingly rigid. When informalization finally appeared to be threatening the industrial heartlands, the ‘protected fictitious commodity labour’ already accounted for too small a portion of the world labour force relative to that part of which was subsumed to the control of capital without any protection.

Informalization of Labour

There are many different theories and explanations of the informalization of labour. The definition of informal labour in fact varies country to country, union to union, and scholar to scholar, as readers will observe in following country studies. The most common one though has been the ‘informal sector’ understanding of the issue that focuses labour conditions in particular economic sectors that were outside formal regulation and control in developing countries, particularly in Africa and Asia, or developing countries in general. Initiated by the International Labour Organization (ILO), this has been the most commonly used understanding until quite recently. The reason why the ILO and its researchers began to look into this matter was that the existence of a relatively large population working in unregistered and unregulated economic activities was very interesting matter in contrast to the western counterparts where capitalist work enjoyed by and large stable, secure, and clear-cut employment relations. The diagnosis for this ‘interesting’ problem was the problem of underdevelopment. It is important to note that during this period enthusiasm about economic development on the basis of the Western model was still high and almost all social problems were attributed to the problem of underdevelopment. Therefore, the solution for the problems was obviously more economic development, backed by the right policy to promote it. Then the formal form of capitalist labour would appear and become dominant as it did in the west. However, this understanding soon came under heavy criticism for many reasons. Let us mention a few of them here:

• Informal labour was neither temporary in nature, nor a by-product of the lack of capitalist development. Rather, the greater the capitalist expansion of the economy, the greater the portion of the population that would come to work informally. It was rather reflecting a way in which capitalist social relations expanded.

• Informality was no longer to be constrained to unfortunate workers in the South, as it once seemed, but expanded to the workers in the formally established economies in developed and developing countries, often referred as ‘flexible’ labour rather than informal labour. It was not an abnormal problem, but has been proven to be rather ‘a tendency accentuated by globalization for work and workers to become informalized’ and ‘[recognition] that informalization is a critical component in capitalist globalization today, particularly but not exclusively in the global south’.3

• Most of all, an ‘imaginary’ boundary between formal and informal sectors on which the informal sector argument was based has been increasingly dismantled by the cross- sectoral penetration and expansion of the informality of labour.

These undeniable points were recognized later by the ILO, which has changed its focus from the informal sector to the ‘informal economy’. The term ‘informal economy’ has come to be widely used to encompass the expanding and increasingly diverse group of workers and enterprises in both rural and urban areas operating informally.4 This means the focus of discussion xviii Asian Labour Law Review 2008 of the informal labour has been transferred from the nature of enterprises or industries to that of employment.5 As the concept focuses on ‘informal employment’, it now incorporates ‘all forms of informal employment’, such as ‘employment without secure contracts, workers’ benefits, or social protection, both inside and outside informal enterprises’.6 Therefore, informal labour came to refer not only to own-account (self-employed) workers, contributing family workers, and employees in informal industries and unregistered enterprises, but also to family workers and employees in formal enterprises.7

However, again, the informal economy framework cannot fully overcome the shortcomings of the informal sector approach, in the sense that informal labour still appears to be a peculiar phenomenon in a particular ‘realm of economy’. In other words, despite recognizing informal labour an integral part of globalizing capitalist development, ‘informal economy’ theory presents informal labour as something that exists outside of ‘normal’ economy. Therefore the informalization of labour is described as an ‘object’ rather than a ‘process’.8

Accepting wholesale the concept of ‘separate’ economies, an informal and a formal one, has the danger of allowing informal labour to continue being regarded an exceptional misfortune of the ‘working poor’ or something related to the workers in backward individual capitals, i.e. sweatshops. In doing so, this may blind one to the increasing informal nature in the works of formal workers and create an imaginary distinction between formal and informal workers that again creates barriers to solidarity between those workers in reality and therefore to united struggle to confront informalization.

The growth of the informal sector is still described merely as a product of poverty as if economic development will automatically remove the informal nature of labour in developing countries, rather than as a consequence of a particular form of capitalist ‘development’. This contains the implication that the existence of the informal sector the informalization of employment stem from two different causes.

Rather, however, surviving jobs of the informal sector and the informalization (or irregularization) of employment are two different aspects of the same origin: the expansion of capital through more fluid forms of capitalist labour that can be treated as any other commodities, selling, buying and disposing – this is the nature of the informalization of labour. The common nature between those who working at some points of the expanded circuit of capital for the creation and realization of profit as manufacturing or agricultural workers, street vendors, service workers or tenant farmers is indeed much bigger than the differences between them. The informalization of capitalist labour is the way that capital expands in the era of globalization: it is not an abnormal or extraordinary phenomenon. Without informalization of capitalist labour, capital will not and cannot expand the way it is now.

Of course, this is not to say that informalization is a natural process. It is a historical product created by a particular development of conflict between capital and labour as described above. Informalizing labour means effectively marketizing labour relations, and once again challenging the once dominant idea that labour is a commodity needing protection. The informalization of labour is a realization of the capitalist ideal where labourers, just like any other actors in the market, can benefit the best from the market when they exchange their commodities, labour power, according to the exchange rate that the market offers without distortion by non-market factors such as the state or excessive labour legislations. The expanded circuit of capital is too wide and expensive to be institutionally regulated and decently paid, and there are no significant social alliances to pursue such regulation. This naturally results in an increasing number of people Reclaiming Labour Law and Beyond xix working under no regulation.

In spite of the dismal conditions of labour, it is more often than not necessary for workers to sell labour power to survive as the entire swathes of human activity in society has been anyway commodified and continuously needs money income to sustain lives in it. Capital moves through these areas exercising its control yet less agreeable to paying much for them, at least not as willing as it was for the workers in core industries during the heyday of the workers movement. In Asia, the 1990s has a particular importance in shaping Asian labour because it was through this period that capitalist labour finally became the common substance for the survival of Asian population. At the same time it was through the accelerated globalization in 1990s when capitalist labour took on a particular nature; it had become commonly informal, as particular historical forms, conditions, and definitions of ‘labour’ as formal labour have been eroded worldwide. This development has been faster in speed, bigger in scale and ‘smoother’ in process in Asian countries where ‘formal’ capitalist labour had not yet been firmly established. In this accelerated globalization, capital no longer wanted or needed to rely on regular, protected and formal jobs in order to expand.

Uneven Development of Informalization in Asia and the Gender Question

Development of labour informalization in Asia has been highly uneven and accordingly many different forms of informalization exist. Informal capitalist labour broadly includes mainly two forms: labour in informal ‘employment’ and un-waged capitalist labour largely in the informal sector. Informal forms of employment here refer to the wide range of people whose working relation is based on direct and indirect ‘wage relations’. This includes the whole range of workers who are not permanent and full-time employees. They can be categorized in many different ways and in fact different countries have different systems to distinguish one from another informal employment. According to the period of labour contract, there are short-term contract workers, which again include many different forms such as seasonal agricultural workers, project-based construction workers, and most migrant workers whose work contract is inherently short-term in nature. According to the indirect nature of employment, there are dispatched workers, in-company subcontract workers, agency workers, home workers, and disguised self- employed. And according to the forms of labour service provision, there are part-timers, on-call workers and so on. One form of informal employment does not exclude others. More often than not, different forms of informal employment overlap. For instance, dispatched workers are mostly short-term contracted.

While the forms of informal ‘employment’ just mentioned are those which appear in the statistics as irregular employees, the ‘un-waged’ forms of capitalist work get excluded, even though, it is a prevalent form of making a living particularly in low income countries, such as many forms of self-employment in agricultural, manufacturing and service sector. Often, self- employed workers are related to employers or corporation service users through commercial not wage relations, even if they do work for corporations. Though their relations with employers may be vague and untraceable, they are still doing capitalist work because their works provide essential services to reproduce capital by reproducing labour power of others, distributing petty products among consumers, cleaning the streets, providing cheap meals and transportation to workers, etc. Often, they do not own any means of production, nor do they have employees under their command. These are the people who constitute most of the urban poor and large scale reserve army of labour in developing countries. They are often more vulnerable to market despotism and bullying of authorities than informal employees in industrial establishments, lacking any form of social security, not to mention union protection. xx Asian Labour Law Review 2008

As our country studies show, different countries present different dominant forms of informal labour according to the pathways and degrees of capitalist development and power relations between capital and labour. In low income developing countries in Asia, such as Cambodia, India, Laos, Mongolia, Pakistan and Viet Nam, the lack of institutional labour protection, the immaturity of industrialization, the often forced integration of the population into capitalist social relations and the fast expansion of the circuit of capital that quickly commodifies people’s livelihood deprive people of the means of production and subsistence, on the one hand, and provide no decent jobs, on the other. This creates a particular form of development: an increasing informal sector where different survival forms of incoming-earning activities are mixed up with traditional self-subsistence and reproductive labour. This has, as Arnold points out in his chapter on Cambodia, much to do with ‘disruption in rural-agricultural livelihood’. People in rural communities lose their means of production and subsistence in various ways. Occupation of land for property development or plantation often deprives small scale cultivators of their inherited right to land and forces them to leave their lands. Many of them flow into urban areas in search of jobs. Commercialization of agriculture often involves aggressive inroads by big agri- businesses and forces rural villagers to migrate to cities. Mega-scale development plans of the state do the same, as described in the chapter on Laos.

Apart from rural-urban migration, other factors contribute to the increase of un-waged jobs in the informal sector. Many workers once employed in the formal economy and laid off in the process of restructuring, for example, become urban dwellers in search for survival jobs and often permanently stay in the informal sector. As Van Thu Ha illustrated in the chapter on Viet Nam, the privatization of former state-owned enterprises (SOEs) in Viet Nam forced many into the informal sector due to different ‘private sector barriers’ against the former SOE workers. One of the barriers is ‘age’ as private sector prefers young workers. Similar cases have been reported in China as well after the state-engineered mass lay-offs of SOE workers that axed at least 27 million workers between 1997 and 2003.9 Older workers and particularly middle-aged women workers could not succeed in finding new formal jobs. Daily work experiences in the informal sector in fact represent people’s livelihoods in Asia, as the size of population in this condition in the most populated countries in Asia well exceeds people in formal employment in Asia. Informal jobs in the informal sector accounted for 86 per cent of the total workforce in India between 2004 and 2006, according to Mansingh (see the chapter on India). More than 70 per cent of Indonesia’s workforce is also known to be in the informal sector.10

Workers in Japan, as well as workers in core manufacturing industries in some high income countries in Northeast Asia, were once known for secure jobs, since experiencing a period of the formalization of labour with the emerging labour movement and democratization. The institutional protection of labour which workers in the core industries had enjoyed later expanded to the manufacturing sector in general and solidarity-based protection also appeared by the early 1990s, in the cases of Korea and Taiwan, and decades earlier in Japan. In these parts of Asia, the growing informality of labour largely (though not exclusively) has meant the dissolution of regular employment, as we see in the following chapters on Korea, Japan, Taiwan and Hong Kong. An increasing number of workers, previously in standard forms of employment with institutional protections, have now become disposable as they join the irregular workforce in dispatched, contracted and part-time arrangements. Most striking is the collapse of the Japanese employment system with emerging informal jobs and in particular the steep increase in the number of part- timers as described by Sakai and Hiroki. Kim’s chapter describes South Korea’s switch from one of the countries with the highest job security during the heydays of the militant trade unions to one with the highest level of irregular jobs among the OECD countries after neoliberal reforms. It is also a striking example of informalization as South Korea has been known as a Reclaiming Labour Law and Beyond xxi good example of new unionism that could survive the fast expansion of capital. With much less active and politically divided unions and workers collective rights under threat, as Liu describes, Taiwanese workers also have difficult choices between informal jobs or no jobs. This trend of formal employment being replaced by informal employment is felt hard even in Hong Kong and Macau where the portion of formal and secured jobs was relatively smaller than other Northeast Asian countries. In particular, as Wu describes in her chapter on Hong Kong, Hong Kong’s swift restructuring of economy from manufacturing to a service and finance-based economy appeared to have accelerated the informalization of employment. In cases of Hong Kong and Macau, the fast informalization of employment has more to do with weak trade unions and sluggish development of collective labour rights during its industrialization. Workers in both Special Administrative Regions of China – Hong Kong and Macau - lack the right to collective bargaining although both cities have freedom of association that is missing in mainland China. Now with massive outflow of capital to China, unions have even more difficulty in upholding labour protection. In Macau, as described in detail in Choi’s chapter, continuous inflow of migrant workers from mainland China to Macau opens the way to more informalization and puts the weak unions and labour activists in a difficult position.

These different trends can also appear all together in one country. India is a good example of this. The core manufacturing sector that developed with protected formal labour on the basis of relatively strong union power and protected domestic market now faces increasingly informalizing employment, whereas the vast majority of previously self-subsisting agricultural labour forces dwell in the informal sector. By and large the middle income countries in Southeast Asia, such as Malaysia, Indonesia, Thailand and the Philippines, share same experiences and problems with India, however with unwaged labour of a smaller scale in the informal sector. In these countries, as Xavier, Ofreneo, Bundit, Voravith and Suntaree succinctly show, subcontracting and outsourcing of works to work units that cannot be monitored and regulated causes a major concern. Home- based work is a typical case of this. Existing labour laws often do not cover home workers and new regulations and protective measures, if any, are highly selective and limited so that workers in these particular strata of the supply chain work in risky and often fatal working conditions. In the so-called least developed countries, the informalization of labour can be accompanied ironically with more formalization of economy as the chapter on Laos presents. Countries like Mongolia share the same experience. This means that more of the population previously engaged in self- subsistence economic activities move to formalized work arrangements in more formal industries often as waged workers. However, this does not mean that their labour relations will be formal in the sense they are regulated, protected and unionized. It is very unlikely that newcomers from largely agricultural self-subsistence or petty market economy to manufacturing industries or other urban industries through the formalization of economy will have ‘formal’ jobs. Therefore, workers in these countries are not free from the worldwide informalization process. Cambodia’s experience is perhaps a good illustration of this. Cambodia is also experiencing the formalization of economy with an increasing number of wage workers, which however goes together with the informalization of labour. According to Arnold’s chapter on Cambodia, even jobs in the garment sector which had been the driving force of Cambodia’s development and created most of Cambodia’s foreign currency earnings are being informalized to a significant extent.

Perhaps the most important uneven development of informalization appears along the line of gendered division of labour. As many contributors to this book have clearly pointed out, informalization is not a gender-neutral process but a highly gendered process. Women’s work tends to take more informal forms than men’s work and women tend to be the majority both among the informal sector workers and informal employees. With no exception among Asian countries, developed, developing or least developed, women workers are being targeted for the xxii Asian Labour Law Review 2008 replacement of permanent full-timers with workers in non-fixed form of employment while women’s survival forms of service provision are usually more mixed up with traditional household or communal labour in domestic and other non-industrial spaces. The informalization of women’ s work is pre-contextualized in gendered-class hierarchy (or often classed-gender hierarchy). The prevalence of women in informalizing employment and non-waged capitalist labour force is precisely because women’s work has been traditionally counted as ‘informal’ in capitalist society.

The reason why women’s work is considered ‘informal’ is again because women’s work at home is regarded as not ‘immediately’ creating capitalist value, a belief shared even by many radicals and reformists. Women’s work at home is recognized not as producing ‘value’ or profits but only creating ‘use value’ at home. Therefore, women’s work is regarded as perhaps important but not as valuable as men’s work. This widespread and deeply rooted idea of women’s work as ‘secondary’ imposes disadvantages to women at work. Women’s integration into the labour market for ‘real jobs’ gave many women opportunities for economic independence but was also used by capital to create a massive reserve army of labour that could guarantee a cheaper supply of labour to capital. By and large, jobs given to women were largely humble unskilled jobs and this tendency still remains strong with only a few exceptions. The more serious integration of women into the labour market was then a product of the process in which many essential domestic works done by women at home and communities got commodified and the service provision in domestic and communal spaces became a domain of business for capital. Many women became employees in these ‘women’ sectors but the gendered connotations of these women’s services remained intact and therefore wages in these sectors remain cheap.

The gendered division also affects those who do the same jobs as men do in the formal labour market, often reflected in slower promotion for women. There is also a strong tendency to sack women workers during recession and re-employthem during a boom—largely treating women as surplus labour. In this sense, the ‘secondary’ nature of women’s work is therefore inscribed from the very beginning of capitalist development, rather than new to the informalization of labour.

However, this ideology of women being secondary labour force has been fully utilized in informalization process as our country studies show. Although informalization is an overarching development across the region, it is true that informalization attacks women workers first and more effectively. One of the most common rationales given by employers and governments is that women are more suitable for flexible arrangements for work and they themselves prefer those arrangements. Indeed, our country studies show that in many cases women workers prefer flexible arrangements. In particular, home-based work often makes a good example of informal jobs offering ‘opportunities’ to women who cannot work full-time away from home. However most women ‘have to’ prefer these forms of work arrangement. It is the combination of women’ s unshared obligation for work at home, which many men and women believe ‘natural’, and the informalizing labour market, that makes informal work appears to be women’s own choice. The real reason for women to ‘choose’ these jobs is the lack of decent jobs with a social system for child care, the unshared burden of domestic work, and excessively long working hours with too little wage for the male counterparts, rather than women workers’ ‘natural preference’.

Furthermore, the labour movement has not done much to prevent women workers from being informalized. The labour movement, both radical and reformist, has not counted the exploitation of women at home seriously, nor that of women at work. However, women’s labour has been absolutely essential in the (re)production of capitalist social relations and therefore it is not possible, contrary to the typical argument that resolving class contradiction would remove gender inequality, to address the exploitation of capitalist labour without addressing women’s exploitation both at work and home. Reclaiming Labour Law and Beyond xxiii

Organizing women workers has long been regarded as a secondary, and women’s work at home and work regarded as lower priority, by many trade unions; but as many feminist activists and academics have found, the exploitation of women’s work at home and work is an essential part of the exploitation of capitalist labour. Women’s unpaid and unwaged domestic and emotional labour is indeed an important root origin of the value exploited from labourers by capital. Profit comes not only from the non-paid work of male workers (as in the traditional radical argument) but also from the unpaid labour of women that reproduces labour power commodity at home. So the concept of exploitation has to always integrate the unpaid women’ s work. More importantly, it is urgent for the labour movement to recognize that the entire class exploitation has been built upon the specific mediation of women’s exploitation and patriarchy is an important and essential basis of capitalism. One of them cannot be overcome without overcoming the other together. It is precisely because of this that the problems women are facing in informalization of labour cannot be regarded as women’s problems only but as the problems of all.

Reclaiming or Reforming Labour Law

In most of the Asian countries we have studied, we find that labour law is indeed a contesting ground for capital and labour struggling for a better economic and political position in the continual reformulation of conditions for development. Labour law reforms gearing toward more flexibility and informality in most of the Asian countries manifest the power relations between labour and capital after the Asian economic crisis of 1997-98. Organized labour has been losing ground, if not been made irrelevant, whereas capital has taken full advantage of the crisis to reformulate the basis of capital accumulation nationally, regionally and globally. Neither the recovery from the economic crisis nor formal democratization following the crisis has accommodated further political mobilization of the working class or improved labour protection. However, as we see also in our country studies, struggles to create a new paradigm of labour protection have already begun. They have begun with women workers organizing in India, informal workers building alliances in Korea and Cambodia, regular workers campaigning for informal workers’ rights, home workers networking throughout Southeast Asia and, most of all, the increasing number of informal workers who are realizing that they are the ones who can change the conditions that make their livelihood intolerable and our society unsustainable.

Then, where are these struggles leading us to? While there is a consensus that informal workers should be organized to gain more protections and social rights, there are various approaches to the matter of informalizing labour. Our particular concern in this book is indeed about our strategy regarding the use of labour law. Where does labour law fit into these struggles for better livelihood of informal labourers? Can a better labour law be achieved, and if achieved, can its implementation stop the gendered informalization of labour in Asia? Few reader of this book would argue against the idea that we need to reclaim those labour laws that have been ‘reformed’ toward labour informality in favour of capital and against the interest of the working class. However there may be different ways to reclaim labour laws in the interest of the working class. One way is perhaps to go back to where we were before the informalization of labour, in other words, re-formalizing labour. In this strategy, labour law is indeed at the centre of discussion. This strategy involves 1) expanding protective labour laws to cover not only existing formal form of labour but also informal form of labour, on the one hand, and 2) restricting the use of informal labour, on the other. The other possible strategy to reclaim labour laws on behalf of labour is rather more fundamental in the change it seeks, as it involves ‘reinventing labour law’ to be a law that allows democratic control and allocation of social labour, rather than a law that constitutes labour as a commodity to be exchanged through the market. xxiv Asian Labour Law Review 2008

The former strategy, i.e. restoring ‘formalization’ may look quite familiar; it is precisely because we have, or, to be more correct, the labour movement in the West has, been there. This strategy believes in putting things back into place, i.e. re-formalizing labour is the solution. For this ‘global reformalization’ strategy, it is necessary to rebuild the social setting of state- based labour regulation and protection. For them the combination of the state, labour law, and formal labour is presented as the ultimate form of democratic control and there is no intrinsic problem with it. In this sense, this argument is in line with that of ILO and perhaps, that of the US President-elect Barack Obama – the market and democracy as two wings of modern society. The only problem is that they somehow lost the social alliances and solidarity upon which the combination relied for being relevant. Informalization is problematic because labour law cannot protect those workers at the edge of the legal boundaries of the old labour law. Things will get better by ‘recovering’ the particular social settings in which protective laws could be powerful and the state could implement the law. What concerns them then is the fact that particular commodity was not protected enough.

However, there are serious problems with this strategy in spite of the immediate feasibility and therefore persuasiveness of it. Firstly, this strategy does not seriously address the reason why the seemingly perfect combination broke down in the first place. The given answer to the question is rather too simple: too much market and too little state. Actually the power of social alliances started declining as soon as organized labour tried to ‘democratize’ capitalist social relations with clearly self-imposed limits, within which labour could be exchanged as commodity, nonetheless protected commodity. Labour became a ‘protected’ commodity, but only at the expense of being more like a commodity in nature (just like one can be ‘respected’ slave only by becoming a better slave). This is what I named the intrinsic contradiction of labour law. As mentioned above, labour law only covers labour insofar as it is sellable and buyable. As long as labour remains as a commodity, labour only has two choices, to be protected or not protected. Reforming labour laws can make this particular commodity more protected but cannot challenge the commodity nature of labour. The solution based on labour law reform is therefore a solution within the inherent contradiction of labour law.

Furthermore, it may no longer be possible to recycle this strategy even within the inherent contradiction of labour law because it relies on the social form of labour that existed about a half century ago. The combination of the state, labour law and formal labour might have been suitable strategy for the industrial form of social labour. A particular form of democratic control over capital developed on the basis of it. However, as the social form of labour evolved, the feasibility of the same strategy is at best highly questionable. The very combination of the state, labour law and formal labour that developed was a strategy pursued on the basis of the industrial form of social labour that was the contemporary form of labour at that time—not designed on the basis of any previous social form of labour, such as indentured labour or slavery. A new strategy is required for the present era of informalization. Furthermore, having seen the recent development of so- called representative democracy in developed countries, it is also doubtful that the combination of the state, labour law, and formal labour is the ultimate form of democratic control over capital.

Perhaps then it is time for us to reclaim labour law differently. This does not mean relying on labour law to get things right or relying on the state to do the job. Rather this means we reclaim the underlying spirit of the struggles for conditions that would not treat human labour as commodity. This means that we widen the scope of labour rights and once again, just as the earlier labour movement did, test the legal boundaries, establish a new paradigm of labour regulation and protection that goes beyond the existing legal boundary of employment and the state power, as imaginatively as the earlier labour movement went beyond the poor law with labour laws. In Reclaiming Labour Law and Beyond xxv so doing we can invent an alternative labour regulation based on a different form of democratic control of capital. In this case, reclaiming labour law is to go beyond the inherent contradiction of labour law. We need a lot more than the existing labour law. That is to say, challenging current power relations between labour and capital is to be prior to legal reform. The former works for the latter, not the other way around.

It is important for us to notice that workers in informalizing labour relations have indeed employers even if it does not seem so. The employer is the society itself that is subsumed to the process of making and realizing profit for capital. The labour movement needs to be the movement of socialized labour that organizes all those who are working for capitalist (re)production within the extended circuit of capital with or without institutional protection and rights. In doing so, the labour movement perhaps needs to be almost completely reformed according to the changing form of labour to effectively challenge the power relations. Even the old concept of democratic/independent unionism that was used to define a ‘real’ union needs to be changed. There are many ‘democratic’ and ‘independent’ trade unions that do nothing for workers outside their territories and constituencies. The vast majority of informal workers are excluded ‘democratically’. In many cases unions appear to be just and only as democratic as the state whose dictators are elected by universal suffrage. Almost all strategies, developed, written, and formalized in text books and manuals of the labour movement are rarely useful as much as the protective clauses in the labour law are now. The question is whether we are ready to change everything we have or not.

Conclusion

The problem created by informalization is more about the effectiveness of ‘labour law in general’ as a traditional means of enhancing labour standards, rather than the ‘quality’ of different Labour Acts in different countries. The problem lies with the fact that protective elements of labour laws have become more and more powerless. The reason why existing labour law is not effective is that capital has left, or rather was allowed to supercede, the limited time-space dimension that was the basis of modern labour law and formal labour. It is a consequence of the declining effectiveness of the particular form of democratic control, based on social solidarity which had the power of endorsing the state. That is why all the efforts to lobby parliaments to make ‘labour law’ better to ‘protect’ labour, without changing the existing system of politics and building wider democratic alliances, have only limited impact even at their maximum. Indeed, all that matter is not the law itself but the power relations between labour and capital behind the law, the relations that appear to be legal relations in the law.

The meaninglessness of law is indeed one of the most common experiences of the working people today when they try to claim their entitled rights. Then why do we need to study labour law after all? We believe it is important to know labour law not simply because it is ‘the’ tool to protect us from increasing attack on the labour movement and security of livelihood (not job security) but because knowing labour law is a prerequisite to overcoming the intrinsic contradiction of labour law, and to overcoming the social power that is reflected in it in general.

Amid the currently deepening world-scale crisis of capitalist development, the labour movement once again faces great challenge: whether or not the crisis is to be overcome at the expense of workers, particularly of the most vulnerable part of the working class including informal, migrant and women workers. It is in this context that our study would like to enlighten some strategic points and, in so doing, to assist labour activists across the region to develop a strategic approach to future ‘labour reform’. xxvi Asian Labour Law Review 2008

REFERENCES

Castells, M. and Porters, A. (1989) ‘World Underneath: The Origins, Dynamics, and Effects of the Informal Economy’, in Alejandro Portes, Manuel Castells, and Lauren Benton (eds.) The Informal Economy: Studies in Advanced and Less Developed Countries. Baltimore: The Johns Hopkins University Press, pp. 11-37. Chen, M. (2003) ‘Rethinking the Informal Economy,’ Seminar, 531, November, http://www.india-seminar.com/ cd8899/cd_frame8899.html, downloaded 24 July 2005. Frost, S. (2002), ‘Introduction’, in Stephen Frost, Ed Shepherd and Omana George (eds.), Asia Pacific Labour Law Review: Workers’ Rights for the New Century, Hong Kong: Asia Monitor Resource Centre. International Labour Organization (2002) Decent Work and the Informal Economy, Geneva, ILO. Munck, R. (2002) Globalisation and Labour, London: Zed Books. Neary, M. (2002) ‘Labour Moves: A Critique of the Concept of Social Movement Unionism’, in Ana C. Dinerstein and Michael Neary (eds.) The Labour Debate: An Investigation into the Theory and Reality of Capitalist Work, Aldershot: Ashgate. Sedane Labor Information Centre (LIPS) (2004) Indonesian Labor Update, First Semester 2004, Bogor, Indonesia. Zhang, J. (2003) ‘Urban Xiagang, Unemployment and Social Support Policies’, a paper presented in China Labor Market Policies Workshop, World Bank Institute, Beijing, 27-28 October 2003.

ENDNOTES

1. Frost (2002), p. 12. 2. Neary (2002), p. 244. 3. Munck (2002), p. 112, 115. 4. ILO (2002), p. 2. 5. Chen (2003) 6. Chen (2003), p. 4. 7. ILO (2003), pp. 121-9. 8. Castells and Porters (1990), p. 11. 9. Zhang (2003) 10. Sedane Labour Information Centre (LIPS) (2004). xxvii

C o n t e n t s

Introduction: Rights for Asia’s Invisible Majority, Social Justice for All Working Women and Men Rene E. Ofreneo, Ph.D...... iii

Reclaiming Labour Law and Beyond Dae-oup Chang ...... xiii

East Asia China Prof Ye Jing-yi ...... 3 Hong Kong Wu Mei Lin ...... 15 Japan Kazuko Sakai ...... 25 Michiko Hiroki Korea Aehwa Kim ...... 43 Macau Alex H. Choi ...... 57 Mongolia B. Batkhishig ...... 77 Taiwan Liu, Wan-Ling ...... 87

Southeast Asia Cambodia Dennis Arnold ...... 107 Indonesia Hesti R. Wijaya ...... 125 Laos The Special Correspondent ...... 145 Malaysia Irene Xavier ...... 167 Philippines Rosalinda Pineda Ofrenco ...... 177 Phoebe O. Cabanilla Josephine C. Parilla Thailand Bundit Thanachaisethavut ...... 195 Dr. Voravith Charoenlert Suntaree Saeng-ging Vietnam Van Thu Ha ...... 215

South Asia India Pallavi Mansingh ...... 243 Pakistan Azra Sayeed ...... 259

Contributors ...... 271 xxviii Asian Labour Law Review 2008 China

East Asia Asian Labour Law Review 2008 China

China

Informal Employment in China and Female Workers in Informal Employment

Ye Jing-yi

1. Contemporary Snapshot

New Updates and Trend of the Labour Laws and Policies in China

n 1994, the Labour Law of the PRC was approved by the Standing Committee of the National I People’s Congress (NPC), the top legislature of China. After this, the Ministry of Labour and Social Security released 17 implementation guidelines and supplementary regulations.

In 2003, the State Council enacted the Occupational Injury Insurance Regulation to improve arrangements and management on occupational injury insurance, while in 2004, the State Council enacted the Labour Protection Inspection Regulation, which is a higher-level legislation regulating the enforcement and inspection of the fulfillment of employees’ labour rights and interests. Other new laws including the Labour Contract Law and the Employment Promotion Law were enacted on 29 June 2007 and 30 August 2007 respectively, both taking effect on 1 January 2008. The Labour Contract Law requires employers to provide written contracts to their workers, restricts the use of temporary labourers and helps give more employees long-term job security. Under the Employment Promotion Law an employer may find itself in court if it discriminates against a job applicant on the basis of sex, age, religion, race or physical disability. The Labour Dispute Conciliation and Arbitration Law and the Social Insurance Law have been approved by the Standing Committee of NPC on 29 December 2007. A series of related laws and regulations will be released in the coming years which, together with the existing laws on labour and security issues based on the Labour Law (1994), will provide a comprehensive and sound labour and security legal system.

Besides related laws and regulations, the State Council also released a series of policies covering some key issues regarding employment and social security such as: • Notice on further improvement of employment and re-employment (2005), • Decision on streamlining the arrangement of the basic social insurance associated with old age (2005), • Opinions of solving issues related to migrant workers (2006), • Guidelines on pilot basic healthy insurance for urban inhabitants (2007).

China signed the International Covenant on Economic, Social and Cultural Rights in October 1997, International Covenant on Civil and Political Rights in October 1998. Until now, China has signed or ratified 25 international human rights conventions or treaties. Asian Labour Law Review 2008

Table 1. Major Laws and Regulations Since 2003

Year Major Laws and Regulations since 2003 2003 Occupational Injury Insurance Regulation 2004 Regulations on Collective Bargaining Labour Protection Inspection Regulation 2005 Women’s Rights and Interests Protection Law 2007 Employment Promotion Law Labour Contract Law Workers Paid Annual Leave Regulation Labour Dispute Conciliation and Arbitration Law Social Insurance Law

Note: Regulations are issued by authority of the State Council or Ministry of Labour and Social Security; Laws are issued by authority of the National People’s Congress.

2. Informal Employment in China and Female Workers Engaging in Informal Employment

China was established as a socialist country, and under the leadership of Mao Tse-Tung, sectors of the economy were strictly delineated. Workers were employed by the state, which provided workers with lasting job security and guaranteed livelihood—‘the iron rice bowl.’ However as China took the path towards opening its economy, the employment situation changed dramatically. Millions of jobs were dropped from the state-owned enterprises, and created in manufacturing and services in the private sector, but the new private sector jobs were without the old guarantees of wages and benefits.

Fulfilling the promise of the neoliberal export-oriented model, China has truly been reaping the economic rewards. GDP growth has exceeded 10% every year since 2003. (See Table 2).

Table 2. GDP Growth in 2003-2007

2003 10.00% 2004 10.10% 2005 10.40% 2006 11.10% 2007 11.40% Note: GDP per capita = around US$2,010 in 2006 (Cf. US$50 in 1978)

A significant characteristic of employment in China now is the massive use of migrant workers. There are estimated to be 150 to 200 million migrant workers—out of a working population of 770 million in 2007.

Another major phenomenon is the level of labour unrest and disputes that has accompanied the rapid economic development before sufficient safeguards had been built to ensure sufficient protection for the working and living conditions of workers. In 2007, there were more than 450,000 cases of labour disputes, according to the Ministry of Human Resources and Social China

Security. Most of the cases dealt with wage issues and Guangdong had the highest number of cases. The desperation and discontent of workers has often been expressed through direct actions such as work stoppages or public blockades (such as of highways), with participation of workers at times reaching thousands.

The rapidly increasing number and scale of labour disputes have been a major reason for the enactment of a major revision to the labour law, in spite of the strong opposition of foreign business associations in China, such as the US Chamber of Commerce.

A. Definitions of ‘Informal Employment’ in China

Informal employment in China is usually officially referred to as ‘flexible employment’ (linghuo jiuye). Common views by researchers have been arrived at that informal employment should comprise employment in informal sectors as well as non-standard employment in formal sectors which is also shared in this article.

Employment in informal sectors: Informal sectors, according to the definition by the ILO refers to those micro or small productive units which are always isolated unstable and vulnerable engaging in production and distribution of goods and services. Lacking capital, managerial skills and preferential supports from authorities, the managers of those units in informal sectors always suffer from disadvantages regarding market access, fair competition and public services, while they also provide their workers with highly unstable employment with low and unstable wages only for subsistence not to speak of decent jobs. The informal sectors in China are mainly composed of small-scale business units outside of the legally registered and separate bodies including companies, public institutions government agencies and civil societies: (1) micro business units set up by individuals, families or partnerships such as self-employed workers, family-based handicraft operations and sole proprietorships with less than seven employees (ge ti hu): (2) public labour organizations based on communities, enterprises or NGOs aiming at creating jobs and wages; (3) casual workers, vendors and other workers working at all other labour organizations not covered by the existing legal system.

Non-standard employment in formal sectors: Non-standard employment in formal sectors refers to all the kinds of special employment that differ from standard employment in working arrangements, ways of working and employer-employee relationships, including flexible employment, temporary employment, non-fulltime employment, contractual employment and seasonal employment. The formal sector is composed of independent legal bodies which are legally registered have much more capital, advanced managerial skills and preferential support from government agencies, and are able to provide their employees with more stable positions and higher wages. In China, non-standard employment includes: (1) the informal workers in formal enterprises, public institutions, government agencies and civil societies such as temporary workers, seasonal workers and hour-paid workers; (2) workers working in flexible ways in formal enterprises, public institutions, government agencies and civil societies such as flexible workers and non-fulltime workers; (3) freelancers with high skills such as writers and interpreters. It should be mentioned that the non-standard employment can also exist in the employment in the informal sectors.

B. The Background and Development of Informal Employment in China

Before the introduction of reform and opening up policy in 1978, there had been distinct separation between the urban and rural areas. Rural peasants mainly made their living on the land Asian Labour Law Review 2008 while urban workers formed life-long and fixed labour relations with the state-owned enterprises (SOEs) under the central planned economy, so both informal sectors and non-standard employment rarely existed.

The opening up of the economy accelerated and deepened in the 1980s and 1990s, bringing to workers a wrenching change as the economy changed from one where most workers had guaranteed jobs with full state-provided benefits upon completing their education, to one where one’s job and the terms of one’s jobs depended on market demand. With the rise of the private sector, millions of industrial workers were laid off from unprofitable state-owned enterprises or enterprises that could not withstand foreign competition, and thus lost their ‘iron rice bowls’. The informal employment in China arose and gradually developed together with the development of competitive labour market and diversification of flexible working relations after China set up the socialist market economy.

1. Great employment pressure arising from the reform of SOEs, urbanization of rural areas and the huge amount of newly added working population

The reform of SOEs is an important part of the whole market-oriented reform of economic institution in China, during which many SOEs went bankrupt or underwent reconstruction and a large number of workers were laid off. According to the estimation of the Asian Development Bank, about 37 million workers were laid off or redirected from 1995 to 2001 while, during the same period, only 17.5 million jobs were provided by private and foreign enterprises. In 2006, there were still 8.4 million registered unemployed workers in urban areas. Besides the existing employment pressure mentioned above, there is also the huge number of newly added working population. Take the situation of 2006 labour market, for example: the whole newly added productive population in urban areas over the country rose up to nine million and the number of the whole labour population in urban areas waiting to work was more than 25 million, while the newly added positions provided was estimated to be only 11 million, so the deficit of jobs was as high as 14 million. During the process of urbanization, about 150 million rural migrant workers in total rushed to urban areas to find jobs. The statistics mentioned above all demonstrate the tremendous employment pressure facing the Chinese government which is no longer able to provide enough formal job positions in the formal sectors and naturally turns to the new approach of informal employment, which features easy access and large capacities to absorb productive populations to alleviate the great employment pressure.

2. The influence of global trend of informal employment

A lot of workers engaging in simple and manual jobs were squeezed out by the advanced technologies applied in the enterprises and transnational corporations, which, in order to reduce company costs as well as keep their competitive advantage, always contract their non- core businesses to developing countries with cheaper labourers. Workers are dispatched from traditionally formal working places to various small and flexibilized production units. The working time, methods of wage calculation and management of workers also vary dramatically. China, with its abundant and cheap labour resources, has been considered one of the best investment destinations and has naturally been influenced by the related trend of informal employment.

C. The Scale and Composition of Informal Employment in China

There is a lack of official statistics specifically related to informal employment in China. Concrete statistics supporting the present overview of informal employment such as the whole China scale of it and gender ratios, etc. are rare. This article is mainly based on other related official statistics and some regional surveys which are also shared in the main existing research.

According to official statistics, it is estimated that the working population in urban areas engaged in informal employment was about 80 to 100 million in 2002, while some scholars consider the ratio of working populations engaged in informal employment to the whole working population in urban areas to have risen from 13% in 1998 up to around 30%. Among this number of workers in the informal sector overall is 27.07 million, accounting for 42% in proportion while the number of workers in traditionally formal sectors accounts for 58% in proportion. A newly released research report in 2007 by the Shanghai-based Fudan University (FDU) claimed that the whole number of the working population engaged in informal employment in urban areas is up to 130 million, accounting for more than 40% out of the total urban populations in proportion, whose contribution to GDP is more than 35% of the whole proportion.

The whole of the working population engaged in informal employment may fall into categories as follows: 1) the migrant workers, 2) the urban laid-off workers (xiagang) and 3) the newly added productive populations in urban areas among which the migrant workers account for the majority. One distinct trait of the working populations engaged in informal employment is that the average educational level is very low. According to the FDU report: half of the population ended in junior high schools (46.4%) while only 8.5% of them received tertiary or university education; for the rest of the population, 26.6% went to senior high school, 11.6% elementary school and 7% below primary school or illiterate.

With the deregulation of the labour market since 1978, those entering wage labour have been much more likely to enter informal work.

From the perspective of professions and employers involved, informal workers include informal employees such as temporary workers (linshi gong) , hourly wage workers (xiaoshi gong) and dispatched workers (laowu paiqian gong) in traditionally formal sectors and units; workers in the urban working units offering household services without profit or creating more positions for the unemployed; owners and employees of sole proprietorship or micro and small-sized enterprises; street vendors; and those professions requiring special skills including writers, interpreters and actors which is totally a very small amount, covering from the tertiary industry, especially the wholesale and retail trade and catering, to labour-intensive construction, manufacturing and mining of the secondary industry to some services requiring special skills.

Those statistics mentioned above fully demonstrate the important role in enhancing the economic development and solving the employment issues for the huge capacity to absorb the unemployed and broad coverage of industries and professions of the informal employment.

Below are further descriptions of the main groups of workers composing informal labourers in China.

1. Migrant workers from rural areas

It is estimated that now in China there are totally 150-200 million migrant workers, the majority of whom are engaged in informal jobs. Among all the labourers participating in the secondary industry, migrant workers from rural areas account for 57.6% in number, even with a higher proportion especially in the processing and manufacturing industry (68%) and Asian Labour Law Review 2008 construction industry (80%) and among all the labourers in the tertiary industry, migrant workers from rural areas account for 52% in number. In 2005, migrant workers are mainly engaged in the following sectors construction (19%), manufacturing of electronic parts and appliances (17%), manufacturing of clothing and footwear (15%), hotels and restaurants (11%) and business services (9%), which in total comprise more than 70% of all migrant workers.

2. Urban laid-off workers (xiagang)

According to domestic surveys, 70% workers laid off by SOEs turned to informal employment especially in local communities. A regional survey1 launched in Wuhan city, the capital city of the Hubei province in central China, shows that only 20% of the workers laid off by SOEs and collectively-owned enterprises could find other jobs in SOEs and collectively-owned enterprises while the majority of them realize their re-employment through self-employment or working at private enterprises. The laid-off workers got reemployed mainly in the tertiary industry such as community services for public interests by ways of setting up own micro-businesses (45.1%), short-term temporary workers (25.5%) and others (23.2%), covering from household care (38.5%), management of community services (24.2%) to public service in communities and others (22.8%).

Another survey launched in six communities of six different cities in 20022 reveals that among the 918 laid-off workers engaged in informal employment involved in this survey, only 28.9% of them had signed labour contracts. The survey in Wuhan also demonstrates that only 25.1% of laid-off workers realizing reemployment through informal employment never changed their jobs while 67% of them had changed jobs twice to four times. Such instability and vulnerability of informal labour relations is partly attributed to flexible arrangement of informal employment in terms of working time, workplaces, way of paying wages and administration, which, without effective laws and regulations related in place, probably are conducive to the infringement of labour rights and interests.

3. Newly added labour force in cities (university graduates and the informal workers engaged in high-end industries)

The number of university graduates in 2006 was 4.13 million, was 4.95 million in 2007 and will hit 7.1 million in 2010. Employment pressure facing more and more university graduates rose not only from the huge volume reflected in the statistics above but also from some structural issues. Given the traditional obsessions with and preference for jobs in formal sectors in developed cities, a majority of university graduates prefer doing casual jobs such as software designer, translator and or artist in big cities such as Beijing and Shanghai rather than having a stable and formal position in less developed regions in central and west China. But the group of university students who voluntarily choose to take informal and highly unstable jobs, with their greater competitiveness of education and professional training, on average are able to earn much more while being less exposed to occupational risks than the other two groups mentioned above. There are also some freelancers or part-time professionals with special skills such as interpreters, tourist guides, writers and actors who voluntarily engage in paid non-standard work having strong bargaining power in the labour market. Some researchers think that it is a trend of future ways of employment in China. The total number and the proportion of this kind of high-end informal employment is very small compared to the migrant workers and laid-off workers engaging in informal employment. China

D. Features of Informal Employment in China

1. Labour relations in informal employment is always unstable and vulnerable. Workers engaging in informal jobs, whether high-end or low-end positions, are no longer fully protected by nor do they abide by laws and regulations. A major reason for this is the small number of signed labour contracts.

2. Those in informal employment have weak bargaining power and the employment quality of most informal workers is very poor.

3. Workers are strongly polarized into low skill and low-paid, vs. high-skilled and highly paid. Except for those freelancers or professionals with special skills, most informal workers, lacking knowledge and skills, are engaged in the informal sectors or non-standard positions of formal sectors. This non-standard employment helps to relieve the problem of subsistence and the poverty of the workers but is far from providing decent work conditions.

4. Hard work with low compensation. Workers face discrimination compared to formal workers for equal work done, and wages are subject to delay or deduction. It was reported that in 2004, the average annual income of migrant workers was around 8,000 RMB compared to 15,000 RMB for their urban counterparts. The 2007 Fudan report (referred to earlier) claims that there are huge income gaps between informal workers in different industries and regions. According to the data of the report, totally 44.8% of them earn 401-800 RMB per month and only 3.5% of them can earn more than 2,000 RMB per month.

Wages of informal workers are mainly calculated on the basis of working hours, and partly on the basis of pieces they have finished. A survey in Zhejiang Province in eastern China also reveals that among all the migrant workers in this province, 7.5% of them earn less than 600 RMB per month, which is even lower than the monthly minimum wage of this province. In industries which absorb a lot of migrant workers, such as the construction industry, the problem of wage deduction and back wages is serious. Those migrant workers working in formal sectors or units as temporary employees are always discriminated against relative to the formal employees in terms of wages and welfare. The laid-off workers who manage to get re-employed by means of informal employment earn much less than before. According to a spot check, 30.2% and 34.9% workers could earn 300-500 and 500-1,000 RMB per month respectively before they were laid off, while up to 87.7% laid-off workers only got 300-500 RMB per month when they found other informal jobs in the communities.

5. Work having long hours and requiring great physical strength. It was reported that there was a macro-sized private enterprise in Zhejiang province (a coastal province in China) hiring more than 5,000 migrant workers who worked for ten hours a day with only one day for rest every month. As their wages were paid according to the pieces they finished, migrant workers had to extend working hours to get more wages. A survey published by the All-Sichuan Province Federation of Trade Unions (Sichuan is an inland province) shows that a garment limited company in that province worked continuously 13-17 hours a day for five days. To our particular concern, it was reported that more and more migrant workers organized collective work strikes against the heavy workload and wage delay or deduction. In other words similar conditions of informal work are being found in all regions of China.

6. Poor conditions at workplaces, lack of proper occupational safety and health (OSH) arrangements and frequent workplace accidents. A survey from Sichuan province revealed 10 Asian Labour Law Review 2008

that 62.2% migrant worked had not been provided with labour protection items, 57.75% had not been trained on safe working, and 9.3% had experienced occupational injuries once while 4.23% twice. Because some small enterprises or workshops put the workplaces, the dormitories and the warehouses together with disorderly management of chemical substances, migrant workers working at such enterprises or workshops, directly exposed to dangerous even exotic substances or gases, were subject to various occupational diseases. Such illegal employment practices as forced labour and child labour were frequently observed in small coal mines and workshops. Even those migrant workers offering simple services in urban communities are mainly involved in such dirty and tiring work.

7. Workers involved in informal employment are mainly excluded from existing social security arrangements. According to related research of the Ministry of Labour and Social Security (now renamed the Ministry of Human Resources and Social Security), by 2004, only less than 30% informal workers had been found to have the basic old age insurance scheme and less than 10% in the basic medical insurance scheme, while the national average coverage of these two basic social insurances were 46% and 31% respectively. Regional statistics revealed more serious situations: Only 3.41% migrant workers working at enterprises of county level and above in Sichuan province took part in the industrial injury insurance while 0.84% of unemployment insurance and 2.99% of old age insurance. Apart from employers’ intent to evade responsibility to insure their workers, reasons for such low coverage of migrants in social security schemes include: low awareness of workers regarding such schemes; low monitoring of companies and enforcement of relevant laws; and the tendency of migrant workers to frequently change jobs and workplaces.

8. Informal workers, with their unset and flexible ways of working and some new and more complicated forms of employment such as sub-contracted labour, are difficult to organize to join trade unions. The legal and government-sanctioned All-China Federation of Trade Unions functions in a top-down manner, rather than grassroots-upward, and has been focusing on formal rather than informal workers. Most informal workers would rather turn to their local relatives or hometown fellows when their rights and interests get infringed upon.

9. Migrant workers engaging in informal employment also face some institutional obstacles such as the hukou (household registration) system which administratively and economically obstruct migrant workers from fair market access, competition and social protection. These migrant workers are discriminated against in their children’s education, housing, and subjected to abusive practices of the urban management forces (cheng guan).

E. Females Engaging in Informal Employment in China

In spite of lack of official gender statistics on informal employment in China, some features can still be discerned as follows according to present research.3

The total number of female workers engaging in informal employment is slightly greater than that of male workers. Of those in informal employment, female workers are more than male workers among laid-off workers, while among migrant male workers are more in number than their female counterparts. Of female workers as a whole, 63.7% of them are in informal employment while only 49.5% of the male workers are in informal employment. China 11

From the perspective of industries and occupations involved, female informal workers distinctly differ from male informal workers. Female informal workers are mainly engaged in the industry of agriculture, forest, herd and fishing, the industry of retail and wholesale trade industry, the of restaurant and hotel industry as well as the social services industry. On the other hand, male informal workers are mainly employed in the industries of construction, transportation, warehousing post and telecommunications industries. From this we can find that female workers are generally engaged in domestic and household-related work, especially in homemaking services in which the workers involved are mostly female. Even in those industries and units without distinct gender segregation, female and male workers still differ in the details of the jobs they do. For example, male workers in restaurants can easily access such positions requiring certain special skills such as chefs, while female workers are mainly involved in supplementary jobs like the waitresses.

At the same time, within the manufacturing industry, which is composed of formal workplaces, women tend to be concentrated in assembly line work of light industries such as toys, garments and shoes, and are also found in large numbers in the information and technology industry. These industries are characterized also by outsourcing, thus contributing to the process of informalizing labour in China.

Gender segregation in industries and occupations in the end cause the gaps in terms of income and social benefits between female and male informal workers. According to estimates based on the Second National Survey On Chinese Women’s Status (2001), the annual average income of female informal workers only accounts for 70.1% of that of the male workers in 1999—a gap that increased by 7.4% from 1990. The annual average wages of female workers in such industries with mostly female workers is generally lower than that of the industries with mostly male workers while in the manufacturing industry featuring no distinct gender disparity, the average annual income of female workers only accounted for 48.47% that of the male informal workers. Even in such industries where female workers are concentrated, such as the industry of wholesale and retail trade, restaurant and hotel and the industry of social services, the average annual income of female workers only respectively accounted for 74.02% and 60.39% that of the male informal workers. Female informal workers also enjoy less social security and benefits than male informal workers. Yet at one time, the average income of Chinese women was about 80 per cent that of men.

Besides the general problems facing informal workers mentioned above, the rights and interests to work, as well as the rights to the body and wealth of female informal workers are subject to be more severely infringed. Take the housekeeping industry with highest rate of female participation, for example; the Labour Law fails to apply to the relations between the individuals and families, and housekeepers are subject to physical injury and sexual harassment from the hosts of the families they serve.

Informal employment to some extent helps female workers to balance work and raising children as well as housekeeping. But in all only a very small number of female workers voluntarily choose to engage in informal employment and the majority of them are forced to engage in informal employment with of low quality.

We may conclude that the female informal workers are the disadvantaged in the whole group of informal workers, who themselves are the disadvantaged of the whole labour market. Given the different physical features of their gender, shortage of knowledge and skills, traditional views of women’s role and responsibilities as well as gender’ related discrimination, female informal 12 Asian Labour Law Review 2008 workers are generally unfairly treated in terms of compensation, social security and benefits and protection of legitimate rights and interests, causing them to suffer from poverty.

3. Official Responses to Informal Employment and An Overview Of Present Related Laws and Policies

Given the huge employment pressure both in volume and structure, the Chinese government tends to encourage the development of flexible employment by devising regulations and policies to take advantages of the functions of informal employment in improving employment, alleviating poverty as well as keeping social stability. The policies below are intended to provide positive and institutional support to the development of informal employment:

1. Provide the laid-off workers with a series of preferential policies in the fields of finance, taxes and business administration to encourage them to get re-employed or self-employed, including offers of preferential treatment regarding tax and loans for laid-off workers engaging in sole proprietorship and partnership, provision of wage subsidies, and tax reduction or exemption to the small enterprises employing those laid-off workers.4

2. Intensify the protection of migrants’ basic rights and interests to work including the right to wages and right to OSH. Government at all levels specifically issued administrative measures regarding wage payment and industrial injury insurance of migrant workers and nationally launched special checks on their enforcement.

3. Encourage the development of the informal working sector in communities to create more jobs for public interests. At the national level, nine ministries including MOLSS and eight other ministries in 2001 jointly published ‘Several Opinions On Improving Employment In Communities’ in order to, by offering a series of preferential policies and training programmes, encourage and support the laid-off and the unemployed to organize themselves to set up some small units to provide simple services in communities. At the regional level, since the mid-1990s, Shanghai has been issuing comprehensive preferential policies to encourage the development of ‘informal labour organizations’ which absorbed urban laid-off workers and rural redundant labourers to get them employed or self-employed in communities and family-based workshops, providing socialized services for formal and big enterprises as well as engaging in works for the public such as public services, to get basic income and social security. The Shanghai municipal government provides the ‘informal labour organizations’ with a package of preferential policies within the first three years after the organization was set up, ranging from exemption from local taxes, preferential payment of social insurance, and free training for owners and employees on necessary skills, to securities for setting up loans. By the end of 2005, there were a total of 34,000 informal labour organizations in Shanghai, involving up to 355,000 labourers. The development model of informal labour organization in Shanghai was crowned as the ‘Shanghai model’ by ILO.

In reality, however, the success of ‘Shanghai Model’ is a rare case. Most of the preferential policies are still far from effective and fall short of expectations.

4. A series of laws and regulations were promulgated to regulate non-standard employment including Some Opinions on Issues of Non-fulltime Employment by MOLSS in 2003 and the newly published Labour Contract Law in which special chapters are included which set out rules regarding non-fulltime employment and contract labourers. However the Opinions issued by MOLSS are not enforceable. China 13

On the other hand, the new Labour Contract Law made effective in January 2008 has given much hope to workers – in spite of various employers’ maneuvers to evade it. The new Labour Contract Law stipulates that every employee should have a contract which lays out all the workers’ rights and entitlements, and if any employer fails to do so must pay two times more compensation to the workers. It also introduces more job security, regulates and limits part-time and dispatch labour, and reduces use of of short-term contracting which had been widely used by employers to avoid accident pay, health insurance and so on. Now, after two short-term contracts, a permanent open-term contract must be signed.

5. The coverage and levels of policies and laws regarding social security were improved. The MOLSS issued a series of circulars to regulate issues such as how to take part in the basic old- age and medical insurance for such flexible labourers as urban self-employed and freelancers, including some new arrangements on the responsible for paying premiums, the base and rate of payable premiums as well as the payment procedures.

Present laws and policies mainly focus on key groups involving informal employment such as migrant workers and laid-off workers, and lack whole and comprehensive regulations and supervision. Moreover, in spite of good government policies and incentives to encourage the development of informal employment, laws and regulations for the protection of labour rights and social security on informal employment remain inadequate and problematic. The major problems are:

1. The present labour law, with a limited coverage, applies to the labour relations between employees and their unit employers only and not to the labour relations between individuals, especially housekeepers and the families they serve, who are explicitly excluded from the labour law.

2. Labour standards regarding wages, work hours, rest and leave in the present Labour Law are mainly defined on the basis of formal employment, failing to meet the requirements and needs of flexibilized and informal employment.

3. The present social security arrangements can not match the development of informal employment. The existing social insurance system involving old-age and medical insurance etc., featuring high rates and payments, designed based on sole and formal employment relations between employees and their unit employers. Those social insurances are registered, declared and paid for the employers. But informal workers, which usually have no employer (or are self-employed) or who have more than one employer (i.e. if they have part-time jobs) with unstable positions and low income, are actually excluded from the present social insurance system.

4. Existing laws and policies are far from fully implemented and enforced. Informal workers applying for preferential treatments in tax and finance are always frustrated by the complicated formalities and long period of waiting while related authorities award the treatments without clear standards for doing so.

4. Conclusions and Suggestions

Given the severe employment situation in China as well as the role of informal employment in improving employment and alleviating poverty, absorbing a large number of labourers, informal employment will not be a temporary model but a long-lasting form of employment. 14 Asian Labour Law Review 2008

We think that laws and policies should focus both on encouraging the development of informal employment and the protection of related rights and interests of informal workers:

1. To make different policies and regulations regarding employment in informal sectors and the non-standard employment respectively according to different key features and issues in two fields. For informal workers in informal sectors, more preferential policies, such as tax and financial policies for small enterprises as well as sole proprietors should be issued and more efforts should be made to simplify the administrative registration formalities, to reduce chargeable items and to low market access. Governmental agencies should provide public services in the form of information, consultation and training to micro and small enterprises in informal sectors and design a package of social insurance arrangements suitable to informal labourers based on voluntary participation, while creating more preferential policies to guarantee that more and more informal workers are likely to benefit from social assistance and the social welfare system. For workers with non-standard employment (in the formal sector), great efforts should be made to standardize enterprises’ employment practices towards equal pay, social welfare and security among informal workers and formal workers doing equal work.

2. To improve laws and regulations regarding protection of rights and interests of informal workers. • To expand the coverage of the Labour Law • To get informal workers involved while efforts should be made to regulate those non- standard labour standards so that they guarantee informal workers’ rights and interests. Government of all levels should strictly implement related laws and regulations, especially cracking down on such illegal practices as employing child labour and forced labour and lower economical and administrative restrictions against migrant workers while providing them with securities on housing and education of their offspring.

3. Government of all levels should create an educational and training system suitable to informal employment to offer more opportunities for informal workers’ upward mobility, fostering more technical talents to contribute to industrial upgrading of industrial skills.

ENDNOTES

1. http://www.nongjianv.org/old/club/publishing/lunwen/31.htm 2. Xue Shaoyun (2004) ‘Observation and Reflection on Informal Employment in China: A Survey on Informal Employment in Six Urban Communities’. Wuhan Family Service Centre. 3. The statistics refer to ‘the Second Survey on Chinese Women’s Social Status’ and ‘The Yearly Book of Labour Statistics in China’ which can also be found in the following articles: Jiang Yongping: ‘Informal Employment and Gender Analysis of Chinese Labour Market’ and Tan Lin and Li Junfeng: ‘Gender Analysis on Informal Employment in China’. 4. For example: ‘Notice on Preferential Policies For Laid-Off Workers Engaging in Self-Employed Business’ and ‘Notice on Further Improvement of Small-Amount Loans for Laid-Off Workers’ Hong Kong 15

Hong Kong

Wu Mei Lin

1. Contemporary Snapshot

Informalization and Casualization of Labour as a Result of Globalization and Economic- Restructuring

ince the mid-1990s, Hong Kong has transformed itself from a manufacturing centre to a S global financial and sourcing hub. This has come about with first, an exodus of manufacturing activities to mainland China and Southeast Asia in pursuit of low-cost labour and resources (43 per cent of Hong Kong’s manufacturing and trade companies have reported investments in factory facilities in China);1 and second, the growing magnitude of the service sector in terms of its share in gross domestic product (GDP).

The phasing out of the manufacturing sector has caused Hong Kong workers in general and women workers in particular to be hard hit. In 2002, the manufacturing sector represented only 5.1 per cent of the total number of people employed, marking a steep decrease from 41 per cent in 1980.2

Middle-aged women workers displaced from the manufacturing industries constitute a massive reserve labour force for the service sector. Many end up as manual workers in retail, catering and other services. From the statistics (see Table 1 below), it is clear that the new service sectors cannot possibly absorb all the women workers laid off from manufacturing.

Table 1. Major Sectors Which Employ Women Workers Major sectors open for women % of the Within the sector, the % of suitable workers labour force posts for low-skilled women of low (2005) educational level displaced from manufacturing jobs Wholesale, retail, import/export, 27.2% 36.3% catering and hotel Finance, insurance, property and 16% 6.6% commercial services Community, social and personal 26.9% 34.5% services Source: Census and Statistics Department (2006) Quarterly Report On General Household Survey.

Jobs in the service sectors are characterized by two major unattractive factors: long working hours with low pay; and casualized, part-time and contracted-out, work.

Employment on a part-time, temporary and subcontractual basis is on the rise. From 1997 to 2005, the number of part-time workers more than doubled from 67,800 to 150,900, while 16 Asian Labour Law Review 2008 the proportion of part-time workers to the working population rose from 2.7 per cent to 5.2 per cent.3 In government statistics, only 3.3 per cent of part-time workers are identified as having ‘no financial need’;4 women make up over half (62.79 per cent) of the part-time workers; and 37 per cent of the part-time workers earn less than HK$5,000 per month.5

As a result of casualization, more women are failing to get employment benefit protection. From 1997 to 2005, the number of part-time workers increased by 32 per cent, from 82,000 to 150,700. The percentage of part-time workers in the whole labour force increased from 2.8 per cent in 1997 to 5.2 per cent in 2005; many of these workers are middle-aged women displaced from the manufacturing sector.6

It is expected that the trend towards casualization of women workers is going to become more extensive, affecting not just women displaced from the manufacturing sector, but also young school-leavers. Nowadays, many young women are employed as flexible hourly-paid workers with no fringe benefits or employment security. Even clerks and nurses are employed on a contract basis. Also, the trend towards ‘disguised self-employment’ is increasing, such that to get a job a worker is required to pretend to be self-employed, because self-employed workers are excluded from the existing Employment Ordinance protection and the employer can thus circumvent obligations and costs under the Ordinance.

Gender Inequality in the Labour Market

According to government statistics, the median monthly earnings of employed persons overall in 2001 and 2006 were US$1,282 and US$1,269 (US$1 = HK$7.8) respectively. In 2001, women earned US$1,090 while men earned US$1,538. In 2005, women still earned less than men (US$1,028 compared with US$1,410), which represents a 27 per cent difference in the median monthly earnings.7

There continues to be an occupational gender bias among managers and administrators. In 2002, men made up 74.4 per cent of this category compared with 25.6 per cent women. In 2005, the figures were 73.2 per cent for men and 26.8 per cent for women. In more elementary occupations, the trend is the reverse; women form a higher proportion of the workers. For instance among clerks, 74.2 per cent were women in 2002 and 73 per cent were women in 2005.8

Of those employed earning less than US$384.60 (HK$3,000) a month, women made up 64.9 per cent in 2002 and 66.4 per cent in 2005. Of those earning more than US$3,846 a month, 68.3 per cent were male in 2002 and 67.8 per cent in 2005.9

The Post-1997 Hong Kong Government

The ideology of neoliberalism prevailed in Hong Kong under the colonial government for decades. The doctrine of laissez-faire was upheld along with the principle of government non-intervention in the market. Even after the return of sovereignty to China in 1997, the new government has followed the same principles. The non-intervention principle is further accentuated under the policy of ‘small government/big (and free) market’. Privatization of public services in the form of outsourcing and corporatization are two main strategies to practice the doctrine of small, i.e. minimal, government.

A typical example is the Hong Kong Housing Authority. Public housing has a long history of outsourcing services to private companies. Since 1987, the Housing Authority has contracted Hong Kong 17 out cleaning services and security related services and confined itself to the role of management and monitoring. The pace of privatization further expanded in the late 1990s so that the whole management of the Housing Authority has been contracted out in line with the downsizing of the government. The monitoring role is left to private companies, which are profit-oriented. In 2004, the Housing Authority divested itself of its retail and car parking facilities.

There is a growing trend towards privatization of other social infrastructure as well, such as the postal services, railway systems, cross-harbour tunnels, energy supply and telecommunications.

Trend in Feminization of Poverty within Economic Growth

The transformation of Hong Kong to a global city serving the interests of transnational corporations (TNCs) makes the gap between rich and poor more acute. The gap has grown in recent decades. The Gini coefficient (based on pretax monthly household income) was 0.518 in 1996, 0.525 in 2001, but 0.533 by 2006.10

From 2000 to 2006, there was a decrease in the unemployment rate but an increase in the working poor. The lowest earning 20 per cent of the population owns only 4.4 per cent of the wealth of Hong Kong, while the top earning 20 per cent of the population owns 57.1 per cent of Hong Kong’s wealth.11

Between 1996 and 2006, the numbers living below the poverty line increased from 13.5 per cent to 18 per cent.12 During the same period, the working poor population increased by 87.9 per cent, from 222,800 persons in 1996 to 418,600 persons in 2006; and the majority of these were women. The poverty rate increased during this time from 7.6 per cent to 13.1 per cent.13

According to government figures, the lowest paid jobs are mainly in the community, social and personal sector, and the wholesale and retail sector. Not surprisingly, these two sectors can be viewed as ‘women’s’ sectors in the sense that a large number of the employees are women.

As mentioned above, women workers make up the majority of the working poor. Of the 405,000 workers who earn less than half of the median monthly salary, i.e. HK$5,000 (US$641), women make up 74 per cent. In other words, one out of seven employed women falls into the category of the working poor. Moreover, the largest wage discrepancy exists between the sexes at the bottom of the employment hierarchy. The median monthly salary of female unskilled workers is just HK$3,900 (US$500), which is half of that of their male counterparts, who earn HK$7,500 (US$961).14

Within the working poor population, women are poorer than men. In 1996, the poverty rate among women was 14 per cent; this increased to 18.4 per cent in 2006. Within a ten-year period, poverty among women increased by 177,700 persons. In 2006, women accounted for 60 per cent of older persons, and 63 per cent of the working poor were women, the majority aged between 45 and 59 years.15

Apart from being poorly paid, jobs are difficult to find, especially for middle-aged women. Age discrimination is widespread in the service sector. Being young and having a beautiful face are perceived as assets in getting a job as a saleswoman or waitress. Middle-aged women end up as cleaners and general workers in public housing estates, offices, restaurants, and fast-food chains – in other words, in the lower strata of the service sectors. 18 Asian Labour Law Review 2008

Government’s Lack of Gender Sensitivity and Feminization of Poverty

Despite the rise in female employment since 2002, women continue to make up the largest proportion in every sector of the poor population. About 80 per cent of the working poor are female; more than 80 per cent of single parents receiving government financial assistance are single mothers; and most of the ageing population receiving government financial assistance is also female.

The Women’s Commission (WoC) and the Commission on Poverty (CoP) put emphasis only on the need to build up individual capacity and to increase individual competitive power in the labour market as the strategy for poverty alleviation. They have not considered tackling the structural factors that push women into such vulnerability and into poverty.

The CoP, set up in 2004 and composed of people appointed in a closed-door process, admitted that ‘among the low-income employees in mid 2005, relatively most of them were female workers, persons aged 40-59’. The CoP has not defined a poverty line. Furthermore, the CoP set their priorities on ‘Inter-generational Poverty’ and ‘Elderly in Poverty’ and formed two task forces, namely, for ‘Children and Youth’ and a ‘District-based Approach’. Definitely, women’ s poverty is not on the government’s agenda.

The WoC shared a gender-mainstreaming checklist with the CoP.16 However, it is clear that the CoP has not made any effort to tackle feminization of poverty as shown by the absence of a task force for women’s poverty. In other words, the CoP did not respond to the WoC’s gender- mainstreaming ‘checklist’, which is not mandatory. The CoP has failed to adopt a women’s perspective in defining the poor population and in analyzing the structural causes of poverty. As a consequence, no gender-sensitive policy has been proposed to address the problem of feminization of poverty.

Employment Protection and Related Employment Policies

1. Ignoring the existence of the working poor

The Hong Kong government does not provide an official poverty line, while the Commission on Poverty (CoP) considers an employee to be working poor if his/her monthly income is below 50 per cent of the median income of all employees. Under the definition of the CoP, women who ‘voluntarily’ participate in part-time jobs because of household duties are excluded from being counted as working poor, even if their incomes are far below the median income level.

2. Saying NO to legislation on minimum wage

The polarization of income/levels has become more and more serious. In 2005, the government decided to set up a wage system stipulating that wages in government contracts should not be lower than the average wage in the private market for similar occupations – applying only to the cleaning and security sectors. The move virtually offers a HK$1,000 (US$128) wage increase for all subcontracted cleaning workers. In November 2006, the Hong Kong government refused to legislate on a minimum wage level for all sectors; instead they initiated the ‘Wage Protection Movement’ for cleaning workers and security guards. Due to labour movement pressure, however, the government has recently agreed to legislate a minimum wage. The details have yet to be worked out. Hong Kong 19

3. One-pillar retirement protection

The World Bank suggested that there should be three pillars to ensure basic retirement protection,17 but in Hong Kong there is only one pillar in retirement protection, the Mandatory Provident Fund (MPF). Under the MPF, both employers and employees contribute 5 per cent of the worker’s wage to the pension fund; for workers whose wages are below HK$5,000, only the employers need to contribute. This system excludes domestic workers (local and foreign); 90 per cent of domestic workers are women.

From 1996 to 2004, unemployment among middle-aged workers increased sharply. The unemployment rate of employees aged between 40 and 49 years increased from 2.2 per cent to 6.5 per cent, while for employees aged between 50 and 59 years the rate has increased from 2.7 per cent to 8.7 per cent. The MPF for low-income workers cannot provide a decent living after retirement. Middle-aged poverty will progress as poverty into old age.

4. Employment Ordinance restricts protection targets

According to the Employment Ordinance, employment protection is given to all permanent, casual, temporary and part-time workers as long as their working hours meet the requirement of a ‘Continuous Contract’. That means a worker being employed continuously for four weeks by the same employer working no less than 18 hours per week (simply called ‘4.1.18’). Benefits under 4.1.18 include paid maternity leave, dismissal and redundancy protection, paid annual leave, paid sick leave, sickness allowance and long-service payment.

Thus, 4.1.18 not only regulates the labour relations, it indirectly discriminates against part-time workers. Employers can escape the responsibility by deliberately arranging for workers to work less than 18 hours and to stop working at the fourth week. For example, the hotline enquiries services of the Jockey Club betting agency or the PCCW telephone company employ part-time workers for 17.5 hours per week. Such workers cannot benefit from annual leave, holidays, or allowances for pregnancy or sick leave. Another example is found in supermarkets: workers will be laid-off for one week after working for almost three months; this disrupts continuous employment and no benefits are given for discontinuous employment.

It is a common practice for employers to institute a discontinuation period between three- month contracts or half-year contracts with their female employees so as to evade the responsibility of giving employment benefits. For most female workers working irregularly on and off in different industries for different employers for different durations, paid maternity leave has become a luxury beyond their expectations.

5. Employment Ordinance excludes contractors and subcontractors

If workers become self-employed they lose employment protection. There have been cases where employers force employees to sign ‘self-employed’ contracts, or to obtain business registration, in order to evade the employment regulations. The most common cases are reported by domestic workers, retail promoters, construction workers and cleaners.

6. Composition of wages

According to the Employment Ordinance, wages are a monetary remuneration to employees 20 Asian Labour Law Review 2008

as a reward for work done. They include tips, commission, bonuses, travelling allowances and overtime payment. Exclusion of housing allowance allows the employers to treat part of the wages as a housing allowance to avoid responsibility.

7. Easy to form unions but not recognized for collective bargaining

By law, at least seven workers from the same industry or the same firm can form a union, but there is no legislation on collective bargaining. That means an employer can ignore the existence of the union, or the employer can choose a yellow union18 to negotiate no matter how many members a self-formed union has.

The law indirectly limits the workers’ rights to strike: workers can strike at any time, but the days on strike are counted as absent days and hence are unpaid; and the employer may fire workers who are on strike.

Employers can be charged if they discriminate against workers based on membership of a union. However, the burden is put on the workers to prove the discrimination, which is very difficult.

Before 1997, unions in Hong Kong were broadly divided into three main confederations: pro-mainland; independent; and pro-Taiwan. After ten years, they are now divided into: pro- mainland (Hong Kong Federation of Trade Unions, The originally pro-Taiwan, Hong Kong and Kowloon Trades Union Council has become very small in numbers - 5,000 in 2007.) and independent (Hong Kong Confederation of Trade Unions).

The law protecting trade union right to collective bargaining and mandatory recognition by employers was scrapped in 1997 after the return of sovereignty to China. Thus workers are left without any weapons to even protect their gains.

8. The inadequacies of the Sex Discrimination Ordinance

The Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) has been implemented in HK since the 1980s. The Sex Discrimination Ordinance was passed in 1995, legally prohibiting discrimination on the basis of sex, marital status and pregnancy, and also prohibiting sexual harassment. The Family Status Discrimination Ordinance, passed in 1997, makes it unlawful to discriminate against a person based on ‘family status’, which is defined as the responsibility for the care of an immediate family member.

The Equal Opportunities Commission (EOC) was established in 1996 to implement these two Ordinances and the Disability Discrimination Ordinance.

The EOC can only take action on complaints lodged under the above Ordinances. Its role is mainly investigation and conciliation. The EOC is required by law to investigate complaints brought before it. But the EOC can decide not to conduct or to discontinue an investigation into a complaint if the act complained about is out of the scope of the Ordinance. For example, if a sexual harassment case is between two colleagues, then the EOC will investigate the complaint and decide to proceed to conciliation or to start legal proceedings; but if the case is between a customer and sales girl then the EOC will not make an investigation or take any further steps. This is because the Ordinance does not apply to all environments. It only Hong Kong 21

applies to the workplace/employment related environment and educational establishments.19 It is unlawful for the goods/services/facilities providers to sexually harass their customers/ recipients.

The Sex Discrimination Ordinance gives no protection to workers against discrimination according to age, race, religion, or sexual orientation. It also gives no protection to foreign women workers.

Significantly, the law against sexual harassment does not apply to harassment of workers by customers. This is a major area of shortfall, as the service sector has become the largest work sector that employs women workers.

2. Impact of Informalization of Labour on Women Workers

The employment conditions for women have steadily deteriorated in two ways. First, a casualized mode of employment has become the norm, such as work that is of a part-time, temporary, or contract-based nature, and is excluded from protection under existing employment laws. Second, there is a trend towards longer working hours and suppressed wages in full-time employment, intensifying the pressures on women working under both sets of conditions. Furthermore, job segregation by gender and sex discrimination are still prevalent and have had an adverse impact on women. Many women are also subject to unfair employment conditions on the basis of their age.

Women workers who are either underemployed or involuntarily taking part-time jobs account for 20 per cent of the total female working population.20 The phenomenon of ‘hidden unemployment’ is particularly serious amongst grass-roots women. Some studies have shown that the unemployment rate of women actually reaches 25.8 per cent, a much higher figure than the official unemployment rate of 4.6 per cent (figures for January to March 1999).21 The repeated difficulties in finding jobs, combined with the heavy burden of family responsibilities and the lack of appropriate social support, have discouraged many women from their job-seeking efforts. However, unemployed women are not represented in the official unemployment statistics because the government has deliberately categorized them as ‘housewives’. Consequently, these women workers also lose their status as workers.

It is clear that women workers are being exploited for their multiple identities as working women as well as poor labour and caregivers. Their plight is compounded by the fact that because they are the principal child-carers their choices in job-seeking and their bargaining power are seriously compromised.

Even for women working in different industries, common needs and demands are identifiable, as they face similar hurdles to enjoying full employment rights. The number of casualized women workers will most likely increase with full-blown privatization.

It is foreseeable that the trend towards casualization of women workers will become more extensive, affecting not just women displaced from the manufacturing sector, but also young school leavers. Nowadays, many young women are employed as flexible hourly-paid promoters with no fringe benefits or employment security. Even clerks or nurses are employed on contract basis.

Women move between unemployment, looking after the family and casual labour, but none 22 Asian Labour Law Review 2008 of these situations offers any protection to them. Income disparity between the sexes increases gender inequality, and lower economic power affects women’s position in the family and society. Women’s self-esteem and positive self-image suffers as a consequence.

3. Policies Advocated for Addressing Problems Faced by Women Workers

Protection of employment rights:

1. Remove the requisite 18 hours each week for four continuous weeks (4.1.18) restriction from the Employment Ordinance

The Employment Ordinance only provides protection for workers who work continuously for the same employer for four weeks and for not less than 18 hours per week. Under the current trend of casualization, many women are employed on a part-time or temporary contract basis and are not protected by employment laws.

Countermeasures should be set up to address the problems faced by most of the women workers.

2. Legislate a minimum wage to ensure a reasonable wage

The Hong Kong government has evaluated the ‘Wage Protection Movement’ implemented in November 2006. It is obvious that the ‘movement’ has been a failure since it has no legal basis. Due to mounting pressure from the labour movement, the Hong Kong government has agreed to legislate a minimum wage level, but there is concern that it will limit wage protection to cleaning workers and security guards, and refuse to apply it to all work sectors.

There should be legislation for a minimum wage for all sectors to ensure a reasonable wage for low-income groups. This will be a continuing campaign.

3. Set up a comprehensive retirement scheme

When formulating a retirement benefits scheme in 2000, the government ignored the call for a comprehensive retirement scheme that would give basic protection to all sections of the population. Instead, it developed the Mandatory Provident Fund (MPF), further marginalizing the large percentage of grass-roots women engaged in unstable, low-income employment, or those forced to be full-time housewives at various stages of their lives to take up family responsibilities.

Comprehensive retirement benefits would guarantee basic living expenses for the aged, and those persons who are unable to make contributions to the MPF.

4. Increase the budget for social services

Feminization of poverty has become much more acute and the marginalized position of women in the economy denigrates their status in society. The weakening of women’s survival tools only increases their dependence on families and, exacerbated by the lack of social support, there will be many obstacles to women’s development in the future.

An increase in the budget for social services could increase job opportunities on the one hand while extending social services to relieve women of their heavy burden of family responsibilities on the other. Hong Kong 23

5. Stop sub-contracting public services to the private sector to put an end to the continued exploitation of labour

The government, in its privatization of public services, spearheaded the casualization of employment for women. Under the current trend towards privatization, government services are usually subcontracted to those private contractors who offer the lowest tender. In order to be highly competitive, subcontractors often make savings by cutting wages and benefits to their workers.

6. Recognized union rights for collective bargaining

Laws protecting trade union rights to collective bargaining and mandatory recognition by employers should be legislated, otherwise employers can ignore the existence of the union, and workers are left without any weapons to even protect their gains.

Protection of Equal Opportunities in Employment:

1. Legislate against age discrimination

In 1994, Hong Kong acceded to the United Nations Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW), enacting legislation against sex discrimination. However, protection against age discrimination is not included in the provisions of CEDAW and yet this is the most acute problem confronting women in the labour market. Employers often refuse to employ women because of their age or use it as an excuse to cut their wages. Many women are forced to accept low wages if they are to find any work at all.

It is necessary to legislate against age discrimination to promote the elimination of age discrimination against women in employment.

2. Extend the law against sexual harassment

The law against sexual harassment does not apply to harassment of workers by customers. This is significant, as the service sector has become the largest work sector that employs women.

It is therefore important to extend the Sex Discrimination Ordinance.

3. Implement the principle of equal pay for work of equal value

Currently, women do not enjoy the same level of pay as men, even when their work is of equal value. This must be remedied if Hong Kong is to truly be a place where women and men have equal rights.

It is necessary to address the phenomenon of job segregation by gender and to ensure remuneration for women’s labour which is not less than what men doing the same work receive. 24 Asian Labour Law Review 2008

ENDNOTES

1. Hong Kong Government. Census and Statistics Department, Trade Statistics; Hong Kong Trade Development Council. 2. Hong Kong Government, Labour Department, 1992. Hong Kong Labour and Employment. 3. Hong Kong Government, Census and Statistics Department (2006) Population By-census. 4. Ibid. 5. Ibid. 6. Hong Kong Government, Census and Statistics Department (2006) Social Data Collected via the General Household Survey – Special Topics Report No. 43: Casual Employment/Part-time Employment, March, p. 38. 7. Hong Kong Government, Census and Statistics Department. (2006) Women and Men in Hong Kong - Key Statistics, p. 78. 8. Ibid., p. 59. 9. Ibid., p. 75. 10. Hong Kong Government, Census and Statistics Department (2006) Population By-census. 11. Hong Kong Government, Census and Statistics Department. 12. Hong Kong Government, Census and Statistics Department (2006) Women and Men in Hong Kong - Key Statistics, p. 78. 13. Ibid. 14. Hong Kong Government, Census and Statistics Department (2002) Women and Men in Hong Kong - Key Statistics, p. 48. 15. Hong Kong Government, Census and Statistics Department (2006) Population By-census. 16. Revealed in a paper submitted by the Health, Welfare and Food Bureau to the Legislative Council’s Subcommittee to Study the Subject of Combating Poverty in March 2006 (LC Paper No. CB(2) 1706/05-06 (2).) 17. World Bank (1994) Averting the Old-Age Crisis: Policies to Protect the Old and Promote Growth. This report recommended a three-pillar approach to protection of the aged, including: a publicly financed social security net; a mandatory funded individual account system; and voluntary personal savings and insurance. 18. A company union, business union or, pejoratively, a yellow union is a union which is located within and run by a company, and is not affiliated with an independent trade union. 19. See http://www.hklii.org/hk/legis/en/ord/480/sch1.html. 20. Women’s labour force participation rate and job opportunities are directly and adversely affected by family responsibilities, child rearing and child-care facilities. Often, women are forced to give up employment altogether and this results in the breaking up of their continuity of employment. The government simply evades its responsibility by categorizing unemployed women as ‘housewives’. 21. Chan K. W. and Leung L. C. (1999). Women In and Out of Work: A Research Report, Hong Kong Young Women’s Christian Association. Japan 25

Japan

Kazuko Sakai & Michiko Hiroki

1. Contemporary Snapshot

Escalation of Employment Irregularization and Impoverishment

Increasing irregular employment ssues concerning ‘income disparity’ and ‘poverty’ have been raised constantly in the media in I Japan over the past two years. These are serious issues, especially among women and youth. In the early 1990s, after the bubble economy burst, the difficulty of youth in finding jobs became a big social issue as the economy faltered. Those who could not become regular employees had no choice but to work part-time or temporarily, but it was regarded as their own decision; these workers have been dubbed ‘freeters’. ‘Freeter’ is a recently coined word from the English word ‘free’ and the German ‘Arbeiter’ meaning worker, which is used in Japan to refer to part-time jobs. ‘Freeters’ numbered over two million at one stage. Later in 2002, the economy began to recover, and after the unemployment rate hit its worst at 5.4 per cent in 2002, it has recovered to 4.0 per cent in March 2007. Statistically, the employment rate of new graduates has improved, but this does not necessarily mean regular employment. Therefore, the situation remains the same, with low wages and instability.

The labour force population in 2006 was 66.57 million; 38.98 million male, and 27.59 million female (41.4 per cent of the total labour force). By employment status, irregular workers (part-time workers, temporary workers who might be contract or dispatched workers, etc.) among men counted 5.17 million (17.8 per cent of all male workers), whereas that among women the number of irregular workers was more than double, at 11.59 million (52.8 per cent of all female workers). After 2003, the regular employment rate among women workers decreased to below 50 per cent, reversing the rate of irregular employment (irregular employment rate among all workers was 33.0 per cent in 2006).1 See Table 1 and Figures 1 and 2.

Table 1. Change of Ratio of Irregular Workers by Sex Year Regular Employees Part-time workers Temporary and others Female 1986 67.8 28.8 3.4 1990 61.9 34.4 3.7 1995 60.9 35.5 3.7 2000 53.6 42.1 4.4 2006 47.2 40.0 12.8 Male 1986 92.6 3.6 3.8 1990 91.2 4.7 4.1 1995 91.1 5.2 3.7 2000 88.3 8.0 3.7 2006 82.1 8.5 9.3 Source: Labour Force Survey, Ministry of Internal Affairs and Documentations-Statistics Bureau

26 Asian Labour Law Review 2008

Source: Labour Force Survey, Ministry of Internal Affairs and Documentations-Statistics Bureau

In Japan, ‘dispatched workers’ are those hired by dispatch companies and sent to the client companies for work. The client companies have contracts with the dispatch companies, pay fees to the dispatch companies and use the workers sent by them. This is a form of temporary work, and of indirect employment (the legal employer and final user are different entities). Another kind of temporary worker is the kind directly employed by employers (both private and public) with fixed term contracts; they are contract workers. Some of the people are workers who have been re-hired as temporary workers on contract for one year or less, after reaching retirement age. That contract can be renewed many times.

Part-time workers dominate 70 per cent of all irregular workers, and 70 per cent of part-time workers are women. They have long been synonymous with low wages and labour without rights; eventually, the Part-Time Work Law was revised in the 2007 Diet (the details of this law will be discussed later in Section 2). Japan 27

Since the ban on hiring dispatched workers in the manufacturing industry was lifted by the ‘revised’ Temporary Work Law in 2003, the number of dispatched workers has sharply increased. Of approximately 2.55 million dispatched workers (in 2005), 37.2 per cent are male and 62.8 per cent female (in 2004).

In addition, ‘independent contractors’ – a type of consignment or contract workers, who are not employed directly but working based on contracts – are increasing. Independent contractors are regarded as ‘individual business owners’, who are not directed by employers; therefore, they are deprived of protection by laws such as the Labour Standards Law and the Industrial Accident Compensation Insurance Law. Although the working style is the same as regular employees or dispatched workers, there are business enterprises which disguise these workers as independent contractors in order to avoid the application of labour laws. Women, working at home or as contributing family workers are predominant in the masses of workers uncovered by labour laws.

Japan is placing extreme restrictions on the acceptance of foreign workers. However, systems concerning foreign trainees and technical interns have been introduced, and more than 150,000 have practically become part of the necessary labour force. Since trainees are not categorized as workers, labour laws do not apply to them. In reality, the lectures that the trainees are supposed to receive are not held, and often the wage due to them is not paid for the overtime work they put in. Labour laws are applied to the technical interns, but there is no end to cases of violation such as wages being paid below the required minimum, failure to provide paid holidays, and abuse of human rights, including sexual harassment and illegal detention.

Box 1. Foreign Workers Employment Policy

Ever since the Plaza Agreement concluded at the G5 foreign ministers’ conference in 1985, the number of foreign workers in Japan has increased rapidly. Against the backdrop of widening economic disparities among the countries, the strong yen has attracted many workers from developing countries. At that time, Japanese government had a closed policy against foreign workers, which was also supported by trade unions. Therefore, many of them were treated as ‘illegal workers’ or ‘undocumented workers’ and they have been subjected to human rights abuse, discrimination and adverse working conditions. Thereafter, several amendments in immigration law as well as institutionalization of foreign trainees have been made. However, the limited acceptance of foreign workers remains to this date, except for professional and technical workers, and workers of Japanese origin from Latin American countries.

As of 2006, there are approximately 900,000 foreign workers who are categorized as ‘newcomers’, as distinguished from ‘old-comers’ who are mostly resident Koreans and Chinese, who number about 700,000. The newcomers account for about 1.3 per cent of the workforce in Japan. Among them, professional and technical workers amount to 150,000 persons while foreigners of Japanese origin, student part-timers and undocumented workers account for 230,000, 180,000 and 200,000 persons, respectively.

Due to the different interests and stances of the concerned ministries such as Ministry of Justice, Ministry of Health, Labour and Welfare, Ministry of Economy and Trade, and Ministry of Foreign Affairs, the government has been slow in formulating unified policies regarding foreign workers. Recently, however, new initiatives have been taking place in relation to the necessity to review the programme of foreign trainees and to respond to labour shortages. On the other hand, control over foreign workers has been strengthened by the amendment in the Employment Measures Law, which obliges employees to report their employment of foreign workers. 28 Asian Labour Law Review 2008

Escalating Impoverishment of Women Irregular employment has gradually become firmly established since the 1990s, and consequently, the impoverishment of women is escalating.

The economic growth rate (the real growth of GDP) indicates that Japan recovered from recession in 2003, reversing the negative growth to 2.5 per cent, and to 3.7 per cent in 2004. However, the increase of wages has not followed. The salary of regular employees has increased from the previous year 2003, by 0.1 per cent (318,800 yen), whereas that of irregular employees excluding part-time workers has decreased by 0.2 per cent (191,000 yen). Economic recovery is not reflected in the wages of irregular employees, thus widening the disparity. Among the irregular employees, the salary of males has increased by 0.7 per cent (222,800 yen) from the previous year, but on the contrary, it is sharply down 1.8 per cent (165,400 yen) for females. Even when the economy is recovering, women remain as irregular workers with their wages unchanged.

Consider the hourly wage of part-time workers, for instance: it is 940 yen (US$1=107 yen in January 2008) for females and 1,057 yen for males. Although the female part-time workers’ length of service is usually greater than that of males, their wage is lower. The hourly wage of female part-time workers is closely linked to the minimum wage. The minimum wages differ by prefecture. Even the minimum wage in Tokyo, which is 739 yen in 2007, if worked full- time, yields an amount that is not sufficient to maintain the prescribed welfare standards. Female part-time workers are the working poor below the welfare level, which is necessary to maintain ‘minimum health and cultural standard of living’ specified in Article 25 of the Constitution. It sets out livelihood, housing and other criteria. For a single person in Tokyo in 2007, the welfare payment including livelihood and housing was 137,400 yen per month, which adds up to 1,648,800 yen per year. Although there is no official ‘poverty line’, an annual income of two million yen is generally regarded as the line.

There are 10.23 million (22.8 per cent) private company employees, whose annual income is less than two million yen; that is more than 10 million people in poverty, for the first time in 21 years. By gender, of those earning less than two million yen, males number 2.63 million (9.6 per cent of all males), and females 7.6 million (43.6 per cent of females); of those earning less than three million yen, males are 5.92 million (21.6 per cent), and females 11.49 million (66 per cent).

The average annual working income of single-mother households is 1.71 million yen, and even when the child-care allowances or welfare payment are added, it is 2.13 million yen. Among the single-mother households, 85 per cent of the mothers work, but regular employees make up 43 per cent, and temporary workers or part-time workers 44 per cent. The rate of unstable employment is high. Many single mothers have multiple jobs in order to support their children’s education.

There is a growing number of youth who stay overnight at ‘internet cafes’, the so-called ‘internet café refugees’. Because they do not have a stable job nor a stable income, they are unable to pay the rent for stable accommodation. The number of welfare recipients is increasing since 1994, and in 2006, it exceeded 1.5 million people (one million households). Japan is not an exception in having an emerging class of ‘working poor’, but the phenomenon is more acute among women than men. Japan 29

Current Situation of Trade Unions

Three National Centres Trade union density has been steadily decreasing in Japan. It was 25.2 per cent in 1990, and has been below 20 per cent since 2003. In 2006, it was down to 18.2 per cent (number of unions; 59,019, members: 10,041,000; and ratio of women to total membership: 28.2 per cent). Among them, part-time workers increased by 126,000 to 515,000, or 5.2 per cent of the total. But union membership among part-time workers is estimated to be low at 4.3 per cent. The number of labour disputes has decreased drastically from 284 (843,000 participants) in 1990, to 51 (7,000 participants) in 2004. There are three nationwide unions:

1. Rengo (Japan Trade Union Confederation) Unionized in November 1989. The national union with three trends (Sohyo, Domei, and Churitsuroren) was restructured and integrated. Membership: 6.55 million. It is affiliated with ITUC, the International Trade Union Confederation. Representatives are sent to ILO, and occupy a slot in councils consisting of three parties: public interests, business circles and workers.

2. Zenroren (National Confederation of Trade Unions) Unionized in November 1989. When Rengo was restructured, Zenroren was founded as a competitor. Membership: 930,000.

3. Zenrokyo (National Trade Union Council) Unionized in December 1989. Membership: 150,000.

Newly Formed Unions The unions mentioned above are all mainly company-based, but there are other types of unions which individuals can join regardless of business categories: community unions which organize workers or residents in specific areas, women-centred unions, dispatched workers’ unions, managers’ unions, and youth unions. Recently, a new union has been founded for irregular workers, whose aim is mainly to fight against poverty. A number of community unions are affiliated to Rengo, but others are independent or minority groups. These unions handle social issues by organizing foreigners, ‘freeters’, and others, working in coalition in order to strengthen their impact.

Major Labour Legislation and Public Consultation

Starting Point of Labour Protection Legislation It has been 140 years since Japan opened up and established the Meiji government in 1868. In 1872 (Year Meiji 5), the first governmental silk-manufacturing plant was built, and ever since, the textile industry has sustained Japan’s industrial development and capital accumulation. Most of the workers in the textile industry were young single women from poor rural areas. They suffered from extreme low wages, long working hours and severe conditions such as being chained to the dormitory. In order to protect women workers and juveniles (under 15) from poor working conditions, the first ‘Factory Law’ was formulated in 1911. Working hours were limited to 12 hours a day for the first time. It also prohibited late-night work from 10 o’clock to 4 o’clock in the morning. However, factory owners bitterly opposed the idea, and implementation was delayed by five years. In addition, exceptions were recognized for ‘special cases’, which made the law virtually ineffective.

In 1946, a year after the end of World War II, a new constitution was adopted, and based on 30 Asian Labour Law Review 2008 its principles, the Labour Standards Law and the Trade Union Law were passed. Thus, the root of current labour legislation lies in the constitution. The bases are: the right to pursue happiness in Article 13, equality under the law in Article 14, the right to exist in Article 25, minimum labour standards in Article 27, and the right to organize in Article 28. The Labour Standards Law played an important role in improving working conditions, and trade union membership even reached 55 per cent in the late 1950s because of the law.

See Table 2 below for ILO Fundamental Conventions and Japan’s ratification of them.

Table 2. ILO Fundamental Conventions (Eight Core Labour Standards) - Japan's ratification. (Ratified ○ ; Not ratified X) (Year of Ratification)

(a) Freedom of Association and the Effective Recognition of the Right to Collective Bargaining Year No.87 Freedom of Association and Protection of the Right to Organize ○ 1965 No.98 Right to Organize and Collective Bargaining ○ 1953 (b) Elimination of All Forms of Forced or Compulsory Labour No.29 Forced Labour ○ 1932 No.105 Elimination of All Forms of Forced or Compulsory Labour X (c) Effective Abolition of Child Labour No.138 Minimum Age ○ 2000 No.182 Worst Forms of Child Labour ○ 2001 (d) Elimination of Discrimination in Respect of Employment and Occupation No.100 Equal Remuneration for Work of Equal Value ○ 1967 No.111 Discrimination in Employment and Occupation X

Major Labour Legislation

The Labour Standards Law (1947) Wages, working hours, days off, holidays and other working conditions were prescribed. Working hours were set at eight hours per day, 40 hours per week.

The Trade Union Law (1949) The legislation protects workers’ right to organize, bargain with employers and take collective action. When workers join trade unions, or organize one, business enterprises are not allowed to dismiss them, discriminate against them in terms of wages or bonus, or transfer them under adverse conditions; these are unfair labour practices. When an unfair labour practice is found, the case can be brought to the local labour relations commission, and an order can be sought.

The Equal Employment Opportunity Law (EEOL, adopted 1985, revised 1997 and 2006) The law was adopted in 1985 as a corollary to the ratification of the International Convention on the Elimination of All Forms of Discrimination against Women.

Initially, the law was mild, only persuading ‘business enterprises to make an effort not to discriminate against women’ in all stages of employment from recruitment to retirement. The 1997 amendment pushed it further to ‘prohibit discrimination on the basis of gender’, and the 2006 amendment reinforced the regulations to prohibit adverse treatment for pregnancy or Japan 31 childbirth or taking maternity leave. It also holds business owners responsible for taking measures to prevent sexual harassment and to implement positive actions.

The most controversial point of the 2006 amendment was the introduction of the prohibition of indirect discrimination. Indirect discrimination indicates those rules or practices, which are gender-neutral on the surface, but have an adverse effect on members of one gender. The prohibition of indirect discrimination followed recommendations from CEDAW, the committee overseeing the implementation of the international convention, as well as from ILO, and actions by women. However, precise rules were to be set by orders from the Ministry of Health, Labour and Welfare. The prohibition was then restricted to the following three practices: • Specifying employees’ height/weight or physical capacity as requirements for recruitment • Requiring relocation involving the change of residence when recruiting employees for the management track • Requiring relocation when promoting employees

It is difficult for women with families to be relocated, and if they are required to do so, it would be disadvantageous to them. Such requirements were thus specified as indirect discrimination. However, women fiercely opposed this non-exhaustive list, since the limit on three points was likely lead to new forms of indirect discrimination. As a result, a supplementary resolution of the Lower House appended a note, stating that there may be other forms of indirect discrimination, that such discrimination may be subject to judicial ruling, and that for these reasons provisions would be added or revised.

The Part-Time Work Law (1993, revised 2007) The revised Part-Time Work Law of 2007 prohibited discrimination against part-time workers in relation to regular workers, but it was limited to those whose employment term was open-ended. For the overwhelming majority of other part-time workers, appropriate working conditions were to be provided. Part-time workers are defined as ‘workers whose weekly working hours are shorter than regular workers at the same working establishment’. The Labour Standards Law, the Minimum Wage Law, the Industrial Safety and Health Law, and the EEOL apply equally to part-time workers but the Child Care and Family Care Leave Law, employment insurance, health insurance, and employees’ pension apply under certain conditions based on working hours and annual income.

The Temporary Work Law (1986, revised 1999 and 2003) The legislation admitted indirect employment as an exception to the Employment Security Law which prohibited ‘labourer-supply businesses’. Temporary work indicates that the worker is dispatched from an agency (company) with which the employment contract is signed, to the client (company) which has signed the contract of supply of temporary labour with the agency and that the worker would follow the directions of the client. The 2003 amendment expanded the applicable business domain to the manufacturing industry. The limited term of dispatch has been removed for 26 specialized businesses, and it has been set at three years for general and manufacturing industries. If the client company wishes to keep the worker beyond three years, direct employment would be required.

The Child and Family Care Leave Law (The Child Care Leave Law of 1991, revised 1995 to The Child Care and Family Care Leave Law, revised 1999 and 2004) Child care leave can be obtained, in principle, by both male and female workers who care for children under one year old (in some cases one year and a half years old). Before the law was 32 Asian Labour Law Review 2008 revised in 2004, it was not applied to the workers on daily contracts or fixed term contracts. Although the revision covered those on fixed term contracts, the condition remains severe; continued employment has to have practically lasted three years or longer. During the leave, 50 per cent of the wage is paid from the employment insurance.

Family care leave can be obtained by both male and female workers who have family members in need of nursing care. Family members are defined as spouse, parents, children and parents-in-law. The leave covers up to 93 days per said family member, and 50 per cent of the wage is paid from the employment insurance. As for workers on fixed term contracts, the leave can be obtained under certain conditions, such as continued employment of one year or longer.

Public Consultation Concerning Labour Issues, and Solutions to Individual Labour Disputes 1. Prefectural Labour Bureau (located in each prefecture) Deals with consultation, advice, supervision, mediation and admonition or arbitration on labour issues in general.

2. Labour Standards Inspection Office Carries out direction and supervision based on the Labour Standards Law and the Industrial Safety and Health Law, processes applications for occupational accidents and deals with licensing procedures.

3. Public Employment Security Office (commonly called ‘Hello Work’) Deals with employment placement, counselling, mediation of admission to Polytechnic schools and insurance.

4. Prefectural Labour Department-Equal Employment Opportunity Office Deals with consultation, advice and arbitration on issues relating to the Equal Employment Opportunity Law, Child and Family Care Leave Law and Part-time Work Law.

5. Tokyo Metropolitan Labour Consultation Centre Provides information and deals with consultation/mediation on labour issues in general.

6. Industrial Trial System (2006—established in response to an increase of individual labour disputes)

There had been no court specialized in resolving labour disputes, and it had become extraordinarily time- and money-consuming to file suit in general courts. Under the new system, when a worker files the case, three trials are held by the industrial trial committee consisting of three parties: the trial judge, the judge from the worker’s side, and the judge from the employer’ s side. When there is a potential for resolution by negotiation, the committee arbitrates; if the worker and the employer both agree to the solution proposed by the Industrial Trial Committee, the case is settled, but otherwise, the case proceeds to the general court.

2. Implications of the Revisions to Labour Laws

In the mid-1980s, about the time when the Japanese National Railway was privatized, trade unions were restructured and integrated, and there was a major change in the current of labour movements. Since then, new labour laws have been adopted or revised, but the main message has been deregulation. In retrospect, it is as though the original function of labour legislation has been changed. Japan 33

Box 2. The Judicial Struggle of Temporary Public Employees

Public employees are subject to National Public Service Law and Local Public Service Law, which are distinct from laws applied to private employees. Working conditions of public employees are determined not by labour-management negotiations but by the laws and by-laws of the national and local governments.

Increasing non-standard employment is not limited to the private sector alone. Among the public sector, too, the number has been on the rise not only due to privatization and sub-contracting of national and local administration and public organizations but also by the surge of temporary public service workers employed on fixed term contracts. Under the pretext of administrative reform, the government has reduced the number of public employees, while the shortage of people to carry out the necessary administrative services has been compensated by non-standard workers such as temporary and part-time employees. They are mostly employed in libraries, women’s centres, hospitals, schools and welfare-related institutions such as daycare centers. The number has been reported to amount to 600,000 persons throughout the country and the majority of them are women. Being female, their salaries have been kept low with no provisions of pay raise, bonus and retirement benefit. The annual income of a temporary public employee is one third of an ordinary public employee while her working hours stretches over the three-fourth of the latter. Most of the temporary public employees are employed with contracts of less than one year term, not necessarily for temporary work but rather for regular work through repeated renewal of their contract. It is not unusual that they face sudden dismissals with the excuse of term expiry.

Despite many judicial fights so far made regarding dismissal and discrimination of temporary and part-time public employees, it has been proven that it is extremely difficult to win cases under the complex public service laws. However, in recent years, two cases which were fought over unjust dismissal won epochal victories. Also a few trade unions of regular full-time public workers have begun to work on this issue. These are encouraging signs of hope for the future.

Deregulation of Labour Standards Law

Basically an employment contract should be without a fixed term, and a contract lasting one year or longer was not admitted. This was beneficial for the worker’s employment stability. When the worker wished to continue the contract, the employment would last until the retirement age unless there were overwhelming circumstances for lay-off. In the case of irregular employment, it was common to see consecutive renewal of contracts lasting shorter than one year each time, but this made it difficult for the business enterprises to refuse renewal when the contract expired after several times of renewal. In response to strong pressure from business enterprises wanting to make employment terms more flexible, a new regulation was formulated in 2003, limiting labour contracts to up to three years, so that the employers could smoothly terminate the contract when the contract expired three years later. (Actually, the logic of this is often difficult to understand for workers themselves.) 34 Asian Labour Law Review 2008

Deregulation especially affected working hours. In 1987, weekly working hours were reduced from 48 hours to 44 hours (and to 40 hours from 1999). In later years, several revisions advanced deregulation, introducing an average working hour system, flexi system and discretionary work system.

Japan’s long working hours are globally well-known. Alongside the trend of increase in the number of irregular workers, overtime hours of regular workers have increased and long working hours have become the norm. The rate of taking paid leave has decreased since the 1990s. In addition, there is a large amount of overtime without extra pay. The long working hours trigger death in some cases (‘karoshi’), and it is also the key factor behind consigning the burden of housework and child-rearing to women.

The principle of the eight-hour working day has fallen apart, and a new ‘white-collar exemption’ (a system which makes the white-collar worker responsible for managing his/her working hours, so that paying for overtime is not needed) was proposed for introduction in 2007. However, it met with fierce public criticism as a measure aimed at ushering in ‘zero overtime pay’, and was not submitted to the Diet.

Equal Employment Opportunity Law (EEOL) and Employment Management Categories

The 1997 revision specified the prohibition of discrimination. At the same time, under the pretext that they contradicted gender equality rules, the clauses in the Labour Standards Law limiting women’s overwork hours/holiday and late night work were removed. As a consequence, it has become common for women workers to work long hours and late into the night.

On the other hand, the disparity of wages between men and women has not narrowed, The promotion of women to managerial positions has been slow, way behind the global equality level. The biggest obstacle is the issue of ‘employment management categories’. The EEOL prohibits discriminatory treatment between men and women within the same category of employment upon recruitment. In other words, if the category is different, even if the resulting treatment seems different by gender, it cannot be identified as discrimination on the grounds of gender. For this reason, many business enterprises have introduced ‘the career track-based personnel system’. Before that, the employment-by-gender management (placement, promotion and wage structure) was common. There were two different wage curves between men and women, of which men’s were much higher. Under the career track-based personnel system, males were placed in a ‘management track’ and females in a ‘general track’, in effect discriminating against women because the former ensures higher wage and promotion to male workers and the latter never gives women such opportunities. This is a typical method of indirect discrimination. Many women have filed suit claiming discriminatory treatment under this system, and although they have won court decisions or settlements after years of struggle, there have been no cases won based on the interpretation of the EEOL.

Similarly, in the case of irregular workers such as part-time workers, since women are the majority and there are no comparative male workers within the same category of employment, it cannot be identified as discrimination on the grounds of gender even though female part- time workers get lower wages. The EEOL fails to ensure affirmative action. Only a small number of women have taken up the management track, and most women have been brushed aside, widening the disparity with men. Japan 35

Deregulation of Temporary Work Law

The ‘dispatch’ of workers by agencies tends to make working conditions worse and employment security unstable, since the employer of the worker is different from the client company to which the worker is dispatched. Therefore, the dispatch was initially limited to 26 job categories (in the ‘positive list’) which would require specialized knowledge, techniques, and experience. After several rounds of deregulation, allowable types of jobs were liberalized in principle, excluding port/transportation, construction, security, medical, and manufacturing process in 1999 (the ‘negative list’). The 2003 revision admitted the dispatch of workers to the manufacturing process, sharply increasing the number of temporary/dispatched workers.

The main characteristic of Japan’s temporary workers is that a majority of them are covered by an unstable registration system. The dispatch of workers takes place under two systems: the regular and the registration. Under the regular system, the worker is on a continuing contract with the dispatcher company, whereas under the registration system, the worker is merely on the register, to be employed when a position is available. About 80 per cent of temporary workers are registered workers; by gender, 62.3 per cent of males are regular, and 75.8 per cent of women are registered (2004).

An increasing number of young people work as ‘spot dispatch (one-day dispatch)’ workers, registering with an agency by sending an e-mail from their mobile phones. They are hired by the day, and end up in poor working conditions.

Revised Part-Time Work Law

In order to deal with the problem of increasing numbers of irregular workers, the Part- Time Work Law was revised (effective from 2008) in order to improve their working conditions. Discrimination against part-time workers, whose quality of work is similar to that of regular employees, was prohibited, but there is a disadvantageously high bar for the law to be applicable to women.

The discrimination is prohibited only against those part-time workers who fulfill all three of these requirements: 1) the same duties (work and responsibilities) as a regular employee, 2) the same personnel transfer (relocation) obligation as a regular employee, and 3) a non-fixed-term contract. Only a small percentage of part-time workers are expected to qualify. Therefore workers, trade unions and opposition parties strongly opposed the revised law protesting that it would not eliminate discrimination but would entrench it. Nevertheless, it was passed by the Diet.

The revised Equal Employment Opportunity Law (EEOL) stated that requiring workers to accept relocation when dividing them into the management and general tracks or evaluating workers’ promotion prospects, was illegal as a form of indirect discrimination. Nevertheless, the stipulation of the revised Part-Time Work Law includes the same relocation as a regular employee, one of the requirements for part-time workers to be treated similarly as regular employees.

Women who cannot accept relocation or work overtime due to family responsibilities are discriminated against. This would violate the intent of the ILO Convention Article 156 (on family responsibilities), which the Japanese government has ratified in 1995.

With every revision of laws such as the Equal Employment Opportunity Law, Child and Family Care Leave Law, Part-Time Work Law, and Temporary Work Law, the disparity among 36 Asian Labour Law Review 2008 women workers has widened depending on employment status, and as a result, women’s status has deteriorated.

See Table 3 for a summary of major labour legislations in Japan.

Table 3. Major Labour Laws in Japan

Constitution No.25 Right to Live, No.27 Right and Obligation to Work and Minimum Standard of Labour, No.28 Right to Organize 1946 Right to work Individual labour Labour Market Employment 1947 relations Law Security Law (Employment Employment Insurance 1974 Security Law) Law Employment Measure Law 1966 Temporary Work Law 1985 Human Resource 1969 Development Promotion Law Law on Stabilization of 1971 Employment of Older persons Law on Employment 1960 Promotion of Disabled Others Employment Labour Standards Law 1947 Relation Law Minimum Wages Law 1959 (Labour Workers' Accident 1947 Contract Law) Compensation Insurance Law Industrial Safety and Health Law 1972 Equal Employment Opportunity Law 1985 Part-Time Work Law 1993 Child Care and Family Care 1991 Leave Law Temporary Work Law 1985 Law on Promoting Resolution of Individual Labour Disputes 2001 Labour Contract Law 2007 Others Public Service National Public Service Law 1947 Law Local Public Service Law 1950 Others Right to Collective Industrial Trade Union Law 1949 Organize Labour Relations Relations Law Labour Relations Adjustment 1946 Law Japan 37

Equal Wage for Work of Equal Value

The argument used in court regarding gender discrimination in wages is founded in Article 4 (on equal wages for men and women) of the Labour Standards Law, since the EEOL excludes provisions on wages. Japan ratified the ILO Convention No. 100 (on equal remuneration for work of equal value) in 1967. But there are only a few cases where women workers win the case in court based on Article 4 of the Labour Standards Law because Article 4 does not fully reflect the principle of the Convention. So the principle of equal pay for work of equal value should be clearly stipulated in the legislation, and a gender-neutral job evaluation system should be drawn up as the means of executing the legislation. Only when this is done will wage discrimination against irregular workers be corrected. The ILO has pointed this out to the Japanese government from time to time.

3. Critical Analysis

Employment Strategies in Business Circles and Deregulation of Labour Laws

After the bubble economy burst, followed by the recession in the 1990s, a wave of corporate bankruptcies raised the unemployment rate. Business enterprises dismissed part-time workers and middle-aged regular employees in the name of restructuring, and regular employees had their status changed to irregular employment as companies sought to reduce costs. In 1995, the Japan Federation of Employers’ Association (then, Nikkeiren) announced ‘Japanese-style management in the new era’ as an employment strategy for the age of globalization. It split up employment statuses into three groups, in order to trim the total personnel costs, aiming to be internationally competitive. The three groups are: a core workforce with employment security, a fluid workforce with special skills and a flexible workforce of different occupations. Needless to say, most women were categorized in the third group. The employers’ associations argued that since the traditional ‘Japanese management’ of lifetime employment seniority-based wages was making the labour market stagnant, a change was needed to make jobs more flexible and to promote the employment situation as a whole. The government supported the idea, and this strategy was rapidly adopted.

The already mentioned deregulation of the Labour Standards Law, the new Temporary Work Law and successive deregulations were all crucial to implementing this strategy.

The deepening of economic globalization intensified the international competition of business enterprises. Businesses shifted the pressure of reducing production costs to the workers, and deregulation was further pursued in the name of self-responsibility under the neoliberal ideology, leading to widening disparity among workers. In 2006, the Council on Economic and Fiscal Policy, a consultative body of the Cabinet including intellectuals outside the Diet and the government, convened to discuss labour policy and a member of the Council said that ‘a labour big bang is necessary to review the related systems holistically and fundamentally’. After that, the government’s policy review institutions and the business lobby Keidanren announced their visions on the liberalization of the labour market, and on moving towards the ‘labour big bang’ (based on the idea that workers’ protection is ultimately unnecessary).

Gender Division of Labour and Gender Bias

Business Enterprises Regard ‘Pregnancy, Child Bearing, Child Rearing’ as Cost A big factor contributing to the ‘irregularization’ of women workers’ jobs is that business enterprises consider employing women as long-term regular employees a high risk, because of the 38 Asian Labour Law Review 2008 possibility of their getting married and pregnant. Since the EEOL came into effect, the system of obliging women to quit upon marriage and of retiring them early became illegal. But the practice and the atmosphere at the workplace remained unchanged and women are still obliged to quit work when they get married or get pregnant.

Employers are obliged by law to provide their workers with maternity leave, child-care leave and exemption from overtime to those with pre-school children. However, business enterprises which regard these obligations as a cost are increasingly displacing women workers from regular employment.

Moreover, Japanese society strongly favours gender-based division of labour, and family responsibilities weigh heavily on women.

Wage System of Business Enterprises and Gender Bias in Company-based Unions

Japan has traditionally followed a seniority-based wage system, a system with a subsistence wage that rises in accordance with the number of years in service. In this, the family allowance and housing allowance are provided to the male head of a household. A different wage system is becoming more prevalent now: wage is set based on the evaluation of not only the actual quality and quantity of work at a given time, but also of expected future contribution. Moreover, in recent years, business enterprises are increasingly shifting their payment systems to performance- based compensation, in order to restrict the wage growth that seniority-based payment entailed.

These wage systems are disadvantageous for women who need maternity protection and have family responsibilities.

Some past policies of trade unions are also to blame. Company-based unions had been the ones seeking head-of-household wage as subsistence wage, and opposed wages based on quality or quantity of work. The slogan of the trade unions during the economic growth period had been ‘enough pay to eat without wives having to work’. Until the mid-1990s, male-oriented unions consisting of regular full-time employees failed to address the wage demands of part-time workers.

Taxation and Pension Systems Based on Gender Division of Labour In the same year when the EEOL was coming into effect in 1986, special tax exemptions for spouses and a gender-biased pension system were newly established. The former applies to a salary taker (husband) who has a wife annually earning less than 1.03 million yen (tax-free limit), and entitles the salary taker to tax deduction (partially). The latter (gender-biased pension system) applies to a wife annually earning 1.3 million yen or less, and her husband is entitled to the social security system for employees. It is a system where the wife can get enrolled in the health insurance, and she can receive a basic pension in the future as well, without paying pension premiums herself.

A conservative attitude of seeing the household as being the base of the nation is still prevalent. This, combined with the business enterprises’ policy of detesting additional costs has resulted in contradictory policies; the Equal Employment Opportunity Law for working women to promote women in the workforce on the one hand, and preferential policies for housewives to keep women playing supplementary roles on the other. This has allowed business enterprises to justify paying low wages to housewife-workers, who have been made to think they were working within the limits of preferential provisions. The system seeks to ensure that a married woman remains a housewife or works as a part-time worker with low wages. Japan 39

Government Measures on Irregularization Issues and Their Problems

Gender-Biased Regularization Plan for ‘Freeters’ A plan for the regularization of ‘freeters’ was written into the 2008 budgetary request. This is a proposal to regularize the employment of 350,000 senior ‘freeters’ (part-time workers or arbeiters aged 25 to 34); it entails assistance to business enterprises and practical training.

The Ministry of Health, Labour and Welfare defines the ‘freeters’ as those aged 15 to 34, male graduates, and female graduates who are single. Excluding married women from the definition of ‘freeters’ and from the employment measures reflects gender bias and the assumption that married women are supported by their husbands.

According to this definition, there were 2.17 million ‘freeters’ in 2003, and although the number has slightly decreased since then, senior ‘freeters’ have become a significant phenomenon—i.e. those who had difficulties being hired as regular employees during the recession period (as opposed to ‘freeters’ who are fresh graduates). Therefore, the regularization of these senior ‘freeters’ is seen as a disparity correction policy. The part-time workers and arbeiters in the corresponding age range number up to 430,000 males and 1.38 million females. Although women are dominant, married women are excluded from the regularization measures.

On the other hand, a job assistance programme for single mothers started in 2003, but it has had hardly any impact. This programme ostensibly aims to help self-reliance among single- mother households, but in reality it aims to cut down the child-rearing allowance provided to single-mother households. The policy demands single mothers to work more but they are already are working, by reducing the time spent sleeping or looking after their children, with consequent effect on their health. However, this drastic measure has been suspended for some time, following persistent protests by single mothers.

Dubious ‘Work-Life Balance’ The government consulted with Keidanren and Rengo drew up a ‘Work-Life Balance (harmonization of work and life) charter’ in 2007 in order to eliminate overwork and stem the decline in the nation’s birth rate. The action guidelines set numerical targets as follows: halve the percentage of those working 60 hours per week or longer in the next 10 years (currently 10.8 per cent), raise the rate of male workers obtaining child-care leave to 10 per cent in the next 10 years (0.5 per cent), raise the rate of obtaining paid holidays to 60 per cent in the next 5 years (46.6 per cent), and double the number of home-based tele-workers (10 per cent). However, it is doubtful whether the measures are effective, as concrete budget and legal regulations are lacking.

‘Work-life balance’ stands on the premise that both men and women share the responsibilities at work and home and that a living wage as well as reasonable working hours are ensured. Even if shorter working hours or temporary/intermittent working styles are chosen, ‘work-life balance’ will not be realized in the absence of a living wage. Furthermore, a system is lacking whereby when people temporarily quit work or switch to shorter working hours due to child-care responsibilities, and where workers are evaluated on their experiences and capabilities, receiving occupational training and help in improving their career prospects.

Summary: Current Moves Around Labour Legislation

The 2007 the Japanese Diet was reported to have been proceeding towards a deregulation of labour legislation. However, there was a fierce opposition from labour organizations, backed 40 Asian Labour Law Review 2008 by media and public opinion. Two issues had been awaiting submission for parliamentary consideration: ‘white-collar exemption’ which would have sought to deny overtime pay for some salaried employees, and ‘financial settlement upon dismissal’ which would have promoted dismissals by making payouts.

1) Moreover, when discussion on a ‘revised Part-Time Work Law’ started in March 2007, women workers’ NGOs and trade unions energetically lobbied Diet members, sat in on meetings and Diet proceedings, clarifying the problems that would be created. This effort led to a landslide victory for the Democratic Party in the Upper House election in July, reversing the equations between the governing and opposition parties, and the prime minister suddenly stepped down in October.

2) A discussion on the establishment of ‘the Labour Contract Law’ was held during that period. It stipulates basic rules to prevent conflicts over employment. Due to the change of industrial structure and the circumstances of management and employment, personnel management has become individualized and diversified. The problems relating to working conditions include that termination of employment has become individualized and the number of terminations has increased. But there is no systematic rule to resolve such labour disputes related to labour contracts.

The Labour Contract Law specifies the principle that the working conditions should be decided by negotiation between worker and employer on equal basis. It stipulates that the abuse of the rights of dismissal (by employers) is invalid and termination of the contract with fixed term contract workers within the period of time is also prohibited unless the inevitable circumstances exist.

However, workers have strongly opposed the new law especially about the stipulation of ‘shop/working regulations’, in which the concrete working conditions including work hours, wages, retirement, etc. in each enterprise are described according to the rule of Labour Standards Law. The Labour Contract Law says that the working conditions laid out in the ‘shop regulations’ would become the content of the ‘labour contract’, and when changing the shop regulations, hearings of workers’ majority representatives would be held, followed by the dissemination of the changes to the workers, and if the changes are rational, they would be the contents of the contracts, again. It means that the contents of the labour contract are easily changed by the employers if the conditions above are met. In small and medium- sized enterprises, workers are already suffering from the unilaterally imposed disadvantageous changes in their working conditions, and this situation is now moving towards being legally acceptable. Shop regulations are prepared by the employer, and submitted to the Labour Standards Inspection Office, after hearings (without need for approval) by representatives of the majority of workers (including trade unions).

For irregular workers, it is almost impossible to have their opinions taken into account in the process of making changes to the shop regulations. Similarly, the minority trade unions in the enterprises and small unions such as community unions and women’s unions to which members of the unions individually joined from different enterprises, have no power to become representatives of the workers at their workplaces. This would cause the existence of these trade unions to be denied.

3) Another topic discussed in the Diet was the revision of the ‘Minimum Wage Law’. As irregular employment expanded, increasing numbers of workers are earning just about the Japan 41

minimum wage. Therefore the minimum wage has become more important than ever. It has become a social issue that the minimum wage is below the welfare standard (i.e. the standard of income below which people can collect welfare payments). In 2007 the average of minimum hourly wage was 687 yen. Workers demanded that the wage rise to 1,000 yen, and the trade union Zenroren insisted on adopting uniform minimum wages across the country, but both demands were rejected. The revised bill incorporated the need to ensure consistency with the welfare standard regulated by the Livelihood Protection Law, but on the other hand, there is a debate that a revision of the welfare standard is necessary as it is too high. It seems that those who are working earn less money than those who are not and who still get money from the government as social welfare regardless of the reasons; thus the employers say that the welfare standard should be reduced.

4) The two bills were passed just before the Diet session closed. The Rengo trade union agreed to the bill, but Zenroren, Zenrokyo and other unions and organizations organizing irregular workers (women and youths) who are the most vulnerable, kept up their protest. One of the core groups was the ‘Action Center for Working Women (ACW2)’, which was established gathering women’s unions and women workers’ groups across the country in January 2007.

5) Alongside the Diet proceedings, activities demanding the revision of the Temporary Work Law have been carried out. A non-profit organization (NPO) called NPO Dispatched Labour Network submitted a demand for fundamental law revision, strengthening the joint action with Rengo and Zenroren, and lobbied Diet members and the media. As a result, the momentum is mounting even within the ruling party that partial revision is necessary, such as to stop spot dispatch. The labour organizations are on an offensive, aiming at further fundamental revisions and the revised bill is to be submitted to the (next) Diet session.

6) Irregularization, or deepening of unstable employment, is directly connected to impoverishment. In order to solve this issue, ‘equal treatment’ needs to be ensured as well as stabilization of employment by tightening regulations on national policies and labour legislation. A mechanism must be created to disallow discrimination by different working styles.

‘Equality Action 21’ has strongly demanded this through its nationwide network. In order to change irregularization of women and impoverishment policies, organizing women workers and their empowerment are crucial. Rengo and Zenroren have established the Irregular Workers’ Center. As well as strengthening the activities of gender-sensitive trade unions, the NGOs working on labour issues play a big role in studying policy proposals, and lobbying for legislation, together with the women workers.

Endnotes

1. Ministry of Public Management, Home Affairs, Posts and Telecommunications (2006)Labour Force Survey. 2. Ibid. 3. Annual Report on Temporary Work Business, 2005; Survey on the current situations of dispatched workers, 2004. The former is regularly conducted but has no information by sex; and the latter includes breakdown by sex but is not regularly conducted and 2004 figures are the latest. 42 Asian Labour Law Review 2008

4. Ministry of Health, Labour and Welfare, (2006) Basic Statistical Survey on Wage Structure, 2006. 5. These treatments were depicted in a book entitled Joko Aishi, a tragic history of factory girls,’ written in the 1930s by a male spinning factory worker. Hosoi, W. (1925) Joko Aishi, Tokyo: Kaizosha. Korea 43

Korea

Aehwa Kim

Introduction: Neoliberal Structural Adjustment and Women

xpanding globally since the 1980s, neoliberalism has been characterized by deregulation E of the economy, privatization of state companies and public enterprises, liberalization of external trade, downsizing of the social welfare system and the imposition of a flexible labour market. Neoliberal structural adjustment policies have exacerbated social crises of impoverishment, massive unemployment, and extreme inequity in the distribution of income and other resources. The living conditions of the public have grown worse as a result.

In Korea, the transition to a neoliberal accumulation model started to appear from the late 1980s and became entrenched in 1990s. Most of all there were external pressures from monopolistic capitals in developed countries pursuing globalization of capital movement and financial capitalism in response to worsening profitability in the 1970s. As a result, the pressure to open and liberalize domestic markets in developing countries increased. Various financial institutions including the International Monetary Fund (IMF), the World Bank, and the Organization for Economic Cooperation and Development (OECD) played important roles in promoting neoliberal structural adjustment.

Internal conditions in Korea also moved in the same direction. Chaebols (big Korean conglomerates) tried to avoid governmental intervention and the political burdens of state financial support, believing they gained enough power of reproduction without the state’s direct protection. Accordingly, they began to advocate market-oriented economic policies, relaxation of state regulation and a private, commercial-based economy. Chaebols have tried to get rid of existing regulations, or to stop the introduction even of regulations needed to relieve newly emerging dilemmas of capitalism in the Korean economy, invoking the deregulation trend in Western developed capitalist countries, which had emerged in a very different historical context. The chaebols’ logic is that national competitive power should be strengthened to deal with increasing international competition, and that chaebols are the best suited to achieve this. They also claim that the state should remove any regulations that interfere with corporate activities, and suppress wages and costs through labour and capital market flexibility.

The policy of deregulaion and liberalization of capital and finance continuously progressed through the Chun Doo-hwan (1980 to 1988) and Noh Tae-woo (1998 to 1992) governments, with relaxation of foreign investment regulations in the 1980s. At the beginning of 1990s, the so-called ‘globalization’ policy (segyehwa) of the Kim Young-sam government further facilitated the trend. The Kim government’s ‘new economy policy’ was indeed a neoliberal policy, pursuing as it did privatization, liberalization and a profit-based evaluation system in the public sector, deregulation of the private sector, liberalization of employment and lay-offs, labour market flexibility, wage flexibility, aggressive acceptance of globalization, and so on. The neoliberal line has been thoroughly regularized in Korea since the IMF’s intervention following the 1997 Asian financial crisis. 44 Asian Labour Law Review 2008

In Korean society, where household incomes are not secured by the government and the social welfare system is severely deficient, individual families – and especially women – have been charged with the responsibility of social reproduction, i.e. labour reproduction for society, which takes place in the family. Women have been actively used as shock-absorbers in the process of neoliberal structural adjustment. Women workers were the first to be laid-off during the IMF foreign currency crisis in South Korea, providing the basis upon which neoliberal structural adjustment in South Korea emerged. This demonstrates the dominant ideology that the livelihood of a working family can be sustained by a male bread-winner’s so-called ‘family income’. However, the logic of ‘family income’ proved to be false, and the laid-off women workers returned to the labour market as low-wage, irregular and contract-based workers. The destabilization of the labour market and the intensification of poverty necessitated a majority of women to participate in the labour market to sustain the livelihood of their families.

In the 1980s, the trade union movement in South Korea was successful in demanding family income and benefits on the basis of male workers’ organized forces and workplace negotiation skills. Even then, issues of women workers were not treated as central topics of trade union struggles. As a result, income inequality between the two genders remained. This perception of women’s work as temporary and peripheral became the fundamental reason for the trade union movement’s failure to stop capital from exploiting women workers’ labour. The labour movement in the late 1980s failed to actively organize against the destabilization of labour that women workers had to face. In other words, the South Korean labour movement committed a critical mistake in not realizing that the destabilization of labour, as well as neoliberal globalization, was materializing first and foremost with the sacrifice of women workers.

1. Contemporary Snapshot

The Irregularization of Korea’s Labour Force

The term ‘irregular worker’ that Koreans often use does not have a clear definition and leaves room for misinterpretation. However, we can conceptualize irregular labour in contrast to ‘regular labour’. Regular labour generally implies full-time, continuous employment, whereas irregular labour is characterized by irregular and short work hours, non-customary work requirements, and unstable legal and economic status. In Korea, the concept of irregular labour includes fixed-term (contract) workers, part-time workers, dispatched workers and disguised self-employed workers. Table 1 gives basic statistics about general and irregular workers in Korea.

Table 1. Characteristics of Contemporary Korean Workers

Factors Nos./% involved Data as of Economically active 24 million 2007 population (15 million) (Labour force) Total employment rate 60.4 % November 2007 Female employment rate 52.5% 2006 Total unemployment rate 3.0% November 2007 Youth unemployment rate 7.1% November 2007 (age 15-29) Unionization rate 10.3% 2006 (end of ) Korea 45

Minimum wage/hour KRW3,770 January to December 2008 Irregular workers’ wage 48.2% June 2007 as a proportion of regular workers’ Workers’ average no. 41.3 hours June 2007 working hours Irregular workers’ average 46.9 hours June 2007 working hours Source: Korea National Statistical Office (www.kosis.kr)

Indeed, the number of irregular workers rapidly increased from the mid-1990s after the Kim Youngsam government adopted ‘labour market flexibility’ as the prime labour policy. However, it was after the IMF-directed structural adjustment in 1997 to 1998 (at the time of the Asian currency crisis) that irregular labour became a serious social problem.

The crisis of the IMF relief loan brought waves of changes into Korean society. Its impact reached every corner of society including economic, legal and cultural sectors. Above all, changes in the labour market fundamentally transformed the nation’s social structure. Changes in the labour market are directly connected to people’s livelihoods by affecting family incomes (i.e. economic power). In a capitalist society, changes in the basic structure of money earning, in turn mean changes in the earner’s social status.

The number of irregular jobs increased by 900,000 in five years from 7.72 million in 2002 to 8.61 million in 2007.1 While regular workers’ average wage increased by KRW570,000 (US$1=KRW1,000)2 – from KRW1.82 million to KRW2.39 million – irregular workers’ average wage increased only by KRW240,000 (from KRW0.96 million to KRW1.2 million), resulting in such a large wage gap that compared with what regular workers earned, irregular workers earned half (i.e. the ratio of their earnings was 100:50).3 Worse still, the number of workers who earned less than the statutory minimum wage reached 1.89 million; and of these, 1.79 million were irregular workers.4 In other words, one out of five irregular workers earns less than the minimum wage.

Figure 1. Number of Regular and Irregular Workers in Korea, 2001-2006

Source: National Statistics Office 46 Asian Labour Law Review 2008

Exacerbating Social Polarization

One of the most negative features of social polarization in Korea is the increase in numbers of the working poor. With an imperfect and unstable welfare system, job insecurity directly results in income insecurity. It happens especially in the case of irregular workers, as their income is about half that of regular workers. As a result, they gradually add to a new type of poor who cannot escape poverty even though they keep working for a living. Today, discrimination against irregular workers – i.e. fewer rights for irregular workers who do the same work as regular workers – such as working conditions and job insecurity, are one of the main causes of polarization, currently the most serious social issue in Korea.

While the traditional concept of poverty means the material deprivation caused by lack of economic activities, working poor means the situation where many people barely escape living in poor conditions despite having employment. It shows that it is increasingly difficult for the second class (i.e. the new poor class earning only a little more than the minimum cost of living) to escape poverty by simply getting a job. It is assumed that the working poor make up about 50 per cent of those in absolute poverty (those who earn less than the minimum cost of living of KRW435,921 for a one-person household per month, and KRW1,205,535 for a four-person household per month. They move in a cycle in and out of poverty, rather than always being in poverty. Also based on income, they represent 13 to 14 per cent of the total working households.

In contrast, the wealth of the rich in this period increased rapidly. The phenomenon of the rich becoming richer and the poor becoming poorer deepened. US-based brokerage firm Merrill Lynch reported recently that the number of rich with financial assets greater than US$1 million has increased more rapidly in Korea than in any other country in the world. The report indicated that from 2004 to 2005, people with financial assets greater than US$1 million increased by 21.3 per cent in Korea, whereas the average rate of increase in the numbers of those people in Asian countries overall was 7.3 per cent. 5

Social polarization threatens the health and safety of families. A study has shown that the level of lead in the blood of children from low-income families is higher than in other children. This results from the dietary habit of low-income household favouring cheap food over relatively more expensive healthy food. Also suicide rates in Korea have constantly increased since 2000, reaching the highest level among OECD member countries.

In response to polarization, the Korean government has suggested increasing economic growth, arguing that the best social welfare is new job creation through growth. With the exception of one year, 1998, right after the IMF crisis, Korean economic growth has increased. And with the exception of two years (1998 and 2003), in every year more jobs were created. The average annual rate of Korean economic growth since 2000 through 2007 has been 5.2 per cent, making it only second to Ireland among the 30 members of the OECD. It is respectively double and triple the 1.7 per cent growth of Japan and 2.6 per cent growth of the US.6 However, an economic growth rate increase by itself cannot solve the problems of irregular labour. While the working population has increased by 1.9 per cent every year since 2000 until 2007, most new jobs have been low-income and irregular, and polarization of the labour market has been getting worse and worse.7

Impoverishment of Women

Meanwhile, it should be noted that women have become subjects of poverty in social Korea 47 polarization. As the following chart shows, the proportion of women in medium- and high-wage groups is significantly lower than men.

Figure 2. Wage Distribution by Gender

Source: See Datanews website: http://w21.datanews.co.kr

The following describe some features of female labour in Korea:8

• In 2006, the number of economically active women reached 10 million (54.7 per cent) but was still lower than the OECD average rate of 60.8 per cent. Of these economically active women, 6.444 million (67.7 per cent) were wage-earning women workers who were mainly employed in unskilled labour and unskilled service-related jobs. • Of the 1.44 million workers at the minimum wage level, 65 per cent are women, and about 70 per cent of women workers are employed in irregular jobs. Irregular workers and workers employed in businesses with five or fewer employees make up 77.3 per cent. These figures indicate that it is women workers who are concentrated in poor working conditions. • The wage of 42 per cent of women wage earners and 58 per cent of irregular workers is less than two-thirds of that of middle- to high-wage earners. In 2006, 14.4 per cent of the total population (both men and women) of 15 years of age or higher were at the poverty level, and 60 per cent of the same population were working poor. Some 51 per cent of the working poor population is identified as currently working: their type of work includes temporary, day labouring or self-employed business. • In 2007, 19.9 per cent of households were headed by women; of these, 35.7 per cent worked as temporary/day labourers, while 27 per cent were unemployed and suffered from absolute poverty. The rate of poverty in households headed by women is 34.5 per cent, which is three times greater than male-headed households, at 10.5 per cent. This gap has been widening since the IMF intervention. • Wage discrepancies exist between different types of employment, and also between men and women. Male, regular workers are the most highly paid. If we construct an index, with male workers at 100, then irregular workers’ wages are much lower, at 54. Regular women workers’ wages are at about 70 and irregular women workers at 42. Wage inequality is higher between types of employment than gender, but irregular women workers are doubly penalized. (If the wage for men is 100, the wage for women is 64; and if the wage for regular women workers is 100, the wage for irregular women workers is 52). 48 Asian Labour Law Review 2008

• Alternative plans are needed for the approximately 300,000 homecare providers, house- cleaners and other types of caregivers working in disadvantaged areas, earning less than the minimum wage and receiving no welfare. • Indirect discrimination against women continues in several different forms. One is repeated career discontinuity and loss of seniority: when women’s careers are stopped or interrupted with marriage or childbirth, previous work experience is not taken into account in new jobs after returning to the workforce. Another is changing the form of employment, from before and after career discontinuity, to part-time or other informal or irregular status. And another is work segregation based on gender, which is widening the gender wage gap. The market for women’s labour is continuing to produce an ‘M type’ work participation trend whereby women in their late 20s and early 30s leave the workforce for marriage, birth and child rearing. For example, in 2006, 67.3 per cent of women between the ages of 25 and 29 years of age were employed, as were a similar percentage of men. However, this figure dropped to 50 per cent for women aged 30 to 34 years, and then increased to 60 per cent for those of 40 to 44 years. Some 46 per cent of women claimed child-rearing to be the biggest obstacle to employment. • Women mostly work as unskilled labour and peripheral labour, and are largely hired indirectly. Discrimination in wage increases and promotion through job status divisions deepens and strengthens the inequity in the structure of the female labour market. • A media report suggests that one out of three of the large corporations secretly exercises a male quota system. As such, women experience invisible forms of discrimination that hinder employment, education, placement and promotion.

Low Birth Rate and Ageing Society 9

Korea’s total fertility rate, meaning the average number of times a woman gives birth in her lifetime, reached it lowest in 2005 at 1.08, and then slowly increased to 1.13 in 2006, and was expected to be 1.25 in 2007.

Significant changes are expected in future labour supply and demand with a rapidly ageing society. The portion of the population aged 65 or above rapidly increased from 5.9 per cent in 1995 to 9.1 per cent in 2005, and will probably reach 24.1 per cent in 2030, creating considerable difficulties and affecting the future labour supply. It is said that by 2012 a serious labour supply deficiency will emerge.

As gradually more and more older people begin to engage in economic activities in a rapidly ageing society, the quality of their working conditions becomes worse and worse. In other words, the proportion of temporary and daily-contracted forms of employment is continuously increasing. While the labour force participation rate of people aged 65 or above increased from 28.7 per cent in 2003 to 30.5 per cent in 2006, the percentage of older workers employed as temporary or daily-contracted labour reached 25.8 per cent in 2006, from 18.3 per cent in 1999. This means that one out of four older workers is an irregular worker in a temporary or daily- contracted form of employment.

The average wage of older workers is thus steadily decreasing. If the average monthly salary of all wage workers were indexed at 100, then by comparison the average monthly salary of workers aged 60 or above begins to decrease from 91.9 in 1999 to 78.2 in 2005. The change is especially great in older male workers. In 1996, their average wage was equivalent to 101.6 points – even higher than the average of all wage workers – but it decreased to 98.8 (lower than the average) in 1997 and to 83.5 in 2005. Korea 49

On the other hand, the low birth rate and an ageing society have resulted in a weakening of the way families function. Structural changes in families where women work outside the home have slowly undermined the tradition where families took care of their own members. Most significantly, household size has diminished while the make-up of families has varied. In 1990, the average family had 3.7 members, but this fell to 3.1 in 2000. The proportion of single-parent families increased to 15.5 per cent in 2000 from 9.6 per cent in 1990, while the proportion of female heads of households increased from 15.7 per cent to 18.5 per cent during the same period.

Because of the effects of the low birth rate and an ageing society, it is time for Korean society to seriously consider and prepare for the inevitable socialization of caring labour and accept a foreign immigrant workforce.

2. Major Changes in Labour Legislation

On 11 September 2006, the Korean Tripartite Commission – made up of government, labour and industry – reached an agreement on a labour-management relations advancement plan (known as the ‘Roadmap’). Legislation for the Roadmap had been discussed since September 2003.

The labour-management relations roadmap is composed of three acts: the Trade Union and Labour Relations Adjustment Act, the Act on the Promotion of Worker Participation and Cooperation, and the Labour Standards Act. The roadmap covers various issues (34 in total) which have enormous effects on labour in general, such as the ban on companies paying salaries to full-time trade union officials, the introduction of the multiple union system in companies, the abolition of the government’s right to intervene in labour disputes in essential public services, the ability to hire substitute workers in public services, rules related to unfair dismissal and so on.

Trade Union and Labour Relations Adjustment Act

1. The three-year grace period of multiple unions approval in a company curtails workers’ right to organize. It means that where paper unions or company-dominated unions are already registered, such as in Samsung, POSCO, Hyundai Heavy, etc., the establishment of democratic unions is suspended. 2. The compulsory arbitration which has long blocked workers’ right to strike in ‘essential public workplaces’ has been abolished. However if the government judges a strike as undermining the public interest, essential public service operation must be maintained in any case or by any trade union. Here, essential public service operation means core production operation, so in fact, if this operation is continued, any strike would be almost completely ineffective. 3. The use of substitute workers during strikes and expansion of the essential public workplace actually block reinstatement of workers who participate in strikes, and impede workers’ right to strike. 4. Regarding unfair dismissals, criminal penalty on employers who unfairly dismiss workers has been abolished, and it has been made possible to demand financial compensation for unfair dismissals. Thus removing the criminal penalty, which the managements had most feared, furthers unfair dismissals to occur. In other words, it ensures that the problem of dismissed workers can neatly be solved through the ‘monetary compensation system’. 5. When a dismissal is due to managerial reasons, the period of prior notice has been shortened so that dismissals can be done even more freely. 50 Asian Labour Law Review 2008

Thus it can be said that overall the Labour Roadmap (Labour Relations Adjustment Act) not only limits the right to organize and the right to strike, but also guarantees the management more right to dismiss workers.

Table 2. Main Contents of the Labour-Management Relations Roadmap Content Current situation Changes Multiple union system Enforcement from Suspension until at a company 1 January 2007. 31 December 2009. Salaries to full-time trade Enforcement from 1 January Suspension until union officials abolished 2007 (after enforcement, any 31 December 2009. employer who pays a salary to a full-time trade union official will be punished for unfair labour practice). Compulsory arbitration In the event of strikes in Abolition of compulsory essential public services, arbitration system from the Labour Relations 1 January 2008. Commission conducts compulsory arbitration (any industrial action is prohibited for 15 days after arbitration). Scope of essential Hospital, electricity, water, gas Addition of blood supply public services supply, railroad services, oil services and aviation refineries, Bank of Korea, etc. services. Hiring substitute workers Only replacement of workers Hiring substitute workers during strikes in essential in workshops is allowed is allowed (the number of public services substitute workers should be less than 50 per cent of workers on strike). Workers in essential public services should carry out certain essential managerial work even during industrial action. Remedy for unfair A laid-off worker should be If a laid-off worker wants, dismissal reinstated upon being given he or she can receive remedy order by the Labour financial compensation Relations Commission. instead of reinstatement. Notice of working Of the various working Working conditions conditions and cause of conditions, at least wages including wages, work hours, dismissal should be indicated in writing. days-off and vacations should be indicated in writing. No regulations on a written notice for cause of dismissal. A cause of dismissal should be issued in writing. Required period of An employer should inform Period of advance notice to labour-management the employee’s representative the union decreased to 50 consultation in case of 60 days in advance and consult days; advance notice to dismissal for managerial in good faith. workers decreased to 30 days. reasons. An employer should try to An employer should re-hire re-hire laid-off workers. laid-off workers first for the same job that they did before dismissal for a period of three years. Source: The Ministry of Labour, Roadmap for New Industrial Relations Korea 51

Irregular Labour Protection Act to Protect Fixed-term and Part-time Employees

The Roh Moohyun government started working on provisions for irregular labour issues in the public sector and legislation on irregular labour rights after it gained power in February 2003. Under the Roh government, the increase in irregular labour was even significant in the public sector.

In July 2007, the Irregular Labour Protection Act was brought into force by the Ministry of Labour. The main content of the Act is that if an employer hires fixed-term employees (the main form of irregular labour) for more than two years, then these fixed-term employees should automatically be granted non-fixed-term contracts. The employment period is thus limited to two years with conversion into a non-fixed-term contract beyond two years. However, a loophole in this is that dismissal is possible anytime in the first two years. Indeed, a number of fixed-term employees were refused renewal of their contracts (in fact dismissed) before July 2007 when the law was implemented, and an increasing number of corporations began outsourcing jobs.

In the case of E-land workers these exact fears were realized. E-land Corporation is one of Korea’s largest retail companies. Before notice of the Irregular Labour Protection Act, E-land had employed most of its cashier staff directly as fixed-term employees. But because the Act would, upon implementation, require converting fixed-term staff into regular (permanent) staff, the company terminated the contracts of its fixed-term staff, re-employing them as indirectly employed staffi.e. they were hired through employment agencies. In May 2007, as many as 350 workers from E-land affiliate New Core and 400 from its other affiliate Homever had their jobs terminated. The union of E-land workers conducted a high-profile struggle over 500 days and eventually reached a settlement in favour of the workers.

Also, since July 2007, the conversion of irregular staff into regular employees has been proceeding mainly in the financial sector. However, the transition has been criticized by labour advocates and civil society for creating a new working class of ‘semi-regular labour’ instead of, as intended, transforming irregular into regular labour. The legal status of these workers is as regular labour, but their wages remain at the level of irregular labour.

Labour Standards Act

The following are the ramifications for workers of the 2003 revision of the Labour Standards Act. a) The 40 hour working week extended As a result of the revision of the 2003 Labour Standard Act, the statutory working hours per week and per day are now 40 hours and eight hours respectively. The date of enforcement of this revision differs according to the scale of businesses or workplaces. In December 2007, in businesses or workplaces with between 20 and 50 full-time workers, the pre-2003 provisions of 44 hours per week and 8 hours per day were still applied. b) Monthly paid leave abolished Under past law, a worker was granted one day’s monthly paid leave if his or her attendance during the month had been 100 per cent. But this monthly paid leave was abolished in the 2003 amendment. c) Menstruation leave was converted from paid to unpaid leave. 52 Asian Labour Law Review 2008 d) Promoting the use of annual paid leave Article 61 in the Labour Standards Act states that if a worker does not use annual paid leave, the employer has no obligation to compensate the worker for the unused leave. e) Leave in lieu of overtime pay An employer may, instead of paying overtime compensation, grant leave in lieu to a worker to compensate for overtime, night and holiday work according to a written agreement with workers’ representatives.

Maternity Protection Act In November 2001, the new Maternity Protection Act took effect. It was revised from maternity protection related laws including the Equal Employment Act, Labour Standards Act, and Employment Insurance Act. The main contents are: a) 90 days of paid maternity leave given, instead of 60 days. b) Both men and women who are parents of children under 12 months can take paid childcare leave. In July 2008, three days paid paternity leave was also granted. Parents of newborns will also be able to take unpaid leave of up to one year, in turns, and during that period, each may receive KRW500,000 (US$500) a month from their employment insurance. c) Stronger punishments for sexual harassment were introduced, and regulations against indirect discrimination were clarified.

Response to Immigrant Workers The migrant workers’ movement in Korea is essentially that of irregular labour, because the working conditions of migrant workers imply irregularity. The presence of migrant workers began to increase in Korea in the 1980s. In the 1990s, there was a large scale influx of migrant labour to the ‘3D occupations’ (dirty, dangerous and demeaning). The legal system regarding migrant labour, however, defined migrant workers as perpetually irregular in Korean society by limiting them to short-term contractual work.

The development of the Korean legal system regarding migrant labour can largely be divided into two periods: the industrial training period; and the employment permit period. As the number of migrant workers increased, the Korean government in August 2004 introduced the employment permit system. It is true that the employment permit system provides a more advanced legal framework than the industrial training system. Since the employment permit system was institutionalized, migrant workers have been able to obtain the status of labourers, and therefore be legally eligible to demand their rights to minimum wage as well as the three primary rights of labour: the right to organize, the right to bargain collectively and the right to take collective action (i.e. to strike).

However, the employment permit system in reality does not differ greatly from the industrial training system that it superseded, and has often been criticized as one of modern-day slavery. The system limits a migrant worker’s stay to the short term (less than three years) and clearly denotes the irregular nature of migrant labour by requiring a migrant worker’s contract to be renewed on a yearly basis. His or her freedom to change workplaces is also restricted, impeding a person’ s right to work at the place of his or her choice. All these elements of the employment permit system point to its potential to become an evil law. As such, migrant workers in Korea, regardless of the system of industrial training or employment permit, are deprived of their rights to work freely and to exercise the three primary rights of labour. This is why issues of migrant workers are raised as part of the irregular workers’ movement. Korea 53

3. Trends in Labour-Management Relations

While the number of company-level unions and overall union density has decreased, industrial union density has increased. According to the Ministry of Labour, union density decreased by almost half, from 18.6 per cent in 1989 to 10.3 per cent in 2005.10 Instead, industrial-level negotiation has increased. About 90 per cent of all union workers belonged to company unions ten years ago, but now the proportion has decreased to 60 per cent. However, the number of industrial union workers has increased by the same amount. This is a reverse of the global trend, where company unions rather than industrial unions have been increasing.

Polarization proceeds in labour relations. Since 2000, labour disputes in large enterprises and public enterprises decreased, while labour disputes in small and medium enterprises, and among quasi-independent contractors and irregular contractors increased.

Rapidly changing conditions of the working class have caused a number of changes in the labour movement, such that the abolition of irregular labour became one of the main demands of a general strike by the Korean Confederation of Trade Unions (KCTU). Newly emerging issues, including establishing solidarity between irregular workers and regular workers, and concern about the prospect of the irregular labour movement, have become dominant topics in the labour movement.

While union density of the total Korean workforce is 12 per cent, that of irregular workers is a mere 2.8 per cent.11

KCTU began with 417,000 members in 1995; by 2007, it had 800,000 members. Of these members, 16 per cent in 2007 were female.12 The low organization rate among female workers is related to the low rate of organization of irregular workers. Women make up a large proportion of irregular workers, and most women workers are employed at small-scale workplaces or places that are informal and not very visible.

In comparison with the situation in 2000, the response of capital to workers’ organizing has been a lot more refined. Capitals often recognize the existence of a trade union, but restrict union activities and regularize not the job itself but the formal status of the worker. The cunning of capital has even resulted in the situation where a regularized worker, who has won his/her regular status thanks to the hard struggle of irregular workers, shows no more interest in the irregular labour movement. In addition, the core work process is again segmented, as irregular workers are placed in the core work process, causing segmentation and the gap between regular workers and irregular workers to deepen. This happens not only at the social level but even at the workplace, once the traditional area where workers would find their common interests and unite.

The main points of the Irregular Labour Protection Act implemented in 2007 are that irregular workers who have worked continuously at a workplace for more than two years should become regular workers; and there should be an end to discrimination between regular and irregular workers who are doing the same job at one workplace. However, as seen in the case of E-land, the fear of workers being fired and their jobs outsourced has in fact been realized. Also, in the area of ending discrimination, research shows that the wage discrepancy between regular and irregular workers has actually deepened since the implementation of the Act. The monthly wage gap between regular and irregular workers aged 20 to 30 years increased by KRW10,000 to KRW590,000 between 2006 and 2007.13 The Irregular Labour Protection Act has therefore not been effective in its stated aim. In order to prevent any indiscriminate increase in irregular 54 Asian Labour Law Review 2008 employment, the Act should be revised to include criteria establishing a ‘fair reason’ as a condition for using fixed-term workers. Moreover, even among regular workers discrimination is committed by way of creating different ranks, and to eliminate it the principle of equal pay for equal work must be strictly enforced. Also, in order to remove the salary gap between wage workers, a minimum wage level should be guaranteed that is at least half of the average wage of all workers. Insurance for unemployed workers should also be expanded. These are the minimum demands. The struggle for an Irregular Worker Protection Act that accommodates these minimum demands is underway at many workplaces.

Resources

Organizations

Korean Women Workers’ Association http://www.kwwnet.org/ This association focuses on organizing domestic workers and caregivers. Korean Women Workers’ Trade Union http://www.kwunion.or.kr This organization, as well as the KCTU, focuses on organizing irregular women workers. Korea Alliance of Progressive Movements http://blog.daum.net/jinbocorea This alliance is a civil society alliance of organizations concerned about irregular workers. Working Voice http://www.workingvoice.net/ This organization focuses on organizing informal and irregular workers. Korean Labour and Society Institute http://www.klsi.org/ This is an independent labour research institute which also gathers data about irregular workers. Korean Confederation of Trade Unions (KCTU) http://www.nodong.org/ Each industry and regional division of KCTU has its own campaigns on behalf of irregular workers.

Government Statistics National Statistical Office http://www.nso.go.kr/ Labour Department http://www.molab.go.kr/

News and Analysis Hangyoreh Newspaper www.hani.co.kr Kyunghyang News www.newsmakers.khan.co.kr

Labour Documents Irregular Labour (Korean Irregular Worker Centre monthly journal), 2006. Eun Soo-mi (2007) 2006 Survey of Irregular Workers-Management Relations. Korean Confederation of Trade Union documents Korea 55

ENDNOTES

1. Available from: http://drawadream.tistory.com/48. 2. KRW=Korean won, the South Korean currency. 3. Ibid. 4. Ibid. 5. Merrill Lynch and CapGemini World Wealth Report, 10th Anniversary, 1997-2006,cited in Shin Kwang- young (Professor in Joongang University), Hangyoreh Weekly Journal, December2005, Issue 641. 6. Kim Y. S. (2007) The Hankyoreh (www.hani.co.kr), December. 7. Ibid. 8. Korean Confederation of Trade Unions. (2008) KCTU Demands and Tasks in 2008. 9. The information in this section is mostly drawn from an article in Weekly Kyunghyang, 28 February2008. http://newsmaker.khan.co.kr. 10. Government of Korea, Labour Department and National Statistical Office. 11. KCTU documents. 12. KCTU documents. 13. The Hangyoreh, 18 August 2008. 56 Asian Labour Law Review 2008 Macau 57

Macau

Labour Rights and the Political Economy of Growth: Migrant Workers and Labour Informalization in Macau

Alex H. Choi

he last decade must be remembered as one of the most dramatic periods in Macau’s five T centuries of history. During this short decade, Macau’s sovereignty was reverted from Portugal back to China in 1999. To alleviate the pain of re-absorption, socialist China promised to keep capitalist Macau’s economic and political system remain for 50 years. Macau’s casino- dominated economy was allowed to stay. It was also permitted to have an autonomous government, which could rule with minimal interference from Beijing. A similar package has been offered to neighbouring Hong Kong, whose colonial rule ended two years prior to that of Macau. Hong Kong and Macau were given the status of Special Administrative Region within China’s unitary state structure. This is known as the ‘one-country, two-systems’ formula. This formula is touted by China to be the model for its future reunification of Taiwan.

Shortly after the political transition, the Macau government reviewed the system of the casino monopoly, and decided to liberalize the system by increasing the number of licenses to a total of three1 after the extant monopoly expired on 2001.2 This landmark event, in effect, signified much more than the breaking down of the 90-year old gambling monopoly system. Its dismantlement made room for the injection of foreign, especially US, capital, the emergence of Las Vegas style resort casinos, and much needed competition, all intended to revitalize the declining industry and revive Macau’s economy. At the same time, in 2003, China relaxed and simplified the procedure of granting exit (travel) permits to its citizens visiting the two Special Administrative Regions. As a result, tens of thousands of mainland tourists flooded into Macau, enjoying the excitement of casino gambling, which is still prohibited and criminalized inside China. Macau’s new prosperity thus become indissolubly bound up with China’s gambling ban and its desire to use Macau (and Hong Kong) to demonstrate to Taiwan the beauty of the ‘one country, two systems’ formula. From this perspective, the foundation of Macau’s present economic boom rests very much on unique political circumstances.

This pattern of development has produced fundamental changes to the economic structure and has injected new dynamics in the authoritarian polity. Export-oriented industrialization has effectively been declared obsolete; its existence had been sustained by a steady inflow of migrant women workers from China. Trade protectionism against Chinese exports also forced manufacturers to maintain their base in Macau so that they could claim a non-Chinese origin of their products. With the decline of the manufacturing sector, Macau has become an ever more mono-industry town. The present push for diversification to convention and cultural/heritage tourism is a strategy to enhance the competitiveness of its gambling industry, rather than finding an alternative recipe for growth. In all, the changes in the last several years have consolidated the preponderance of the casino-based service sector in Macau’s economic structure. 58 Asian Labour Law Review 2008

This transition, which took place in a highly compressed period of time, could also be attributed to the government’s unmitigated pursuit of economic growth at all costs. This strategy is derived from an ideology that treats economic development as inherently desirable. It necessarily entails a politics of growth that attempts to marginalize and unravel any oppositional voices that question its rationale.

One of the foundations of this politics of growth is corporatism. At pinnacle of this corporatist structure is the business-led political elite, who rules with the blessing of Beijing. The present chief executive, Edmund Ho, is a key player in the local business circle, and the son of well-known Chinese leader, Ho Yin, in the colonial period.3 At the same time, he doubles as the leader in the local pro-China groups which had played a unique political role in representing and mediating with the Portuguese colonial government over Chinese interests since the ‘123 incident’ in 1966.4 The three most important pro-Chinese groups are the Macao Federation of Trade Union (MFTU), the Macao Neighbourhood Association, and the Macao Chamber of Commerce. The political structure created for Macau after its reversion to Chinese rule has been clearly dominated by the local business elite.5 This ruling system functions smoothly if the legitimacy of the government is high. However, if the government is seen as tilting too one- sidedly to a particular social sector or not playing fairly as a custodian of public interests, these social groups suffer too because they are not only considered to be part of the ruling system, they are sometime called up on to defend unpopular government actions. Their acquiescence has enabled the government to embark on a course of developmentalism without much concern for its social impacts.

One of the key issues that has undermined the legitimacy of the government and its social alliances is corruption. The arrest of Mr. Ao Man Long, the Secretary for Transport and Public Works, on December 2006, for corrupt land deals and government contract kickbacks, merely confirmed widespread rumours on impropriety at the very high up level of the government. Government mishandling leading to rampant property speculation, inflation, and traffic congestion added to the public discontents with the regime. Working class dissatisfaction eventually flared up into a number of public demonstrations in 2006 and 2007. Thought none of them were participated by more than a few thousands of people, they had highly symbolic meanings in a society in which disruption of social harmony was considered to be a social sin.

In the following sections, I will give a brief outline on the recent structural changes on the labour sector, the existing labour regulation regime, and the pattern of trade union movements in Macau. Then I will argue that the importation of migrant workers is a key instrument for the government to discipline labour and to promote informalization in the sense of reducing job security and the cheapening of labour. It is then demonstrated that this informalization calls forth different degrees of resistance. The success of the government in managing these forms of resistance depends on its ability to deploy resources and to mobilize its social networks to co-opt and to proscribe. In all, significant degrees of difference in informalization are demonstrated in different sectors of the labour market in Macau.

Labour and the Economic Transformation

The economic growth of Macau in the last few years has been nothing short of spectacular. Macau was in a deep recession registering a real GDP growth rate of -2.4 per cent and -4.6 per cent respectively in 1997 and 1998. It was recovering very slowly at the turn of the century. However, after China relaxed the restriction of its citizens visiting Macau (and Hong Kong) in a scheme known as Free Individual Tourism launched in July 2003, Macau’s tourism-dependent Macau 59 economy bounced back, pulling along with it the overall economic growth. The average annual real GDP growth rate for the last five years (2002-2006) registered an amazing 15.32 per cent (See Table 1). By 2006, it is reported that Macau’s GDP per capita ranked third in Asia, and has overtaken that of Hong Kong.6

During this period of take-off, Macau has also undergone a profound transformation into a service-oriented economy. The percentage of manufacturing employment as a percentage of total employed population plummeted from 19.5 per cent to 11.1 per cent between 2000 and 2006. During the same period, the combined share of the two key service-related sectors, namely Hotel and Restaurant, and Cultural, Recreational and Services, increased from 21.8 per cent to 31.5 per cent. Other indicators pointed to the same trend. Visitor arrivals shot up from 9.2 million to 22 million, representing a jump of 239 per cent. Hotel rooms increased from 9,284 to 12,915. A further 2,825 was added with the opening of the mega–resort The Venetian, raising the figure to 15,740 in November 2007. The number of gaming tables soared even more dramatically from 339 in 2002 to 2,762 in 2006. It stood at 3,992 in the third quarter of 2007, representing a jump of over ten times in six years.

Table 1. Basic Statistics of Macau, 2000 - 2006

2000 2001 2002 2003 2004 2005 2006 1) Real GDP Growth Rate (%) 5.7 2.9 10.1 14.2 28.4 6.9 16.6 2) GDP per capita (current price, 14,171 14,253 15,567 17,805 22,634 24,369 28,853 US$) 3) Population (‘000) 431.5 436.3 440.5 446.7 462.6 484.3 513.4 4) Median Income 4,822 4,658 4,672 4,801 5,167 5,773 6,701 (current price, MOP) ------change --- -3.4% 0.2% 2.76% 7.62% 11.73% 16.07% 5) Inflation rate -1.61% -1.99% -2.64% -1.56% 0.98% 4.4% 5.15% 6) Unemployment rate 6.8% 6.3% 6.0% 4.9% 4.1% 3.8% 3.0% 7) Manufacturing employment* 19.5% 21.8% 20.5% 18.4% 16.4% 10.7% 11.1% 8) Hotel & Restaurant 10.8% 11.1% 11.5% 10.9% 11.0% 10.5% 11.7% employment* 9) Cultural, Recreational, 11.0% 10.9% 11.4% 11.6% 16.6% 17.2% 19.8% Gambling and Other Services* 10) Visitors Arrivals (million) 9.2 10.3 11.5 11.9 16.7 18.7 22.0 11) Hotel rooms 9,284 9,081 8,869 9,280 ------12,915 12) Gaming Tables ------339 424 1,092 1,388 2,762 *: (as a percentage of total employed population); ---: not available Source: Statistic and Census Service, Statistical Indicators (http://www.dsec.gov.mo/e_index.html, accessed 16 January 2008).

The rapid economic growth and structural transformation had significant impacts on the well-being of the working population. The unemployment rate was reduced from 6.8 per cent to 3.0 per cent between 2000 and 2006. During the same period, median monthly income increased from MOP4,822 to MOP6,701. However, it is pointed out that the working class did not enjoy a fair share of the economic growth. Real per capita GDP doubled between 2000 and 2006, but the nominal median income rose merely by 39 per cent. Even this increase has to be tempered by 60 Asian Labour Law Review 2008 high inflation rates, reaching 5.15 per cent in 2006. Income distribution worsened during this period of intense growth. It is reported that Macau’s Gini coefficient increased from 0.43 in 1999, to 0.45 in 2003, reaching a peak of 0.48 in 2006, and was higher than neighbouring countries.7 A total of 4.9 per cent of the employed population were earning less than MOP2,000 per month in 2006, and another 18.1 per cent were earning between MOP2,001-4,000 per month. In other words, a total of 23 per cent of the employed population were still stuck in very low income categories.8

The low income level can be attributed to the low education attainment of the working population. In 2006, 28 per cent of the employed population have only a primary or lower education.9 However, the presence of a significant number of migrant workers must also be regarded to be another important factor depressing income.

Table 2. Resident and Non-resident Employed Population

2000 2001 2002 2003 2004 2005 2006 Employed population 195,288 204,984 204,892 205,385 219,143 237,451 265,054 Local employed population 168,067 179,059 181,432 180,415 191,407 198,040 200,381 Migrant workers 27,221 25,925 23,460 24,970 27,736 39,411 64,673 Male 8,049 7,405 6,811 8,307 9,805 18,499 37,855 Female 19,172 18,520 16,649 16,663 17,931 20,912 26,818 Unskilled* ------21,257 22,621 31,561 56,734 Skilled** ------3,713 5,115 7,745 7,908 Migrant : local ratio 0.16 0.14 0.13 0.14 0.14 0.20 0.32 Source: Statistics and Census Service, Employment Survey, Table 7.1, various years; Statistics and Census Service, Demographic Statistics, Table 2.2, various years; Statistics and Census Service, Yearbook of Statistics, Table 3.8, various years. * Based on approval from 12/GM/88 plus the number of domestic helpers. ** Based on approvals from 49/GM/88 minus the number of domestic helpers. --- : not available

Between 2000 and 2006, the number of migrant workers increased from 27,221 to 64,673. The ratio of migrant to local workers also increased from 0.16 to 0.32 (see Table 2). In other words, there was one migrant worker for every three local people working in Macau. The sex ratio of the migrant workers has gone through a major change. In 2000, 70 per cent of the migrant workers were female. The percentage was reduced to 41 per cent in 2006. The change is probably due to a change in the occupations of the migrant workers. In the past, most migrant workers were employed in the garment industries, which tended to hire women in their workforce. The present construction boom opened more employment opportunities for male construction workers. Between 2003 and 2006, the number of migrant construction workers soared from 1,715 to 22,043, while manufacturing migrant workers only slightly increased from 13,761 to 14,516.10 The dramatic increase in migrant construction workers probably tipped the sex ratio amongst the migrant workers in Macau.

In terms of the skill level, most of the migrant workers are admitted under the unskilled category. Between 2003 and 2006, the percentages of skilled workers in the total migrant worker population decreased from 14.9 per cent in 2003 to 12.2 per cent in 2006 (See Table 2). In all major industries where migrant workers had a significant presence and where data are available, migrant workers earned significantly lower levels of income than their local counterparts. For Macau 61 instance, in the manufacturing industries, unskilled migrant workers on average earned 25 per cent less than their local counterparts. The differences are 18 per cent, 3.5 per cent and 13.7 per cent respectively in the hotel and restaurants, security guard services, and the gambling industries.11 The glaring wage disparities are probably one of the most important reasons accounting for the high demand for migrant workers.

Most of Macau’s migrant workers came from mainland China, to be followed by Hong Kong and other Southeast Asian countries.12 Published statistics do not give a clear breakdown of the industrial concentration by nationalities. However, it is believed that Chinese migrant workers spread out in manufacturing, construction, hotels and restaurants, and the gambling industries. Hong Kong migrant workers occupied the more skilled positions in the construction, and retail services. Most of the security guards and domestic helpers came from the Philippines and other Southeast Asian countries.

The Legal Regime Regulating the Labour Sector

Macau’s labour laws are outdated, rudimentary and incoherent. The system was designed in the late 1980s, and the level of labour protection has stayed the same that period up to now. Gaps in the labour system, such as on the regulation of labour import, have not been plugged. Promises made in one level of the law are not recognized and followed up in other levels. The post-colonial Macau government appears to be uninterested in either closing the loopholes or resolving the inconsistencies until labour protests threaten social stability and the political credibility of its rule.

The legal framework regulating the Macau labour regime is composed of three levels. At the top, the Macau Basic Law guarantees citizens the freedom to choose occupations and the rights to organize unions and to participate in labour strikes (Articles 27 and 35). The Framework Law on Employment Policy and Workers’ Rights (4/98/M) re-states in more detail the general principles on labour rights and policies. The second level comprises of laws regulating in practical terms the different aspects of the labour regime. The most important one is the Labour Relations Law (Decree Law 24/89/M) which lays out the minimum standards of employment and labour contracts.14 The final layer of the labour system consists of various administrative orders regulating, for instance, the importation of migrant workers (12/GM/88 for non-skilled migrant workers; 49/ GM88 for professionals), the prohibition of illegal work (17/2004) and the special arrangements for manufacturing workers during periods of insufficient work (43/95/M).

These laws and orders provide a bare minimum level of labour protection, and are hardly commensurable with Macau’s current ranking to be the country with the 3rd highest GDP per capita region in Asia. The Labour Relations Law provides for a six-day work week (Labour Relations Law 24/89/M, Article 10). Workers who have completed a year of service are allowed six days of paid annual leave. Workers who have completed the three- month probation period are entitled to ten days of statutory holidays, of which only six are paid (Article 19). Women are entitled to 35 days of paid pregnancy leave after they have completed at least a year of service (Article 37). The Legal working age starts at 16. But child labour is allowed as long as the children are above 14 and have medical certificates proving the work will not do any physical harm to the minors, and the work is not in the household.15 Disability and death compensations are capped respectively at MOP625,000 and MOP500,000. Unemployed workers are entitled to a maximum of 90 days of unemployment benefit, and are paid MOP70 per day.16 Permanent citizens reaching the age of 65 who have worked for five years are entitled to a fixed sum of old age pension of MOP1,450 per month.17 What these figures have shown is that Macau workers are still required to work long weeks, and with very little annual and pregnancy leaves. They are 62 Asian Labour Law Review 2008 still not entitled to any paid sick leave. If they suffer from injuries and deaths, the maximum compensation they are entitled is about one third of neighbouring Hong Kong.18 Finally, the payments of unemployment insurance and of pension are so nominal that nobody can really survive on them at the current level of living costs.

Macau workers do not enjoy much job security. Any workers can be dismissed without reason by paying the necessary compensation depending on years of service, with a maximum of 12 months of salary at a capped level of MOP14,000 per month. In other words, the maximum amount of severance pay is MOP168,000.19 The law further allows employers to avoid paying this severance pay by claiming the following reasons: ‘worker misbehaviour’, the poor quality of service rendered by the worker and ‘significant alteration in the conditions of the agreed labour relation’ (Article 44 of the Labour Relations Law). These reasons are written in such vague language that it is not hard for the employers to find situations fitting these descriptions. Theoretically, employers are not allowed to dismiss pregnant women workers, but this protection ends if the employer is willing to pay compensation equals to 35 days of wages (i.e. the length of pregnancy leave) plus the severance pay (Article 37).

Workers have the right to form unions, and being union officials cannot be invoked by employers as an excuse for ‘dismissal with reason’.20 However, the law does not prohibit arbitrary dismissal as long as severance is paid. Furthermore, the court has no power to order a reinstatement. Three persons can form a union by going through a relatively straightforward registration process. However, the power and status of the trade union, especially its right to represent workers in collective bargaining and the right to call a labour strike, are not recognized by law. Pro-labour Legislative Assembly members had tried to propose a private member’s bill on trade union law in 2005 and 2007. But both attempts were defeated in the business-dominated assembly.21 Under this situation, the rights to organize and to strike remain empty promises. In Macau, there are no collective bargaining agreements, and the item ‘days lost in strike’ does not exist in government statistics.22 Given the very poor job protection, and the abundant supply of non-resident workers, taking strike action carries an inordinate amount of risk. It is not surprising that disgruntled workers prefer public demonstrations to air their grievances rather than risking jobs in strikes.23 It should be noted that the above minimal level of protection are not enjoyed by all workers in Macau. The Labour Relations Law (Article 3) specifically excludes migrant workers and domestic workers from its coverage. 24

Incompatibilities between different laws have made some of the workers’ rights unenforceable. The government has not been forthcoming in trying to resolve the contradictions and to clarify the confusions, thus putting many of those rights in limbo. For instance, Article 5 of the Framework Law on Employment Policy and Workers’ Rights enshrines non- discrimination based on age, sex, race, nationality and territory of origin in relation to labour relations. Nevertheless, Article 3 of Labour Relations Law allows the exclusion of migrant workers and domestic workers from its protection. Thus Article 3 of the Labour Relations Law allows discrimination while Article 5 of the Framework Law outlaws it. Furthermore, many provisions in the Framework Law have not been implemented almost 10 years after its first enactment. The most glaring omission is related to Article 7c which calls for ’the establishment of a minimum wage and its regular update‘. In reality, Macau workers as a whole have never enjoyed a minimum wage, and the government has never put this issue very high on its agenda.

The apparent reason for these discrepancies in law is traced to the decolonization history. The retreating Portugal colonial regime was said to be controlled by a group of socialist zealots who were eager to introduce pro-labour policies which the colony could ill afford.25 Some of Macau 63 the examples are the Framework Law on Employment Policy and Workers’ Rights (4/98/M) and the Decree Law 52/95/M on gender equality in the workplace. For the sake of maintaining political confidence in the transition process, all of these laws were allowed to stay in the book. But they were sidelined by the succeeding Edmund Ho government which demonstrated no commitment to implement any of these pro-labour policies. Indeed, throughout the first eight years of the Edmund Ho regime, only one piece of labour legislation was introduced and passed in the Legislative Assembly in 2003. A large part of this legislation is the prescription of a process of adjudicating disputes and compensation related to industrial injury and disease.

The Organized Labour Sector

The shape of the government’s labour policy is influenced by its relations with the organized labour sector. Macau has a very powerful labour centre, the Macao Federation of Trade Unions (MFTU). Paradoxically, this powerful centre failed to bring significant pressure onto the government. The recent changes, such as the revisions of labour laws, were brought on by a few newly set-up maverick labour groups that were able to mobilize thousands of people onto the street to demand government attention to their plights. The emergence of these new labour groups is an indication of the discontent with the approach of the MFTU.

There are a total of 159 labour unions registered with the government.26 Beyond this figure, there is very little information available, including their membership and activities. MFTU claimed in 2000 to have a total membership of more than 60,000 people scattered over its 49 member unions.27 The number of member unions has increased to 65 at the end of 2007.28 MFTU is part of the so-called pro-Beijing social network in Macau, and its functions have been deeply enmeshed with the Beijing regime’s policy over colonial Macau. The predominant position of MFTU in Macau’s labour sector was consolidated after the 1966 ‘123 incident’ which led to the wholesale expulsion of the pro-Taiwan labour unions from Macau.29 Since then the MFTU has become the undisputed representative of the colony’s labour sector. With the departure of Portugal in 1999, the succeeding political elite invited MFTU, amongst other groups in the pro- Beijing network, to become one of its ruling partners in the new regime.30

In all, because of the ideological commitment to cooperation and stability and its historical connection to the pro-Beijing structure, the MFTU was pre-disposed to work inside the government as a loyal supporter and, perhaps, as a loyal critic too. The Macau government has also been willing to give the MFTU a privileged standing in all matters related to labour affairs in order to get the legitimacy it needed.

Yet the failure of the MFTU to resolve the thorny issue of migrant workers has sparked a series of demonstrations shortly after the setup of the new Macau SAR government in 2000 and during a time of economic depression and high unemployment rate. These demonstrations were organized spontaneously, and in the aftermath, several labour groups emerged. Not unexpectedly, a fair degree of division and realignment occurred within these groups due to personality rivalries, choice of strategy, and government cooptation. By the time of the 2006 May Day demonstration, about three camps have been consolidated. They were the Macau Workers Union, led by the pair Ho Heng Kuok and Lei Man Chao; the Macau Labourer and People’s Spirit Association, led by Wong Pui Lam; and the Macao Free Trade Union for Casino and Construction Workers, led by Ng Shek Yiu and Lee Kin Yun. None of these groups could claim a massive membership. But they have been able to sustain a level of critique and a circle of activists who managed to catalyze massive demonstrations when the tide of public opinions turned against the dominant elite. 64 Asian Labour Law Review 2008

In addition to these labour groups, there are two other players in the labour sector. The first one is the Macau Civil Servant’s Association (APFTM), which has been made prominent by its outspoken leader Jose Pereira Countinho, who won a seat in the 2005 Legislative Assembly election depending largely on votes from his civil service constituents. APFTM claims a membership of about 9,000.31 The other important force in the labour scene belongs to the oldest democracy group in Macau, the New Macau Association (NMA), led by its two prominent Legislative Assembly members, Ng Kuok Cheong and Au Kam San. The NMA has a middle class background, and most of its members are believed to be professionals, teachers and civil servants. Ever since its establishment in 1992, it has been active in voicing the concerns of the working class.

In conclusion, the Macau organized labour sector is dominated by the MFTU which has been incorporated into the ruling network. Yet, recently, a few fringe labour groups have emerged to challenge its domination. While these groups are still too weak and too disorganized to talk of an erosion of MFTU’s control, they have injected a healthy dose of competition into the organized labour sector.

Labour Informalization and Economic Growth

A large capital influx has created havoc in Macau’s labour market because of the relatively small size of Macau’s local workforce. A limited labour supply can be translated into re-evaluated wage levels that could erode into the profit margins of the labour intensive service industry. The Macau government has played its traditional labour regulatory role through the import of migrant workers. The liberal import of migrant workers in almost all sectors of the economy not only depresses wages, but also creates a sense of insecurity that significantly undermines labour rights. In this context, the discussion of informalization of the labour force becomes pertinent for the Macau workers. However, if informalization assumes a prior status of formalization, this becomes problematic because the vast majority of the Macau workers have never enjoyed formal rights, as shown in the above sections, remotely comparable to their counterparts in the developed countries.

The government has adopted a very liberal approach with regard to labour import. There is no maximum import quota, no occupational restrictions and no minimum wage.32 One of the outcomes of this approach is the putting of foreign workers into direct competition with Macao’s own low skilled counterparts, which still represent a very significant proportion of the city’s workforce. Apart from wage depression, the import serves to discipline the working class as a whole by placing a constant threat that their jobs can be replaced by migrant workers, thus curtailing their demands for improvement of wages and working conditions.

It should also be emphasized that the migrant workers are themselves victims in the system. They are exploited and forced to work and live in harsh conditions, cramped dormitories and suffer discriminatory social attitudes. Even the meagre labour standards granted under the Labour Relations Law have been denied to them. They have to pay outrageous agency fees and monthly labour management levies to recruitment agents. Under-payment or non-payment of wages by employers is commonplace. Construction workers face a hazardous workplace, with very high occupational death and injury rates. 33

For some local workers, poor pay and poor working conditions have pushed them into the informal sector for subsistence. One of the informal sectors that has caught a lot of public attention recently is the so-called couriers that carry goods across the border from Macau to Macau 65

Zhuhai (the town on the other side of the Macau-China border). Taking advantage of the price differentials between the two cities and the low costs of border crossing, people are paid as little as MOP10 per trip to bring consumer products such as canned fruit and potato chips to the other side of the border. In one good day, these couriers could cross the border up to several dozens of times. This form of work has provided a means of livelihood for several thousands of people. For the government, it serves as a safety valve because, if this alternative source of livelihood is not available, unemployment could explode into an unmanageable political crisis. Social agitation for the ending of the migrant worker program could also be more intense. The present labour shortage and congestion at the border crossing have caused commentators to ask the government to impose tighter administrative measures to force these people back into the formal job market. No actions have been taken yet. One of the reasons probably is that many of these couriers are unskilled, middle-age people, who cannot be easily reabsorbed into the formal job market.34

Civil servants and public sector employees are the workers most likely to have been affected by informalization in its proper sense. In the past, the public sector has offered the most coveted jobs because of its pay, job security, fringe benefits and social status. The labour relations with the civil servants are governed by a set of special regulations giving them better working conditions and protections than those offered by the Labour Relations Law. However, in the last several years, the government has taken a number of new public management style reforms that have significantly undermined the traditional privileges enjoyed by this sector. These reforms include an increase in contract-based employment, lower salary and wages for new employees, annual job performance assessment, pension reform and etc. The widespread use of contract-based employment is a source of constant complaint from civil servants. According to one estimate, over 40 per cent of the 19,000-strong public sector employees are under temporary contracts.35 Since contract workers are excluded from the civil service regulations, it creates not only the condition of unequal pay for equal work, but also opens the doors to nepotism and corruption.

In Macau, the reform of the civil service has been driven primarily by political, rather than budgetary considerations. The political elite saw it opportune to assault the widely-perceived arrogant, elitist and inapt colonial bureaucracy in order to improve its popularity. Policy errors are conveniently deflected to the bureaucracy. Administrative reforms have been eagerly embraced because they can be used as a surrogate for democratic reform. While the Macau civil service is certainly not immune from incompetence and corruption, the reform measures may not help it to shore up its long-term capability and cohesiveness. Moreover, the recent economic boom has opened up higher pay and professional job opportunities in the private sector. The prestige of the civil service has been eroded and an exodus of civil servants to the greener pasture in the private sector is expected. All these developments have intensified dissatisfaction within the rank and file, and led to Coutinho, the leader of APFTM, participating in the 2007 May Day demonstration to show their discontent.

Contrary to the trend of informalization, civil service Association’s the card dealing sector has undergone a process of formalization. The expansion of the gambling economy drove the soaring demand for card dealers. In the last several years, their wage, benefits, and job security have been significantly improved. As of mid-2007, there were a total of 17,272 card dealers, earning on average MOP14,370 per month, which is almost double the prevailing median wage.36 Symbolic of the change has been the emergence of a pay system in which the amount of tip, which represents more than 60 per cent of croupier’s take-home pay, is guaranteed at a fixed level by the casino management. This change has also implied a change in the work process in which the hustling for tips from players has been removed as a key part of their job, and thus significantly reduces the tension between croupiers and players.37 66 Asian Labour Law Review 2008

The arrival of foreign casino operators, it is claimed, has broken down labour paternalism and has brought a more formal, impersonal style of labour-management relationship in the casino sector. Before the liberalization of the gambling monopoly, in spite of the existence of many casinos in Macao, all of them were owned by Stanley Ho, the monopoly holder. The terms of employment were dictated to the card dealers who faced no other buyer of their service in the market, a job change would amount to a change in career. Currently, with other operators entering the market, job change has become possible, and the turnover rate has been high. The competition for workers has driven up wages and other benefits.

The other, arguably more important, factor affecting the card dealer occupation is the government’s unwritten policy of not allowing migrant workers to work in the card dealing business.38 It is a shrewd move because, in an economy where migrant workers are ubiquitous, the position of casino dealer acquires the image of a well-paid job reserved solely for Macao people. The refrainment of the government from the opening of the card dealer sector to migrant workers has demonstrated that labour import is not just about economic imperative but that political considerations are also very much key part to its decision-making. The government needs to create a social sector that benefits directly from the government’s economic policy.39 Understandably, various interests are intensely lobbying the government to lift the ban. One form of discourse maintains that the ban has distorted Macau’s human resource strategy, and harms its future generation. The high pay of this low skill sector has led the younger generation to quit school and to flock to casinos once they reach the minimum casino working age of 18 years old. It also instils a sense of low value of pursuing an education because the card dealing occupation requires only primary school education and offers a pay much higher than a fresh university graduate working in non-card dealing jobs.

The other discourse targets the prospect of job promotion. While card dealing is reserved for locals, casinos are permitted to fill both lower paid positions such as housekeeping, cleaning, cooking and waitressing, and more senior positions, such as game supervisors and pit managers, with migrant workers. In essence, a racial hierarchy is established within the occupational structure of the casino. The bottom end is filled by workers from mainland China for cost considerations, while the middle levels are recruited from Southeast Asia, where many of them have operated casinos for a long time, and there are pools of workers who have casino supervisory experiences. The very top management are usually seconded from US headquarters or recruited from Hong Kong. In this system, Macau card dealers would have very limited promotional prospect because, firstly, if they are promoted, that means fewer people would be able to do card dealing. Secondly, local card dealers need to compete with migrant workers from Southeast Asia who have far more experience, better English speaking skills, and demand a salary far smaller than their local counterparts. If the government is not prepared to make policy initiatives to address these problems, these discourses may gather enough momentum to break open the sector for labour import.

Gender and Informalization

Gender issues are difficult topics to research in Macau. There is no activist women group raising the voice on gender discrimination. There is a Women’s General Association of Macau (WGAM) which is part of the pro-government, pro-China network and is a group dominated by upper class ‘respectable’ women. It adopts a service-oriented approach intending to help women to adapt to the society, rather than promoting structural transformation of the patriarchal system. Its constitution has clearly stated that it is a patriotic association whose goals are to provide services to the women and children and to protect the rights of the women.40 Its key activities Macau 67 include the running of childcare facilities, family service centres, schools, and a shelter home for battered women.

There are very little in-depth studies on gender inequalities in Macau. However, elementary statistics does show considerable wage gaps between the sexes and the segregation of women into unskilled and low wage occupations. Table 3 indicates that women in general earned only between 60 per cent and 80 per cent of their male counterparts in industries where information is available. The gaps in the manufacturing and construction industries are the widest, while that in the gambling industry is somewhat narrower, but still represents a 15% difference.

Table 3. Monthly Earnings (MOP) of Selected Industries by Sex, 2006

Male Female Female/Male (%) Manufacturing* 6,193 4,074 65.78% Electricity, Gas & Water Supply** 20,333 16,256 79.95% Construction**^ 526 331 62.93% Wholesale & Retail Trade** 9,533 7,711 80.89% Hotels and Restaurants* 7,899 5,647 71.49% Transportation, Storage and 18,354 14,597 79.53% Communication** Financial Intermediation* 18,669 11,899 63.74% Gambling Industries** 15,220 13,062 85.82%

Source: Statistics and Census Service, Manpower Needs and Wages Survey, various industries, and Indices and Daily Wages of Construction Workers. *: 3rd Quarter 2006 figure; **: 4th Quarter 2006 figure; ^: Daily wage

Table 4 indicates the number of male and female workers employed in different occupations, and the median wage of each occupation. There are significantly less women occupying professional and senior management positions, both of which are paid the highest. For instance, in the category of Legislators, Senior Officials of Government and Associations, Directors and managers of Companies, there are only 4,224 women compared with 12,798 men, representing a female-male ratio of 33 per cent. There are relatively more women working in the category of professionals which earned the highest remuneration. The ratio is 75 per cent, but is still far below the overall ratio of 87 per cent in all occupations. The trend is reversed only in the categories of clerk and unskilled workers. The former is traditionally considered a woman’s occupation. The latter is the poorest paid amongst all occupations. 68 Asian Labour Law Review 2008

Table 4. Employed population and Median Wage by Occupation and Gender, 2006

Occupations Employed Population Median Wage (MOP) Female Male F:M Legislators, Senior Officials of Government 4,224 12,798 33.01% 14,982 and Associations, Directors and managers of Companies Professionals 4,031 5,397 74.69% 17,802 Technicians and Associate Professionals 11,455 12,029 95.23% 11,024 Clerks 37,491 23,345 160.60% 9,516 Service and Sales Workers 26,583 28,186 94.31% 5,576 Skilled Agricultural and Fishery Workers 365 1,066 34.24% 4,991 Craftsmen and Similar Workers 1,990 25,865 7.69% 7,197 Plant and Machine Operators, Drivers and 11,211 14,111 79.45% 4,045 Assemblers Unskilled Workers 26,150 18,757 139.41% 3,813 Total 123,500 141,554 87.25% 6,701

Source: Statistics and Census Services, Annual Employment Survey-2006; Labour Affairs Bureau (http://www.dsal.gov. mo/pdf/work/chinese/8_SalProf_a.pdf, accessed 22 January 2008).

Apart from wage discrimination and gender segregation, there are other difficulties facing women in the labour sector. One of the issues is sexual harassment in the workplace. In 2006, four civil servants sued their superiors for persecution and sexual harassment. The court accepted that the superior’s behaviours did cause ‘uneasiness’ on the plaintiffs, but considered them not serious enough to merit compensations according to the Civic Code. The case thus was thrown out of court. Legislator Kwan Tsui Hang however, pointed out that Macau has no law regulating sexual harassment in the workplace, and this put the working women in jeopardy of sexual intimidation which is considered to be widespread in a conservative and male-dominated society.41

The reservation of higher paid jobs of card dealing for local people and the general expansion of the economy do increase woman’s job opportunities. Women’s labour participation rate has increased from around 55.3 per cent in 2000 to 58.8 per cent in 2006. 42 While more women are entering the job market, especially in the service sector, there are not enough supporting services to help them to take care of the children and the family, which are still very much seen as women’ s responsibilities. Many of these jobs demand long hours and shift work; women are often left alone juggling between family and work.

The WGAM’s response to the crisis is the stepping up of calls for the import of domestic helpers to assist women in taking care of the family, rather than demanding for equal sharing of domestic work between the sexes, or the demand for a higher level of socialization of reproduction. It should be pointed out that domestic helpers from the Philippines, Indonesia and Thailand have been working in Macau for a long time. The WGAM’s demand is specifically Macau 69 focused on urging the government to open the import of domestic helpers from mainland China.43 It rationalized the demand in terms of mainland Chinese helpers being able to speak the local language and sharing the same culture, thus delivering better services to local families. In reality, the key reason appears to be that mainland domestic helpers could be paid at a much lower rate than their Southeast Asian counterparts. This demand encountered a number of hurdles at the supra Macau level. For mainland domestic helpers to work in Macau, the Macau government had to convince Beijing to change its policy of not exporting domestic helpers to the two special administrative regions. In turn, China was concerned that a lifting of the ban would force Hong Kong to reverse its long-held position of not importing mainland Chinese maids, and the subsequent complications with Hong Kong politics.

Apart from domestic helpers, Macau has also acquired the reputation of a pleasure periphery where erotic labour can be bought from women (and men) from many ethnic backgrounds.44 Most of the sex workers are from mainland China, to be followed by those from other Asian and Eastern European countries, with a conspicuous absence of locals working in this sector. The Macau government takes a relaxed attitude to the industry because it is keenly aware that the presence of a thriving sex market helps bring players and tourists to the casinos. Macau legislation does not criminalize the act of prostitution per se. However, the procurement, soliciting and living on the proceeds of prostitution are criminal offences. Furthermore, the Law on Organized Crime specifically prohibits tourists from engaging in prostitution. In practice, however, the police take a very tolerant attitude to sex workers except perhaps those working in local residential neighbourhoods.

Consciously or nor, government policy segregates the sex workers into two groups. The first group of sex workers work in an institutionalized setting (e.g. nightclubs, saunas, massage parlours, etc.), and their employers usually apply for them to be properly documented to avoid being charged of employing illegal workers. Their clients are mainly tourists who are able to pay a higher price for their service. To maintain legal status, sex workers are required to undergo medical check, specifically AIDS test, once every four months. Their status will be terminated if the AIDS test returns a positive result. The other group of sex workers come to Macau on tourist or transit visa or through smuggling channels. Their stay in Macau is precarious, and they are always concerned about police, triad, or client harassment. Thought many of them claim to come voluntarily looking for opportunities to make money, a number of them are trafficked and forced to work in the trade. News story of police smashing rings of forced prostitution regularly appear in local newspapers. Obviously, there must be many more not smashed nor reported.

Sex work is a controversial feminist topic, and the debate is divided into two diametrically opposing camps: prostitution as exploitation versus sex work as liberation.45 The key issue, however, is that the phenomena of trafficking and under-aged prostitution are still quite widespread in Macau. This is not an acceptable situation in the position one adopts. Since 2006, the US has put Macau in the observed list of countries of not doing enough to combat trafficking.46 In response the government has announced in September 2007 the setting up of a committee under the coordination of the Secretary of Security to study and investigate the situation. This is clearly a form of delay tactics, and more pressure, especially inside the Macau society, has to be exerted on the Macau government, and probably on the central government too, if any prospect of improvement is to be forthcoming. 47

The Politics of Informalization

While gender issues have not garnered enough social attention at present in Macau, the 70 Asian Labour Law Review 2008 migrant worker issue has generated, arguably, one of the primary impetuses to reform the capital- dominated authoritarian political structure. As demonstrated in the above sections, the basic form of labour informalization in this small enclave operates along the line of the import and globalization of labour.

There has been relatively little public display of political dissent. However, the opposition to the government’s migrant worker policy was the key rallying point for the two consecutive May Day demonstrations in 2006 and 2007. The latter one caught world attention when a member of the Macao Police fired five warning shoots at the sky in an essentially peaceful demonstration. A few short months later, demonstrators on motorcycles took to Macao streets again on the eve of China’s National Day (30 September 2007) to oppose the authoritarian and intransparent approach in implementing the new Traffic Law. The most noticeable event in this demonstration appears to be the appearance of a group of school teachers and social workers holding banners and placards demanding government actions to fix the problems in Macao’s education and social welfare systems.

A pattern could be gleaned from these social actions. Initially, the 2006 demonstration focused mainly on labour issues and were participated in largely by the lower working class. By now, the issues have been broadened to encompass issues that touch on the integrity of the government and its capacity to provide coherent and efficient government functions. Participation in these demonstrations is no longer confined to the working class hurt by the migrant worker policy, but includes common people, and a segment of the middle class. These actions have apparently broken the myth that the Macao people are politically apathetic. They demanded that their voices be heard in the governance process.

These mobilizations have generated disruptive pressure on the pattern of rule in Macau. Firstly, the concessions46 made by the government to the organizers before the demonstrations could be interpreted as a slight to the pro-government social groups. For instance, Ms. Kwan Tsui Hang, the most outspoken Legislative Assembly member from the MFTU, had demanded for a number of years to review the investment immigration scheme, but to no avail. However, the government included in the concession package an immediate suspension of the scheme just before the May 2007 demonstration.48 It not only calls into question the effectiveness of social organizations working inside the government system, but also gives rise to a perception that the government would only listen if people are on the street. Secondly, these pro-government social groups are expected to help stabilize the government’s social base, in particular to deter and to dissolve social challenges to the regime. The demonstrations raise the spectre that they may not be able to contain social oppositions, and indirectly threatens the monopoly position the government had given them since the 1999 transition. In the wake of the 2006 and 2007 May Day demonstrations, these pro-government social groups have faced unfriendly comments of their losing touch with the people,49 and calls were made for them to rejuvenate the link with their constituencies.50 The MFTU would surely find this an unfair criticism, and largely an attempt to scapegoat them for all the policy errors the government had committed.

Recognizing the government has made concessions to the opposition, one needs to put these concessions into perspective. As Au Kam San presciently commented, none of them directly threatened the elite’s core interests, namely the control of land sales, and the import of migrant workers.51 Migrant labour has saved Macau employers millions of dollar every month.52 There is simply too much resistance from vested interests to allow it to be changed. Even if changes have been promised, there simply is not the political determination to implement them. For instance, the government promised in the annual policy speech of the Chief Executive at the end of 2005, Macau 71 to impose a foreign workers levy in 2006. This levy was envisaged as a means to raise the cost, and thus reduce the incentives, of employing foreign workers. The money collected would be put into a fund used for the retraining of local workers. Despite all the fanfare associated with this policy initiative, the government has not produced a credible plan that could prevent the burden of this levy from being transferred to the migrant workers through reduced salaries. Worse still, there has been a lot of procrastination and foot dragging, and the foreign worker levy is still only a promise on paper three years later. 53

After the 2006 May Day demonstration, the government has also promised to increase the transparency of the migrant worker system by submitting to the Legislative Assembly a Law governing the import of migrant workers.54 In August 2006, the government announced a draft bill and a government regulation relating to the import of migrant workers. The draft bill put down the general principle, while the regulation lay out detailed regulation. Critics pointed out that this arrangement is a way to circumvent legislative oversight because only the former would require Legislative Assembly discussion and endorsement.55 The draft law and regulation on migrant workers are said to be an attempt to improve the existing system by codification of a number of existing practices. Following their predecessor decree laws (12/GM/88, 49/GM/88), they endorse priority of employment opportunities being given to local people, make provisions for charging a foreign workers levy, and impose fines and penalties if the stipulations are violated. However, they have not been able to satisfy the concerns of the labour groups. There were very few new initiatives; many stipulations in the draft represent merely the writing into law in vague terms various verbal commitments already made by government officials. Concrete protection measures demanded by labour groups such as an overall import quota, occupational restrictions, minimum wages, and various measures to prevent employers from firing local workers over preference for migrant workers, have not been incorporated into the law/regulation.

The government undertook some consultations of the two draft legislations. These consultations, however, took place mainly in closed circles. There was also fear that they would follow earlier versions to be shelved when public pressure died down. However, just before the 2007 May Day demonstration, the government again promised to submit them to the Legislative Assembly for consideration before June 2007. Eventually, the new Labour Relations Law was sent to the Legislative Assembly in late 2007, and the government claimed that the Migrant Worker Law would follow once the Labour Relations Law finished the process of legislation.

Conclusion

The conflicts endemic in the migrant worker system symbolizes an important aspect of Macao’s politics. The authoritarian regime cocoons itself in a dense network of incorporated social groups glued together by a web of interests and power. Oppositions are neutralized by making selective concessions. Some times, oppositions are stridently made by groups that merely aim to win a chance of being invited to join the incorporation. Under this pattern of politics, social groups could become an obstacle to transparency and accountability. The newly sprung up labour groups are facing this challenge too. If these groups cannot maintain their effective autonomy and cannot sustain a social critique on the political elite, they could turn Macao’s undemocratic politics even to be more irrational and monolithic. The most urgent task at this moment appears to be the democratization of organizations and the associated incorporated networks.

This democratization process could have major impact on the politics of informalization. Informalization takes place unevenly plaguing labour sectors with weak bargaining power. The card dealers in Macau’s casino have demonstrated that job security and decent wages can be 72 Asian Labour Law Review 2008 attained if they can coalesce into a powerful political force. The task ahead for the labour sector in Macau is to expand this power across the board to prevent the casino workers from being isolated and confined as a labour elite. The existing pattern of politically-mediated and top-down labour unionism has so far proven unable to achieve this mission. A more autonomous and grass-root oriented labour unionism has to be explored.

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Chinese Language Sources Mò Róngtiān (1994) ‘Cóng shèhuì xíngdòng kān gǎng'ào liǎngdì de zhèngzhìfāzhǎn (An Analysis of the Political Development of Hong Kong and Macau from the Perspective of Social Action)', Yúzhèn (ed.) Àomén zhèngzhì yǔ gōnggòng zhèngcè chūtàn (A Preliminary Study of Macao Politics and Public Administration), Àomén: Àoménjījīnhuì. Macau 73

Chēn Shǒuxìn (1999) ‘Shūrù láogōng yǔ àomén de shīyèwēntī (Labour Import and the Unemployment Problem of Macao’, Aomén Yānjīu, 12: 40-51.

Chēn Shǒuxìn (2003) ‘Àomén de shīyè wēntī jī dùiyìng zhèngcè (Macao’s Unemployment Problem and Policy Response)’, Xiānggǎng chēngshì dàxué yǎzhōu guǎnzhì zhōngxīn Zhōngguō shèhuì kēxuēyuàn gōnggòngzhèngcè yānjīu zhōngxīn (ed.), Zhōngguōgōnggòngzhèngcè fēnxī 2003 (Public Policy Analysis of China -2003), Xiānggǎng chēngshì dàxué chūbán.

Xú Qīuyún (2003) ‘Àomén shūrù wàidì láogōng de fālǜ zhèngcè yānjīu (A Study of Macau’s Labour Import System – the Law and Policy Perspective)’, Xíngzhèng, 61: 817-853.

Zhào Lǚpīng (1998) ‘Àomén shūrù wàidì láogōng zhèngcè fēnxī (Policy Analysis of Macao’s Labour Import System’, Àomén yānjīu, 8: 97-149.

Lóu Shìnghuá (2004) Zhuǎnxíng shīqī àomén shètuán yānjīu (A Study of Macao’s Social Groups in the Transitional Period) , Guǎngdōng: Guǎngdōng rénmín chūbán shè.

Àomén fāzhǎn cèluè yānjīu zhōngxīn (2000), Àomén shètuán xiànzhuàng yǔ qiánzhān (Macao’s Social Groups: Current Status and Future Development), Àomén: Àomén fāzhǎn cèluè yānjīu zhōngxīn. (downloadable from http://www.macaudata.com/macauweb/book251/)

Cài Xìngqíang (2004) ‘Àomén de wàidì láogōng: quánqíuhuà hé láodònglì (Migrant Workers in Macao: Globalization and Labour’, Xiānggǎng shèhuì kēxué xuébào, 27: 103-130.

Cài Xìngqíang (2005) ‘Xīnjiāngpō wàidì láogōng shūrù jìhuà géi àomén de qǐshì (Singapore’s Migrant Worker System: How Macau can Learn from It?’, Àomén yānjīu, 27: 88-94.

Endnotes

1. Shortly after, a further three so-called ‘sub-licences’ were added. The six casino operators are: Stanley Ho’s SJM, Galaxy, Venetian, Wynn, Melco PBL, MGM Grand Paradise. 2. The ending of the monopoly related to a number of reasons, including the economic recession sweeping the region in the wake of the Asian Financial Crisis, the poor services provided by the monopoly holder, and the political transition taking place at that moment. A good account of the transition is yet to be written. However, Pina-Cabral (2002) and Eadington and Siu (2007) offer good glances of that period. 3. Cremer (1991), p. 201. 4. Edmund Ho is the son of the well-known Chinese leader Ho Yin. For the 123 incident (‘123’ stands for 3 December) was sparked over the construction of a school by pro-China groups in Taipa. For more on the 123 incident and the subsequent rise of the pro-China social groups in Macau politics, see Dicks (1984), Lo (1995), Lóu Shèng Huá (2004: 111), Fernandes (2007). The colonial government forcefully stopped the construction claiming that it was illegal because the appropriate licence had not been obtained. Eventually, the incident spread to become a major anti-colonial movement. The colonial government was defeated and conceded to have made the mistake of suppressing the people. One of the conditions agreed by the colonial regime was to expel the pro-Taiwan forces from Macau. Since then, the pro-China social groups have indisputably become the dominant force in Macau politics. 5. Putten (2004), Sousa (2002), p. 166, Yee (2005), p. 241. 6. Jornal Do Cidadao, 24 August 2007. 7. Jiāng Xùn, ‘Tòu shì zhōng guó: ào mén guāng xiān debèi hòu’ (http://news.bbc.co.uk/go/pr/fr/-/chinese/ trad/hi/newsid_7160000/newsid_7165400/7165442.stm, accessed 22 January 2008) The same story reports that neighbouring countries have a lower Gini co-efficient: mainland China (0.447), South Korea (0.316), Singapore (0.425). 8. Statistics and Census Services, Employment Survey, 2000-2006. 9. Labour Affairs Bureau figure, http://www.dsal.gov.mo/pdf/work/chinese/2_EmpEdu_a.pdf (accessed 22 January 2008). 74 Asian Labour Law Review 2008

10. See information from Labour Service Bureau website (http://www.dsal.gov.mo/pdf/work/chinese/ 10_ImpWkCAM.pdf, accessed 22 January 2008) 11. The average monthly wages for the local workers in the Manufacturing, Hotels and Restaurants, Security Guard Services and Gambling Industries are respectively MOP4,023, MOP5,169, MOP4,353, MOP6,178. The same figures for the migrant workers are: MOP3,190, MOP4,378, MOP4,206, MOP5,434. See Statistics and Census Service, Manpower Needs and Wages Survey, various industries. 12. In 2006, the percentages of migrant workers from China, Hong Kong, the Philippines, Malaysia and Thailand are respectively 57.76%, 18.9%, 11.33%, 1.19% and 1.06%. See Labour Affairs Bureau website (http://www. dsal.gov.mo/pdf/work/chinese/10_ImpWkNation.pdf, accessed 22 January 2008). 13. See Labour Services Bureau statistics (http://www.dsal.gov.mo/pdf/work/chinese/10_ImpWkNation_M.pdf, accessed 22 January 2007). 14. The other labour laws are: 1) Decree Law 52/95/M on gender equality in the workplace outlaws various discriminatory practices. 2) Decree Law 40/95/M provides compensations on industrial accidents and occupational diseases; 3) Decree Law 9/2003 regulates the process the court system handling labour disputes and the adjudication of compensations on industrial accidents and occupational diseases; 4) Decree Law 58/93/ M provides various social security measures including unemployment insurance, disability allowance, and retirement pension. 15. See Article 38-42, Labour Relations Law. The prohibition of housework for children under 16 is probably an attempt to outlaw the traditional practice of keeping mui tsai (girl servants) at home. 16. To be qualified for this benefit, workers must be ’involuntary unemployed‘ and have worked 9 months in the previous 12 months. Once the 90 days of benefit have been exhausted, the unemployed worker has to wait for one year before he or she is qualified again. See Social Welfare Institute website (http://www.fss.gov.mo/chn/ fssmainset.htm, accessed 25 January 2007). 17. Social Security Fund website (http://www.fss.gov.mo/chn/fssmainset.htm, accessed 25 January 2007). 18. The maximum compensation for Hong Kong workers is HK$1.75 million Jornal( Do Cidadao, 31 December 2005). 19. See Article 47 of the Labour Relations Law (24/89/M). The level of compensation varies with length of service. Workers completed one year of service are entitled to seven days of wages. Workers completed 10 years or more of service are entitled to 20 days of wage for each year of service. 20. Article 45a of the Labour Relations Law stipulates that participating in a union does not constitute sufficient reason for dismissal. 21. Macao Daily, 14 November 2007; Jornal Va Kio, 30 December 2007. 22. The author carried out a search on the keyword ‘labour strike’ over the year 2007 in the database Wisenews, which contains most of the Macau newspapers. The search produced nothing. 23. The lack of protection of the rights to organize is a key complaint from the US and the International Trade Union Confederation. See the US Department of State's Country Reports on Human Rights Practices – 2006: Macau (http://hongkong.usconsulate.gov/usmo_hr_2007030601.html, accessed 9 January 2008), and ITUC's International Recognized Core Labour Standards in Macao, S.A.R. – Report for the WTO General Counil Review of Trade Policies of Macao (http://www.ihlo.org/HKM/030507.html, accessed 9 January 2008), and 2007 Annual Survey of Violations of Trade Union Rights – Macau SAR (China) (http://survey07.ituc-csi.org/getcountry.php?I DCountry=MAC&IDLang=EN, accessed 9 January 2008). 24. The Article also excludes civil servants. See below for further discussions. 25. The authoritarian Salazar regime was overthrown by a revolution in 1973. The post-revolution Portuguese state promoted decolonization. It was under the control of left-wing governments until the early 1990s. See Maxell (1995) 26. See the information published in the Government Printing Bureau (http://cn.io.gov.mo/Priv/categories/9.aspx, accessed 27 January 2008). 27. See the 2000 Annual Report of the MFTU, available at the MFTU website (http://www.faom.org.mo/files/ faom27.pdf, accessed 27 January 2008). 28. See the 2007 Annual Report of the MFTU, available at the MFTU website (http://www.faom.org.mo/files/ faom31.pdf, accessed 27 January 2008). 29. See Endnote 3. 30. MFTU was given representation in almost all of government consultative committees. For a complete list, see MFTU website (http://www.faom.org.mo/?mod=page&pid=1154658745, accessed 27 January 2008). Macau 75

31. See ATFPM website (http://www.atfpm.org.mo/eng/about/main.asp, accessed 27 January 2008). 32. There are a number of studies on the migrant labour issues in Macau. See Chén Shŏuxìn 1999, 2003, Xŭ Qiūyún 2003, Zhào Lǚping 1998, Cài Xìngqiáng 2004, 2005, Choi 2005. 33. Jornal Va Kio, 13 June 2007. 34. Breitung 2004: 22, Macao Daily, 1 January 2008. 35. Jornal Do Cidadao, 15 July 2007. 36. The total number of croupiers and their average wage level are found in Statistics and Census Service, Manpower Needs and Wages Survey – Gambling Industries, 2nd Quarter 2007. Median wage level during the same period was MOP7,708. (http://www.dsec.gov.mo/index.asp?src=/chinese/indicator/c_ie_indicator.html, accessed 31 January 2008). 37. There has been a long-running battle between croupiers and Stanley Ho on overtime compensation. This boiled down to a contest over whether or not the definition of wages should include tips. Macau’s Court of Final Appeal handed down a decision in late 2007 ruling tips could not be considered wages, not withstanding two lower courts having ruled otherwise. The croupiers and their supporting Legislative Assembly members are pressing for a revision of the Labour Relations Law to define tips as wage. See Macao Daily 11 October 2007, Cheng Pao, 11 October 2007. 38. The Secretary of Economy and Finance, Tam Pak Yuen, reiterated this policy in the debate of his policy statement in the Legislative Assembly. See Jornal Do Cidadao (23 November 2007). 39. The other sector of similar situation is bus drivers. After the bus driver union threatened drastic labour action, the government decided to turn down the application by a public transit company to import migrant bus drivers in early 2007 (Macao Daily 29 January 2007). 40. See its constitution, published in its website (http://www.macauwomen.org.mo/rules/index.htm, accessed 29 January 2009). 41. Cheng Pao, 11 July 2006; Jornal Do Cidadao, 8 January 2007. 42. Labour Affairs Bureau figure, see http://www.dsal.gov.mo/pdf/work/chinese/5_PartiSex_a.pdf (accessed 31 January 2008). 43. Macao Daily, 20 December 2007. 44. This section is taken from Choi (2007). 45. Kong (2006). 46. See the US report on trafficking in Macau: http://gvnet.com/humantrafficking/Macau-2.htm (accessed 9 January 2008). See also Macao Daily (6 November 2007). 47. On January 2008, the police prosecuted a Vietnamese woman, for the first time in Macau history, on charges of human trafficking. See Cheng Pao (18 January 2008). 48. This scheme fuelled property prices, and increased the difficulties for low-medium families of home-ownership. See http://www.updmo.org/index.php?mod=page&pid=1169109195 (accessed 20 May 2007). 49. Of course, this kind of challenge is fiercely denied. Personal communication with Kwan Tsui Hang, 5 May 2007. 50. Macao Daily, 22 August 2007. 51. Personal communication, Au Kam San, 8 October 2007. 52. A crude estimation could be made in this way: assuming that each migrant worker could save the employer MOP700 per month, the total amount saved at the 2006 level of migrant worker import is MOP45 million per month, and MOP540 million per year. This has not yet included the surplus value these workers could have produced. 53. Jornal Va Kio, 23 April 2007. 54. The importation of migrant workers is governed by two separate decree laws, 12/GM/88 and 49/GM/88, respectively for unskilled and skilled workers. But these two laws, established 20 years ago, are said to be inadequate and outdated to meet the present need of the society. 55. See the opinion of the New Macau Society on the drafts, http://newmacau.org/mainbody.php?inner=es/ laborlaw (accessed 20 May 2007). 76 Asian Labour Law Review 2008 Mongolia 77

Mongolia

Informal Labour in Mongolia

B. Batkhishig

fter the people’s revolution in 1921, the Mongolian government began a process of A developing totally new labour relations in the history of Mongolia in order to respect and protect the rights of the working class and eliminate feudalism which was the dominant system in Mongolia for centuries. The working class did not recognize itself as a class in Mongolia prior to the people’s socialist revolution of 1921 and therefore there were no legal grounds for adopting specific laws and regulations dealing with the labour relations at that time.1 Since 1921 the Mongolian government has adopted various laws regulating labour relations in the country. Such laws were adopted and enacted in 1925, 1930, 1933, 1934, 1941, 1973 and 1991. The current Labour Law of Mongolia was adopted in 1999 and since then the law has been significantly improved. The labour laws of 1991 and 1999 are considered to be the laws of the transitional period.

Since the 1990s the term ‘informal economy’ or ‘informal labour’ has entered the labour relations of Mongolia and the number of people involved in the informal labour relations has been rapidly increasing, creating serious difficulties in the overall labour relations in Mongolia. The above-mentioned labour law does not regulate the informal labour relations. Therefore the Mongolian government has been taking serious measures in successful dealing with the informal economy in order to create a favorable legal environment for protecting the rights of the people involved in the informal sector of economy and, more importantly, to reverse it to formal labour relations.

1. Contemporary Snapshot

Mongolia made a peaceful revolutionary transition from a totalitarian system based on central planning and state-owned economy towards democracy and free market economy. The incapability of the private sector of the economy to fully bear the new challenges of economic and social burdens in the beginning of the transition period was the main factor bringing into existence the informal labour relations in Mongolia. And since that time, the so-called informal sector of economy or informal labour has played a significant role in increasing profits and creating new jobs in Mongolia. In other words, the informal labour has largely contributed to reduction of unemployment and increased economic growth.2 Besides the government organizations and private corporations, individuals also become owner-employers in the informal sector of economy.

Although the wage system of the informal labour sector greatly differs from its formal counterpart and has no solid guarantees, the people involved in this sector usually work towards meeting their basic needs. Moreover the informal sector has begun to attract foreign workforce establishing business partnerships, which indicates that the informal sector has been more globalized and has significantly contributed to its growth. 78 Asian Labour Law Review 2008

When compared to the countries of the Asian and Pacific Region, the Mongolian economy and its Gross Domestic Product (GDP) statistics reveal a relatively high level of growth. In 2001 GDP of Mongolia was 3.0 per cent, in 2006 it equaled with 8.6 per cent.3 Also, according to the ‘Employment Data 2006’ of the National Statistical Office, the unemployment rate was reduced from 3.5 per cent in 2003 to 3.2 per cent in 2006. This seems to demonstrate that Mongolia has been relatively successful in reducing official unemployment and poverty; however, the rates of poverty and unemployment have actually not gone down since 2003. According to standard international methodology, unemployed persons are those segments of the population of the working age who are currently not working in a paid or self-employed position, are actively looking for a job and are willing to work. In contrast, according to the Mongolian government, the unemployment rate is measured by unemployed people registered in the Central Employment Office. By this definition, thousands of non-registered unemployed people are not considered unemployed, so if they were included, the numbers of unemployed would be far higher.

On the other hand, the labour market of Mongolia is becoming more and more two-sided, which means that one part of the population is able to enjoy decent work conditions with high wages, while the rest have no choice but to work in hazardous and unprotected environments to make ends meet. 4 This is a very dangerous situation.

Labour Force and Employment

Since the adoption of the Labour Law of Mongolia in 1991, more than 30 articles of this law have been amended in order to regulate the mutual labour relations between an employer and an employee on the basis of the labour agreement or contract. According to the Labour Law, citizens aged from 16 to 60 years of age are considered to be the economically active population. A National Statistical Office (NSO) study done in 2006 reveals the labour force statistics as following:

Table 1. Employment Data

For the General Population (Unit: thousands)

Indicators 2003 2004 2005 2006 Population of working age 1,488.9 1,531.1 1,577.0 1,619.6 Economically active population 956.8 986.1 1,001.2 1,004.8 Of which: Employed 926.5 950.5 968.3 1,009.9 Registered unemployed 33.3 35.6 32.9 32.9 Labour force participation rate, % 64.5 64.4 63.5 64.6 Employment to population rate % 62.2 62.1 61.4 62.4 Unemployment rate, % 3.5 3.6 3.3 3.2 Mongolia 79

For the Female Portion of the General Population (Unit: thousands)

Indicators 2003 2004 2005 2006 Population of working age 765.4 790.3 815.3 835.2 Economically active population 475.8 503.0 507.3 536.8 Of which: Employed 457.7 483.4 489.0 518.1 Registered unemployed 18.1 19.6 18.3 18.8 Labour force participation rate , % 62.2 63.6 62.2 64.3 Employment to population rate, % 59.8 61.2 60.0 62.0 Unemployment rate, % 3.8 3.9 3.6 3.5

Source: National Statistical Office, 2006 Note: Population working by contracts in foreign countries and Ministry of Foreign Affairs missions were excluded.

According to 2006 statistics, more than half of the workforce (53%) were involved in the informal sector of the economy, the vast majority of which (92%) worked in agricultural sector in rural areas. In recent years there has been a tendency toward reduction in the overall share of the agricultural sector of Mongolia, which in turn leads to shrinking of the informal labour as a whole. At the same time, informality is rising among salaried workers. (See Figure 1.) According to the Selective Study of the Labour Force in 2004, 126,000 people worked on two jobs, which is 14.6 per cent of the total economically active population, 44.8 per cent of whom were women.5 The main reason for being employed in two or more jobs for this category of people is a very low level of wages in Mongolia, inadequate to meet even the basic needs. Although the minimum wage rate is renewed by the government twice a year, the employee’s right to receive an adequate wage has not yet been respected.

Figure 1. Overall informality is decreasing but informality among salaried workers is on the rise (Informality rates, %)

70 60 60 53 50 40 30 19 20 12 10 0 In total In wage In total In wage employment employment employment employment 2002 2006

Source: Government of Mongolia, Living Standards Measurement Survey (2002), cited in The World Bank (2007) Mongolia: Building The Skills For The New Economy, June (Report 40118). 80 Asian Labour Law Review 2008

Informal Labour in Mongolia

One of the peculiarities of the informal labour is that the worker has an opportunity to determine by himself/herself the wages, working hours, resting hours, etc. The informal sector workforce of Mongolia can be categorized into the following groups: owner-employers of micro-enterprises, which employ a few paid workers, with or without apprentices; own-account workers, who own and operate one-person businesses, who work alone or with the help of unpaid workers, generally family members and apprentices; and dependent workers, paid or unpaid, including wage workers in micro-enterprises, unpaid family workers, apprentices, contract labour, home-workers and paid domestic workers, such as livestock breeding, illegal hand mining on a small scale, sex work, baby-sitter work and other household works. The most noteworthy groups in the informal labour are livestock breeding, sex work and mining. Since 1999 the number of herders has decreased and in 2006 there were 364,400 of them, but the number of rich livestock breeders increased.6 This phenomenon may be explained by reducing the overall share of the agriculture, severe weather conditions, desertification, and pasture deficiency, and leads to increase of the number of livestock per household. Therefore a huge number of rural people migrated to the urban areas, filling the army of the informal sector of the economy.

In 2000-2001 Mongolian herders suffered huge losses of livestock due to severe unusual weather conditions, triggering the bankrupt herders to make their living by working in the illegal mining sector, which is available in almost every region of Mongolia. According to the survey undertaken by the Mongolian Business Development Agency and Eco Minex, about 100,000 people are involved in illegal gold mining, 40 per cent of whom work all year round without adequate working conditions, safety and insurance. 7

Besides the people directly involved in sex work, there are many other categories of citizens indirectly involved in this field of illegal business, such as night club dancers, massagers in saunas, etc. But serious studies on the issue of determining physical and emotional conditions, social protection and the number of people involved in sex work have not been undertaken by the government nor by foreign states. Women's share of informal sector employment has remained high. However, women most probably number much more than reflected in available statistics. They comprise most of the unpaid family helpers and home-based workers, and thus fall easily through gaps in enumeration. Productive but unpaid work is often compounded with household work. In many cases, women themselves do not view themselves as workers. The typical hazardous working conditions of informal work seriously affect women’s health; moreover there is a huge threat to their reproduction abilities.

But interestingly, some women involved in informal labour have various advantages over those women working in formal sector, which includes proper satisfaction of their physiological needs, the possibility of managing their vacation without any risk of losing their jobs, and having more time to spend with their children after birth.

Both informal and formal sectors of the Mongolian economy violate the register of jobs prohibited for women to perform by the Labour Law of Mongolia, such as restriction on night and overtime work and assigned trips for women having children, reduction of hours of work of pregnant women and mothers, their transfer to other work, limitation on loads handled by women, etc.

The widespread strategy of subcontracting production and services to family enterprises and home-based labour has contributed to the further integration of women's home-based labour into Mongolia 81 the formal production system under informal, flexible employment arrangements. Self-employed workers, most of whom are own-account and unpaid family workers are considered the major component of the rural and urban informal sector.

As shown in a study on informal work, the divorce rate among families working in the informal sector is much higher, almost twice as much as their formal sector counterparts.8 In some respects, this phenomenon can be explained by the peculiar features of the informal labour, including unjust share of the resources.

As in the formal sector, in contrast to their male counterparts, women workers tend to be concentrated in a narrower range of activities or occupations (common stereotyped activities are food processing, garment sewing, domestic services), in tasks that require less or no skills and pay less, and in the lower-end of the markets. Moreover, in addition to constraints faced by workers and producers in the informal sector with regards to assets, markets, services and regulatory frameworks, women face additional gender-specific barriers (e.g. restrictions on entering into contracts, insecure land and property rights, and household and childcare responsibilities).

Working all year round in hazardous, unfriendly conditions affects not only women’s health, but their temperament. For instance, 47 per cent of women working in trade business such as sellers on the black market place or shop assistants admitted that they became too nervous, 25 per cent of them became able to quarrel and swear and, moreover, 15 per cent of the women became able to fight and brawl, which led to losing some profits and resources. Furthermore, 30 per cent of women who work in the black market as informal workers are constantly suffering from cough and cold, 23 per cent have chronic kidney problems and eight per cent of them suffer from various other diseases due to poor working conditions. 9

Box 1. The female seller S. on Narantuul international marketplace, 45 years of age

‘I have been working here for the last five years, all year round regardless of the weather conditions. In the hot summer time I usually suffer from headaches and high blood pressure; but in the cold winter times I suffer from chronic sore throat and other serious diseases. Also I don’t have my lunch on time. Since my employment here, my character has become nervous and unstable. I even often quarrel with my husband and children, pouring on them my negative energy.’

Source: ‘Last Vision Center’ and ‘Young Women Leader Club’ (2004) Study of Labour Conditions of the Women Working In the ‘Narantuul’ International Marketplace.

In recent years Mongolian citizens have had the opportunity to live and work in foreign countries. During the period from 1990 until 2003, 5 per cent of the Mongolian population, or 120,000 people, have migrated to foreign lands to make their living. Most of them migrated to the US, Japan, Germany, Thailand, Czech Republic and especially South Korea. From 1994, Mongolians began to work in the Republic of Korea. At present over 29,000 people are working there, 60 per cent of who work on a legal basis, while others work illegally. The Mongolian citizens working in foreign countries face very many challenges such as poor working and safety conditions, inadequate health care and other kinds of discriminations. 82 Asian Labour Law Review 2008

Box 2. Mongolian Labour Unions protect the rights of the employees of the formal sector of economy

Labour Unions have the legal environment to protect only the rights of the employees in the formal sector of economy. The Mongolian Labour Union (MLU) consolidates 35 different small labour unions divided according to specific fields of occupation, which include 22 regional labour unions. MLU consists of 2,037 local units and its membership approaches nearly 209,000 supporters which make up more than 20 per cent of the economically active population over the age of 15.

However MLU has failed to adequately protect the rights and interests of the working class. Although Mongolian workers have organized a few strikes on a legal basis in order to protect their own interests, as a rule, they do not reach the desired results. But in September 2007, miners of the Shivee-Ovoo coal mine finally succeeded in reaching the desired results of the strike, which was the biggest strike ever organized in Mongolia. Their clams were to improve working conditions and increase their wages.

Employees of informal labour have begun to establish different NGOs

Recently the representatives of the informal sector of economy have begun organizing different NGOs aimed to protect the rights and interests of this sector, such as taxi drivers, microbus drivers, etc. Trade unions serve only formal employees whom have official labour contracts, not informal workers; for this reason this step taken by informal workers clearly demonstrates that, in fact, informal workers have no authorized way to do this in current difficult situation.

2. Labour Law and the Informal Sector of Economy

As the development of the informal labour shows, it is obvious that it fills the niches and gaps left by the formal sector of economy and is more flexible and adaptable to market changes as well as the formal labour cannot offer enough jobs to the population. As we can see, the world economy is getting more and more flexible and informal labour-oriented, due to various reasons.

Mongolia still has not adopted any laws and regulations dealing with the informal labour. The Labour Law defines that a contract of employment should represent mutually accepted agreement whereby on the one hand a worker undertakes to strictly observe the internal labour regulations and to perform a work in definite trade, specialty and position; on the other hand an administration undertakes to pay labour wages and ensure working conditions in accordance with the legislation of Mongolia and the Collective Agreement as well as the accord reached with the worker himself. But in the informal labour there is no understanding such as ‘internal labour regulations’.

We would like to emphasize again that the conditions of work in the informal sector of economy have violated the rights and interests of its employees, especially the female ones. Besides the legal protections for working women which were mentioned in the previous section, also under the law, pregnant women, mothers having children of 1-8 years of age, and single mothers with children under 16 shall not perform night or overtime work or make assigned trips only on Mongolia 83 their own consent; mothers must be granted baby care leave; dismissal of pregnant women and nursing mothers are prohibited; overtime work payments should be given; and all women should be covered by any legal insurance programmes, such as social and health insurance programmes leading to obtaining the pension after retirement; etc.11 Yet these laws are frequently violated when the female worker is not working in the formal sector.

Moreover, there is no legal term or understanding of a ‘job position’ in the informal labour. This leads to violations by the employers of their obligation to guard workers against industrial accidents and occupational diseases, to ensure safe and healthy conditions of work, etc. In other words, the employees of the informal sector of economy do not enjoy any rights provided by the labour law of Mongolia, which is the direct negative consequence of the primitive legal environment on this issue.

The so-called temporary or provisional labour contract is one of the main aspects defining the flexibility of businesses, but it fails to be applied in a correct way, thus turning formal ‘wage employment’ into informal labour, seriously affecting the employees.

The temporary or provisional labour contract is regulated by the civil code, not by the labour law. In order to avoid high social insurance payments, the employers commonly practice signing temporary labour contracts. Therefore, such employees are not able to enjoy all benefits provided by the labour law such as payment of the social insurance, and as a result also cannot obtain adequate pensions in the future. According to some sources, an enormous migration from the rural area has played a major role in the increase of the informal labour in Mongolia.

Especially, in 2000-2001, drought and ‘zud’ (harsh winter) influenced the employment pattern of many herdsmen, who occupied almost 50 per cent of the total labour force of Mongolia.12 Currently, 60.8 per cent of the population of Mongolia lives in a city or other settlement and almost 62.9 per cent of this settled population live in Ulaanbaatar.13

According to the Labour Law, there is a practice of dismissing an employee after six months of probation period. These persons, as well as the employees with temporary or provisional labour contracts, have been greatly contributing to ‘informalization of labour’ and are not able to enjoy all the benefits provided by the Labour Law. This tendency of informalization of labour is widely practiced in the foreign-invested garment industry. There have not been undertaken any proper surveys on this issue yet. It is definitely one of the most important matters to be resolved.

As we have mentioned, temporary or provisional labour contracts must be one of the main aspects of the labour system, but it needs tough regulations and control, such as respecting the rights of the employees to enjoy the social protection mechanisms.

Beginning this year the social insurance taxes paid by the employers have been reduced. Obviously, this reduction of the social insurance taxes for the benefit of the employer will significantly reduce the level of informal labour in Mongolia. Previously, the rate of the social insurance taxes paid by employers was very high. The employers would want to avoid the high taxes and had no interest in creating new job places or increasing salaries. This situation had the effect of increasing the level of informalization.

In the following section we will be discussing the mechanisms to reduce informalization of labour in Mongolia. 84 Asian Labour Law Review 2008

3. Measures to Be Undertaken to Reduce Informalization of Labour

Mongolia has faced many challenges since the transition from central planning economy towards market economy, such as resolving completely new problems in social and economical relations in order to establish legal environment to protect the human rights of the population. One of the vulnerable issues is the informalization of labour. Although this issue has not any legal grounds yet, the Mongolian government has defined its policy on regulating the informal sector of economy. This ‘Policy of the Government of Mongolia on the Informal Economy’, which was declared in 2006, outlines: ‘Although, informal labour is not prohibited, it includes all unregistered and undeclared non-agricultural economic entities, uncovered by social insurance’. As we can see, agricultural economic entities, which are the main source of informal labour in Mongolia, are excluded. It leads to neglecting the rights of the employees of this sector. The proper changes need to be made.

The main objective of the government’s policy is to formalize the informal labour by establishing adequate legal, economic and social environments to regulate and protect the rights and interests of the employees of the informal labour from various risks, to create favorable conditions for economic growth.

There are no organizations or unions protecting the rights of the informal labourers in Mongolia. Just recently, some groups of informal labour representatives such as taxi drivers, street photographers, bus drivers, etc. have consolidated into non-governmental organizations. The state should undertake appropriate steps to support their actions. According to the Law on the Rights of Mongolian Trade Unions, the trade unions and its federations shall be established according to either a type of profession or industry, and conduct its activities in accordance with the law. Though, the existing law admits establishment of many kinds of trade unions, eventually, only the rights of the formal employees are protected by these trade unions. Currently, Mongolia has totally 35 trade unions. As of September 2008, CMTU has 209.2 thousand (60 per cent female) members, 13 affiliated industrial and professional federations and 22 provincial unions. Affiliated unions are: the energy, geology and mining workers’ union, public employees’ union, railway workers’ union, construction workers’ union, agricultural and food workers’ union, transport, communication and petroleum workers’ union, industrial workers’ union, health employees’ union, private sector workers’ union, road construction workers’ union, trade and service workers’ union and education and scientific employees’ union. In total, 1,955 trade union committees belong to these provincial and branch trade unions. Also, the Labour Law of Mongolia provides the rights of the formal workers, who work in the official organizations. It is needed to emphasize that the rights of the informal workers have been neglected and lack legal protection.

The following measures should be undertaken to successfully resolve the issue of informal labour:

Measures to be undertaken on the state level to resolve informal labour:

1. To reduce any hardships and obstacles exerted on the informal labourers; 2. To establish mechanisms of guaranteed social protection of the workers; 3. To create equal conditions in providing different kinds of services for the workers; 4. To promote formalization of labour by creating favorable economic and other conditions; 5. To make an easy access for obtaining credits on favorable terms; 6. To protect property and assets of the informal labourers from risks; 7. To promote informal labour by favorable tax policy for their contribution in creating new jobs; Mongolia 85

8. To undertake measures to officially include informal sector of economy in the national statistical registration and perform studies and surveys on the gender situation in the informal labour and improve analysis methodology of the sector; 9. To create opportunities for cooperating with the related state and other economic entities and organizations. To promote and support informal labour groups in organizing unions for protecting their rights and interests. 10. To introduce a management programme to improve working conditions of the workers of the informal sector with the support of the International Labour Organization; 11. To promote and explain to informal labour employees the significance and advantages of being covered by the social and health insurance programmes. 12. To join international conventions and agreements on dealing with informal labour.

Measures to be undertaken regarding legal regulation:

The necessary condition for successful implementation of the above-mentioned objectives is establishing an adequate legal environment concerning informal labour in Mongolia.

1. To create legal regulations to protect the rights and interests of the informal labour employees and, in case of violations, establish mechanisms of proper restoring their rights; 2. To establish favorable conditions for the workers of the informal labour to be covered by social and health insurance programmes, by creating adequate legal environment; 3. To establish favorable conditions for the workers of the informal labour to be involved in social welfare and pensions programmes, by creating an adequate legal environment; 4. To amend the related labour laws and regulations in order to establish a tripartite agreements, national committees and councils to reach a consensus on the issue of social protection of informal economy representatives; 5. To harmonize national laws and regulations with international standards. 6. To harmonize national laws and regulations regarding a procedure of dealing with industrial accidents of informal workers, because this procedure has not been clarified.

Finally, it is not enough just to create an adequate legal environment for regulating the informal economy. At the same time it is obvious that a proper mechanism of control is vitally needed, because any implementation process in Mongolia lacks adequate control measures.

ENDNOTES

1. Baasan, L. (2000) Labour Law, Ulaanbaatar. 2. Shi. Batbayar, Ministry of Labour and Social Welfare (2002), Opening Speech at the national conference on Informal Economy and Development of Small and Medium-sized Businesses. 3. Government of Mongolia. National Statistical Office (2007) Study Comparing the Basic Economic and Social Indicators of Mongolia With International Standards. 4. UNDP and Government of Mongolia, (2007) Report on Human Development in Mongolia. 5. Government of Mongolia. National Statistical Office (2003)Selective Study on the Labour Force in Mongolia. 6. Human Development Sector Unit, East Asia and Pacific Region, The World Bank (2007) Mongolia: Building The Skills For The New Economy, June (Report 40118). 86 Asian Labour Law Review 2008

7. Government of Mongolia. National Statistical Office, (2006) Informal Gold Mining in Mongolia, Baseline Survey Covering Bornuur and Zaamar, Tuv Aimag. 8. Government of Mongolia. National Statistical Office (2005) Report on the Study on Mongolian Informal Sector of Economy, Open Society Forum. 9. ‘Last Vision Center’ and ‘Young Women Leader Club’ (2004) Study of Labour Conditions of the Women Working In the ‘Narantuul’ International Marketplace. 10. Government of Mongolia. Ministry of Labour and Social Welfare. (2007) Study on Human Rights of the Mongolian Citizens Working in South Korea, Union of the Small and Medium-sized Business Employees Working Abroad. 11. Government of Mongolia. Labour and Welfare Service Agency (2006) Summary of ‘Research on Informal Workers’. 12. Government of Mongolia. National Statistical Office (2006) Informal Gold Mining in Mongolia, Baseline Survey Covering Bornuur and Zaamar, Tuv Aimag. 13. Government of Mongolia. National Statistical Office (2006)Compilation of Mongolian Statistics. 14. Confederation of Mongolian Trade Unions website, www.cmtu.mn

References

Morris, Elizabeth (2001) The Informal Sector in Mongolia, International Labour Office. Human Rights Report of Mongolia (2004, 2006). Government of Mongolia. Ministry of Labour and Social Welfare (2006) State Policy on Informal Sector. Taiwan 87

Taiwan

Liu, Wan-Ling

1. Introduction

he economic structure of Taiwan (mainly small- and-medium-sized enterprises) and the T labour administration (factory-based union scheme) of the Kuomintang (the Nationalist Party) have shaped the capacity of the labour movement in Taiwan. Small-scaled and divided labour used to rely on governmental intervention to confront the exploitation of employers. With the globalization of the world economy, the state has tried to reduce its role in the mediation between workers and employer. The government policy has tended to support a more flexible labour market. The labour movement allied with the opposition political party in the past to struggle for workers’ rights, but since the opposition party became the ruling party, the liberal policy has not changed at all. The Taiwan labour movement needs to face new ways of organizing, including how to ally with migrants and temporary workers.

2. The Labour Law System In Taiwan

Collective Labour Laws

The collective labour laws include Labor Union Law (announced October 1929 and modified May 1975), Collective Agreement Law (announced October 1930) and the Settlement of Labor Disputes Law (announced June 1928 and modified June 1988).1 These three laws were all originally legislated during the 1920s when the Kuomintang was in power in mainland China. When as a result of civil war the Kuomintang was defeated by the Communist Party in 1949, it moved its government to Taiwan and kept these three collective labour laws.

The Labor Union Law regulates the registration and structure of trade unions. The law recognizes two kinds of unions: the industrial union and the craft union. If there are more than 30 workers in the same workplace, they can form an industrial union. Fewer than 30 workers and the self-employed can join craft unions. In reality, the craft unions are all controlled by the owners of small businesses. The only function of the craft union for workers is to create a platform for joining the Labor Insurance—nothing else. Only the industrial unions can exercise collective labour rights.

Most industrial unions are factory-based, except in state-owned enterprises. And most private enterprises in Taiwan are small- or medium-sized, so that the scale of the union is usually small. Before Martial Law was removed in 1987, all the unions had to join the official confederation, the Chinese Federation of Labor (CFL). Since the mid-1990s, it has been very difficult to establish an independent union. Until now, the law has dictated that unions in Taiwan are closed-shop union, i.e. only a single union can be registered in a single workplace.

The Settlement of Labor Disputes Law regulates the mediation of the government in the settlement of labour disputes. When Martial Law was in effect, the workers’ right to strike was frozen. At the height of the labour movement during the late 1980s and the early 1990s, strikes 88 Asian Labour Law Review 2008 were frequent but quickly decreased. In recent years, there have been almost none. Since most unions are small and have little strength, workers usually rely on government intervention and not collective bargaining power to resolve disputes.

The Collective Agreement Law regulates the Collective Bargaining Agreement (CBA) between the union and the employer. Again, because a large number of unions lack bargaining power, a CBA in Taiwan is rare; only a few have succeeded in being concluded. Even the CBAs that do exist are just repeats of what are already in the labour standards. We can say that most unionists take little advantage of the CBA; they also rely instead on government intervention, rather than collective bargaining power, to raise working conditions and workers’ welfare. Only in recent years have several bank unions tried hard to negotiate a CBA with the employers to demand job security, confronting the privatization or proposed merger of banks.

Of these three laws, the Labor Union Law and the Settlement of Labor Dispute Law are the two most familiar to trade unionists. The resolution of a labour dispute can be considered to have the same binding effect as a CBA, once it has been agreed between the employees and the employer.

Individual Labour Laws

The Labor Standard Act is the basis of labour laws that regulate individual labour rights. It was introduced in July 1984 and last modified in December 2002. The chapters of the Labor Standard Act include labour contracts, working hours, wages, protection of child and female labour, retirement, compensation for occupational accidents, apprenticeships, work rules, among others. In the mid-1980s, the independent labour movement in Taiwan was still in its infancy. It had insufficient strength to push the Taiwan government to legislate this law. The instigation of this law was the result of pressure from the US government to increase the cost of manpower to avoid ‘unfair competition’ in the global market from cheap Taiwanese labour.

But once the Labor Standard Act was legislated, it became a tool for trade unionists to demand workers’ rights. In the late 1980s and the early 1990s, workers asked for back wages, over-time pay and better annual bonuses. From the mid-1990s to the early 2000s, workers’ campaigns focused on how to get compensations when their bosses moved their factories away from Taiwan and invested their money abroad. Demanding enforcement of the Labor Standard Act has been the major role of the Taiwan independent labour movement until the present time.

Another important law for individual labour rights is the Labor Insurance Act (announced July 1958 and newly modified in January 2003). It has two types of coverage: 1) ordinary injury insurance, which provides seven kinds of benefits: maternity; injury and sickness; medical care; disability; unemployment; old-age; and death; and 2) occupational injury insurance, which provides four kinds of benefits: injury and sickness; medical-care; disability; and death.

3. The Labour Situation in General

Size of the Labour Force in Taiwan

According to statistics from the Council of Labor Affairs (CLA, the labour department), the population of Taiwan at the end of 2007 totaled 22,821,000, of which 18,392,000 were civilians aged 15 years and over. The labour force was 10,713,000 of the total population. Of this, 10,294,000 were employed and 419,000 unemployed. According to these statistics, officially, Taiwan 89

96 per cent of the labour force is employed. The percentage of women employees in the labour market is 43 per cent.

Unemployment

According to the same statistics, the unemployment rate of males is 4.05 per cent and of females is 3.72 per cent.

We should keep in mind that the official unemployment rate is much lower than the real situation. At the end of 2007, the total number of jobless affected by closure and bankruptcy was 130,000, and the long-term jobless, out of work for more than one year, reached its highest peak at 60,000. Even more numerous are the many jobless people who use their bank savings to carry on some small business and those who have given up trying to find a job and live on relatives’ support: they are all excluded from the jobless statistics in perpetuity. This hidden jobless population – accounted for as ‘unwilling to work’ and ‘free at home’ persons – who according to official statistics belong to the ‘non-labour force’ category, numbered 960,000 persons at the end of 2007. In just the one year from 2006 to 2007, the hidden jobless increased by a significant 140,000 persons, indicating that the official unemployment rate is much lower than the real situation.

Table 1. Unemployment Rate in General by Year

Year 2003 2004 2005 2006 2007 Unemployment rate (%) 4.99 4.44 4.13 3.91 3.91

Source: Directorate-General of Budget, Accounting and Statistics, Executive Yuan

From the table below, we can see that for female employees, a higher education means a higher unemployment rate. It should be kept in mind that for official statistics, women who become housewives after marriage are excluded from the definition of the labour force. The phenomenon of a higher unemployment rate in higher-educated women reflects the existence of gender discrimination in the society. The higher positions with better pay would be considered to be a male province; female employees are directed to do the so-called unskilled and service jobs.

Table 2. Unemployment Rate by Educational Attainment and Sex (Unit: %)

Education Sex Male Female Below junior high school 4.74 2.92 Senior (vocational) school 4.51 4.01 College, university and graduate school 2.98 4.35

Source: Directorate-General of Budget, Accounting and Statistics, Executive Yuan 90 Asian Labour Law Review 2008

Average Wage and Minimum Wage

Table 3. Average Wage and Minimum Wage, 1985-2007

Per cent Minimum Average Percentage Average Percentage change from wage monthly of change monthly of change previous (NT$) earnings of from last manufacturing from last year about industry period (%) (NT$) period general and service (%) index (NT$) consumers Avg. 1985 -0.16 6,150 13,991 4.24 12,697 4.30 Avg. 1995 3.67 14,880 35,421 5.14 32,555 5.69 Avg. 2002 -0,20 15,840 41,667 -0.89 38,565 -0.05 Avg. 2003 -0.28 15,840 42,287 1.49 39,583 2.64 Avg. 2004 1.62 15,840 43,021 1.74 40,611 2.60 Avg. 2005 2.31 15,840 43,615 1.38 41,751 2.81 Avg. 2006 0.59 15,840 44,107 1.13 42,293 1.30 Avg. 2007 1.80 17,280 45,112 2.28 43,026 1.73

Source: Council of Labor Affairs Note: NT$32 = approx. US$1

According to my own experience, factory workers commonly earn about NT$30,000 a month in the automobile parts or electronics industry. In the textile industry, the wage would be below NT$25,000 for men and below NT$20,000 for women. The official ‘average wage’ above is arrived at from all the employees in the industry, meaning that the income of managers is included in it.

Some workers in the service sector earn even less than NT$18,000 a month. And if a worker’s salary is calculated by hours worked, or deductions are made for reasons such as paying for uniform, the monthly income can be less than the minimum wage. In the village areas, it is common to find textile workers (who are mostly female) earning less than the minimum wage, but they are reluctant to complain about this for fear of losing their jobs.

From 1996 to 2006, the minimum wage was fixed at NT$15,840 in order to keep the labour supply cheap enough for global competition. It severely affected the income of part-timers, migrant workers and traditional industry employees because their salary was just on the border of the minimum wage by law. Taiwan 91

Working Hours

Table 4. Working Hours (Unit: hours/month)

Average Working Hours Of Average Regular Working Hours Of Industry And Service Sector Industry And Service Sector Avg. 1985 203.8 194.2 Avg. 1995 194.2 184.5 Avg. 2002 181.4 172.4 Avg. 2003 181.2 172.0 Avg. 2004 183.5 173.5 Avg. 2005 182.0 172.4 Avg. 2006 180.8 171.7 Avg. 2007 180.3 171.2 Source: Directorate-General of Budget, Accounting and Statistics, Executive Yuan

The regular working pattern is eight hours a day and 84 hours in every two weeks. With prior consent of either the labour union or a majority of the workers in the company, the employer may transfer regular working hours between weekends and weekdays, known as flexible working hours, to avoid paying for overtime. The total working time each day, however, must be less than 12 hours, whether it is accounted as overtime or flexible working hours.

Many companies ask employees to give up their overtime payment in the name of ‘responsibility to the work system’. This is very common in the IT industry and also for white- collar staff. In the advertising industry, the average number of working hours in a day can reach 15 hours, but no one asks for overtime pay! So, we are confident that the data above does not show the true situation.

The law regulates that there should be at least one day of leave for every seven days; thus the working week should be no more than six days. The Labor Standard Act does not cover domestic helpers, so those migrant women, the majority of whom are from Indonesia and the Philippines, in practice suffer slave-like working conditions, which means ‘24 hours a day and seven days a week of working’.

Migrant Workers

At the end of 2007, the total number of migrant worker was 357,937. About 51 per cent of them work for manufacturing industries and 45 per cent for social, personal and related community services, including providing medical and household support.

Wu Jing-Ru, Secretary General of TIWA (Taiwan International Workers Association), has pointed out five major problems in Taiwan's migrant labour policy, including the limit imposed on the length of work, the broker system, the inapplicability of the Labor Standards Law for domestic helpers, deprivation of rights to form labour unions and to inability to choose their employers. Wu claims this discriminatory policy has justified the exploitation of migrant workers, and the NGOs must unite and ask for changes in the policy. 92 Asian Labour Law Review 2008

Table 5. Foreign Workers in Taiwan by Industry and Nationality, End of 2007 (Unit: no. of persons)

Total Indonesia Malaysia Philippines Thailand Vietnam Mongolia Total 357,937 115,490 11 84,423 86,948 69,043 22 Agriculture 3,786 2,526 - 736 13 511 - (crewman) Manufacturing 183,329 11,286 11 60,744 77,936 33,337 15 Construction 8,594 59 - 574 7,180 781 - Social, 162,228 101,619 - 24,369 1,819 34,414 7 personal and related community service Source: Council of Labor Affairs

In 2005, migrant workers for Kaohsiung’s Metropolitan Rapid Transit (MRT, the underground railway) system rioted in the face of employment that amounted to slavery. The case exposed the inadequacy of the migrant labour policies, but it resulted only in political quarrelling and hardly any change to policies.

Brokers, of course, become the beneficiaries. Before 2001, the commission for introducing migrant workers depended solely on demand and supply. When brokers realized just how desperate Southeast Asians were to go to richer countries to make a living, they began to demand a sky-high commission. In most cases, the migrant worker is allowed to stay in Taiwan for no more than three years. They spend their first two years working to pay off the commission. Because workers in debt have no freedom to choose their employers, they either put up with unfair treatment, or become ‘runaway workers’ who are often blamed for rising criminal activities.

On November 2001, after pressure from labour NGOs, the CLA finally announced a regulation prohibiting the brokers from getting ‘commission’. Instead, they can only ask for a ‘service charge’, which is no more than NT$1,800 per month for the first year, NT$1,700 per month for the second year and NT$1,500 for the third. However, Taiwanese brokers have teamed up with brokers in the workers’ home countries, cheating the migrant labour into signing enormous loan contracts so the brokers on both sides can share the commission clandestinely. The migrant workers’ groups are demanding a ‘Household Service Act’ to regulate the basic working standard for migrant domestic helpers. The establishment of a direct hiring system to avoid exploitation from agencies is also being demanded of the CLA.

Number of Unions, Number of Members, Details of Major Union Centres

As mentioned earlier, there are two kinds of union in Taiwan: the industrial union and the craft union. More than 30 workers from the same workplace can form an industrial union. Where there are less than 30 employees in a workplace or where the worker is self-employed, the worker can join a craft union. As most private enterprises in Taiwan are small- and medium-sized, employing less than 30 workers, most unionized labour in Taiwan, as the table below shows, are craft union members. Taiwan 93

According to the statistics, at the end of 2007, the number of female members in industrial unions was 161,944. This means that only 28.3 per cent of the industrial union members are female. The number of female members in craft unions was 1,281,506, which represents 52 per cent of the total.

The organization rate of the industrial unions looks reasonable, although it is decreasing. However, the statistics only include workplaces with more than 30 employees. If we calculate the total organization rate by members of industrial unions with the total employed workforce, leaving craft unions out, then the organization rate in Taiwan in 2006 was only 5.73 per cent.

Table 6. Unions and Members and Organization Rate

Industrial Unions Craft Unions Total

No. No. Organ- No. No. Organ- No. No. of No. of Organ- of of ization of of ization of Institutional Individual ization Unions Members rate (%) Unions Members rate (%) Unions Members members rate (%)

1995 1,204 598,475 25.35 2,413 2,537,396 58.05 3,704 4,475 3,135,875 46.58 2002 1,104 561,140 20.28 2,848 2,299,158 49.19 4,093 4,735 2,860,298 38.44 2003 1,103 558,195 19.42 2,902 2,343,777 49.83 4,158 4,769 2,901,972 38.30 2004 1,109 593,907 19.61 3,024 2,370,704 49.02 4,290 4,844 2,964,611 37.69 2005 1,027 618,006 19.64 3,119 2,368,798 47.98 4,310 4,862 2,986,804 36.95 2006 989 579,291 18.11 3,277 2,399,682 47.15 4,476 4,871 2,978,973 35.94 Source: Council of Labor Affairs

Although 69 general federations are included in the statistics, ‘general federation’ just means a nation-wide federation. In terms of national labour centres, there are now four or five in Taiwan. In fact, only the CFL and the Taiwan Confederation of Trade Unions (TCTU) are really operational.

Before 2000, there was only one national labour centre—the CFL. It was established by the Kuomintang during their mainland era and came to Taiwan with the Kuomintang. The CFL is in two parts—a nation-wide industrial union (in state-owned enterprises) and the regional branches. In the regional branches, there are both industrial unions and craft unions. Because there are always more members in craft unions than in industrial unions, the regional branches are always controlled by the craft unions. Yet the leaders of craft unions do not show concern about labour rights. This is a major issue which angers trade unionists from industrial unions.

After the rise of the independent union movement of the late 1980s, some industrial unionists began to split from the CFL. The first regional federation of independent industrial unions was established in 1994. Only industrial unions can join; the craft unions are not allowed to. In 1997, the preparation committee of a new national labour centre was set up. The preparation committee was transformed into the TCTU in 2000 as the Democratic Progressive Party (DPP) came to power.

The TCTU also comprises a nation-wide industrial union (in National-Owned Enterprises) and regional branches. It is thought to be the essence of the Taiwan independent union movement. It really played this role during the preparation period. After the DPP came to power, it gave up its social movement strategy, betraying the grass-roots activists, and did the same with 94 Asian Labour Law Review 2008 labour issues. But the TCTU still supports the DPP’s labour policies and seldom participates in rank-and-file struggles any more. From 2005 until now, the TCTU has already twice changed its president because both previous presidents accepted DPP nominations: one went to be a legislator (later the Chair of the CLA) and another became head of the Kaohsiung City labour bureau. The seat of the TCTU president is more like a ladder to becoming a politician than a leader of a labour movement. It doesn’t help the labour situation that the previous presidents have turned to politics. As will be discussed later, they support the DPP government in enforcing a labour flexibility policy.

The TCTU is no longer active. It functions more like an NGO but not a national labour centre. Most regional federations of industrial unions have already dropped out the TCTU. Many trade unionists think that the TCTU isn’t capable of representing Taiwan’s independent union movement any more.

Another confederation that still functions is the National Federation of Independent Trade Unions (NAFITU). However, NAFITU is not recognized by the government because it has never registered. NAFITU was set up very early in 1988. It was the first nation-wide confederation of independent unions in Taiwan. Although NAFITU still exists, it is now run only on a small scale.

Table 7. Number of Unions in Taiwan, 2004-2006

No. of Unions End of 2004 End of 2005 End of 2006 Total 4,290 4,310 4,476 General federation of unions 53 58 69 Federation of industrial unions 23 25 36 Federation of craft unions 81 81 105 Industrial unions 1,109 1,027 989 Craft unions 3,024 3,119 3,277 Source: Council of Labor Affairs

Number of Strikes

According to the Settlement of Labor Disputes Law, the term ‘labour disputes’ refers to either rights disputes or adjustment disputes. Rights disputes concern the collective agreements or labour contracts between workers and employers. Adjustment disputes arise between workers and employers when they cannot agree whether to continue or to change the working conditions.

The law goes on to say that rights disputes can be settled by conciliation procedures provided in this law; adjustment disputes can be settled by conciliation or arbitration procedures provided in this law. During the period that labour disputes are in the process of conciliation or arbitration, an employer may not close shop, suspend work, terminate labour contracts, or carry out other activities unfavourable to the workers on account of such disputes. At the same time, workers may not resort to strike, sabotage, or carry out other activities on account of such disputes which may interfere with the normal work procedure.

If the labour dispute cannot be settled by the procedure provided, then the union can go on to strike. The union has first to hold a general assembly and conduct a strike ballot in the Taiwan 95 assembly. If more than half of all the members are in favour of striking, then the union has the legitimacy to strike. According to the Settlement of Labor Disputes Law, only adjustment disputes can lead to strike action.

At the beginning of the high point of the labour movement in the late 1980s, strikes were still illegal under the martial law regime of the time, but wildcat strikes were frequent. Now although the unions are allowed to strike by law, strikes are rare. As mentioned earlier, the unions in Taiwan are usually small-scale, especially in the private sector, so they do not have the capacity to strike. Union leaders always try other strategies to find a resolution.

One way is to hold a general assembly continuously for days but without launching a strike ballot. In practice, it has same effect as a strike, but in legal terms the union has not gone on strike. This means the procedure is still in mediation, the union preferring not to totally break with the employer.

In recent years, only bank unions and unions in state-owned enterprises have had enough capacity to launch strikes. Since 2005, more than ten bank unions have held general assemblies and strike ballots. They all had the legitimacy to launch a strike, but only one strike took place. One reason for this was that the employer compromised after the union obtained legitimacy. Another reason was that the union wished to retain a weapon with which to confront the employer: a strike is the last resort. Thus, if negotiations are ongoing, then strike action is not necessary so soon.

For picket lines, the law has no clear regulation. If workers set up a picket line, then the employer can file a law suit to demand compensation. During the labour movement’s peak and some closure disputes, workers successfully picketed to stop goods being shipped out from factories. The success of pickets depends on the workers’ capacity and the political atmosphere.

GDP, Debt and the Poverty Line

After years of capital outflow and a tax deduction policy for investment, the Taiwan government faces a serious financial deficit and also a large number of debts. The formerly opposition and presently (since May 2008) ruling party Kuomintang announced that by the end of 2007, the national debt had reached a peak of NT$4.85 trillion, 40 per cent of the GDP.

Table 8. Per Capita GDP of Taiwan, Mainland China and Hong Kong (unit: US$) Year Taiwan Mainland China Hong Kong 2006 16,030 1,988 26,611 2005 15,668 1,735 25,191 2004 14,663 1,484 23,751 2003 13,587 1,131 23,021 Source: Department of Investment Service

The debt not only would be left to the next generation, but also would be accompanied by expansion of the gap between rich and poor. The existing poverty line is criticized for being too stringent to match the real situation. Joblessness, credit card debt and the increase in prices as reflected in the CPI (consumer price index) have in reality resulted in more and more people 96 Asian Labour Law Review 2008 falling under the poverty line yet unable to get any support from the government. The problem arises because the social welfare authority in Taiwan classifies the poverty line as 60 per cent of the lowest living standard for a household, and also stipulates that a person living below the poverty line must have no car, must have no house or estate, and other conditions. So, according to official records, the population below the poverty line in Taiwan is estimated in 2007 at only 0.95 per cent of the total population, which would make it the lowest in the world (according to the The World Factbook of the CIA; see www.cia.gov). In 2007, the declared poverty line was NT$14,881 in Taipei City, NT$10,708 in Kaohsiung City and NT$9,509 for other counties in Taiwan.

4. Some Important Changes in Labour Laws from 2003 to 2007

1. Gender Equality in Employment Act (announced January 2002)

This Act sets out to protect equality between the sexes in the right to work, to thoroughly implement the constitutional mandate of eliminating sex discrimination and to promote the spirit of substantial equality between the sexes. The Act includes some very good measures to improve gender equality in employment, such as the menstruation leave one day per month, fraternity leave, maternity leave, parental leave, and so on. Unfortunately, the lack of enforcement makes this Act little more than a few good words on paper.

2. Employment Insurance Law (announced May 2002 and modified January 2007)

An employed Taiwanese citizen between 15 and 60 years of age should join the employment insurance programme as an insured person through his employer or the establishment to which he/she belongs. There are four kinds of employment insurance benefits: 1) unemployment benefit, which is 60 per cent of the pre-unemployment salary, for six months; 2) early re-employment awards; 3) vocational training living allowance; and 4) a subsidy for National Health Insurance premium support for unemployed insured persons and their dependants who are enrolled with the insured person.

3. Labor Pension Act (enforced July 2005)

The old retirement regulation was legislated in the Labor Standard Law. The Labor Pension Act provides a new regulation to replace the old retirement system. Under the old regulation, employees could apply to retire after working for the same boss for 25 years if they were over 55 years of age, and the boss had to pay the retirement benefit in a lump sum. Unfortunately, most small- and medium-sized companies in Taiwan don’t survive for more than 12 years, so in practice most workers cannot get their retirement benefit. Under the new regulation, the boss has to pay an extra six per cent of the employee’s salary each month to the worker’s personnel account and the worker keeps this account until the age of 60, at which point he/she would get a pension paid each month until death. By law, the government guarantees the benefit of the pension fund to at least two per cent.

The benefit of the new retirement regulation is that retired workers can get monthly payments in their old age. The major problem with it, however, is its very low income- replacement rate; it is far from able to cover the minimum cost of living after retirement. Needless to say, inflation is very likely to be more than two per cent. Taiwan 97

4. The Increase in Minimum Wage

After a ten-year pause in the adjustment of the minimum wage (last adjusted in 1997), it was announced in July 2007 that the minimum wage would increase from NT$15,840 to NT$17,280 (about US$540) per month and NT$95 (about US$3) for hourly work. Unfortunately, domestic helpers from Southeast Asia are not covered because they are not included under the protection of Labor Standard Law.

Some Attempts by Government to Informalize the Labour Market

5. To Amend the Three Collective Labour Laws

The ruling party until May 2008, the Democratic Progressive Party, tried many times to amend three important labour laws: the Collective Agreement Law, the Labor Union Law and The Settlement of Labor Dispute Law. (After May 2008, the Kuomintang has come back into power as the ruling party.)

It would have a big impact on the existing labour law system if the amendments were passed in parliament. The major direction of the amendments is to diminish the role of the government in the settlement of labour disputes and change the union structure from closed-shop to open- shop. The trade union leaders are not happy to see the change, worrying that it will worsen the trade unions’ already unfavourable situation. Because the Democratic Progressive Party did not have a majority in parliament and the Kuomintang did not support this issue, the amendments have so far failed.

6. To Legalize Dispatch Employment and a More Flexible Labour Market

The government under the Democratic Progressive Party has attempted to make a new law to regulate dispatch employment, which prevails both in the service and manufacturing industries, but has had no success yet with either.

The reason the government wishes to legalize dispatch employment in Taiwan is that there are many agencies doing this business. Companies from the commercial sector to the manufacturing industry have accepted dispatch employment in their operations, but until now no law exists to regulate dispatch employment. Both the dispatch agencies and the employers have lobbied the government to legalize dispatch employment so as to expand the dispatch labour market.

Trade union leaders cannot agree with such a law because it would legalize flexible hiring by agencies. Currently in Taiwan, many factories hire migrant workers (as much as one-third of the total workforce), which makes it difficult for local workers to find a decent job and also impossible for them to ask for a salary increase. Should the dispatch law be passed and enforced, workplaces would have three diverse labour resources: migrant workers, local regular employees and local dispatch employees. Trade union members might then only represent one-third of the workforce in the company, as migrant workers are excluded in practice from trade union organizations and dispatch workers are not considered to be employed by the same boss.

In fact, since the 1990s, many government offices have hired temporary staff by different means such as outsourcing, short-term contracts, dispatch and so on. The government itself has thus adopted to a flexible hiring behaviour as a way to cut expenses. According to official records 98 Asian Labour Law Review 2008 from Council of Labor Affairs, in 2006 the number of people employed as dispatch labour was about 130,000. However, the dispatch companies point out that in reality the figure is closer to 400,000. How trade union organization of dispatch labour should be developed is a very important issue for the Taiwanese labour movement.

5. Conclusion

From 2000 to 2007, the ruling DPP party, which had allied with the social movement in the past, quickly changed its position to the capitalists’ side. Unemployment and the cost-of-living increase have made the poverty problem more noticeable than ever. Although the government has tried to introduce revisions, like the new pension system and Employment Insurance, this very limited systematic support is not enough to enable the jobless and the aged to live well. Outflow of Taiwanese capital also hurts the government’s finances. Workers cannot leave Taiwan as the capitalists can, and they have to pay the price for all. The labour organization rate is dropping and threatens the limited negotiating power that Taiwan workers have when facing this so-called period of global competition.

Taiwan 99

Appendix 1: Main National Labour Confederations and Labour Groups

Taiwan Confederation of Trade Unions (TCTU) 5F, No. 177, Sec 3, Roosevelt Rd, Taipei City 10647, Taiwan Tel: +886-2-23630980 Fax: +886-2-33652950 Homepage: http://www.tctu.org.tw/ Email: [email protected]

Chinese Federation of Labor (CFL) 4F, No. 177, Sec 3, Roosevelt Rd, Taipei City 10647, Taiwan Tel: +886-2-23660111 Fax: +886-2-23696111 Homepage: http://cfl.trumpet.com.tw/

National Federation of Independent Trade Unions (NAFITU) Tel and Fax: +886-2-29238895 Homepage: http://blog.yam.com/nafitu1988 Email: [email protected]

Labor Rights Association (LRA) 6F, No. 25, Lane 344, Nanjing W. Rd, Taipei City 10345, Taiwan Tel: +886-2-25596233 Fax: +886-2-25594984 Homepage: http://www.laborrights.net/_NewSys/ Email: [email protected]

Raging Citizens Act Now! (RCAN) 5F, No. 17, Lanzhou St, Taipei City 10358, Taiwan Tel: +886-2-25576872 Fax: +886-2-25574367 Homepage: http://www.nobnog.org.tw/ Note: RCAN was previously known as CALL (Committee for the Action of Labor Legislation) or ICLE (Information Center for Labor Education)

Taiwan Labor Front (TLF) Add: R518, 5F-14, No. 110, Sec 1, Hankou St, Taipei City 10044, Taiwan Tel: +886-2-23110259 Fax: +886-2-23115901 Homepage: http://labor.ngo.org.tw/ Email: [email protected] 100 Asian Labour Law Review 2008

Appendix 2: Chronology of Significant Labour Events, 2003-2007 (see Appendix 3 for List of Acronyms)

Time Event Content 3 June 2003 The Nurse Protection A school nurse association called for Alliance established improvement of the OSH situation of nurses when the public was concerned about the prevention and treatment of SARS. 6 June 2003 Former state-owned The Legislative Yuan passed a regulation saying enterprises must have a that more than one director should represent labour representative in the labour union when more than 20 per cent the directorate of the company’s capital is owned by the state. 17 June 2003 TCTU was criticized for Three labour movement activists held a press betraying the labour conference to make public that the so-called movement independent trade union movement, Taiwan Confederation of Trade Unions, had been controlled by the ruling party, the Democratic Progressive Party. March to Zin-Lon Motor Parts The boss of the company escaped owing July 2003 Company labour dispute hundreds of workers three months’ wages. case Workers collectively complained to the government for compensation. 24 June 2003 Kaoshiung Business Bank More than 800 members held a sit-in in front labour union held a sit-in of the headquarters of the Kaohsiung Business to demand work security Bank to protest and ask for a CBA with the employer. 1 July 2003 COSWAS protested in To ask for legalization of the sex industry. front of the Ministry of the Interior 5 August 2003 CYUTTLC protested This state-owned enterprise planned to against privatization when implement a privatization schedule its board meeting was held without permission from labour and the government. 8 August 2003 Ching-hsiu Electronics in Both companies owed hundreds of workers Taoyuan, and Zian-wei salaries and compensation. Employees formed Electronics Co. in a victims’ group to press for compensation. Kaohsiung went bankrupt 11 September TRLU held a strike ballot Taiwan Railway Labor Union successfully held 2003 for an anti-privatization a member’s meeting for a strike ballot. campaign Although facing the threat of punishment, nearly 8,000 members gathered in Taipei to join in and pass the decision to ‘strike during Chinese New Year’. This campaign got strong support from other labour activists in Taiwan, and support letters from UNI (the global union), Hong Kong Confederation of Trade Unions and the Japan Railway Labor Union. Taiwan 101

23 September CTWU held a rally to More than 6,000 members of Chunghwa 2003 protest against privatization Telecom Worker’s Union joined in this demonstration and shouted in front of Legislative Yuan against privatization. 28 September NTA held a demonstration More than 10,000 joined in this rally which 2003 to ask for a better education was held by National Teachers’ Association. environment On this ‘Teachers’ Day’, teachers gave voice to the education issue including asking for a small class policy, education reform and so on. Labour groups supported the NTA and also joined in the rally. 15 October to Taichung Passenger The demands of the union: 1) stop deducting 8 November Transport Labor Union salary; 2) stop hiring more short-term contract 2003 struck for 22 days and won drivers; transfer the existing short-term contracts into long-term contracts; and 3) change the CEO who is on very unfriendly terms with the trade union. 4 November Fun-da Electrical Trade Fun-da TU from the Kaohsiung processing 2003 Union protested against zone protested against the company’s group lay-off lay-off policy. The company laid-off 49 employees at the same time. 16 November Zuan-lon Passenger The demands of the union: return workers’ to 11 December Transport Labor Union salaries of more than NT$13 million. 2003 went on strike 27 November Alliance of state-owned To protest against the privatization policy and 2003 enterprises’ trade unions ask the government to stop selling state-owned held a sit-in in both Taipei enterprises to the private sector. and Kaohsiung 9 December TransAsia Sisters This is an association of migrant brides who 2003 Association, Taiwan come from overseas. TASAT is active in (TASAT) was formed campaigning for their human rights and also supports migrant workers who rally on the street. 28 December Migrant Workers’ Grand At least 600 migrant workers, mainly from 2003 Rally held for uprising the Philippines, Indonesia, Thailand and workers’ right Vietnam, held a rally. It was the first time migrant workers showed their multi-cultural image and demonstrated to the public the migrant workers’ contribution to a progressive Taiwan. 7 February COSWAS held a rally About 400 persons joined in this rally, 2004 for decriminalization of including representative activists from Thailand, sex-workers Korea, Hong-Kong and Switzerland. 7 March 2004 School Nurse Association To protest against the outsourcing policy of held a rally in Kaohsiung public senior-high schools. The outsourcing policy of school nurses hurt both students’ medical rights and also nurses’ job security. 102 Asian Labour Law Review 2008

28 March With the support of Hsin-Chu County Federation of Trade Unions, 2004 the women workers’ chorus issued its first CD. 14 April 2004 TAVOI protested against the stringent standard of the karoshi (death by overwork) definition. 22 April 2004 RCA victims sued the company RCA, the company GE, the Taoyuan county government and the Council of Labor Affairs for occupational disease compensation. 1 to 30 June Yi-Hsin Passenger The company owed employees salaries of more 2004 Transport Labor Union than NT$6 million, and could not keep their went on strike cars in good repair. The company’s financial crisis had hurt its employees’ job security and passengers’ safety. 18 July 2004 Draft of Household Service This draft was promoted by migrant workers’ Act, workers’ version was support groups including TIWA, Hope announced Workers’ Center, and so on. The draft was sent into Legislative Yuan on 20 May 2005. 14 September Yia-wen Electronics Labor This company faced bankruptcy and delayed to 4 November Union went on strike paying salaries and asked employees to work on 2004 their day off with no pay. The final 600 employees fought for compensation. 20 November First Bank Trade Union held a rally to demand job security when the 2004 government asked it to merge with a large international commercial bank. 28 December Pastfame company labour Migrant workers and local workers went to the 2004 dispute case Council of Labor Affair to protest about owed salaries. 6 January After years of protest by labour groups, the Council of Labor Affair amended 2005 its regulation on the karoshi definition. 19 April 2005 Youth Labor 95 called on the government to increase the minimum hourly wage to stop the trend of impoverished youth. 1 May 2005 A May Day rally was held with the cooperation of the TCTU, labour groups and the teachers’ association. More than 2,000 teachers joined in the rally demanding their labour rights. More than 300 migrant workers were also organized to join in. 1 July 2005 Labor Pension Act came into force. 21 August Some 1,782 Thai workers set fire to their company’s office in Kaohsiung. 2005 It was found that the Thai workers’ rights and dignity had been violated. For example, communication with their family members at home was limited, their dormitory was overcrowded (one could say worse than a prison) and their pay was reduced or they weren’t paid at all. Furthermore, they could not speak out about the problems or they would face dismissal. 13 March Thousands of Thai migrant workers in the Formosa Industrial Zone went on 2006 strike over poor working conditions. 16-19 June Huan-Ya trade union The Huan-Ya hotel faced a financial crisis and 2006 urged a strike for lay-off sold its hotel to Holiday Inn. But the former compensation boss was unwilling to pay workers compensation. Taiwan 103

18 December International The church groups urged a solidarity night for 2006 Migrants’ Day migrant workers on 17 December (Sunday). 1 May 2007 CTWU held a rally to demand the government, as the biggest share-holder, change its CEO. 1 July 2007 The minimum wage rose from NT$15,840 to NT$17,280 per month. The hourly rate minimum wage became NT$95. 9 December Migrant Workers’ Rally The major demand of migrant workers in 2007 the rally was: ‘I want a day off.’ 104 Asian Labour Law Review 2008

Appendix 3: List of Acronyms and Organization Websites

COSWAS: Collective of Sex Workers and Supporters, http://coswas.org/, [email protected]/ CTWU: Chunghwa Telecom Worker’s Union, http://www.ctwu.org.tw/ CYUTTLC: Confederation of Trade Unions of Taiwan Tobacco & Liquor Company http://www.tctu.org.tw/front/bin/ptlist.phtml?Category=179157 First Bank Trade Union: http://www.fcbiu.org.tw/ HCTUTW: Hsin-Chu County Federation of Trade Unions, http://www.wretch.cc/blog/hctutw NTA: National Teacher’s Association, http://www.nta.org.tw/ [email protected] SNA: School Nurse Association of ROC, http://www.schoolnurses.org.tw/ TASAT: TransAsia Sisters Association, Taiwan, http://www.tasat.org.tw/ TAVOI: Taiwan Association For Victims of Occupational Injuries, http://tavoi.myweb.hinet.net/ TCTU: Taiwan Confederation of Trade Unions, http://www.tctu.org.tw/ TIWA: Taiwan International Workers Association, http://www.tiwa.org.tw/ TRLU: Taiwan Railway Labor Union, http://www.trlu.org.tw/ [email protected]/ Youth Labor 95: http://blog.roodo.com/youthlabor95/

ENDNOTES

1. In this paper, for accuracy the spelling of 'labor' is kept in the names or titles of labour-related laws and organizations, as they are spelled in Taiwan. Cambodia 105

Southeast Asia 106 Asian Labour Law Review 2008 Cambodia 107

Cambodia

Street Vendors, Factories and Family Workers: Informalizing Labour in Cambodia

Dennis Arnold

n recent years Cambodia’s foothold in the global economy and the most prominent aspect of I its labour movement has been the textile and garment industry. Cambodia’s position in this global industry has been promoted as an ‘ethical producer’ as a result of a monitoring programme run by the International Labour Organization (ILO) initiated by a bilateral trade agreement with the US. While this chapter addresses some of the challenges for the informalizing women workers in the textile and garment industry, its main focus is the estimated 85 per cent of Cambodia’s labour force who are officially employed in the informal economy.

Cambodia is an agrarian-based society and economy; estimates of the population living in rural areas range from 80 to 90 per cent. Many small- to medium-scale landholders are sending their children, predominantly young women, to the cities to supplement the family income and/or ensure its survival. Additionally, millions of rural Cambodians have been pushed off the land into urban and other rural areas for work. This is largely due to debt, lack of title to the land and the interrelated consolidation of land in the hands of an increasingly polarized society. Hundreds of thousands of rural and urban poor have also migrated abroad for work, primarily to neighbouring Thailand for jobs in agriculture, fisheries and seafood processing among other industries. In Thailand they often work without registration or legal rights.

This chapter is divided into three main sections: a contemporary snapshot of socio-economic issues relating to the informal economy in Cambodia; a summary of labour law as it pertains to the informal economy; and an analysis of activists’ initiatives that address the informalization of labour. The chapter focuses on two major groups of informalizing women workers in Cambodia: first, those technically engaged in the informal economy, including street vendors, unpaid family labour and others; and second, women employed in ‘formal’ or registered workplaces such as factories and restaurants where they either work on a short-term casual or flexible basis and/or lack a clearly defined employment relationship. The first group is quite clearly working in the informal economy in terms of the law since they do not have an employer-employee relationship or are specifically exempted from the labour law. The second group are part of the informalization process. Technically, they are protected by the Labour Law but implementation is critically lacking.

1. Contemporary Snapshot

Socio-economic Overview

In 1991, negotiations between factions fighting a civil war in Cambodia since 1979 led 108 Asian Labour Law Review 2008 to the Comprehensive Political Settlement for Cambodia. This called for the creation of the United Nations Transitional Authority in Cambodia (UNTAC)1 a peacekeeping and transitional operation unprecedented in scale for the UN. This was part of a process ending decades of civil war, foreign military intervention and internal/regional strife. Bilateral aid and loans from governments including Japan, the US, China, Russia and Australia, in addition to funding and consultation from the World Bank, International Monetary Fund (IMF) and Asia Development Bank (ADB), have since increased dramatically. The structural adjustment programmes implemented from the early 1990s in conjunction with these governments and organizations espouse an agenda of poverty reduction and economic progress. These policies are tied a priori to a model that regards economic growth led by foreign direct investment, industrial exports, privatization, liberalization and higher agricultural productivity, as the keys to development.

In recent years, Cambodia has experienced significant economic growth. In 2007 GDP expanded by 9.6 per cent, which is below the average of about 11 per cent in the three previous years. GDP growth is projected to decline to 7.5 per cent in 2008 and to 7.0 per cent in 2009.2 Growth is concentrated in garments, construction and tourism. Exports reached US$2.9 billion in 2005, including garments, shoes, cigarettes, natural rubber, rice, pepper, wood and fish, with garments accounting for roughly 80 per cent of the total. Lower levels of growth in 2007 are due to decreases in garment exports and a decreased expansion in agriculture, forestry and fisheries.3 Following the lifting of safeguard quotas on textiles and garments in 2008 imposed by the US on China, in addition to rapidly expanding garment exports from recent WTO member-state Vietnam, exports from Cambodia are expected to continue the decline in coming years.

On the demand side, consumption and private investment contributed to GDP growth. Inflation accelerated to an average of 5.9 per cent in 2007 mainly as a result of increases in food prices (see Table 1).4 Inflation has become a major area of concern. Rice prices rose owing to domestic supply shortages, and prices of other food items also rose. Rising demand and limited supply caused imported food items, primarily from Thailand, to continue to increase. According to the Asia Development Bank’s Asian Development Outlook 2008, ‘The price of meat (pork and chicken) also increased, in part following a ban on meat imports from Vietnam to prevent the spread of animal diseases. Higher global fuel prices added to inflationary pressures, as did the weakening of the US dollar, which is widely used in Cambodia (its depreciation against the Thai baht contributed to imported inflation).’

Government estimates put the overall budget deficit in 2007 at 3.2 per cent. According to a debt-sustainability analysis conducted by the World Bank and IMF in mid-2007, external public debt is ‘sustainable’ and the risk of debt distress is moderate. At the end of 2007, external public debt was estimated at $2.4 billion (30 per cent of GDP). Of this amount 54 per cent was owed to multilateral institutions and around 35 per cent to the Russian Federation and the US.

Table 1: Inflation in Cambodia, 2002-2008 (per cent per year)

2002 2003 2004 2005 2006 2007 2008* 3.3 1.2 3.9 5.8 4.7 5.9 5.5

*Forecasted for 2008 Source: Author’s compilation of Asia Development Bank, Asian Development Outlook, 2007 and 2008 Cambodia 109

Labour Force and Employment Data

In 2003, the informal economy accounted for 62 per cent of gross domestic product (GDP) and 85 per cent of the total workforce in Cambodia, according to estimates by the Economic Institute of Cambodia (EIC) (see Table 2). In 2003 the remaining 15 per cent of the workforce was employed by formal sectors, especially in the garment industry (230,000 [increasing to 350,000 in 2008]), tourism sector (70,000) and public administration (350,000). Although the contribution of the informal economy to the GDP has slowly declined in recent years (see Table 2), the contribution to the economy is still considerable, and its proportion of the labour force has remained constant.

The Cambodian informal economy is made up of a huge proportion of own-account workers and unpaid family workers. These two groups represent respectively 40 per cent and 44 per cent of the total workforce, or a total of 84 per cent, according to the Cambodian Labour Force Survey of 2001.5 Of this, 70 per cent is found in agriculture. Over half of them are women. The total proportion of employment in agriculture, forestry and fisheries is going down while persons employed in this sector are going up (see Table 2).

Table 2: Employment by Sector of Activity, Even Years, 2002-2006

(in thousands) (as per cent of total) 2002 2004 2006 2002 2004 2006 Total employment 6,571 7,496 8,053 100 100 100 Agriculture, forestry and fisheries 4,426 4,520 4,619 67.4 60.3 57.4 Industry 741 947 1,169 11.3 12.6 14.5 Services 1,404 2,028 2,265 21.4 27.1 28.1 Agriculture, forestry and fisheries 4,426 4,520 4,619 67.4 60.3 57.4 Agriculture 4,080 4,103 4,183 62.1 54.7 51.9 Forestry 56 57 60 0.8 0.8 0.7 Fisheries 291 360 376 4.4 4.8 4.7 Industry 741 947 1,169 11.3 12.6 14.5 Mining and quarrying 15 17 20 0.2 0.2 0.3 Manufacturing 601 720 870 9.1 9.6 10.8 Utilities 6 16 19 0.1 0.2 0.2 Construction 120 195 260 1.8 2.6 3.2 Services 1,404 2,028 2,265 21.4 27.1 28.1 Trade 756 1,042 1,140 11.5 13.9 14.2 Hotels and restaurants 24 30 61 0.4 0.4 0.8 Transport and communications 178 196 217 2.7 2.6 2.7 Financial intermediation 9 16 32 0.1 0.2 0.4 Real estate, renting 16 15 184 0.2 0.2 2.3 Public administration and defence 159 180 18 2.4 2.4 0.2 Education 94 106 120 1.4 1.4 1.5 Health and social work 28 37 49 0.4 0.5 0.6 Other social services 59 78 108 0.9 1.0 1.3 Other 81 327 336 1.2 4.4 4.2

Source: International Monetary Fund Country Report No. 07/291, August 2007, citing National Institute of Statistics 110 Asian Labour Law Review 2008

Wages

Articles 104,105,107,108, 109 and 111 of the Labour Law specifically deal with minimum wage. The minimum wage ‘must ensure every worker of a decent standard of living compatible with human dignity’. There is not a general minimum wage in Cambodia; only the garment industry is covered. On 23 October 2006, the Ministry of Labour and Vocational Training issued a Prakas (decree) increasing the minimum wage of textile and garment worker to $45 a month for probationary workers and $50 a month for Undetermined Duration Contract (UDC) workers (i.e. ‘regular workers’) (from $40 and $45 respectively). According to the ILO the average wage of garment workers is roughly $70 per month. However, according to interviews conducted by Womyn’s Agenda for Change from 2004 to 2006, in reality many workers do not even receive the minimum.

The pay rate for night shift work has decreased. In March 2007, Prime Minister Hun Sen successfully lobbied the National Assembly to amend the Labour Law to cut the wage for night work from 200 per cent of the day wage to 130 per cent. He argued that the reduction was necessary to make Cambodia a more attractive place for foreign investors to set up large factories. On 20 July 2007, the amendment of Articles 139 and 144 of the Labour Law went into effect.

Informal Women Workers: Problems and Gender Issues

Roughly 85 per cent of Cambodia’s labour force is not covered by the Labour Law. Implementation of the Labour Law for those workers technically covered is lacking. Informal- economy workers are not recognized, not regulated and are not entitled to legal protection. In the informal economy women workers are subject to a wider range of potential problems or abuses because they have no legal rights, no protection under occupational safety and health regulations (OSH) and no access to social security protection. They are often subject to extortion, bribery, repression and harassment – sometimes sexual – by authorities. 6

HIV/AIDS disproportionately threatens women in the informal economy. Cambodia has the highest HIV infection rate in Asia. Despite numerous programmes that promote the use of condoms, many men refuse to use them. Cambodia’s sex industry is unregulated, despite the efforts of certain women’s organizations and NGOs, increasing exposure to HIV/AIDS and increasing the risk of violence. 7

According to the National Institute of Statistics, 35 per cent of the Cambodian population is made up of migrants. In general males are more prone to rural-rural migration (and international migration), while women are migrating primarily to urban areas. The urban labour market is highly gender-specific, with textile and garment, service sector (small scale hotels, bars, markets, street vendors, massage parlours and restaurants) and sex work all favouring women. In certain sectors such as garments, young, unmarried women are favoured. This is largely due to stereotypes and gendered roles that influence the kind of jobs men and women do in Cambodia. These practices largely determine the choice of work among men and women. For example, nearly every moto-taxi driver (motodop) is a man, while market stall vending is dominated by women. Women represent a large proportion of the informal economy, yet due to a lack of research by sector comprehensive figures are not yet available.

Following the three decades of conflict in Cambodia lasting through the early 1990s, Ledgerwood 8 contends that Cambodians have experienced a loss of their social order to such an extent that images or stories of proper behaviour of women are being re-articulated Cambodia 111 as an idealization in reaction to that loss of social order.9 This pressures women to maintain ‘traditional’ roles in the household, but economic hardships and social change are transforming this idealization of women’s responsibilities. Culturally Cambodia is organized hierarchically, with notions of power and status conditioning social relations. In this social order women are considered to be of lower status relative to men, though the status of an individual is also determined by their age, wealth and other characteristics.10 The roles of men and women in family life differ along gender lines: young women are more likely to quit school early and are expected to provide supplemental income to their families in the provinces. The primary focus of women in the informal economy is often basic reproduction of their lives and their families. Women living on their own in the cities are helping to support their families, yet they are regularly stigmatized for living away from home. This is largely because women’s idealized role in society is as the household manager.

Land and Informal Economy Workers

Fifty per cent of Cambodia’s population is under 20 years of age, so high numbers of workers enter the labour market every year. The formal economy does not have the absorptive capacity to deal with this young and increasingly urbanized population. This is leading to calls for intensification of engagement with the regional and global economy, including attracting foreign direct investment (FDI), which provides a significant proportion of jobs in the formal economy.11 However, this process is creating surplus labour in rural areas.

As more rural Cambodians are pushed off the land due to debt, lack of land titles, increasing prevalence of agro-industry, real-estate development and numerous other reasons, the needs of marginalised populations in both rural and urban areas will only become more pressing. The issue of access and rights to land are critical. Land and labour (much less labour law) are too seldom considered together. This is unfortunate as the case in Cambodia demonstrates; in the course of the flows of women through various sectors of the informal economy, a vast majority of them begin because of disruptions in rural-agricultural livelihoods.

The passage of the Land Law (formally entitled the ‘Immovable Property Law’) by Cambodia's National Assembly on 20 July 2001 is a major step toward commodified land reform. The law aims to overhaul the way land is managed and distributed, and to protect property rights. According to Mr. Urooj Malik, the Asian Development Bank’s (ADB) Resident Representative in Cambodia, ‘This marks the achievement of a major milestone in the sustainable development and management of Cambodia's natural resources, given the gravity of governance issues in relation to landlessness, as well as the need to establish private property rights and facilitate private sector development in the country’. 12

Some key features of the law, are the recognition of rights to land of persons who have had peaceful, uncontested possession of the land for a certain period before the date of proclamation of the law, and the recognition of communal rights to immovable property for pagoda's and indigenous communities. In general, the law clarifies the immovable property regime which was unclear and contradictory under the existing 1992 Land Law. 13

According to Yeng Virak, executive director of Community Legal Education Centre, ‘The 2001 Land Law is progressive. It recognises the right of people who have lived on a piece of land for over five years to be entitled to the land’s title. There has been a systematic effort to register land over the past six years.’ But, Yeng Virak goes on to say that the poor who have been targeted for evictions are among the millions who have not received the ‘paper work’ to lay claim to the 112 Asian Labour Law Review 2008 land they are living on. Consequently, they have become victims of the manner in which the Cambodian government is interpreting the two types of state land in the country – for public use that needs protection, such as forests,14 and for private use, which can be sold for development.15 Since 2001, the scale of land grabs by the wealthy and connected has risen steadily and has become one of the major concerns in Cambodia. Few of the millions evicted have received compensation. In summary, this is a key factor in creating an informalized and proletarianized population.

2. Summary of Labour Laws and Implementation

According to the Economic Institute of Cambodia and the ILO, the term ‘informal economy’ in Cambodia refers to very small-scale units producing and distributing goods and services. These units are composed of independent, self-employed producers, family labour, hired workers or apprentices.

Cambodia has defined activities in its informal economy as those without a firm, identifiable postal address; those that have self-employed workers and utilize part-time or full-time workers; those that have a lot of labour-intensive operations and quick turnover; those that use energy input from human or animal sources; those about which data is unavailable through census surveys; those that are not legally recognized; those that take place in non-structured premises; and those that do not come under any regulations, licence, or insurance, and do not pay any tax.16

Jobs in the informal economy are ‘informal’ in the sense that they are mostly: 17 • unregistered and unrecorded in official statistics and thus not recognized, supported or regulated by the government; • have little or no access to organized markets, credit institutions, formal education and training institutions, or to many public services and amenities; • are compelled to operate outside the legal framework and beyond the pale of social protection, labour legislation and protective measures, even if they are registered and respect certain aspects of the law. • The informal economy also includes employment to the extent that workers are undeclared (by both informal and formal enterprises) and do not enjoy social benefits mandated under the law.

These units:18 • operate with very little capital or none at all; • utilize a low level of technology and skills; • operate at a low level of productivity; • generally provide very low and irregular income, and highly unstable employment for those who work in them.

In Phnom Penh, work in the informal economy includes vendors, shoe-shiners, motodops, cyclos and tuk-tuk drivers, sex workers, mechanics, garbage collectors, small-scale gasoline sellers, road-side/sidewalk vendors, construction workers and all domestic workers. In rural areas they include farmers and workers in non-farm activities such as fishing, fish processing, mining, spinning and weaving, food processing, handicraft-making and vending. In short, these are activities that are not legally recognized largely due to the lack of a clearly defined employer- employee relationship (see below), where work takes place in non-structured premises, where work is conducted without any regulations, licence, or insurance, and where taxes are not paid. Cambodia 113

Many people in the formal economy, including tens of thousands of civil servants are also engaged in the informal economy to supplement their insufficient income. For example many work as motodops in their time off. Other workers employed in the formal economy such as small- scale textile and garment factories/workshops and service sector jobs in restaurants and massage parlours are outside of legal protection for reasons including lack of registration of the workplace, employers who do not declare their employees to the Ministry of Labour and Vocational Training, and a myriad of other technicalities. The following sections outline some of these issues.

Labour Laws and Administration

Cambodia’s labour law is comprehensive for formal economy workers, relatively progressive, and has been described for both formal and informal economy workers in numerous publications. 19 Rather than provide another review of Cambodia’s Labour Law, this section highlights a few key points most relevant for workers in the informal economy, and for informalizing labour in the formal economy.

International Standards Cambodia joined the ILO in 1969 and has ratified 13 ILO Conventions, including all eight of the Core Conventions (see Table 4). It has also ratified numerous UN Human Rights Conventions and Treaties including the Universal Declaration of Human Rights. This is due in part to the prominent role played by the UN and ILO in Cambodia’s democratic transition from the early 1990s to the present, and the ILO’s Better Factories Cambodia Programme, respectively. As stipulated in its Article 31, the Constitution recognizes human rights as stated in the UN Charter, the Universal Declaration of Human Rights, and the covenants and conventions related to human rights, and women’s and children’s rights.

Table 4: ILO Convention Ratification

Convention Ratification date C4 Night Work (Women) Convention, 1919 24:02:1969 C6 Night Work of Young Persons (Industry) Convention, 1919 24:02:1969 C13 White Lead (Painting) Convention, 1921 24:02:1969 C29 Forced Labour Convention, 1930 24:02:1969 C87 Freedom of Association and Protection of the Right to Organize Convention, 1948 23:08:1999 C98 Right to Organize and Collective Bargaining Convention, 1949 23:08:1999 C100 Equal Remuneration Convention, 1951 23:08:1999 C105 Abolition of Forced Labour Convention, 1957 23:08:1999 C111 Discrimination (Employment and Occupation) Convention, 1958 23:08:1999 C122 Employment Policy Convention, 1964 28:09:1971 C138 Minimum Age Convention, 1973 23:08:1999 C150 Labour Administration Convention, 1978 23:08:1999 C182 Worst Forms of Child Labour Convention, 1999 14:03:2006

Source: ILOLEX, Database of International Labour Standards

Note: Core Conventions are highlighted in bold 114 Asian Labour Law Review 2008

The Constitution After the adoption of the Paris Peace Agreement on 23 October 1991, and the formation of a democratic government in 1993, the government of Cambodia has made significant effort in terms of labour-related laws, legislation and building institutions mandated to implement the laws. The 1993 Constitution recognizes fundamental principles relevant to international labour law and a market economy. A series of employment conventions and covenants has been ratified, and a large number of laws and regulations promulgated. 20

Cambodia’s Constitution recognizes: • the equality of Khmer citizens [author’s italics] before the law regardless of race, colour, sex, language, religious belief, political tendency, birth origin, social status, wealth or other status (Article 31); • the right to choose any employment, the right to enjoy equal pay for equal work, equality of work inside and outside the home, the right to obtain social security and other social benefits as determined by law and the right to form and to be a member of trade unions (Article 36); • the right to strike and non-violent demonstration (Article 37); • the right to establish association and political parties (Article 42); • the abolition of all forms of discrimination against women and the prohibition of the exploitation of women in employment (Article 45); • the guarantee of women’s job security during pregnancy and their right to maternity leave (Article 46); • the protection of children from acts that are injurious to their educational opportunities, health and welfare (Article 48); • the obligation of the state to provide free primary and secondary education to all citizens in public schools (Articles 66 and 68); and • the establishment of a social security system for workers and employees (Article 751).

The Labour Law In 1997, the Cambodian National Assembly adopted a Labour Law to cover all kinds of work where there is an employer-employee relationship. It is based upon the 1992 Labour Law, but contains a number of additional provisions and exemptions. Apart from the Labour Law, other legislation also directly or indirectly affects labour relations. The main relevant texts are:Law on the Export of Cambodian Labour to Foreign Countries; Law on Social Security Regime for Those Set under the Provisions of the Labour Law (15 August 2002); Law on Commercial Registrations and the Commercial Register (26 June, 1995), some provisions of which are amended by Law of 18 November 1999; Law on the Press Regime (18 July 1995); Law on Demonstration (27 December 1991); and, more generally, Decree-Law No. 38 on Contract and Other Liabilities. 21

In theory Cambodia’s Labour Law covers all employees, regardless of nationality, gender, creed, political opinion etc. (see Article 12 of the Labour Law). It broadly includes:

the labour contract, collective labour agreements, general working conditions (including wages, hours of work, holidays and leave, and provisions for children and women), health and safety (occupational health and safety, the rights of the labour inspectorate, and accident compensation), trade union freedom, settlement of labour disputes, provisions on strikes and lockouts, the labour advisory committee and labour courts. 22

The most important aspect of Cambodia’s Labour Law regarding the informal economy is employment contracts. Specifically, Articles 2 and 3 define terms of employment contracts as an Cambodia 115 agreement in which one person (the employee) agrees to work for wages for another person or company (the employer). These contracts can be written or oral. The articles state:

Article 2 All natural persons or legal entities, public or private, can be considered to be employers who constitute an enterprise, within the meaning of this law, provided that they employ one or more workers, even discontinuously. Every enterprise may consist of several establishments, each employing a group of people working together in a defined place such as in factory, workshop, work site, etc., under the supervision and direction of the employer. A given establishment shall be always under the auspices of an enterprise. The establishment may employ just one person. If this establishment is unique and independent, it is both considered as an enterprise and an establishment.

Article 3 ‘Workers’, within the meaning of this law, means every person of all sexes and nationalities, who has signed an employment contract in return for remuneration, under the direction and management of another person, whether that person is a natural person or legal entity, public or private. To clearly determine the characteristics of a worker, one shall not take into account either the jurisdictional status of the employer or that of the worker, as well as the amount of remuneration.

In summary, the Cambodian Labour Law only provides for the protection of workers and employers having employer-employee relationships. This means that many occupations are excluded from the Cambodian labour legislation, such as self-employed workers (absence of employer-employee relationships), unpaid family workers (absence of remuneration) and some home workers or outsourced workers (without clear employer-employee relationships). According to Article 1 of the Labour Law, the following are explicitly excluded:

a) Judges of the Judiciary. b) Persons appointed to a permanent post in the public service. c) Personnel of the Police, the Army, the Military Police, who are governed by a separate statute. d) Personnel serving in air and maritime transportation, who are governed by a special legislation. These workers are entitled to apply the provisions on freedom of union under this law. e) Domestics or household servants, unless otherwise expressly specified under this law. These domestics or household servants are entitled to apply the provisions on freedom of union under this law. 23

Despite restrictions of the Cambodian labour legislation’s application to the employer- employee relationship, Sieng and Nuth (2006) contend it is quite progressive. ‘First, it applies to enterprises employing just one or more workers, even on a discontinuous basis. In other words, notwithstanding the scale of enterprise or establishment, workers in the enterprise or establishment are subject to the labour protection enshrined in the legislation. This is meant to extend the labour protection to a wider array of enterprises and people including sweatshop production. It recognizes that the Cambodian private sector is comprised of a large number of micro, small and medium enterprises (MSMEs).’ 116 Asian Labour Law Review 2008

Informalizing Labour in the Garment Industry

The first factories producing textiles and garments for export opened in Cambodia around 1994, with foreign investors from Hong Kong, Taiwan, Malaysia and Singapore. The industry is still dominated by foreign investors. Cambodians currently account for only 5 per cent of ownership, while management is also generally imported from mainland China or the investors’ home country, meaning Cambodians are employed in the lowest wage, de-skilled aspects of the production process. 24 These initial investors were attracted to Cambodia for several reasons. Primarily, Cambodia’s lack of quota restrictions to the US market from the mid-1990s until 1999, combined with quota-constraints other producing nations in the region experienced, led to significant expansion of the industry. Since Cambodia was not a party to the quota system under the World Trade Organization’s (WTO) Multi-fibre Arrangement it was free to sell into the US and EU markets, but those countries were free to limit or cut off market access at will. Contributing to the industry’s boom was the granting of Most-Favoured Nation status by the US, and the framework for cooperation with the EU under the Generalised System of Preferences, both in 1997. Of course, investors were also attracted to the abundance of cheap, unregulated labour and low-cost land. Employment has increased dramatically from about 100,000 workers in the industry in 2000 to roughly 350,000 in 2008 (see Figure 1).

Figure 1: Workforce Evolution: 2000-2006

Source: Better Factories Cambodia, 2006.

Under Cambodian Labour Law there are two main categories of employment contract. Workers may be employed on Undetermined Duration Contracts (UDCs) or Fixed Duration Contracts (FDCs). 25 As their names suggest, a UDC is valid for an unlimited time, while a FDC is valid for a specific period of time. The Coalition of Cambodia Apparel Workers Democratic Union (CCAWDU) stated in an interview that from 2001 (when the federation was formed) until 2005, a majority of workers in registered textile and garment factories were employed as regular workers (UDC) with associated benefits such as sick leave and maternity leave, regular wages, holidays and the like. Since 2005, with the end of the quota regime under the WTO there have been numerous changes in the factories: the piece-wage rate has gone down, and the use of flexible labour (in the form of FDCs, mentioned above) has increased. Also, outsourcing of production to home-based workers or smaller, unregistered ‘sweatshop’ facilities has increased. These trends indicate that workers’ time in the factory is pushed both in length (hours of work) and intensity (amount of work accomplished). Cambodia 117

A prominent means to increase productivity for often stagnant or decreasing wages is use of the piece-rate system. Currently there is no minimum wage for piece-rate work. Article 108 stipulates that an average piece-rate worker must be able to earn the minimum monthly wage by working the same hours as a worker on a contract of service. 26 Implementation of this stipulation has been a constant point of conflict over the past several years. The increased use and intensity of this system in Cambodia coincides with numerous shifts of the textile and garment industry at the global level. Steep competition puts factories under greater strain to produce more goods at low prices. Numerous workers interviewed by Womyn’s Agenda for Change (WAC) said that the piece rate declined over the course of 2006. At a Mean Chey area factory the rate is now just $0.02 per dozen pieces (in the quality control section), so that take-home pay for regular workers is well below the legal minimum wage of $45. The same factory in Mean Chey summarily fired 70 workers who demanded that the piece rate be restored to its previous higher rate. The workers were compensated by the factory, which determined that the profits from the lower piece wage were greater than the cost of compensating 70 workers. Piece-rate wage systems give low-wage workers an incentive to maximize time at their work station, at the expense of rest time or even their bathroom breaks, which negatively impacts their health. 27

While the rate of piece wages is a major point of contention in Cambodia, the use of flexible labour is another. Employers are increasingly using informal/flexible labour employed on a day- to-day or short-term period as part of efforts to maintain or increase profits and avoid demands of organized workers. Ms Anne Ziebarth, legal advisor for the ILO’s Better Factories Cambodia stated, ‘An increasing number of garment factories have started to use FDCs for all workers, which is troubling because it may indicate that they misunderstand the appropriate use of the different types of contracts, or that they are using FDCs to undermine workers’ employment security’. 28 According to CCAWDU, the use of flexible labour began in larger knitting factories which employ from 3,000 to 10,000 workers, primarily in Kandal Province where unionization rates are highest. Over the past year CCAWDU has found that use of flexible labour has spread to both smaller knitting factories and garment assembly factories of all sizes. Flexible labour can be employed on a day-to-day basis, where pay is daily, or on short-term two-month contracts, which can legally be extended for up to a year. If these workers are hired as regular employees their time as temporary workers is not factored into their seniority and benefits. These workers work side by side with regular employees, with different coloured name-tags or uniforms as a form of separation in lines and work units.

Many factories, such as one in Tuol Sangke, exploit loopholes and keep workers on short- term contracts well beyond the one year limit. Others will not allow male workers to become regular, out of fear that they will become union leaders, as men are perceived to be more likely to be union activists. Some only allow workers to become regular if they fulfil certain requirements, such as not asking for leave during their first three months of work, or being unmarried.

The ILO confirms that employers prefer flexible labour (FDCs) to regular workers (UDCs) ‘...because they believe that it is easier to terminate workers’. 29 Employers are under no obligation to renew a flexible worker’s contract after it has expired, but they are prohibited from firing flexible workers for illegitimate reasons, including anti-union discrimination. Cambodia’s Labour Law is clear that all workers have the right to join and form a union, regardless of the type of contract. Employers are expected to have a valid business reason or justification based on the worker’s aptitude in deciding whether to terminate a flexible worker’s contract. Without a valid reason an employer is liable to pay damages to the worker in addition to legally mandated 5 per cent lay-off compensation. 118 Asian Labour Law Review 2008

The piece rate and use of flexible labour have been major factors in the sharp increase in plant level strikes in Cambodia since 2006. In 2006 the ILO stated, ‘We are seeing more disputes arising over the type of contract used to employ permanent workers, with workers in some factories complaining that they lack security of employment because they are working under repeating short-term FDCs.’ 30 Other issues leading to industrial disputes include unjustly dismissed union activists, sexual harassment and demands over benefits. Regularly strikes and agitation from plant level activists have resulted in regular workers being sacked and replaced with flexible labour.

Table 5: Number of lost days caused by strikes affecting Garment Manufacturers Association of Cambodia (GMAC) members

January 2003-May 2006 Year Total 2003 130,284 2004 107,112 2005 52,419 2006 (Jan-May) 181,556

Source: GMAC Labour Support Office 2006

Table 6: Number of disputes (strikes and conciliations) affecting GMAC members Jan 2002-May 2006

Year Strikes Conciliations 2002 80 - 2003 55 78 2004 84 38 2005 66 54 2006 37 30 Source: GMAC Labour Support Office 2006

Thus far CCAWDU is organizing flexible labour in garment factories to become members of plant level unions. They support demands to become regular workers with benefits accorded to this status such as maternity leave, sick leave, bonuses, etc., while demanding that their time as flexible workers be included in their employment package.

3. Workers’ Responses, Initiatives and Struggles

Since the transition to democracy began in Cambodia in 1991 there has been a dramatic increase in both the number and extent of activities of trade unions and NGOs contending for space in civil society. 31 Since the founding of the Free Trade Union of Workers of the Kingdom of Cambodia (FTUWKC) in 1997 there has been a major spike in the number of trade union federations and plant level unions in garments, particularly in the years since ILO monitoring Cambodia 119 began in 2001. In mid-2006 there were 892 trade unions in 270 garment factories, according to the Garment Manufacturers Association of Cambodia. Nearly 60 per cent of the workers in the industry are members of trade unions. But, only about 1 per cent of the total labour force is unionized, and outside the garment and tourism/hospitality sectors, the trade union movement remains quite weak. 32

It is a competitive environment, particularly in the garment industry, in terms of organizational politics, objectives and access for unions to resources. 33 These organizations range from pro-ruling party, pro-opposition, independent/radical positions, to corrupt pro-capital unions. At times this is apparent in terms of the staff at the federation level of trade unions. Some unions such as the Coalition of Cambodia Apparel Workers Democratic Union (CCAWDU) are led by current and former rank and file workers. On the other end of the spectrum, the Cambodia Labour Union Federation’s former leader was an investor in garment factories and had acted as advisor to Prime Minister Hun Sen. 34

New Forms of Organizing

Currently in Cambodia there is not a clearly identifiable informal workers movement. Registered trade unions most relevant to the informal economy are the Cambodian Union Federation of Building and Wood Workers and the Cambodian Construction Trade Union Federation. Informal economy workers’ associations are registered under a more complex set of rules with the Ministry of Interior. An example of this kind of association is the Cambodian Association for Informal Development. In 2006, another association of informal workers was formed, the Independent Democratic Informal Economy Association (IDEA).

IDEA joined CCAWDU, a progressive/independent trade union federation with over 30,000 members, the Cambodian Food and Service Workers Federation (CFSWF) and the Cambodia Independent Civil Servant Association (CICA) to form the Cambodia Labour Confederation (CLC). 35 The vast majority of CLC members are from textile and garment factories and the food and service sector. CLC has not yet developed a centralized strategy in terms of their organizing in the informal economy or informalizing labour. The activities of several members overlap. For instance, CCAWDU (primarily a garment union) is organizing workers in gas stations and women in service sectors 36 – both IDEA and CFSWF are focusing on the same or similar sectors. Thus, as a confederation they maintain a degree of flexibility in terms of the member activities and have not established neatly defined ‘territories’ for each of the members. This can be viewed as a potential strength as it allows organizers to utilize their particular strengths and share strategies. By not narrowly focusing on one sector it allows organizers to access a broader range of workers across sectors, which more accurately reflects workers’ mobility in the urban labour market.37

CLC members focus on organizing the following sectors or forms of informal and informalizing labour: • flexible labour in textile and garment factories (85 to 90 per cent women) • casual labour in service industries such as food and beverage services (nearly 50/50 men and women) • beer promotion women (100 per cent women) • motodop drivers (nearly 100 per cent men) • street vendors (nearly 100 per cent women)

CCAWDU, IDEA and other CLC members do not organize a significant proportion of these workers with the immediate intent to negotiate a collective bargaining agreement or pursue 120 Asian Labour Law Review 2008 other tripartite functions. Many trade unionists may think it is pointless to organize if there is no employer with whom the workers can negotiate. This is, obviously, impossible for a number of informal-economy or informalized workers. The underlying objectives for CLC members are primarily social and to an extent political and correspond to the immediate concerns of their members. Social organizing and legal advocacy is an underlying aspect of their organizing strategy. Rather than consider a narrow economic functionality to trade unions these organizations are, to an extent, pushing beyond the conceptualization of trade unions prevalent throughout much of the post-war period.

Case study Since the formation of CLC, CCAWDU and IDEA have successfully organized two unions for women working to promote particular brands of beer in bars and restaurants. This is a very difficult sector to organize in Cambodia. In Cambodia and internationally, both industry and civil society representatives refer to these workers as ‘promotion girls’ or ‘beer girls’ but this language is belittling, so we use the term ‘beer promotion women’. Beer promotion women are ubiquitous in Cambodia’s bars, beer gardens, restaurants and nightclubs. CARE (2005) estimates that there are 4,000 beer promotion women nationwide, though this is surely a conservative estimate for Phnom Penh alone. Normally each establishment will have women promoting at least three different brands of beer on a commission basis, in addition to ‘regular’ staff. Based on the size of the establishment there may be numerous women promoting the same brand. The women usually wear provocative dresses with the name of the beer they are promoting emblazoned on them. This is, of course, an example of the commodification of women by beer corporations including Heineken, Carlsberg, Tiger, Anchor, Ankor and others.

Male customers regularly choose the woman rather than the beer brand, as customers are approached by several women selling different brands upon taking a seat. The woman (or beer brand) chosen is expected to closely service the customers throughout the night, ensuring glasses are never empty, and ice is regularly added to the glass, etc. In many cases the women are expected to sit with and and/or drink beer with the customer and provide ‘entertainment’. Workers on commission are more likely to drink beer with customers both due to pressure from the customers and the interrelated need to sell more beer. According to a study by CARE (2005) cases of harassment and abuse are rife within beer promotion. In their survey of 640 beer promotion women, 83 per cent reported having experienced derogatory behaviour (verbal/non-verbal), 80 per cent unwanted sexual touching, 54 per cent physical abuse, 60 per cent have been threatened or forced (verbal, physical and at gun point) and 38 per cent have had to perform a coerced sexual act in the workplace. 38 These issues are considered ‘on the job hazards’ for these workers. The survey found that one quarter of beer promoters are paid a monthly salary (plus bonuses), and 73 per cent work on a commission-only basis. Many of these women do ‘after-hours’ sex work voluntarily, while others are forced or coerced into it.

Most beer promotion women in Phnom Penh are rural-urban migrants who are working to support extended families. For the ‘successful’ ones, beer promotion can offer a higher income than working in a garment factory. But in exchange they must deal with an ever-present threat to their personal safety. Beer promotion women are normally employed by distributors for the beer brands. This makes it difficult to organize as women working for any one distributor are scattered throughout the city. Women can shift location regularly, meaning workplace-specific organizing strategies are not always effective. According to CCAWDU, many beer promotion women are only concerned with day-to-day survival and are not interested in talking about longer-term efforts to improve their work environment through collective action. Many do not expect to be employed in these jobs for long, so they do not see the point of organizing. The CARE (2005) Cambodia 121 survey found that 67.5 per cent of respondents had been working in beer promotion for less than one year. Only 15 per cent had worked on the job for more than two years.

Bearing these challenges in mind it is quite a success to have organized unions for beer promotion women. It is, however, too early to write of an outcome since it is quite recent and the unions are in initial phases of their activities. What is lacking from this case study is research and insight into the lives of the women who have chosen to organize, and the personal-social context that has led to this association and their perceptions of empowerment.

Conclusions

Cambodia’s Labour Law is comprehensive and relatively progressive but coverage and implementation is critically lacking. A salient example is Cambodia’s high-profile garment industry. Competition in the global garment industry is intensifying and the ILO is in the process of handing over the Better Factories Programme to local stakeholders. The government has not rigorously implemented the law at any stage, leading to concerns that flexible labour may take on the competitive advantage over ‘ethical production’ in the coming years.

For those in the informal economy the situation is even more critical. Eighty-five per cent of the labour force is not covered by the Labour Law. One potential way to overcome the problems facing informal economy workers is to extend the labour law to include all workers. However, as the ILO has noted, extending the labour law is complex and contradictory. A point of concern is that enforcing contracts and registration of business establishments may drive workers into more uncertain situations. The business registration process has been simplified since 2004, but the registration fee is as high as $250 to $300.39 For street vendors and other small-scale enterprises in the informal economy where incomes are very low, this fee is well beyond reach. Furthermore, the benefits associated with registration do not outweigh the costs, given the low level of social security and other benefits such as retirement, health care and the like. Despite the fact that a social security law exists in Cambodia, a system to implement it has not yet been put into place. Given these circumstances, the revenue for social security and other benefits should not come from small-scale employers. Rather, it should be a government provision.

This article has suggested that individualized negotiation with government and employers is not feasible in Cambodia. Furthermore, the formal economy accounts for a very low proportion of Cambodia’s labour market, meaning collective bargaining in tripartite models is difficult if not irrelevant in this context. Accordingly, new and creative forms of social organizing and empowerment are necessary to address the social and economic difficulties facing a vast majority of Cambodians. The resolution of this may include macro-economic policy reform that would generate a budgetary provision for workers in small-scale industries and sectors. Pressure to implement this kind of reform is not likely to come from the World Bank, IMF, ADB or garment corporations prominent in Cambodia’s socio-economic transition to date. Rather, grass-roots social-worker activism and progressive/radical organizational activists are essential in opening the debate, dialogue and action on these issues.

One of the primary advantages for organizing informal and informalizing labour in Cambodia is that it has a quite young and vibrant labour movement with many committed activists. Numerous activists working with trade unions and NGOs are thinking of new ways to address the many challenges confronting the labour movement. Through this we find much needed conceptualizations and practices that are transforming ‘passive victims’ of history and the global economy into agents of change in Cambodia. 122 Asian Labour Law Review 2008

Endnotes

1. On 3 January 1992, the US lifted its embargo against Cambodia, thus normalizing economic relations with the country. The United States also ended blanket opposition to lending to Cambodia by international financial institutions (Department of State 2006). 2. Asia Development Bank (ADB) (2008) Asian Development Outlook. 3. Ibid. 4. Ibid. 5. Economic Institute of Cambodia (EIC) (2006a) Decent Work in the Informal Economy in Cambodia: A Literature Review, Informal Economy, Poverty and Employment: Cambodia Series, No. 2. Bangkok: International Labour Office. 6. Economic Institute of Cambodia (EIC) (2006b) Handbook on Decent Work in the Informal Economy in Cambodia. Informal Economy, Poverty and Employment, Cambodia Series, No. 1. Bangkok: International Labour Office. 7. It is worth noting that the US Government and any US funding through such agencies as USAID do not support any organization or programme that promotes the regulation or legalization of sex work. 8. Ledgerwood, J. (1990) Changing Khmer Conceptions of Gender: Women, Stories and the Moral Order, Ph.D. Dissertation, Anthropology Department, Cornell University. 9. Gorman, S., D. Pon and K. Sok (1999) Gender and Development in Cambodia: An Overview, Working Paper 10, Phnom Penh: Cambodia Development Resource Institute, June. 10. Gorman et al. 1999. 11. To this end, the Cambodian government has approved 15 special economic zones in border and rural areas since 2005. 12. Asia Development Bank (ADB), ADB Congratulates Cambodia on Passage of Land Law, http://www.adb.org/ Documents/News/CARM/2001/carm200101.asp [Accessed 15-4-08] 13. Asia Development Bank (ADB) (2001) 14. See Global Witness (2007) Cambodia’s Family Trees: Illegal Logging and the Stripping of Public Assets, June. 15. Macan-Markar, M. (2008) Rights-Cambodia: Land Grabbing-A Serious Concern, Bangkok: IPS, Jan 28. 16. EIC 2006a 17. EIC 2006b 18. Ibid. 19. See Falkus, M. and S. Frost (2003) ‘Labour Law and Workers’ Rights in Cambodia’ Asia Pacific Labour Law Review: Workers’ Rights for the New Century, Hong Kong: Asia Monitor Resource Centre, pp. 91-104. 20. Sieng, D. and M. Nuth (2006) ‘Extending Labour Protection to the Informal Economy in Cambodia’, in Tajgman, Ed., Extending Labour Law to All Workers: Promoting Decent Work in the Informal Economy in Cambodia, Thailand and Mongolia. Bangkok: International Labour Office. 21. Sieng and Nuth 2006 22. Falkus and Frost 2003 23. See Brown, E (2007) Out of Sight, Out of Mind? Child Domestic Workers and Patterns of Trafficking in Cambodia, International Organization for Migration, January. 24. Yamagata, T. (2006) ‘The Garment Industry in Cambodia: Its Role in Poverty Reduction Through Export- Oriented Development’, Institute of Developing Economies, Discussion Paper No. 62. 25. Better Factories Cambodia (2006) Better Factories Concerned about Labour Contracts, Quarterly Newsletter, No. 6 October. 26. Falkus and Frost 2003 27. Womyn’s Agenda for Change (WAC) (2005) ‘Current Situation of Labour Flexibilization in Cambodia,’ available at www.womynsagenda.org. 28. Better Factories Cambodia 2006 29. Ibid. 30. Ibid. Cambodia 123

31. On a general level this is an issue far too complex to address in this chapter; numerous articles and books have been written on the subject. See Hughes, C. (2003) The Political Economy of Cambodia’s Transition, 1991-2001. London: RoutledgeCourzon; Hughes, C. (2007) ‘Transnational Networks, International Organizations and Political Participation in Cambodia: Human Rights, Labour Rights and Common Rights,’ Democratization, Vol. 14 No. 5, pp. 834-852; Landau, I. (2008) ‘Law and Civil Society in Cambodia and Vietnam: A Gramscian Perspective’ Journal of Contemporary Asia, Vol. 38, No. 2. May. pp. 244-258; and Arnold, D. and H.S. Toh (forthcoming, 2009) ‘Success Story or Barely Surviving? Cambodia in the Global Textile and Garment Industry’, Journal of Contemporary Asia. 32. International Trade Union Confederation, 2007 Annual Survey of Violations of Trade Union Rights. 33. As a brief summary, there are 20 trade union federations in the garment industry, two federations in construction, two federations in food, beverage and services, one workers’ association for sex workers, a civil servants’ union, three informal workers’ associations in addition to numerous non-government organizations (NGOs) focusing on the informal economy in wide-ranging capacities, up to ten NGOs working on labour- related issues (in a wide range of programmes and capacities), several trade unions and NGOs working in plantations, and scores of NGOs working in rural areas with farmers and peasants. 34. Falkus and Frost 2003 35. The CLC is not able to formally register since two of its members, IDEA and CICA, are not yet ‘legal’; regulations require at least three registered federations to form a confederation. 36. This is, partially, a survival strategy for CCAWDU given the uncertain future of the garment industry in Cambodia. 37. One drawback of organizing in these sectors is that several CLC members have secured funding from external donors such as international NGOs and trade unions, since they do not have surplus budgets from work in other sectors to support work with informal/izing workers. This entails project reporting, writing proposals and other tasks that are time consuming and distract the union activists from their core work of interacting with their members. Thus, they run the risk of becoming like an NGO in certain functions and capacities. 38. CARE (2005) A Report on the Situation of Beer Promotion Women in the Workplace, Cambodia. 39. EIC 2006a 124 Asian Labour Law Review 2008 Indonesia 125

Indonesia

Informal Women Workers: The Case Of Indonesia

Hesti R. Wijaya

1. Contemporary Snapshot

Description of Indonesian Informal Economy

he most complete picture on the informal employee situation is portrayed in a survey T conducted by BPSN or Badan Pusat Statistik Nasional (Central Bureau of Statistics). Based on BPSN data of 2006, the Indonesian population stood at 224 million, comprising of 106.28 million in the productive workforce (95.18 million are employed and the remaining 11.1 million are unemployed). Around 60.77 million work as labourers, which mean that around 63.85% of the workforce works in informal economic enterprises.(See Table 1)

Table 1. Formal and Informal Workers Year Number of Formal Number of Informal Productive Workers Workers Workforce 2004 34.5 million 59.2 million 93.7 million 2005 34.5 million 60.6 million 94.9 million 2006 34.4 million 60.7 million 95.1 million Source: BPSN, 2006

The above data reflects that the number of people working in the informal economy is increasing yearly. In contrast, the formal economy is in a downturn so that it can be said that job creation in the formal economy is unable to absorb the growth in the labour market. The informal economy is more likely to operate in enterprises that do not rely on advanced educational backgrounds and require no special skills. As reflected in Sakernas (National Labour Force Survey) data of 2006, 46% of the workforce which was engaged in informal activities were elementary school graduates, followed by employees who had not graduated from elementary school. 126 Asian Labour Law Review 2008

Table 2: Number of Workers in Informal Activity Based on Educational Achievement in 2006

Educational Background Total Percentage (millions) Elementary School (not finished) 14.337 23.66 Elementary School (graduated) 28.026 46.12 Lower Secondary School 12.031 19.80 Upper Secondary School 5.939 9.78 Diploma/Academy 0.166 0.27 University 0.23 0.37 Total 60.769 100 Source: BPSN, 2006 (February)

The statistical figures above do not reflect whether the informal workers referred to are mainly comprised of workers outside the agriculture sector. However, given the workforce structure based on the sector (see Table 3) we might find that most of the workforce is employed in informal economy of trade.

Table 3. Informal Workforce Distribution Based on Sector

No. Sector Number of Workforce (millions) 1. Agriculture 39.22 2. Processing Industry 2.84 3. Service provider 10.09 4. Consultancy 1.93 5. Others 6.68 Source: BPSN, 2006

In addition to informal economic activities related to the agriculture sector and economic patterns based on culture and local tradition, recently there has been a rapidly developing informal economy that is linked to the modern economy. Although the word informal might indicate small-scale business, the economic contribution of these informal activities is significant. In 2004, the Central Bureau of Statistics estimated the number of Business Entities categorized as non-legal entities (Usaha Mikro, Kecil dan Menengah or Small, Micro and Medium Enterprises) at 17 million business units, employing a total of 30 million informally, with total production valued at IDR 537 billion. 1

The Process of Informalization

One area of interest related to the informal economy is the informalization of working relations that were previously formal. This informalization relates to economic development in developed countries such as the US and Europe which has promoted new work divisions under production which has become global. The production system, by developing supply-chains, no Indonesia 127 longer focuses on centralized production activities but spreads production to a number of regions or countries based on comparative competency. Hence, economic units become more flexible to deal with competition. Meanwhile, production parts are outsourced to the third parties. Such transfer of production is often carried out by a number of illegal business units employing, for instance, immigrant workers; this type of production unit is what is known as a sweatshop. This phenomenon explains the employment informalization process. In this context, usually workers do not receive protection of employment status or health care. The New World (i.e. developed world)’s work practices have had an impact on Indonesia. Beginning in 1970s, a number of factories were established in different industrial estates, prepared by the government to attract foreign direct investment. The investors, mostly foreigners, tried to win bids offered by major European and American companies such as Adidas, Nike, and Reebok by taking advantage of the comparative advantage of low-cost manpower in Indonesia. Some argued that those companies shifted their operations due to strict provisions in the constitution and regulations of both Europe and the US.2

To top it off, the world’s worsening economic situation that caused poverty in developed countries in the late 1990s compelled the global community to become more selective in exercising their spending power, and focus more on economizing rather than buying luxury items. The Wal-Mart retail business which has been rebuked for its anti-union policy was able to expand significantly because the consumers in the country of origin no longer care about anti-sweatshop campaigns.3

In those days, factories employed workers in a manner that frequently contravened laws and regulations. This included employment of young children, or discrimination against female workers, e.g. by giving less compensation compared to their male counterparts. Only after international human rights and local labour organizations focused on this issue did these factories improve themselves and reduced illegal practices. However, the companies also transformed their production units into smaller units often undertaken by smaller home industries. The workers of such industries usually work based on contract and receive remuneration based on the size of the order they complete.

Problems and Issues of Informal Workers: Focus on Women

In Indonesia, the informal workers are located in both in the urban and rural areas. By and large, the work is recognized from its ease of entry, lack of any formal procedure whatsoever, operation on a very small scale, maybe done on own account or with the help of others sometime without pay, use of locally based resources, where the technology required is simple and easy to adapt to, and no education required for the job, which more than often not was creatively thought of by the workers themselves. For example these are street traders, laundry service, food producers, handicraft makers, pedicab drivers, only to mention several, as the activities, indeed, cover various products of goods and services.

Characteristically the problems and issues faced by these informal workers are:

1. Poverty Most of the informal workers are living in poverty. The majority of them are women, who, due to poverty, always apply survival strategies in their daily life to secure their living. 2. Lack of capital They have only a low level of capital. In most cases their working motivation are only as 128 Asian Labour Law Review 2008

simple as having enough income earning to meet the daily food consumption, with no intention to pile wealth. 3. Limited skills 4. Limited access to regular markets and technology. 5. Poor working conditions Lack of capital and small income, they work in indecent places. 6. Low and unstable income 7. Invisibility Unlike those in the formal employment, the informal workers do not appear in statistics, are unregistered as working enterprises, or are wage workers employed by a middle-person. 8. Unprotected workers Since Indonesia’s independence in 1945, for around six decades labour regulations have not yet been designed for them. It is not surprising therefore, that the informal workers have become workers with neither protection nor any form of standard social security. 9. No labour union Working in solitude, such as working in isolation within their own home with no common establishment, organizing in a labour union is almost impossible. This leads to the fact that almost all of the informal workers are unorganized workers. Consequently, they have no representation capacity. 10. Long working hours The women might work for long working hours, particularly when the informal work is intermingled with domestic chores under women’s responsibility. Other common reason is related to the workers capital availability. As capital is limited, they rely on their labour to earn. Moreover, as earnings are low, they are willing to spend hours to work to earn enough for living.

The evidence is enough to conclude that being an informal worker is an unfortunate thing. Despite their plights, because they do not work within enterprises that adhere to legal and regulatory frameworks, it is a logical consequence that they have little or no legal and social protection. This is still true despite the latest development, the passing of the latest labour law, namely Law No. 13/2003 about manpower, in which all wage labourers are supposed to be covered, while the own account workers shall be covered by social security for all policy areas in accordance with Law No. 40/2004, as described in the next section.

Informal Women Workers

Very much related to the gender role of women, the majority of Indonesian women work in the informal economy. Largely, there are two categories of informal women workers: own account workers, and wage workers. a. Own Account Women Workers

In this category the following type of workers are included: 1. Heads of family business 2. Self-employed 3. Unpaid family workers 4. Street vendors Indonesia 129

Relatively speaking, self-employed women conduct regular work; they have daily orders, and can decide on their own compensation and work standards, working hours and rest periods, holidays and leaves. They get paid upon selling their products, following the entire production process, and bear all of the risks. Sometimes these are not all applied, and what happens then is more complicated. An example is the case of palm-sugar production by the own account women workers in Lumajang, East Java.4 (Wijaya, 2008). These workers are necessarily women because the production process involved boiling and simmering the palm nectar to be molded later; any production activities related to cooking is women’s work.

Three parties are involved. First, are the sugar wholesale traders, who grant loans to the self-employed women according to their demand of money and their ability to return the loan, collect palm sugar from the workers at the price set by this wholesalers (usually lower than the market price), and sell it to the buyers. Though they claimed that there is no interest for the loans, they gain huge profits from loaning as they collect palm sugar from the workers at a much lower price than they sell to the market. Second, are palm tree owners who rent palm trees to the palm sugar workers. Third, are the self-employed women workers who work to earn a living and to repay debts. The workers do not have adequate capital to start their own business. They have very low credit ratings, making it impossible to obtain loans from banks. They also prefer borrowing money which is ‘interest-free’, not understanding the high implicit interest rate in such borrowing. As they cannot save enough capital to set up their own business, they have no choice but to continue borrowing from the same person to get enough capital for production and sustenance. The working conditions are poor. The family workers, often unpaid, usually have to climb up palm trees without safety devices, and the workplace for boiling nectar and moulding the palm sugar has poor ventilation and poor lighting. Risks for the women such as falling from the palm trees or third degree burns from splashing boiling nectar are common, yet the women lack health insurance against such risks. b. The Wage Workers

Various wage workers are included in this category. They maybe classified as follows: 1. Employees of informal enterprises 2. Casual workers without a fixed employer 3. Home-workers (industrial outworkers, or workers in the putting-out system, the system of producing for external companies) 4. Domestic workers 5. Temporary or part-time workers 6. Unregistered workers 7. Undeclared workers

Lacking statistical figures, it is believed that home-based workers are the majority of women informal workers in Indonesia. Like elsewhere in the rest of the world, this is related to the gender roles of women as the home-maker, which necessitate that women work in their own home even though it is an economic activities to earn income. Other reasons are that because it is flexible work, they can do income-earning activities without neglecting their roles as mother and wife in the home as necessary. The women home-based workers alternately do domestic chores and work for income-earning activities. They work by orders to perform special tasks and get paid by piece or by volume. It has been observed that in most cases the domestic role is prioritized over the putting-out system work, resulting in a double burden to the women workers, lack of rest and working overtime to meet the deadline. 130 Asian Labour Law Review 2008

Not only is the work flexible, while recruitment is simple—through word of mouth only—home-based work is less tense than working in a factory since the work is unsupervised. Nevertheless, quality control is carried out by the employers (or immediate employers/the middle person), and the risk of below-standard production must be borne by the workers in the form of deducted payment in the case of products beyond repair, or by undoing and redoing the rejected product, which usually takes longer time than initially. The employer–employee relationship is loose, without any standard practice of that officially recognized by the Department of Labour and Transmigration. This predicament leaves the home-based workers, like other informal workers in the rest of the world, without any access to social protection.

Home workers show specific characteristics remarkably different from workers in a manufacturing establishment which belongs to the factory owner. In Indonesia, there are three types of home-based workers: 1. Home workers in the putting-out system (POS) who work in their home. This work is obtained from the employers or, in most cases, immediate employers or intermediaries who give them orders and raw materials; thus the workers do not have any rights to the type of products and they do not have rights to market the product; 2. Home workers who act as middle persons, employ other home workers and employ themselves in similar type of work, and 3. Home workers who are self-employed and work independently in producing goods according to their own designs, having full rights to their production and marketing their products themselves.

An example of typical home-based work in Indonesia is shoe production in Asrikaton Village, Malang Regency, East Java 1 (Students for Equality and Equity Project of Hong Kong University, 2007, unpublished report). Sanny shoe factory, which receives orders from overseas (Malaysia, Germany, Singapore and Hong Kong) and domestic buyers, allocates part of the production process to the factory, and outsources the rest to home-based workers through ‘middlemen’ or intermediaries, as factory partners. The shoe factory is a transnational company, with investors from Germany, Malaysia and Indonesia. The factory claims that all of the production processes are finished within the factory, and that it outsources some of its production process to partner factories only when the factory lacks the capacity to meet the demand. This claim, however, is contradicted by what the intermediaries and the women home workers have said, i.e. that the factory conceals the fact that they employ home workers. The intermediaries in most cases are long-term employees. For example, the head of the Assembly Department has not only the responsibility to train the assemblers in the factory and supervise the production process in his department, but since eight years ago when economic crises hit the Indonesian economy at its worst and a large number of workers were retrenched, he has been assigned the additional role of finding women home workers to assemble shoes when the factory has difficulty fulfilling orders in time. He profits from the difference between the piece rate he receives from the factory and that offered to the home workers. He also checks the quality of the finished products and returns those which are sub-standard, but he neither trains these workers nor supervises the production process. The home workers receive orders for sewing shoes from the intermediaries. Sewing is perceived as women’s job, and only women are perceived capable to do so, regardless of the fact that it is, indeed, tough work. Therefore only women are recruited as the home workers, receive orders from the intermediaries, and are paid based on a piece rate ranging from IDR (Indonesia rupiah) 1,900 to IDR 2,500 (equivalent to US$2.1 – US$ 2.6) according to the complexity of different models. On average each workers can finish 10 – 12 pairs a day. This is similar to the capacity of their counterparts working in the factory. But their working hours fluctuate a lot due to the irregularity of the orders, and their income, too, fluctuates accordingly. Furthermore they Indonesia 131 do not receive benefits. These women workers are the ex-workers of the shoe factory laid off years ago and have been working as home-based workers ever since, receiving raw materials in the form of shoe parts, including shoe-soles, needles, and thread. Yet no occupational safety measures are practiced from the order provider against punctured fingers, wound and cuts, shoulder aches and sore eyes.

All three types of home-based workers have the following characteristics in common (typical of informal workers, as previously mentioned): 1) long working hours, 2) low returns, below the regional minimum wage, 3) work often involving family labourers, 4) no social security, 5) no occupational health and safety devices, 6) no written contract, and 7) use of their home as their base of production. Neither return nor compensation is paid to the POS workers for their contribution on fixed cost (e.g. room, premises), variable costs (e.g. electricity, oil, paints, water, petrol) and equipment (such as cooking utensils, knife, scissors, molds, etc.) and machineries (e.g. sewing machines). The POS system involves their production in mass production, unlike the self- employed women, where the production process moves from one home-based worker to another before the final product is fully shaped.

There are additional similarities between home workers in the POS and home workers who are middle persons at the same time. Their work is irregular, orders are from one to seven days, and wages are paid through piece rate decided upon by the immediate employer or intermediary, and upon delivery of products which are considered satisfactory by the latter. Despite long working hours, they have no overtime payment. Their contributions to the production process which consist of not only labour, but other input factors mentioned above are only compensated for (if at all) by the flat all-inclusive piece-rated return. Workers lack any bargaining power to overcome this problem. There are no provisions regarding length of working hours, overtime bonus, weekly rest period, maternity leave, menstruation leave, or annual leave. More often than not at the time of economic crises, or simply during market failure of their product (e.g. time of Gulf War, rejection of garment products from entry to Germany and the USA, during financial crises in the second half of the 1990s) it is the home workers who suffered losses. They bear the brunt of these market changes because they do not get paid if products remain unsold.

State of the Labour Movement with Particular Attention to Women

The experience of self-employed workers—namely of street traders, home-workers in the putting-out system, overseas contract workers as domestic helpers, forester community, farmers and fishers—in workers organizing and advocating for social protection are different from one another, because each group has unique characteristics.

Home-workers are the only self-employed workers that are officially organized under proper registration following Law no. 22/2001 on workers’ organization, although it should follow a bottoms-up approach from the bottom level of the Technical Labour Agency at the municipality level and regency (an intermediate administrative unit) level, to provincial level, before going to the national level. At present, the level of organization is primitive. East Java is the only Province out of 33 provinces in Indonesia in which the Association of Women Home workers (Himpunan Wanita Pekerja Rumahan Indonesia) is officially registered as a labour union (in the regency of Malang, municipality of Blitar, regency of Mojokerto and the regency of Situbondo. These are only four out of 38 Municipalities regencies in East Java Province. The workers should be empowered before capable of registering themselves, due to their unique characteristic wage workers. They should know by heart the aims of organization such as: - collective bargaining capacity 132 Asian Labour Law Review 2008

- collective advocacy - recognition as workers - obtaining rights as workers including social security rights - alliance-building for strengthening workers’ capacity

Standing before the officials of the local labour technical agencies is a tough challenge for the home workers, who may regard themselves as being just housewives.

- As for the other type of informal workers, the organization, if any, may not be officially registered while their aim for organizing focuses on productivity only. It is different from one organization to another. With the self-employed street trader in Jember, East Java, for example, the goal set is provision of local regulations for street traders which protect them and offer them job security and freedom from exploitation. On the other hand, the fisherfolk, forestry community and the farmers organization aim at: a model of protection, social empowerment, and protection of natural resources.

The only informal workers who are insured with the state worker insurance company Asuransi Jasindo Consortium are the overseas contract workers—basically, those who go abroad to work as domestic helpers. However, regardless of their full payment of the insurance premium, they remain unprotected at the receiving countries; they became undocumented workers precisely because their documents get confiscated by the labour agencies. At all stages, whether during pre- departure, at the work place or even on the way to return back home, claiming insurance for a work-related accident is almost impossible.

For workers who have not got any experience in organizing themselves, organizing is often perceived as a waste of time, particularly for those for whom, very much due to low income and poverty, time is a factor sorely needed for survival. Organizing this unorganized sector requires a process and facilitation. The role of NGOs in capacity-building and organizing is crucial, while character-building ought to be undertaken too. It can be as simple as it looks such as in the case of street traders, yet it can be as complicated as overseas domestic helpers at their workplace which involve various components and many players. The unique characteristics of each must be taken into account in the effort to organize an informal workers’ union. Protection against risks may be an effective entry point for informal workers’ movement.

Specific segments of informal work have specific type of risks related to occupational health at the workplace, variously ranging from physical ills (e.g. respiratory problems, eyesight problems, stomach disorders, muscle tension, skin diseases, cuts and wounds, over-fatigue), to emotional tension, to economic risks. Sometimes sexual violence is suffered by the women informal workers, as experienced by women workers in the tobacco drying area in East Java. Even death occurs among informal women workers, both among those who work as domestic workers abroad as well as those who work in-country such as street traders. Among the fisherfolk, the informal workers face uncertainty about their future when they get old and they are too weak to work, no longer capable of selling their labour with frail aging bodies. ‘Pension’ is not in their vocabulary.

In the recent laws of social security for all, those above-mentioned risks may be covered by health insurance, social security insurance, and a pension scheme for the old age. All these depend, however, on the capacity to pay premium, which is a question mark for the low-earning informal workers. Indonesia 133

Another problem is related to the type of the insurance scheme availability. During the 2nd Informal Sector Workers Conference in 2005, it was revealed that there are other types of risk which is usually uncovered by any insurance scheme, such as: a. Economic related risks for the women home-workers in the putting-out system such as unpaid wages and lack of benefits and holiday b. Death, capital loss, overfishing, instability of fish prices, seasonality and uncertainty of catch and competition with the capital intensive modern fishing companies risks for the fisherfolk c. Risks of total capital loss, and uncertainty of workplace availability for the street vendors d. Risk of death, loss of land, loss of product and income loss, risks of instability for the farmers e. For overseas migrants workers and domestic workers: risks of unpaid wages, deportation, loss of jobs as formal workers, confiscation of documents (e.g. passport, working permit, ID card and/or working contract), transformation from legal to illegal status, confiscation of money and personal belongings, treatment as modern form of slaves, sexual and physical abuse, and death.

All those risks are good entry points to initiate informal workers’ movement and struggle to obtain social protection, or, social security, wherever applicable as their rights of workers. This has been applied to home workers in Indonesia, as part of the home workers movement in Southeast Asia. Since it is only at the initial stage, we need to wait to observe its progress and success.

Indonesian Labour Law: Does It Apply To Informal Workers?

For a long time the Indonesian labour law has not included any clear concept between the formal workers and that of the informal one. The former is well-regulated, while the latter is neglected. Policies related to the protection of informal workers have been absent, even though the 1945 Basic Constitution, Chapter 28 reads that:

‘Every citizen has the rights to obtain social security that make it possible for a person to develop properly as a respectable human being.’ while Chapter 24, Article 2 states that:

‘The state shall develop a social security system for all of the citizens and empower the poor segment of the society in accordance with proper degree of humanity.’

This is a logical consequence of the fact that informal sectors are invisible. Their numbers are not covered by statistics or by any labour union – let alone organization, and representation. For more than 15 years, official efforts to protect home-based workers have been conducted in Indonesia to analyze the existing labour laws, since home workers are invisible as workers under the law even though they actually have working relations with their employers and receive pay in return. Those workers should therefore be recognized by law and obtain their rights as workers.

This Country has not ratified the 1996 ILO Convention on Home Workers. This Convention defines a home worker as someone who works for remuneration in his or her home or in other premises of his or her own choice, other than the workplace of the employer, resulting in a product or service as specified by the employer, irrespective of who provides the equipment, materials or other input used. Are home workers protected under the Indonesian Labour Law No. 13/2003? The following section explores this issue by describing the characteristics of home workers in Indonesia, analyzing their predicament under the current labour law, and making certain conclusions at the end. 134 Asian Labour Law Review 2008

When Labour Law No. 13/2003 was passed, a new hope begun to take form for the formal workers. By the definition of workers in this law, all wage workers should be covered by this law. This leads to the implication that the wage workers in the informal economy are also protected. The main problem is that terminology of informal workers is not mentioned explicitly in this Labour Law. Research into this law has indicated that they are not protected by written working contracts due to a lack of formal and direct ‘working relations’ with the employer (Wijaya & Sembodo, 2005).

However, to the informal workers the law is not readily implementable for various reasons. For example in the case of home-based workers. Essentially, these segments of informal workers may be classified into the following categories (as described earlier in the chapter):

Home-workers in the putting-out system Sub-contractor who are sub-contracting the job order to the other home-workers Self-employed workers

Does Law No. 13/2003 Protect Workers in Informal Employment? The case of home-based wage workers

Working relations between home-based workers and their immediate employers has specific features distinct from employer-employee relations in the industrial sector or formally registered companies. They have the following characteristics:

1. The working contract between the employee (i.e. home workers) and their immediate employer is only a verbal agreement. This verbal agreement covers an extremely short time only (one day to one week), yet because there is a constant repetition of the job, the work goes on continuously. The job contract components include, for example: a. a job order b. a wage/salary upon completion of work performed c. workers working for ‘employers’ within a subordinate relationship 2. The employers do not supervise home workers who are employed. Yet quality control is imposed upon the submitted product based on their standards of the expected results. 3. The home workers do not have any bargaining power to mutually determine the terms of a contract with the immediate employer. It is the same when they work as intermediaries between end workers and employers.

These characteristics cannot easily be fitted into the new Indonesian labour law. The main question is whether their current patterns of working relations are covered by existing law, thereby ensuring that their rights to be protected as workers are met, or whether such patterns fall outside the existing labour law.

Working Relations

In the case of the putting-out system, for example, although home-workers are not explicitly mentioned in the latest Indonesian labour law, the definition of workers alone implies that this law covers those workers. Consequently they must have the right to obtain social protection. Indonesia 135

In this law (Law No. 13/2003), it appears from a glance that home workers are covered by it. Chapter 3, Article 3 reads: ‘A worker or a labourer is a person who works and receives a wage or a return in other forms.’ Chapter 1, Article 4 also provides that ‘A work provider is an individual or entrepreneur, corporate body or other type of institution that employs a worker and pays by wage or other form of return.’ These definitions are consistent with the home workers’ intention to work for pay.

According to the definition of what an entrepreneur is and what an enterprise is, found in Chapter 1, Number 5, and Chapter 6, Number 6 of Law No. 13/2003, not only the employers, but also the middle persons or subcontractors employing women home workers, should be covered—whether registered or non-registered, as long as they employ other people in the production process.

It implies that entrepreneurs/employers who employ home workers are included in the above-mentioned definition, because it applies to both types of employers. The problem is that entrepreneurs are usually not transparent about the fact that they employ home workers. Entrepreneurs can hide their status as employers since the production process is not done in the factory establishment, but in the houses of home workers.

The Work Contract

In the meantime, the work contract supposedly is covered by the law which states: ‘A working contract is an agreement between the workers/labourer with the employer or work provider that covers work conditions, rights and responsibilities of all parties.’ (Chapter 1, No. 14 of Law No. 13/2003). This definition is broader than the coverage of labour laws in the past. In particular, it explicitly states that a working contract is not only applied to labourers/workers with employer, but also to the middle person. The main difference between the two lies in enterprise ownership. Entrepreneurs may own the enterprises, while the work providers are not necessarily enterprise owners.

Unfortunately, it seems this chapter is nullified by the law which reads: A‘ working relation is relation between entrepreneurs and the workers/labourers, based on working contract that spells out items of work, age and order’. (Chapter 1, No. 15, Law 13/2003)

Legal experts such as Soepomo (1985) and Djumialdji (2002) however believe that a working agreement exists when a worker/labourer has agreed to work for employers who provide jobs and pay upon job performance. It is not necessary for there to be a written contract since Chapter 51, Article 1, of Law 13/2003 reads: ‘A work agreement may be a written agreement or a verbal agreement’.

Thus the elements of work agreements are: 1) job implementation, meaning that the worker agrees to perform a designated job, and 2) a subordinate relationship, meaning that workers work under the leadership or instruction of others.

Repeated Nature of Work Confirms Work Relations Another feature that characterizes home-based work relations is that the work is very much short-term, and replicable continuously. Particular reference to this is in chapter 1601 c, Article 2 KUHP (Book of Rule of Civil Law a) which states: ‘When a work-contract-agreement is followed with other agreement in which there is a time gap in between, or if during the time of drafting the work contract agreement both parties clearly meant to materialize further a number of agreements, such 136 Asian Labour Law Review 2008 that all work contract agreements together are considered as one work agreement….this agreement is considered to remain intact as a work contract agreement.’

It is clear that such relation may be categorized as work relation, because it involves a leadership element or authority for employers to instruct workers such as home workers.

On the other hand, the self-employed workers, as own-account workers, are not covered since no working relations involved.

The Issues of Wage Payment and Social Security

Law No. 13/2003 mentions the following definition of wage or pay. A‘ wage is the worker’ s/labourer’s rights in the form of return from employers or work provider to the workers/labourers which is determined and paid according to a work agreement, joint agreement, or rules of laws, including bonus for workers/labourers and their families upon a job and/or tendered service.’ This definition identifies the work provider as the party who is capable of paying the workers/labourers, thereby implying inclusion of the case of home workers. The ones who are actually the workers/labourers in the putting-out system (POS) are covered and should be protected under Indonesian labour laws.

In addition, as a result of advocacy by Homenet Indonesia and other groups, the Ministry of Manpower covered home-based workers by issuing the following regulation on piece rate: ‘For the labourers on the contract system of piece-rated payment, for over and above a month, the minimum monthly wage should be equivalent to the minimum wage rate at the said company’ (Minister of Labour Regulation No. Per. 01/MEN/1999) Chapter 15, Article 1.

Although the term ‘home workers’ is not specifically mentioned, this article means a lot to them. Consequently, other rights as workers should be applied to the home labourers including social security. This has been seriously undertaken with the promulgation of implementing regulation No. Kep. 150/Men/1999, a Decision Letter of the Manpower Minister regarding operation of the social security programme for daily paid workers, contract labourers and fixed time agreements.

Homenet Indonesia will work based on these rules, as these are not nullified by Workers Law No. 13/2003. As for the self-employed workers, they are supposed to be covered by social security using Law 3/1992, regarding workers’ social security, wherein Chapter 3, Article 2 says: ‘Every worker has the right to obtain worker social rights.’ The mechanism for implementation is organized by and under the responsibility of PT Jamsostek (Worker’s Social Security Company).

As a conclusion, although technically, home workers are not specifically mentioned by the labour laws, Homenet Indonesia claims that these laws can be interpreted to cover the workers or labourers in the putting-out system. However, a lot still has to be done in order to make social protection in general, and social security in particular, a reality for the home workers.

Important also is the question of: ‘Who is the employer?’ because in most cases, the employers are invisible to the home workers and can easily deny any responsibility to their employment.

In 2008, nearly five years since Labour Law No. 13/2003 was promulgated, nothing has happened that positively changed home workers’ access to social security. It is important to note Indonesia 137 that since the law did not explicitly state the definition of home workers, the general perception among government officials and the entrepreneurs remains that they yet uncovered by the law, and thus, are not eligible to obtain social protection benefits. Up to the present time, despite the widespread popularity of informal work, informal workers are not officially recognized. At the empirical level, for instance, both the employers and the officials of the Department of Employment and Transmigration have not had any knowledge of the home workers’ issues. This indicates therefore, that to make the law work for the workers in their obtaining protection, awareness-raising should be carried out to all parties, i.e. not solely to the home-workers, but also to the officials of the Department of Labour and Transmigration and the employers.

Social Security to Cover Informal Workers

After a long period of advocacy, Law No. 40/2004, otherwise known as ‘Sistem Jaminan Sosial Nasional’ (National Social Security System, hereafter NSSS) has finally been promulgated. Through this Law, the government shall cover the social security of all Indonesian citizens. Previously social security had been available only for workers in the formal economy. Optimism is high with the promulgation of NSSS that all workers in the informal economy, own account workers in particular, will be covered and protected.

To the surprise of many, Law No. 40 /2004 regarding NSSS seems to respect the informal workers’ right to decent living. Chapter 1 defines Social Security as: ‘… one form of social protection to secure that all of the people obtain a decent level of the basic needs of life’. From what has been almost a standard norm to provide informal workers only a minimum level of basic needs, it has been raised to a more truly decent one. Meanwhile, the words ‘all people’ implies embracing those in the informal employment including own account workers and home workers too, validating the latter’s inclusion as recipients under the law. The standard of a social security system as it applies to Indonesia is further stated in Chapter 3: ‘National Social Security System aimed at full provision of decent basic needs of living to its members and/or their family members’. By Law, the NSSS will extend minimum protection using the criteria of decent basic living (‘Kehidupan Hidup Layak’). Essential needs, or decent basic needs or living, is defined as meeting minimum basic needs in order to have a decent life—this ultimately is the realization of social welfare to all Indonesian people.

The NSSS explicitly states that five security programmes shall be extended to all Indonesian people: a. Health security b. Occupational accident security c. Old age security d. Pension security e. Death security

• The home-based workers, particularly the self-employed women, are therefore not excluded from availing of the said privileges provided by law. • Chapter 14 states that the government is committed to the poorest and most financially incapable persons, who as recipients of the government-supported welfare plan must be registered with the Social Security Implementing Board. Under the said scheme, a home worker may participate as a self-employed worker by paying the nominal rate determined by the government, or may join the system through a neighborhood group. Home workers in the putting-out system may avail of the scheme through joint payment, with those receiving 138 Asian Labour Law Review 2008

low wages being encouraged to participate in the insurance programme. They should be given access to claim their rights to social security and that of their families. • Social security under this law is obtained depending on the capacity of a person to pay: she or he may choose to avail of all the privileges offered or may choose just one or two of the following—health, workplace accident, pension, old-age security, and death. • In view of the above, the Board of Social Security was legally established, with four agencies to undertake the task of implementation and facilitation of social security extension to workers: Workers Social Security Company (PT Jamsostek), Government – Civil Servant Insurance and Saving Fund Company (PT Dana Tabungan dan Asuransi Pegawai Negeri, or TASPEN), Social Insurance of the Army of the Republic of Indonesia Company (PT Asabri), and Indonesian Health Insurance Company (PT ASKES).

Similarly, a lot still has to be done as the law is not readily implementable as the bureaucracy requires directives or other implementing instructions. In the meantime the Government has taken ILO’s recommendations as follows:

a. organizing the workers by type of employment b. training the workers on workers’ rights and responsibilities c. assisting informal employment workers to become formal ones

Viewing the law positively, it is worth noting that: 1) The government has been aware that the informal employment workers should not be discriminated against by formal workers. A step-by-step approach ought to be undertaken hand in hand with non-government organizations. The latter, considered to be more advanced in experience, should offer their inputs to the government. 2) Every person may become a NSSS member by paying the premium. 3) The government is willing to work collaboratively with NGOs and other forms of community organizations particularly with respect to the availability of data on workers in informal employment that may realistically be used for NSSS purposes across government departments (such as the Department of Labour and Transmigration, Department of Fishery and Oceanography, Department of Health, Department of Women Empowerment, etc.) 4) The government should play a role in the supervision of NSSS implementation particularly with respect to employers who break this law. 5) Socialization of NSSS is needed for the society in general, and the workers in the informal economy in particular.

Effort toward official recognition of home workers remains to be pursued. It is recommended that: a. An official written statement be given, that the home workers be included in the definition of workers by Indonesian labour laws b. The home based workers be organized to conduct a formal registration of an informal workers’ union within the Department of Labour and Transmigration c. Enable informal workers’ associations, through advocacy, to be eligible for membership in the Labour Conflict Solution Board at the provincial/district Wage Boards. This should lead the associations to pursuing a real function and existence. d. Enact or implement local regulation that clearly states rules between the employer and the employee leading to a written working contract that includes at least the basic rights and responsibilities of the two parties. Indonesia 139

e. Advocacy and struggle for the realization of workers’ social protection, particularly their participation in the workers’ social security company, PT Jamsostek, equally for informal workers as for those who work in the formal employment.

Law No. 40/2004 remains inadequate in the sense that are many more risks beyond the coverage of the five social security programmes it mentions. This implies that other type of social security programme that meet the need of the informal employment workers should be developed.

Other challenges also remain, in order for the law to become implementable for informal workers in all sectors concerned, particularly women:

• To date, there are still some 21 compulsory implementing regulations under this law that must be passed. Otherwise its full implementation will prove futile. • Additionally, Chapter 52 on Transitional Directives states that all regulatory directives of the Social Security Implementing Board should be adjusted within five years’ time. Therefore, there is a need for concerted effort and relentless pursuance of public policy advocacy to push the Government to pass all of the implementing regulations. This is to ensure that within five years social security will be accessed by informal workers including the home-based workers, and the rest of Indonesian citizens. Moreover, learning from the past experience of futility and disappointment, there is a real need to keep track of how the good intention of the law is carried out, through advocacy, monitoring and consultation. This includes the government’ s use of its financial capacity, because of its position and power to either deny or provide provision of full insurance packages. • The apparent absence of enforcement power in the law may turn the National Social Security System inutile or inefficient. For example, there is no sanction for uncooperative employers who disagree to make contributory payments for workers’ insurance, nor obligation for those in power to dutifully obey and fulfill their responsibility under the law. • Finally, the organizing efforts among informal sector and home-based workers must be pursued at all levels. In the meantime, for the own account workers, the advocacy should be directed at the drafting and pushing the directives of a social security programme for workers outside the working relations designated in Law No. 3/1992, Chapter 4, Article 2. To fill the gap, indigenous social protection schemes should be promoted.

Tripartite Meeting to Improve Protection for Informal Workers

In addition to the responses to the laws of 2003 and 2004 by workers and NGOs already mentioned, another response was to call for a public discussion through a conference to allow a democratic process involving the ‘tripartite’ structure of the government officials, the SPSI (Konfederasi Serikat Pekerja Selerut Indonesia, the state-backed All Indonesian Workers Union), and APINDO (Asosiasi Pengusaha Indonesia, the Indonesian Business Association), in addition to the NGO network and the workers in the various sectors.

Following the first meeting of its kind solely dedicated to workers in the informal sector in 2002, as preparation of the first ILO International Conference employment in Geneva, in 2005 the second National Conference on Informal Workers was organized in Jakarta. The aims of this conference were: • to discuss and shares the result of the law studies, both that of Law no 13/2003 and Law no. 40/2004. 140 Asian Labour Law Review 2008

• to discuss whether ratification of the ILO convention no.177/1996 is still relevant • to discuss the follow up with respect to the plight of workers in the informal employment

The government’s officials from related departments, SPSI (the state-backed labour union) and APINDO (the employers’ association) were invited. Interestingly, the appropriateness for the informal wage workers and the own account workers of the Social Security under Law 40/2004 was questioned by those parties. In the meantime, the grassroots and the NGOs, after critically examining the type of risks faced by the workers, found that there is a need for adequate measures of social security. Many expressed that formal systems in the above-mentioned laws were still far from appropriate as far as the type of risks and problems are concerned.

As a result, it has been agreed that the workers in the informal employment should organized themselves as a workers’ union to obtain their rights. An All-Indonesian Informal Workers Association has been suggested to be established among the grassroots of the informal workers in which its members shall be composed of groups of informal workers. For example classified as informal wage workers home-based workers, organized within HWPRI (Himpunan Wanita Pekerja Rumahan Indonesia – The Indonesian Association of Women Home Workers), and SBMI (Serikat Buruh Migran Indonesia – The Indonesian Union of Migrant Workers) for the cause of migrant workers, while the own account workers expected to be established are the Fisherfolk Union, Farmers Union and Union of Traditional Traders.

A quick survey to selected informal workers was undertaken to find out whether the labour law was known to them. It was very interesting to find out that they did not yet know that the Labour Law had been passed. Similarly, upon a quick polling of the local governments, a year after the promulgation of the law, most of them were still at the state of awaiting the implementation instruction from the national level government.

The strategies for the wage workers in the informal employment that have been agreed among the organized informal workers were as follows:

- to form a solid group - to register the workers group as a labour union - to submit the file of labour conflict cases to the Labour Agency Technical Department and Court where relevant - to be listed as members of the Labour Conflict Solution Board at the provincial/district Wage Boards - to demand a registration as the beneficiaries of the labour social security

In parallel, advocacy work must be done to the governments officials at all levels managing the social security systems. NGOs and activists’ participation to facilitate the response to work is important.

Health Insurance for the Poor

Consistent with the definition of informal workers as those with no formal working relations, or who are self-employed, the workers shoulder all of the risks themselves, to obtain security against accidents at work, old age and health care, for which the worker must pay on their own. To obtain these benefits, using the minimum regional wage 2006 standard in East Java for example, to cover the entire family of four, the monthly premium is nearly 10% of the monthly Indonesia 141 wage. This is considered relatively high. For the poorer informal workers in East Java whose total monthly earning is around one half of the minimum regional wage, the premium is found to be unaffordably expensive. As though a blessing from God, however, a sudden policy of health care for 50 million of the poor was announced.

Thus, the opportunity for the informal workers believed to be covered by Law No. 40/2004 regarding National Social Security System for all became available through the Health Insurance for the Poor scheme. Solely limited to health care, in 2005, Kepmenkes (Decision of the State Minister of Health) No. 56/2005 was passed as an implementation directive of Health Care Security Programme for the poor.

In the following year, this directive was revised with the passing of Kepmenkes No. 332/2006 regarding Guidelines for implementing Health Care Security Programme for the poor. Namely, under the programme Health Insurance for the Poor (Asuransi Kesehatan Untuk Masyarakat Miskin - Askeskin) s many as 60 million poor people are covered. This is a 20 per cent higher number of poor members of society than targeted under the previous directive (Kepmenkes No. 56/2005), but the mechanism and rules is tighter than before.

Within two years of the passing of the Askeskin programme, the following empirical evidence of on the ground has been observed:

- Below-standard medical service for the poor - Programme information is almost non-existent; it is very difficult to access information on access to Askeskin - The procedure is bureaucratically long, full of red tape and confusingly complicated - Illegal requests of payment from the personnel of the health provider

For poor informal workers, it is certainly a promising health care programme worth the struggle. However, NGOs’ support to advocate and improve this programme is still greatly needed, directed both at the health providers and the informal workers.

State of the Labour Movement: Union Organizing and Organizing of Women

The fact that the informal workers mostly work in isolation yet also spread widely all over the archipelago makes organizing at the national scale difficult. At present the Indonesian union of workers are those organized under SPSI (mentioned above), for the labourers in formal employment. This union has not been recognized yet by the ITUC (International Trade Union Confederation) as a member. For about a decade, including around eight years facilitated by the ILO-DANIDA project (for the home-based workers including self-employed women workers), efforts to organize informal workers as a segment of SPSI has not yet been successful.

Only after the fall of Suharto’s regime did new alternative workers’ unions sprout in this country. In the spirit of democracy and freedom of expression, following the transformation era in 1998, the labour movement tried through various actions on the ground to fight for their rights as workers such as: minimum regional wage adaptation issues, discrimination of labour including gender issues, retrenchments without proper payment, to mention several. Demonstration and strikes have become a way of life of workers They not only showed their feelings and stated their demands to the employers about normative rights, but also to the executives, e.g. to the labour technical agencies at the local as well as national level. When the issue was about law, for example during the drafting process of Law 13/2003, they marched to the People’s Representative 142 Asian Labour Law Review 2008

Assembly structures. Yet their spirit has not yet reached the informal workers. Rallies and strikes are not part of their activities. Campaign among their peers for extension of membership alone up to the present time has not been a movement. Empowerment and awareness-raising is required to make organizing as a labour union get on the move.

It seems that workers in the informal employment still have a long way to go, since without suitable implementing regulations the law is futile. Meanwhile, by 2006, a bright hope has come for own account workers further to the above-mentioned laws in 2003 and 2004, with the passing of Permenakertrans no. 24/2006 (Regulation of the State Minister of Labour and Transmigration no. 24/2006) which seems to be an exceptional government programme to access the social protection programme. This regulation deals with guidelines for implementing the labour social security for workers employed outside the standard working relations. This is perceived, at the same time, as an implementing regulation of Law no. 3/1992 regarding social protection for workers, which states the social protection for workers outside working relationship shall be regulated further. Yet, problems remain. It is not always easy to persuade information workers to agree to join the social security scheme offered. Those who understand and have perceived themselves as workers, do want to be classified as workers instead of the poor.

A new initiative is being applied to fisherfolk who consist of both own account and wage workers, to learn the need to organize as well as to get the protection of the social security board based on their own experience of the risks they have suffered from, including death toll, shipwreck on the stormy seas, and the lack of catches that directly affect their income and wellbeing. Considering Indonesia is an archipelagic country, the fishing community is large and widely spread all over the country. Organizing them is challenging. The type of insurance scheme offered within the social security programme has also not yet covered any total loss of ship and death at workplace on the sea.

Registration of the informal workers group to the Technical Department at the national level has not possible yet, as registration in the local Technical Agency of Labour almost absent. Registration is a must if the group of home workers would like to be recognized by the government. It seems that among various segment of workers in the informal employment, only several home-based workers in East Java have been registered (Malang Regency, Blitar, Mojokerto and Situbondo—four regencies out of 38 regencies/municipalities of East Java Province). An initiative to register has been in place from the early 1990s facilitated by YPP (Yayasan Pengembangan Pedesaan – The Rural Development Foundation), by organizing the unorganized informal workers, started from a group of home workers.

Officially registration has been possible only in this millenium, based on Law No. 21/2002. In 2005, Homenet Indonesia facilitated the establishment of a women home workers grassroots organization of women mentioned earlier - namely Himpunan Wanita Pekerja Rumahan Indonesia. That organization is supposed to be a branch of SPEKINDO (Serikat Pekerja Ekonomi Informal – The Indonesian Informal Economy Workers Union). The other type of informal workers (farmers, fisherfolk, informal workers in The trading sector, and domestic workers) are not yet easily organized nationally. The ission to struggle toward realization of workers rights including social security is not yet in the agenda of any existing national organization of informal workers. This is true for example, in the case of farmers. So far they are under the organization of Agriculture Technical Department. Usually they are organized by group of farmers, in which their vision, mission, and activities focus on productivity and income. This is also the case of farmers organization facilitated by NGOs. Another type of national farmers’ organization exists under Indonesia 143 the wings of political parties, to ensure constituencies’ commitment to place their voting during general election.

For the women farmers, instead of workers’ rights and social protection, the organizing agenda is related to the government development programme strongly related to current gender ideology. Struggles should start with gender awareness-raising not only to the women farmers alone, but also the families, the related technical departments and the concerned NGOs partners. It is certainly challenging since it is work against the mainstream, against culture and against patriarchal ideology that currently remains strong within Indonesian society.

ENDNOTES

1. Central Bureau of Statistics (2006) ‘Beberapa Indikator Penting Sosial-Ekonomi Indonesia’, Directorate of Statistical Dissemination, Jakarta, July, p. 16. 2. Suziani, J. (1999) Kasus Nike di Indonesia, Meneropong Kondisi Kerja Buruh Perusahaan Sepatu Olahraga, Yakoma-PGI, Jakarta, p. 20. 3. Wal-Mart is a major retailer company that expands at the highest speed in the world. In 1998 its sales hit $100 million, and in 2004 it grew almost three times as much, i.e. $276 million. Wal-Mart is also one of the private company that has the largest employees. In 2004 it employed 1.5 million people at 3,361 outlets in the US, 1,363 retail shops, and 1,672 Super Centers. Behind these achievements, Wal-Mart has destroyed employment opportunity and economy in US because most of its items are manufactured abroad. See: Quinn. B. (2005) How Wal Mart is Destroying America (and the World). And What You Can Do About It, California, United States: Ten Speed Press. 4. Wijaya, Hesti R. (2008).‘Sektor Informal - Katup Pengaman dan Sang Penyelamat yang Terabaikan’. Jurnal Perburuhan No. 8, p. 24 - 29. 144 Asian Labour Law Review 2008 Laos 145

Laos

The Lao People’s Democratic Republic

A special correspondent

‘My brother told me that to serve the Party well you must have a mind empty of thoughts and ideas, and be able to totally surrender.’ Friend of the author

‘Laos is being transformed from being a land locked country to a land linked country.’ Chareune Inthavy, Minister of Industry and Handicrafts, 2003

Introduction

he 2003 edition of the Asian Labour Law Review contains an excellently researched T summation of the situation and mechanisms of labour administration in the Lao People’s Democratic Republic (Lao PDR). Any changes that have occurred in the ensuing four years are those of emphasis and are not substantive, despite marked changes in the economy and an escalation in the number of hazardous industries.

‘Lao’ (used by this author as Lao people themselves use it) continues to be a nation dominated by agricultural workers who lack technical capacity or comprehensive education. Despite a growth rate of around seven per cent, industry only accounts for 23 per cent of the economy and employs four per cent of the workforce. The major exports are: wood, electricity, hand-woven textiles, garments, resources from mining and plantations, and handcrafts. Over 60 per cent of consumer products are imported. 1

In terms of influences on labour participation four issues stand out as being particular to Lao: • The at times coerced relocation of thousands of rural villagers to make way for land use projects (dams, extractive industries, and plantations). The consequent loss of arable land, which results in trafficking, urban drift, and employment in hazardous industries.2 • The growth in the export market for the traditional crafts and in particular of silk weaving, leading to craft ‘factories’. This is linked to the burgeoning interest in green or organic products. • An escalation in labour migration, in particular to Thailand where the National Statistics Center counted around 200,000 souls, 55 per cent of whom are women, seek work largely as unskilled workers. 3 • The phasing out of textile and clothing quotas in 2002.

The situation for labour is limited not only by the lack of effective trade union rights, but by the government’s suspicion of civil society, in particular locally formed non-governmental organizations (NGOs). They have allowed the establishment of various associations,4 such as the Community Development and Environment Association,5 which considers the needs of rural 146 Asian Labour Law Review 2008 informal workers, and the Lao Disabled Peoples’ Organization, which assists injured workers; but they maintain control by subsuming the organizations under the Prime Minister’s Office. While international NGOs do exist, they have to observe Lao sensitivities. There are optimistic indications that a new law will be introduced in 2009 making it easier for local civil society groups to be established and function.

This opening up comes in the wake of ASEAN’s Vientiane Action Plan of 2004 and the 2007 UNDP conference in Vientiane, to which 100 senior government officials were invited. South and Southeast Asian speakers representing government and NGOs highlighted the invaluable role of NGOs in assisting the government implement their programmes. This conference, plus membership in the Association of Southeast Asian Nations (ASEAN) since 1997, seems to have yielded slow-growing fruit.

International Picture

The International Labour Organization (ILO) has a small but active office, whose work largely focuses on social security and has sponsored some occupational safety and health (OSH) activities. At the time of writing, only two international NGOs (the Australian trade union-backed Australian People for Health, Education and Development Abroad, APHEDA, and Oxfam) have labour-focused programmes (separate from migration and trafficking, which are heavily supported by international research and operational budgets).

Until the time of writing, no core labour standards have been ratified. Laos has ratified the ILO Conventions C138 (Minimum Age) and C182 (Worst Forms of Child Labour) and since 2000 has been pondering the possibility of ratifying Core Conventions such as C87 (Freedom of Association and Protection of the Right To Organize), C98 (Right to Organize and Collective Bargaining), C100 (Equal Remuneration), C111 (Discrimination in Employment and Occupation) and even C105 (Abolition of Forced Labour). In response to a surge in trafficking in women and children, and commensurate critical international attention, Lao became signatory to ILO Convention C129 on Forced Labour and the UN Convention on the Rights of the Child. It is also signatory to the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW).

In 2006, Laos hosted a regional meeting of ASEAN marked by the Vientiane Action Plan and agreed to participate through ASEAN in the Global Hazard Substances regulatory and control system, becoming a signatory to the International Chemical Classifications systems for industrial, agricultural transport and consumer chemicals in addition to the ASEAN-wide hazard communications system. Laos was in line to provide Secretariat services to ASEAN Occupational Safety and Health Network, or ASEAN-OSHNet, after Indonesia, but declined, presumably in the absence of sufficient technical expertise. Consequently Malaysia took on the responsibility.6

The Deputy Director General of Skills Development and Employment in the Ministry of Labour and Social Welfare (MLSW) participated in the March 2008 International Association of Labour Inspection (IALI) Conference in Adelaide. In his speech, Mr. Singthilath recognized the urgent need to develop OSH interventions at both enterprise and national levels. The IALI is in a good position to extend mentoring and training for this purpose.

Laos suffers an acute shortage of skilled technical and professionally trained personnel; the laws are internally inconsistent and not supported by contemporary regulations. The global disenchantment with labour as a focal point of development means that newly emerging Laos 147 economies such as Laos cannot get assistance to develop competent and effective national and provincial labour administrations.

Occupational Safety and Health

Informal sources indicate safety and health problems emanating from the proliferation of hazardous industries such as sawmilling, lead-acid and nickel-cadmium battery making, hazardous heavy and base metal mining, chemical and plastics manufacture and asbestos tile making - but reports of illness and fatalities are largely anecdotal. Official data seem to be non-existent or incomplete.

The National Institute for Labour Protection (NILP) in Vietnam has provided training and educational support and with the Thai-based Occupational Safety, Health and Environment Institute (OSHEI) conducted extensive training in OSH in 2005-6.

In her presentation to a Tokyo meeting in 2006, Ms. Viengxaylack Souksavath of the MLSW affirmed that incident reporting is non-existent.7 Her comments were consistent with information by Jukka Takkala of the ILO in his 1999 summary on global occupational health and reporting safety reporting, in which he names Burma, Nepal, North Korea and Laos as countries that do not submit accident data or accurate representational data. Laos’ occupation accident rate is consequently extrapolated from that of Malaysia. 8

So while the situation is noted and has remained unchanged for several years, it begs the question of what to do next. The need to establish the nature and extent of major sectors producing death, injury and illness is vital so as to plan services and interventions, and should be a priority for any donor assistance, should they surmise that labour welfare is worth improving.

It can be estimated that some percentage Laos’ high number of traffic fatalities and injuries are occupationally related. 9

The law does not address occupational health, and as far as this writer can ascertain, no dedicated occupational health services are available outside large international private companies.

Despite being signatory to the ASEAN conventions, there is no specialist body in Laos that has ostensible or overarching reporting and investigation responsibilities. Ms. Souksavath admits that the 121 national inspectors are mainly concerned with management and other matters than with inspections, despite having access to all workplaces under the 1994 Labour Act. 10

They are however much more successful with training having trained all 18 provincial MOLSW staff using the ILO model training for ‘Higher Productivity’ and a ‘Better Place to Work’. Ms. Souksavath reports that they are having some success with enterprise-level training using the ILO’s WISE methodologies.

Laos does not have any occupational hygiene laboratories, testing facilities, nor independent loci for advanced skills training. Some private companies, particularly those which are overseas- managed, such as mines and chemical companies, have their own in-house expertise and send trainees overseas. In light of the huge amount of very dangerous chemicals transported by road for use in gold mining (cyanide, concentrated sulphuric acid and hydrogen peroxide, as well as flocculation chemicals, etc.) emergency response teams and regulation would seem to be vital. None exist. 148 Asian Labour Law Review 2008

Donor attention seems drawn by the nascent garment industry, which since the phase out of textile and clothing quotas, is diminishing in importance. This ongoing focus draws attention away from the very real hazards in the other sectors. Large-scale infrastructure, extractive and processing industries, particularly aluminium, carry the very real risk of cancer and silicosis, as well as traffic and traumatic death and injury. The potential risk of radio-nucleides being released during aluminium extraction and processing threatened both workers and communities, given the current low levels of technical enforcement. Laos’ basic medical services, which are rightly focused on public health, makes it unlikely that medical monitoring needed for the management and mitigation of pneumoconiosis and other occupational diseases will be put into operation.

Mr. Singthilath, in his speech mentioned earlier, has acknowledged that Lao had experienced both industrial disasters and recently the proliferation of bone, lung and skin cancers—which he attributed to agricultural exposures.

Private investment in hydropower, in particular, presents cause for concern as it is unlikely that deaths and injuries will be reported. Only a minority of the projects thus far have enjoyed the oversight of the large donor institutions whose purview has at least managed to preserve a modicum of control.

The major exception to the dismal safety and health picture is that of air safety. Laos has been diligent in adhering to air safety regulations and training. A recent meeting on this subject was held in Laos in December 2007. The meeting was sponsored by the Cooperative Development of Operational Safety and Airworthiness Program (COSCAP), SE Asia chapter and was attended by ASEAN representatives as well as French and US Federal Aviation, European Air Safety Association; Boeing, Airbus and other airlines companies also sent representatives.11 It accepted that places like Lao have difficulty in staying up to date and according with international standards of safety.

Women and Work: The Focus for Asian Labour Law Review

This Asian Labour Law Review is focused on women and the informal sector and the transition from formal labour to precarious, unregulated informal employment. But the author, mindful of the pattern of employment in Laos, considers gender to be a less important predictor of equity/ inequity than the rural-urban divide and ethnicity.

Urban-based lowland Lao women enjoy a remarkable degree of self-determination and equality, which is shared to a great degree by rural lowland Lao. However, ethnic minority women do not share this independence or enjoy the same educational opportunities. They shoulder the majority of agricultural and family responsibilities.

Being until now a predominantly pre-industrial agrarian society, Laos is undergoing a process of ‘formalization’ as land is lost to development. Women in particular are becoming wage slaves in industrial employment. Stories told by rural Lao underscore the importance of dignified self- sufficiency,12 which is being undermined by destructive industries.

In this context the environment, encapsulating forest and riverine systems, is a form of social protection for most rural Lao. In times of hardship and transition they have relied on the forest and rivers for food and as sources of income and medicines. Environmental destruction that is happening apace threatens to mire a huge number in absolute poverty. Other than seeking work in the formal sector, some choose to migrate or enter the expanding sex industry.13 Laos 149

Women who enjoyed high status in Lao for their agricultural and handcraft skills are being adversely affected by development.14 It can be argued that industrialization, which encourages atomization of community structures, withdrawal from traditional roles in which women made a significant contribution, into a socio-economic and employment system based on consumerism, is one of the major factors in women’s reduced status. On the other hand, having a disposable income, freedom from village constraints and early marriage also empowers women.

Informalization is driven by low wages and poor conditions in the formal sector - such as women seeking sex work as an alternative to factory employment. Young women seek work in occupations such as housekeeping, particularly in foreigners’ houses. as they earn up to four times more than in a formal industrial setting and have access to safe water and some degree of comfort.15

Economic Indicators of Equity

To underline that growing inequity in Lao, between 1992 and 1998 the Gini coefficient rose from the comparatively equitable level of 0.286 to an inequitable 0.357. Recent studies have indicated that the trend is deepening, rising to 0.370 in 2001 according to both UNDP and World Bank. 16 More importantly Viphonxay et al. (undated) found that the Gini coefficient rose to an alarmingly inequitable 0.426 in Vientiane and 0.394 nationally, as compared with a rural rate of 0.331. 17

It is estimated that up to ninety per cent of employed women work in agriculture. In 2005, manufacturing produced 32.5 per cent of national GDP and industry an additional 21 per cent. Industry grew by 16 per cent in 2005.18 But the garment industry lost ground, dropping from a growth rate of 22 per cent in 2004 to only 10 per cent in 2007.19 Many garment companies have closed, citing poorly trained workers, the tendency to return to the village at harvest and planting times, and the cost of transport as reasons for lack of competitiveness.

A Brief History and Factors Affecting Contemporary Lao

Laos survived years of colonization, foreign occupation, civil war and political instability. In 1975, the Communist Pathet Lao with assistance from Vietnam consolidated their control, arrested the majority of the royal family, who subsequently perished, and established the Lao People’s Democratic Republic in December of that year. Since then Lao has been a totalitarian one-party state.

The country, a nominally Marxist-Leninist state, is ruled by the Lao People’s Revolutionary Party (LPRP). The head of state is the president, elected by parliament for a five year term. The prime minister is head of government and appointed by the president with parliamentary approval. The nine-member politburo of the LPRP, drawn from its central committees, is the key decision making body. A National Assembly meets twice a year and is responsible for scrutinizing, but not opposing, proposed legislation. The assembly is elected by the people from a list of candidates approved by the party. In short, there is little that is democratic about the Lao People’s Democratic Republic.

Instead, they rely on what is called ‘Democratic Centralism’, by which decisions are made by consensus at the upper echelons and then this decision is passed down to operational levels of society. At a recent meeting on agriculture the Minister was horrified at the idea that 150 Asian Labour Law Review 2008 farmers should be involved in decision-making. ‘What do they know?’ he asked some dispirited consultants.

Stuart-Fox hypothesizes that Theravada Buddhism has a lot to do with political stasis in Laos and surrounding nations. The belief being that those in power must have gained lots of merit in previous lives, and now have the wealth to keep doing so, so have the ‘right’ to stay in power.

In the mid-1980s, after years of Marxist central economic planning and dependence on state ownership, the economy nearly collapsed and inflation soared; the National Assembly adopted a constitution which formalized the establishment of a market-oriented economy, called the New Economic Mechanism (NEM).

In theory NEM guaranteed all Lao citizens the ability to own property, if they have resources that is, and protection for foreign and direct investment. Wealthy Lao, of which an increasing number exist, now have greater freedom to travel and choice of employment. Tourism and overseas investment, particularly from neighbouring countries, is encouraging the growth of a fledging private sector.

Despite all this, the population – more than any other in Asia – continues living a subsistence life, 31 per cent of them living below the poverty line, hunting, foraging and growing food. A significant number of villages have no road access or health service.

The continuing government control of the media limits the extent of critique or reportage on controversial topics, such as labour and ongoing environmental destruction. Concerned individuals will rarely speak out as they risk individual and collective family punishment. But, below the surface, there is tension between the political and power elite who control the patronage and the Lao patriots who care about the direction the country is taking. 20

The government projects itself as benevolent, and aligns itself closely to both China and Vietnam. These countries share Laos’ hard-line stances on labour, despite pretensions to a proletariat revolutionary past. There is evidence that broad-scale corruption allows contractors and employers to get away with both environmental and social destruction - including workers health and safety and rights. This is apparent particularly in the logging and hydropower industries. Reports by individual Lao indicate high injury rates in illegal21 and legal logging and construction. Most of the information is conveyed by word of mouth or posted on the Lao language bulletin associated with LaoFAB.

Both Vietnam and China are making increasingly 'imperialist' demands on Lao. Many Chinese and Vietnamese workers have entered Lao working on road and building construction and plantation tasks. What effect that has on labour rights has yet to be seen.

Working Where?

Eighty per cent of Lao workers are still classified as self-employed in rural activities such as farming, weaving and petty trade22 and many have multiple jobs, that is they do all of these activities.

Women hold dual responsibilities for farm (including aquaculture and small livestock management), household and financial management, in addition to petty trading. Women will, for instance, weave, fish and then sell the fish and/or textiles at a market or in a small roadside Laos 151 stall. An un-attributed study found that Lao women were more successful at small and medium enterprises than were men. Despite this, women are 30 per cent more likely to be illiterate and innumerate than men, particularly among ethnic minorities. But women have a substantial and enlarging role in rice cultivation, despite mechanization that favours men.

Women hold primary responsibility for marketing of agricultural produce, including butchering and selling meat. Despite this, and reminiscent of Waring’s findings,23 women’s contribution to agriculture and as family labour is not counted as work in the national accounts of Lao. 24

Despite few gender differences being present in the broader society, it is when women enter the capitalist economy of formal work that they experience disparities. In the formal sector, despite laws to the contrary, they sometimes receive a lower wage than men, due it is said to their lower level of education. Onphanhdala found that on the whole minimally educated women tend to attract lower wages than their male counterparts.25 The exception is the weaving industry, reviewed below, in which women’s wages exceed those of men.

Overall the trend in Laos and in particular for women, is towards formalization. However, that trend as we shall see does not necessarily optimize income.

Textile and Garment Quota

In the previous decade the garment industry played a significant role in Lao’s economy, being the major foreign exchange earner and non agricultural employer. Started in 1990, it steadily expanded in extent until by 1998 garments accounted for 30-40 per cent of merchandise exports.

Now it has been superseded by the electricity and mining industries. The garment industry was however susceptible to shocks. First the Asian economic crisis, then the phasing out of quotas granted by the Generalized System of Preferences (GSP).

The Garment Factory Survey of 2006 conducted by the National Statistics Center for the study cited in this section26 covered 44 companies, almost half of which were foreign- owned. Thirty per cent were Lao-owned, the rest being joint ventures. However foreign-owned companies employed more workers and generated disproportionately more income.

At the time of the study the garment sector employed 28,000 workers, 80 per cent of whom were women with the majority of from the northern provinces.

The major markets were European Union, Asia, Canada and the US.

Competitiveness is determined by labour costs, productivity and lead times. While Laos at US$0.125 per hour, has the lowest labour costs of Asia’s Least Developed Countries (LDCs) the authors concede that low wages cannot be translated into competitive advantage without productivity factors. Productivity in Laos is low when compared to say China. A Lao worker will produce 1,350 pieces in comparison to 7,500 in China. The writers agree with the circular argument that low wages act as a disincentive for hard work and to attract skilled workers. Coupled with poor education and skill levels, and the inability or unwillingness of companies to provide vocational or technical training, the picture is one of stasis.

Turnover rates are between 40-60 per cent per year. ‘Temporary’ turnover results from a high 152 Asian Labour Law Review 2008 proportion of seasonal workers and the absence of work contracts. What is typified as ‘permanent’ staff turnover is attributed to low wages, tedious and repetitive work, and the perception that the garment industry is a waystop to something better.

Lead times are determined largely by inefficiencies in transport modalities (too many transfers at borders) , high costs (the cost of transporting goods to ports in Vietnam and Thailand are higher than the international transport due to massive informal levies) and distance from markets, and lack of supporting industries.

The report identifies working environment and compliance issues as also counting against Laos having a successful garment industry. They cite consumer concern about health and safety and worker’s rights and admit that, as the Association of Lao Garment Industries stated in 2006, the major problems facing the garment industry in Laos include compliance to international standards on safety and health working conditions and quality control. While a few producers have complied, the majority have not. In a similar vein most do not have ISO 9001 or SA8000 accreditation.

Despite this, owners recognize that international campaigns against child labour and absence of labour rights can adversely affect business.

Consequently, a relatively high proportion of Lao FDI and JV respondents to the survey indicated that they wanted to improve and upgrade factory facilities and conditions. Most customers tend to visit factories before placing orders, so owners are increasingly recognizing the importance of compliance with international standards. But more transfer of technology and skills is required from international experts, as few resources exist so far in Laos itself.

While the majority of companies FDI and JV report, for various reasons, only slight adverse effect from the GSP phase, they are more worried at the removal of safeguards that have protected garment industries from China’s onslaught. The gloves come off in December 2008. 27

Trade Unions and the Lao Women’s Union

The sole Lao trade union, the Lao Federation of Trade Unions (LFTU) is an extension of the government and is powerful enough to draft its own legislation. Ms. Pathoumthong told the 2001 International Training Center (Turin) course in OSH and the environment that the ‘LFTU is one of the political organizations of Lao PDR.’ The International Confederation of Free Trade Unions (ICFTU) now the ITUC, International Trade Union Confederation drew attention to the Lao Constitution, which states that the purpose of the LFTU is ‘to unite and mobilize all people for taking part in the tasks of national defence and construction.’

Article 3 of the 1994 Labour law stipulates that ‘workers and employers shall have the right to organize and belong to any mass and social organization that has been formed lawfully.’ No other lawful associations or unions exist; ergo, there is no freedom of association.

At the time of writing, a draft new Lao Labour Act is being circulated, but it is available only in Lao. Summary notes from translation appear below, as does an outline of the new Trade Union Act, which was recently approved by the National Assembly and launched in late December 2007.

The senior trade union officials interviewed after the APHEDA/ILO-sponsored OSH Laos 153 training revealed they had little if any experience of industrial work. Most of the 77,000 rank and file members come from the government technical services, civil servants and the ranks of the army and police, who, are as will be noted below are, exempt from the Labour Act and whose role it is to defend the nation (see box below). The LFTU is represented at provincial level as well as having a central coordinating body - a model that replicates all government bureaucracies.

While all workplaces are supposed to have an LFTU Unit, workers are not involved in electing their representatives.

As Phil Robertson Jr. wrote in the 2003 Asian Labour Law Review:

There are not many other countries in Asia where one finds a trade union body with a constitutionally mandated role … and top union officers with the equivalent of Ministerial rank in the government. Why then does what appears to be a great deal of power and policy dialogue by the LFTU result in such poor and sporadic labour enforcement? What is the role of the LPDR Ministry of Labour and Social Welfare (MLSW) and is that where the problem lies? Does the LFTU adequately represent workers in trouble, seeking redress for violations of their rights under the labour code, or is it a tool for state power to keep workers quiescent?

An Oxfam report on the situation of workers in the nascent garment industry indicated that the LFTU and the MLSW are still confused about their roles and responsibilities with regard to labour protection. Souksavath of the MLSW (mentioned above) reported that while the LFTU has inspectors, employers give them no credence.

As part of their national campaign the LFTU go on air each evening between 7.30 and 8 pm to encourage membership and advise about workers’ rights. I did not meet anyone who had listened to and who could comment on the usefulness of the programs.

The excerpt below is indicative of nexus between the LFTU and the government and in particular references to national defence.

Party leader congratulates trade union

Vice President Mr. Bounnhang Vorachit on Friday joined the 52nd founding anniversary celebrations of the Lao Federation of Trade Unions (LFTU) with hundred of officials from various government bodies. He conveyed his ‘strong sense of love’ and warm greetings from the Party …

In the revolutionary tasks of national defence and construction, the Party has always considered mass organizations as strategic tools, including the LFTU, the Lao People's Revolutionary Youth Union and the Lao Women's Union.

He pointed out that one of the main duties of the union was imbuing workers with a sense of loyalty to the Party and the nation, and strengthening their unity and patriotism, as well as encouraging a strong sense of proletarian internationalism.

The Lao proletariat have sacrificed their lives and used their energy in contributing to the tremendous victories of the Party, army and people as a whole during the long fight to liberate the nation, as well as during the process of national defence and development, 154 Asian Labour Law Review 2008

Mr. Bounnhang said. The task of the union in the new era is to campaign to educate the proletariat to be good citizens and to protect the rights and benefits of their fellow citizens.

Since its establishment, the union has improved in line with the Party's ideology, and its activities have been in line with the Party's guidelines.

‘On behalf of the Party Politburo, may I wholeheartedly congratulate the union's and proletariat's achievements throughout the past 52 years,’ Mr. Bounnhang said.

.. the President of the union, Mr. Vongphet Xaykeuyachongtoua, reviewed (LFTU) activities when foreign imperialists invaded Laos, particularly in the 19th century when Lao workers suffered severely, working 14-15 hours at a time for the foreign occupiers. Mr. Vongphet outlined the growth process of the union in each area and its contribution to national defence and development. The approval of the Union Law by the National Assembly in December last year has facilitated the union's role in representing workers' rights and benefits in playing their part in national defence and development.

To mark and congratulate the achievements of the union, Mr. Bounnhang presented it with a first class Issara Order.

By Souksakhone Vaenkeo Source: Vientiane Times, 4 February 2008

In late 2007, the Vientiane Times reported that at the third Plenary Meeting of the Executive Committee of the LFTU, the number and seriousness of workers’ complaints were noted to be increasing in Laos.31 Last year, 315 complaints were lodged with the LFTU. Of those, 123 had been resolved at the time of writing. Most complaints were in relation to unpaid or underpaid wages. As a result, the union had been instrumental in arranging for employers to pay some 775 million kip (US$81.58) in outstanding wages.

The Times also noted the LFTU is facilitating getting low-cost loans in order to allow workers to take up small business or agricultural activities. It could be said that the LFTU might better expend its efforts enabling workers to get higher wages so as to obviate the needs for loans.

The Times went on to say that the Savannakhet provincial office of the LFTU had collected about US$900 to assist families of those who had died or been injured at work. Xayaboury, which has a large number of sawmills and logging operations, has also collected around US$600. How that money was collected, how it was allocated and if it was a substitute for or in addition to workers’ compensation was not stated, although they did say that the LFTU was ensuring that all companies establish funds at the union branches ‘to assist workers who fall ill or are injured.’

It is thought by Lao observers that the LFTU is gradually clarifying their role within the structural and political constraints. It is not clear however if that represents any fair arbitrage. Regulatory breaches are, according to reports, more common in Lao owned companies.32 Laos 155

New Labour Act

The tenor of the new act, passed in February 2008, is very heavily weighted towards law and order and is little changed from the former Act. ‘Control and discipline’, ‘force’ and ‘obey’ are frequently occurring words. Its focus on a centrist style of control that pre-dates Robens.33 Though there is reference to safety committees, the new act allows workers little self-determination, unlike the Robens Act, which clearly specifies rights as well as responsibilities.

The new Labour Act also reiterates the need ‘to be in accordance with Law in the Lao PDR’ and further ‘workers and employers have to strictly follow the rules.’

The Article 49 on safety stipulates a six-day, 48-hour working week, except for those working with sources of radiation (including UV) and infectious diseases, chemicals and bomb disposal, underground workers, and those labouring in overly hot or cold conditions or with vibration. These workers are restricted to six-hour work days, which it is wrongly assumed should reduce the risk.

While the law makes no mention of an increase in minimum wages, it does insist that employers have no right to underpay workers. It maintains the government’s central role in wage-fixing and does not allow any right of appeal or for worker leverage on determining wage increases.

The new Act maintains the principles of exclusion from risk, not overall risk management. In a move reminiscent of 1950s’ safety law, pregnant women are excluded from heavy lifting, long periods of standing and other risky work as defined in the article about working hours. There is no acknowledgement of reproductive hazards for males or that the objective should be to achieve safety and health for all, not merely the pregnant.

Women are however awarded 90 days’ maternity leave, 42 of which have to be taken after delivery. A worker is then is allowed one hour per day to feed the child on return to work, as well as the right to take paid time off to enable her children to be vaccinated.

The minimum age at which children can enter the workforce is 14 years, but at that age they should not work a full day and are precluded from mining, manufacture of explosive or chemical products, working with corpses, noisy environments, locations where alcohol and gambling are present, or other dangerous work as above. This prescriptive litany is a theme running through the Act. It does not entertain any notion of risk assessment or prevention.. Training or workers participation is not a feature of the new Act.

Pasar Lao is known as an imprecise language, particularly as it relates to legal, technical or scientific ideas and allows room for misinterpretation.34

Comments given by Lao NGO workers on the draft labour law indicate that there are few differences from the previous Act. The minimum wage for so-called unskilled workers (excluding overtime and bonuses) has not been increased and still stands at 290,000 kip per month, less than US$30. This makes Lao workers some of the poorest paid in Asia. Even so, many employers, a number of whom are Lao, prefer to still misunderstand the Act and pay below that rate. The Vientiane Times on 24 August 2007 reported wages as low as US$8 per month in some factories.35 156 Asian Labour Law Review 2008

When this wage was originally mandated, inflation was running at 13 per cent. While inflation has been reduced and remains steady at just over 6 per cent, this signifies the need for a significant cost of living adjustment over the past 13 years. 36 However, this minimum wage extends to all workers, including civil servants and other members of the State apparatus.

On the whole, wage structures in the private sector outpace those in all branches of the civil service and wage hierarchies are relatively flat.37 Police, public servants, and the military and other ‘mass organizations’ (one presumes the LFTU and LWU are included) are specifically excluded from the Act.

Trade Union Act of 2007/8

Late in December 2007, Mr. Khamla Lolonsey, the vice-president of the LFTU, presented the new Trade Union Act to the National Assembly for approval.

In his speech Mr. Lolonsey, reported by the Vientiane Times, said that the new Act would give the LFTU greater rights to form labour units in workplaces employing in excess of ten workers. He said that such a move was needed to assist employers and employees to negotiate in situations of conflict. He reflected that the majority of Lao workplaces had not formed trade union units. Workers had, he said, called the National Assembly instead, complaining of unfair practices and requesting more rigorous inspections. Most complaints concerned non-payment of overtime and wages. He encouraged MLSW officials to also talk with workers, instead of merely consulting with managers. The new trade union law, he said, would give the union the right to inspect factories.

In summary, the new Act brings no substantive labour reforms. It will allow the LFTU to register workers in a wide range of workplaces, including the hotel and restaurant industry where exploitation is reported to be rife. It also allows the LFTU to inspect workplaces where there have been complaints from the workers, and to mediate and refer to what they call ‘higher authorities.’ That the LFTU prefers to mediate rather than initiate a judicial process reveals more about the LFTU’s principle role, which is to enforce Party adherence and obedience.

Lao Women’s Union

The Lao Women’s Union provides an enabling environment for the promotion of gender equality in the Lao PDR. The LWU, the Lao Constitution, and the National Commission for the Advancement of Lao Women provide the pillars of gender representation and institutional advocacy. While regarded as a mass organization the LWU bears the hallmarks of a public service office, with a Byzantine number of varied subdivisions and departments.

Article 35 of the 1991 Lao Constitution ensures women’s economic and contractual equity. The law enables women to own land, have family and economic rights, make contracts and take out loans in their own right. Lao women’s equal rights to employment and to receive an equal salary as well as social insurance are enshrined in other regulations. Lao women also have the legislated right to participate in the National Assembly as well as in policy and law making. Articles 17 and 34 of the Constitution guarantee maternal rights, while Article 25 guarantees access to education, research and training. Laos 157

The Lao Women's Union provides the operational apparatus for women’s representation, having an organizational structure that extends from central to village level. The LWU enables women from ethnic minorities to have a voice in the social and environmental impact assessments of large projects. The Union has ensured that women retain land titles despite moves to encroach on that right and recently launched a magazine (SaoLao) in addition to regular radio broadcasts to reach urbanized women at all levels. It broadcasts news of importance to women, including issues of workplace rights, sexual harassment and health.

Specific Issues

Weaving 38

He: Oh my dear heart How ardent is my wish to have you weave on the landing on my stairs How I wish to have you weave at the foot of the loom having you weave an ikat sinh, and feed silk worms in my house

She: Oh my dear young man Going with you I dare not Because I don’t know how to weave ikat fabrics for you to sell I cannot weave horse blankets for you to sit on As you ride on your trade expeditions. 39

Development tends to sideline traditional culture-bound activities such as weaving, relegating it to the rubric of quaint handicrafts. Increasingly, however, Lao weaving is becoming part of the global market as demands for artistic textile-weaving widens and demand for organic products increases. It is not known how many women weave, but as one woman told me, at least 150 households within a kilometre radius of her land on the outskirts of Vientiane produced silk for sale.

Weaving is a part of Lao living culture. The silk tubular skirt known as a sinh is still widely worn, as are the shoulder scarves known as pha bia worn by women and men for rituals. In addition, silk appeals to the burgeoning tourist market.

The weavers discussed in this part of the chapter are those whose goods are produced for four large Vientiane-based textile companies who design and market the products overseas. The owners and managers are, by and large, all women. Previously the production and trade of textiles were staples of household income providing for both household needs and a small surplus. The end of the Soviet era and the arrival of the NEM, along with lifting of trade barriers with the USA, for instance, have allowed the expansion and development of this enterprise. One cooperative that the author is familiar with, but not included in the study, employs women and men from 200 villages.

It is estimated that each piece of hand-woven silk can provide nominal employment for up to 17 people.40 Most of the produce is exported, netting fair returns to villagers that have few other cash-making options for village improvements. 158 Asian Labour Law Review 2008

Weaving presents the intersection between informal outsourced piecework and formal ‘institution’-based formality. Weaving allows flexibility of labour that fits well with both women’s traditional cultural norms and family responsibilities. It allows them to make money within their own social milieu. It is common to see a cluster of women assembled around a household weaver, assisting and chatting as she makes for a specific buyer or company. Women weave at home for individual sale or barter, or as part of home-based supply chains producing for marketing companies or in weaving ‘factories’, which have dormitories with kitchens and bathrooms. This latter arrangement particularly suits young women migrating from the ‘weaving provinces’.

Feminist analysis of global commodity chains often refers to ‘women victimization’ and ‘marginalization’. However, the other side of this is the empowerment of women who enjoy economic independence and discretion by being employed. Indeed, among the ethnic groups in Lao, a competent woman gains respect if she is able to bring in money.

An increasing number of Lao weaving companies are seeing the marketing and ethical importance of achieving fair trade and organic product status. While Fair Trade, like Corporate Social Responsibility, is somewhat hard to define, the author believes that in Lao the certification is not regarded as a cynical marketing tool but a genuine ethics-driven desire.

In these respects, Laos seems to fall out of the stereotypical patterns drawn by labour analysts. While some supply chains41 are buyer - or producer-driven, Laos does not seem to fall into either of these. Doolittle et al. (in progress) observe that the exploitive power of corporations seems absent. Indeed buyers tend to seek out the Lao companies, while the Lao producers use a variety of methods (exhibits, tourism, art collections, diplomatic contacts) to bring the goods to the eyes of international markets. The scale is self-limiting, being restricted by the availability of fibres and skilled weavers, and production standards.

While men also weave, it is largely a women’s occupation. The ability to weave underpins women’s status as finance providers and managers, which persists into modern day Laos. Consequently, workers interviewed by Doolittle and her colleagues report a high degree of pride and contentment with the working environment. On a 20 point scale (20 being the optimal) the mean was 16.

The trend seems to be away from off-site/home-based piecework, and Doolittle et al. postulate that this could be a sign of the proletarianization process – women moving from villages to become employees. 42

A large majority (86 per cent) of the workers were women, with an average age of 28 years. The slight majority that were married lived with spouses and most came from northern provinces, this is at variance with factory work that prefer to employ young unmarried women.

Most of the women were already competent weavers after tutelage from female relatives, but agreed they had learned and increased their skills as a result of working for the companies. The average period of employment was more than four years, but some had been working for more than 20 years as weavers and earned an average of about 634,000 kip (about US$62) per month (compared to the minimum factory wage of 290,000 kip) for a seven to eight hour day, five-day week (again in comparison with longer hours and a greater number of days for factory workers). Men who predominate in the dye shops and the few male weavers reportedly earn around 17 per cent less than women. Laos 159

If significant orders come in, workers may be asked to work overtime, at which point they are either paid by the length, piece or hour. Companies provide health care and loans for the employees. This is in contrast to factory work which often ignores health and financial responsibilities.

Health and Safety

Women report back-ache, neck and arm pain from prolonged poor working postures and headaches. Those using chemical dyes report skin rashes and respiratory problems from dust, chemical residues and sizing.

A program conducted in Thailand indicates that helping women achieve a participative caretaking approach to health and safety is effective, as it develops both leadership and changes cultures of dependency.43 Culture-induced fatalism led the weavers to blame non-work factors for pain and illness.

This model could well be adopted by Lao women and the entrepreneurs who employ weavers, as cultural factors are parallel.

In summary, the Lao weaving industry provides an island half way between the informal and formal sectors, which allows women some flexibility, humane conditions and relatively good wages. Enterprise owners know about the labour laws, but the conditions and pay are more determined by personal ethics and care for the craft than by legal stipulations. The introduction of fair trade to Laos should enable women weavers to maintain their superiority over industrial workers, as fair trade is more typically applied to the handcraft industry.

Migration and Trafficking

Laos and Thailand share similar cultures and languages but greatly dissimilar economic circumstances, making it attractive to Lao wanting a better life for themselves and their families. The majority of migrants are women from rural areas aged between 17 and 25 years. Lao women work as domestic help, factory labour, hotel maids, in agriculture and restaurants. That is the ‘3 D’ jobs: dirty, difficult and dangerous.

But the wages and opportunity to learn new skills far outweigh those for similar jobs in Laos. Thai managers preferentially seek out Lao workers, who are thought to be more diligent and honest than others (National Statistics Center 2007).

The economic contribution is significant, amounting to around USD100 million per year or five per cent of GDP. Women return having higher expectations of health care and educational services and are more responsive to information, many become leaders in their communities and role models for others. They are likely to marry later, have less children and invest more in education.

Illegal migration comes at a cost. Those who leave without passports are fined when they return and their families can be forced to pay money even before the worker returns if local officials hear of their migration. These fines are often disguised shake downs the amount often exceeding the formal fine. 160 Asian Labour Law Review 2008

Those studying migration have recommended that fines be paid into village funds or the worker left unfined, as the contribution directly made to human development exceeds that of foreign direct Investment. Interestingly, remittances have proved to be more effective than overseas aid or investment-driven projects in reducing poverty, as the money tends to go straight to the village avoiding the filtration system of government kleptocracy.

But as civil service salaries remain below subsistence and the temptation to wield power comes without sanction, there is little reason to think this might change quickly. 44

Chamberlain et al. found that development policies that favour relocation and resettlement tend to provoke migration and trafficking.45 Despite that, Laos is embarking on many such programs, the majority supported by private investment, often without adequate environmental, social or labour safeguards.

Laos also is an intermediate stop for many others migrants seeking better-paid work, particularly those from Yunnan. This may tend to skew wages and conditions in Laos itself.

Mechanisms

While there are an increasing number of labour brokers setting up shop in the major centres, many workers still move informally and in some cases illegally as brokers tend to be too expensive (VOA broadcast transcript 23/03/06).46 Data about migration is imprecise as the borders are so porous and unsupervised. The author sees Lao fishermen traveling back and forth to Thailand in pirogues each day. Many have family in Isarn, the adjacent area in Thailand, in previous times part of Laos.

A taxi driver remarked,’ Laos is the factory for Asia. We make the workers that feed the factories in Thailand.’

His girlfriend, a factory worker, was only 16 years of age, as were most of the young women in her dormitory. Like many women from rural areas, she had only rudimentary education. From the northern provinces she now worked making jeans. The company was overseas-owned, but she did not know the name of the label or the company. She was happy to earn 5000 kip per day (US$0.60) to learn enough skills to enable her to travel to Thailand to seek higher paid factory work. She stands from 8 am to 5 pm ironing jeans. She appeared happy to be working earning money and having a meagre disposable income. Her ideal was to buy a motor bike, fancy clothes, and with enough work experience migrate. She typified both the internal migrant and the prospective out-migrant.

While poverty is a major driver for the mostly poorly educated rural folk who go, the better educated and urban workers influenced by mass media migrate in search of adventure or experience. Young women migrate to avoid farm work, while young men move to avoid education.

Regional festivals and trade fairs, when border controls are more lax, provide ideal opportunities for workers to cross into Thailand, in particular. Few data are available concerning migration to Vietnam or Cambodia. Friends and family provide advice and workers use long- established networks and routes. 47

Chanthavysouk (UNDP) points out that Lao women benefit more than men from Laos 161 migration, as while the culture values women who earn money, the women also tend to return with enhanced self-esteem and confidence and their remittances are more likely to be spent on medical treatment, nutrition and household improvement. 48 They remit more than men and are more reliable senders. However, the price is high - HIV infection (rates in returning women are the highest in Laos) and among men, addiction to alcohol and drugs.

Migrants are sometimes conflated with or become trafficked workers.49 Chamberlain in his study of Lao trafficked and migrant labour for UNICEF concluded:

‘From the findings of the study it is possible to build a profile of those most at risk of trafficking and target interventions accordingly. The overwhelming majority of trafficking victims surveyed (60 per cent) are girls aged between 12-18 years of age and most victims (35 per cent) end up in forced prostitution. Other forms of employment were domestic labour (32 per cent), factory work (17 per cent), and fishing boats (4 per cent). Those that worked in agricultural labour tended not to be trafficked and exploited, whilst those working in domestic household situations experienced some of the most extreme cases of abuse and mistreatment.

The majority of cross-border trafficking was found to occur into Thailand although some cases were reported of trafficking into Myanmar and China for the purposes of buying and selling brides.

Crossing the border is relatively easy; many victims actually crossed with legal papers, and informal crossings are not uncommon. Most victims come from rural areas, although few of the victims came from extremely remote areas or from situations of severe poverty. The connection between ethnic background and the child trafficking issue needs further study, since the majority of non-Lao trafficking victims come from villages that have been resettled or relocated.’ 50

The Lao government’s high profile policies on abolition of opium and promoting hydropower are known be actively contributing to the trafficking of women, girls and, to a lesser extent, boys.

In 2005, the then Thai Minister for Labour gave permission to bodies to employ 10,000 Lao migrant workers, particularly in the construction industry. Thai workers are increasingly reluctant to take on the poorly paid, arduous work typified by construction. Industry groups had lobbied the government to allow more Lao to enter Thailand legally. The minister gave permission only, he said, as a temporary measure, though it is hard to see how this could be effectively rescinded. He was concerned that while many Thai companies had been pushed to officially employ the 1.7 million foreign workers now in the country, only 700,000 had been lawfully registered.51

A significant problem for the authorities is the large number of homeless and parentless children who enter formal or informal work though migration.52 An ILO study indicated that some had been gone for as long as three years without any contact with relatives in Laos.53

More than one in five of all Lao migrants from the provinces are under the age of 18, with girls accounting for more than two-thirds (67 per cent), making this group the most vulnerable to human traffickers. The survey, based on sampling of some 36,398 people in 5,966 Lao households in the three provinces, reports nearly seven per cent have mobile family members and confirmed that the pace of migration is rapidly accelerating. 162 Asian Labour Law Review 2008

Que Bono?

The Bangkok Post (July 2006) reported that migration had bred a sub-business, that of unregistered money-transfer run by Thai brokers for Lao migrant labour.54 The clients are migrant labour, both legal and illegal. Some brokers can earn as much as 50,000 to 60,000 baht (US$1,600 to 2,100) per month for the service, the source said.

At the beginning, the brokers charged 10 to 20 per cent commission for the service. Now it has fallen to just three to five per cent due to higher competition among brokers.

It appears migrant workers prefer the unregistered service, largely because of the lower charges. If a client's family is badly in need of money, Thai brokers give them an advance with monthly interest being charged. However, illegal workers can be defrauded by the more unscrupulous.

Future Trends

There is no evidence that the Lao Government intends to lessen its stranglehold on power. Some observers have commented that the government is getting more nervous and controlling, a feeling confirmed by many long-term international workers and local Lao. In the case of labour, without significant impetus at the donor level, little will change and the new labour law will cement that non-change in place for possibly another ten years.

Lao had been closed country for many years and is now really only beginning to become part of the regional and international community. Its powerful ties to Vietnam and China, as well as old patronage from Russia, tend to hinder progress in the direction of rights-based activities and while a large number of students are encouraged to study in those countries, progress will be slower. However many more are opting to travel and seek education opportunities in Australia, the US Europe and Canada. The problem being that Lao education standards are generally low. So with few exceptions only the children of the elite can achieve a standard sufficient to comply with scholarship requirements. Of those who go to study few opt for technical subjects like occupational hygiene and occupational medicine, safety engineering or other labour related disciplines. Consciousness of the importance of those issues is still low.

Membership of ASEAN, the International Labour Inspectors Association, and industry groups such as the Association of Lao Garment Industries, will all prove to add bricks to a growing structure of change, gradual as it will have to be to succeed.

Some small scale activities including a survey of health and safety issues amongst informal and home workers is also occurring at the time of writing. The education program that follows will have some content on labour law, although the informal sector per se is not addressed in the regulations. The concern is that some very hazardous industries, in particular mining and processing of metals, are being rapidly introduced sponsored by nations who have low compliance levels. There is generalized concern that Lao people are being sacrificed for profits.

Already wood processing, with its attendant risk of cancer, is widespread. Rubber plantations are replacing protected forests driven by a rapidly escalating demand for tires in China. If Laos decides to value-add and not simply export the latex, another potential source of occupational cancers will flourish. In the absence of any reporting system, freedom of the press and a system for Laos 163 monitoring occupational health (as opposed to safety) there is a great risk that Lao workers will suffer the consequences of rapid development.

A creative industries policy that not only regulates handcrafts, but values this sector as part of Lao’s development strategy could employ more people in less destructive ways. However, without donor policy support and direction this is unlikely to happen. In fact, overwhelming pressures from neighbouring private investors is actively reducing the land available for growing both silk and food.

Any significant change depends on the outcome of the tension between progressive reformist patriots and the patronage driven power elite who have cemented themselves into a personally prosperous future.

ENDNOTES

1. Inthavy. C. (2003) Untitled Powerpoint presentation given at the meeting ‘Integrated Frameworks and WTO Accession: Challenges and Opportunities for Poverty Reduction’, Phnom Penh, Cambodia, 1-3 May. 2. LaoFAB is a Laos-based subscriber bulletin board. 3. Press release, 22 May 2007. 4. The Lao government does not speak of NGOs. Advocacy and human rights are not terms that the government encourages. Associations are the only legal expression of civil society. Some elements of the Lao government consider people’s participation and consultation an anathema to the democratic centralism model of governance. This is likely to change with membership in ASEAN. 5. For more about CDEA, see http://www.homenetseasia.org/laos/2006attainingsocialsecurity.htm. 6. ‘National Institute of Occupational Safety and Health (NIOSH), Malaysia (2007), Powerpoint presentation. http://www.oit.org/public/english/protection/safework/cis/about/mtg2007/p_mys_niosh.pdf [accessed 29 September 2008]. 7. Souksavath, V. (2006) JISHA/ASEAN-OSHNET ‘Safety and Health Education for OSH Practitioners’ Powerpoint presentation, 25 September-12 October 2006. See www.jniosh.go.jp/icpro/jicosh-old/japanese/ training/special_speeches/2006/oct10/pdf/msViengxaylacksouksavath.pdf. 8. Takala, J. (1999) Global estimates of fatal occupational accidents. ILO. Special Supplement. Geneva, 6-15, 1998. See www.ilo.int/public/english/protection/safework/accidis/globesti.pdf. 9. Road traffic in the Lao PDR is increasing at an alarmingly rapid rate. Over a 12-month period, from 2005 to 2006, the number of vehicles rose by 32% (motorcycles +34%, pickups +38%, trucks +12%). Motorcycles account for the vast majority (80%) of the 568,290 registered vehicles in the country, reflecting rising living standards and a three-fold decline in prices since 2000 - the introduction of cheaper Chinese models has made motorcycles much more affordable. Increasing numbers of vehicles on the road has led to a rapid rise in the number of road traffic accidents. In 2006, 492 people died (a 19% increase compared to 2005) and 7,825 were injured in 4,620 road traffic accidents recorded by the police. However many accidents go unrecorded and the true number of casualties is undoubtedly much higher: a survey conducted by Handicap International Belgium (HIB) in April 2006 at one of Vientiane's four large hospitals recorded 542 road traffic accident victims seeking emergency treatment in a one month period. Of these victims, 84% were riding a motorcycle and 53% were between 15 and 25 years old. Source Handicap International. http://www.directoryofngos.org/project. cfm?id=144. 10. ‘National Institute of Occupational Safety and Health (NIOSH) Malaysia (2007). 11. ‘Laos Hosts Aviation Safety Meeting’ Vientiane Times, 13 December 2007. 12. The author edited a series of stories written by farmers displaced by the first hydro power dam built in Lao. 13. Doussantousse S. et al. (2005) Lao Women Attracted by Sex Work in Malaysia. International Conference. Trans- border Issues in the Greater Mekong Sub-Region. Ubon Ratchathani, Thailand. 30 June-2 July 2005. 164 Asian Labour Law Review 2008

14. See http://www.socialwatch.org. 15. Personal communication: The author talked with her own housekeeper’s sisters, all of whom are housekeepers. One had recently made the transition from low-wage factor worker to housekeeper and was very satisfied. The other had been sent to English and cooking classes so had improved her employability. 16. See UNDP site http://www.undplao.org/mdgs/ and World Bank site: http://web.worldbank.org/WBSITE/ EXTERNAL/TOPICS/EXTPOVERTY/EXTPA/0,2004. 17. From http://www.unsiap.or.jp/completed_prog/workshop/poverty_indonesia04_/projectwork/lao.ppt. 18. World Bank. See http://go.worldbank.org/GQAO6SK0J0. 19. Ibid. 20. Latif, A.I and Lee, P.O. (2007) Regional Outlook: South East Asia 2007-2008. Institute of Southeast Asian Studies. 21. Further information is in the study: Sisouphanthong, B., Boupha, S., Souksavath, P., Sone, P. (2007) Addressing the Impact of Phasing out of Textiles and Clothing Quotas in Lao PDR: Human Development Assessment in Post Agreement on Textile and Clothing, National Statistical Centre, Committee for Planning and Investment, Vientiane, Lao PDR, August; supported by the UNDP Asia Pacific Regional Office in Colombo. Illegal logging and related cross-border trade is possible because of the collusion between importers, customs officers, the military and local party officials. ‘Much of the border trade is conducted informally and illegally, largely in response to customs officials’ demands for illicit payments.’ Quantities of goods are systematically under- reported, with the savings in tariffs shared between the importer and local party officials. Attempts to give more responsibility to the provinces for managing their revenues only aggravated the problem. See p. 96. Many farmers have been driven into poverty as a result of land expropriations that have been expedited through corruption. The report is in four volumes, each of which have a full-length and an abbreviated version; see: www.nsc.gov.la. 22. Onphandala, P and T. Suruga (2006) Education and Earnings in Lao PDR: Regional and Gender Differences. Graduate School of International Cooperation. Kobe University Technical Papers No 4. July. 23. Waring, Marilyn. (1998) Counting for Nothing: What Men Value and What Women are Worth, Bridget Williams Books. 24. http://www.fao.org/sd/WPdirect/WPreo0109.htm. 25. Onphandala and Suruga (2006). 26. Sisouphanthong, B. et al. (2007). 27. Ibid. 28. Report on Occupational Safety Health and Environment. See http://training.itcilo.it/actrav/2001/A3-2387/ works/works/Report/lao_pat.doc. 29. ICFTU (2006) http://www.icftu.org/displaydocument.asp?Index 30. Oxfam (2007) Report of Scoping Study for Labour Rights in Vientiane Capital and Savannakhet. 31. Vientiane Times, 12 October 2007. 32. Oxfam (2007), op. cit.; Robertson (2002). 33. Lord Robens, the UK legislator, broke the mould of centralist labour law administration by legislating for workers’ participation. What became known as the Robens Act became a hallmark legislative reform enabling of trade union representation and as widely copied in other industrialized countries. 34. An example would be ‘relocation’. In Lao this translates into ‘make a new house’, which on the surface sound innocuous if not positively desirable, hiding the social and economic upheaval implicit in relocation. 35. Vientiane Times, 24 August 2007. 35. World Bank, op cit. 36. Onphanhdala and Suruga (2006). 37. For this section I am indebted to Carol Ireson-Doolittle and her colleagues from Willamette who volunteered their unpublished research papers. The work is ongoing so some of the data sets are as yet incomplete. 38. Doolittle-Ireson, C. and Moreno-Black, G. Traditional Craft or International Business? Vientiane Textile Companies and their Workers (unpublished draft paper) Department of Sociology. Willamette University, Salem, 2007. 39. From Lao classical literature, cited by Bounyavong, Deuangdeuane 40. Personal communication with Rassanikone Nanong, Head of Lao Handcrafts Association, 2008. Laos 165

41. The supply chains term used by the researchers applies to an intricate domestic network of people who contribute to the finished piece: Weaving, dyeing, growing silk, Many are related to the merchandisers, other are from the same province, and are known through extended family linkages. 42. Doolittle-Ireson et al. (op. cit.) 43. Nilvarangkul K., Wongprom J, Tumnong C., Supornpun A, Surit P, and Srithongchai N. (2006) ‘Strengthening the Self Care of Women Working in the Informal Sector: Local Fabric Weaving in Khon Kaen (Phase 1)’ Journal of Industrial Health. No 44, pp. 101-107. 44. From The National Human Development Report, Lao PDR, 2006. International Trade and Investment National Statistics Centre Lao PDR. 45. Chamberlain, J., Phomnombath, P., Vangmua,V., Oudone, P., Vixayath, T., and Chittanavanh, K. (2004) Broken Promises Shattered Dreams, A Profile of Child Trafficking in Lao PDR, Vientiane. Report prepared for UNICEF and the Ministry of Labour and Social Welfare, Government of the Lao Peoples Democratic Republic. 46. www.voanews.com/lao/archive/2006-04/2006-04-04-voa2.cfm and www.voanews.com/lao/archive/2006- 02/2006-02-27-voa1.cfm. 47. Luangsombath, M. ‘Dreams draw Lao workers to Thailand’ at http://www.newsmekong.org/dreams_draw_lao _workers_to_thailand. 48. Chanthavysouk K. (2006) Labour Export: A Contribution to Lao Development. Technical paper for the Third National Human Development Report. UNDP. 49. Tan, D. and Bertran, D. (2007) How Illegal Migration Turns into Trafficking for Sex and Labour Exploitation? Raising Voices of Girls and Women from Lao PDR. From Workshop on Female Labour Migration in Globalising Asia. Asia Research Institute and Asian Metacenter for Population and Sustainable Development Analysis, National University of Singapore. 50. Chamberlain et al. (2004) 51. http://etna.mcot.net/query.php?nid=41359. 52. Huijsmans R. (2008) ‘Children Working Beyond Their Localities: Lao children working in Thailand’ Childhood, Vol. 15, No. 3, pp. 331-353. 53. ILO. Communication and Public Information (2004) ‘Strangers in a Foreign Land—Migration’s Hidden Risk: Increased child trafficking’ World of Work Magazine, No. 50, March. http://www.ilo.org/wow/Articles/lang-- en/WCMS_081346/index.htm. 54. Bangkok Post, 30 July 2006. At http://www.bangkokpost.com/News/30Jul2006_news11.php. 166 Asian Labour Law Review 2008 Malaysia 167

Malaysia

Irene Xavier

1. Contemporary Snapshot

he informal economy in Malaysia is diverse and has been in existence for a long time. In T recent years, it has been expanding. Thus, there are now a larger number of workers whose jobs and rights are unprotected. Home-based work is not recognized as work by Malaysia’s labour laws. The subcontracting of work by factories in various forms has not been addressed in terms of protection for the rights of workers. Many factories have outsourced employment in certain production lines to subcontractors, who supply labour to the production lines in accordance with the fluctuating demands of the factory. The workers are thus not employees of the factory though they work on its premises. They are regarded as employees of the agencies that arrange work for them. As their work is on a casual basis they have little or no access to legal protection.

Many services are also outsourced to subcontractors. These include call centres that service banks, telecommunication companies and airline ticketing offices.

At the core of informal work is subcontract work for factories that is done at home or in small sweatshops. These include garment production, electronics, food products and even automobile parts.

Malaysia also employs a large number of migrant workers, many of whom work in the informal economy. It is estimated that there are 2.2 million foreign migrant workers in Malaysia, accounting for 21% of the labour force. Migrant workers should also be treated as informal workers as the majority of them are on short-term contracts. Furthermore migrant workers have limited access to legal remedy to ensure that employers comply with these contracts.

Table 1. Labour Force and Employment Data Updated on 31 December 2007

Employment 2006 2007 2007 2007 1st Quarter 2nd Quarter 3rd Quarter Total Labour Force 10,628.9 10,826.7 10,970.6 10,967.9 ('000) Employed ('000) 10,275.4 10,461.3 10,601.2 10,627.2 Unemployed ('000) 353.6 365.4 369.4 340.6 Unemployment Rate (% of Labour Force) 3.3 3.4 3.4 3.1

Source: http://www.statistics.gov.my/images/graf/gtQ32007.jpg 168 Asian Labour Law Review 2008

As there is a dearth of information on the informal economy in Malaysia, this paper focuses mainly on home-based workers. The information obtained is also limited to a few research papers on specific and limited topics. One was focused on the home-based workers and utilization of information and communication technologies (ICT)1. The second was a regional report on homeworkers and ICTs in Malaysia.2 The third was an unpublished research paper by an NGO in Malaysia3 and the fourth is a study on Chinese women in industrial home-based work in Malaysia.4 This paper will also briefly touch on the issues of migrant workers in the country whose numbers are increasing and many of whom are part of the informal economy.

Growth of Informal Economy

Since the introduction of the New Economic Policy in 1970 there was a strong push by the government to expand the formal economy through foreign investment in industrialization. Initially it was import-substitution industrialization and in the recent past the move has been towards an export-oriented industrialization. Women entered the formal labour force especially in industrialization for export. However with the recent restructuring in response to globalization, the informal economy has re-emerged as an important component of this global production chain. Capital has adopted subcontracting and outsourcing as an option to keep costs low and remain competitive globally.

The informal economy exists in various forms as some limited studies have shown. Both the public and private sectors use informal labour. Many government departments too employ contract labour. Privatization has resulted in the extensive use of contract labour in cleaning services, ports, telecommunications and public health. The government has privatized some services that were formerly in the public sector. These include port services, garbage collection and disposal, some of the light railway services and some sections of the public hospitals such as catering and cleaning. Several attempts have been made to privatize the public hospitals but they have stalled mainly because of public opposition.

Meanwhile, it is estimated that there are about 20,000 government employees on contracts in the civil service.5 This gives an indication of the extent of informalization in government service.

It appears that a large formal workforce is viewed as being ‘unsustainable’ by employers. They prefer to expand the scope of informal work, which appears to them to be more efficient, and more sustainable. However from the workers’ point of view this type of work poses many problems and challenges.

Problems and Issues Facing Informal Workers and Women

There has been a relatively low rate of participation of women in the formal labour force in the last decade: Women’s participation has remained at around 44 per cent. Some effort has been taken to increase women’s participation in the formal sector but little has been done for women in the informal sector.

Problems of home-based work Homeworkers are involved in making and providing a wide range of products and services. These include traditional handicrafts and food processing cottage industries, labour-intensive work subcontracted from factories as well as knowledge-based services. Malaysia 169

Home-based workers are usually counted as own account workers.6 There is no system of registering them and thus they do not show up in statistics. They are also not regarded as workers according to the Employment Act of 1955. As a result they are not eligible for any of the terms in the Act such as weekly rest day, annual leave, sick leave, maternity benefits, Employment Provident Fund or state social security contribution by the employer.

Home-based women workers often face harassment by local officials for using residential premises for production without proper licences.

All these factors together serve to keep the home-based workers invisible and their economic contribution is not regarded as work by the government, factories or employers. Their contribution to the economy is not recorded and reflected in national accounting and budgeting. Another reason for the invisibility of home-based work is that productive work is carried out alongside domestic care work. Their domestic tasks are deemed to take precedence and thus they are regarded as ‘housewives’ rather than workers even by themselves.

A survey by the Malaysia-based network, eHomemakers, in 2006, yielded the following findings:7

The majority of the homeworkers previously worked in labour intensive factories but took up home-based work after childbirth when confronted with a gender insensitive environment unsupportive of mothers with small or disabled children and aged parents. This confirms the earlier research finding by Loh-Ludher (2002) that home-based work offers women an opportunity to be gainfully employed when they are either unable to participate in, or have to withdraw from, the formal labour force after childbirth.

The home-based workers face another problem—that of negotiating contracts with the subcontractors or factories. The main difficulty is that they have to negotiate contracts individually. They are therefore in a weak bargaining position. There are no standards or legal measures on which they can base their contracts. If they are cheated they have hardly any access to legal redress.

Home-based workers also have great difficulty in organizing themselves. They perceive their work as being illegal or semi-legal. Consequently they are reluctant to draw any attention to themselves. Much of their relationship with the sub-contractors is based on personal ties. In an unpublished study by Persatuan Sahabat Wanita in 2005 it was found that the home- based workers had work given to them by village heads, relatives or people known to them.8 These personal connections make it difficult for them to organize themselves to better their conditions. They are usually reluctant to share information about their work contracts. As a result factories exploit home-based workers by paying them extremely poor rates.

Moreover, there are health and safety risks for home-based workers and their families. There is little or no consideration for making their work safe. There are no lighting or ergonomic considerations. Production material is also stored haphazardly.

State of the Labour Movement

The Malaysian trade union movement is subject to laws that allow the Registrar of Trade Unions to control it. Registration must go through a civil servant who disallows a trade union when there is strong employer lobby against it. This is the case with the National Union of 170 Asian Labour Law Review 2008

Electronics Workers that has failed to get approval for registration. The laws also do not permit more than one national union in an industry. The classification of the industry is the sole prerogative of the Registrar of Trade Unions. The laws also make it practically impossible to hold a legal strike. Industrial action is limited to legal action that can only be taken after negotiations under the auspices of the Labour Department or the Industrial Relations Department have failed. Permission is granted to proceed to legal action either by mutual consent of workers and employers or the Industrial Relations Department chooses to refer the matter to court.

The effect of such legislation and the policies the Registrar has pursued since independence in 1957 have served to produce a generally compliant trade union sector that has rarely challenged the government on its labour policies. The trade union movement has not been able to stop the amending of labour laws to take away existing benefits of workers, such as overtime rates. The union movement has not been able to stop or even effectively regulate privatization. It has done little to improve the conditions of work for migrant workers who constitute a large percentage of the Malaysian workforce. Membership in trade unions has never exceeded ten per cent of the work force. Out of a labour force of about 11 million today, only about 7 per cent are unionized.

Table 2 (below) shows a decline in trade union membership since 2002.

Tables 3 and 4 (below) show that although the total number of unions both by sector and industry have increased since 2002 the total membership figures have fallen.

This reflects the decreasing trend in the formal workforce overall—something which is not yet reflected in official government statistics, which do not disaggregate levels of informal employment (yet). The lower level of formally employed workers within a sector can be accounted for by increased use of contract and part-time workers and home-based workers; at the same time there is lower overall employment in the last several years within certain sectors like construction and agriculture/fisheries.9 The lower union membership also reflects the increased employment of foreign workers, who upon employment must sign contracts which forbid them to join unions. In 2001, foreign workers composed 9% of the workforce; in 2004, this rose to 12%; and as of January 2008, they composed 21% of the workforce.10 Foreign workers are strongly represented especially in manufacturing, petroleum, construction and household help positions.

Table 2: Membership of Trade Unions in Malaysia

Year Trade Unions Membership 2002 581 807,260 2003 609 789,163 2004 611 783,108 2005 621 761,160 2006 631 801,585 Malaysia 171

Table 3: Number of Trade Unions by Sector in Malaysia, Year 2002 - 2006 Sector 2002 2003 2004 2005 2006 Private 373 380 380 390 396 Government 128 127 130 127 130 Statutory Body 80 88 87 91 92 and Authority Employers 11 14 14 14 13 13 TOTAL 595 609 611 621 631

Table 4: Number of Trade Unions by Industry in Malaysia, Year 2002 - 2006

Sector 2002 2003 2004 2005 2006 Agriculture, forestry 48 55 54 54 55 and fishery Mining and quarrying 2 2 1 1 1 Production 149 145 144 146 150 Electricity, gas and 28 39 39 39 39 water Construction 11 11 11 11 11 Commerce 12 18 18 18 19 Transportation and 53 58 61 61 61 telecommunication Services 278 281 283 291 295 TOTAL 581 609 611 621 631

Trade unions have seen an increase in women members as Table 4 shows. This partly reflects the expansion in Malaysia of the sectors that employ large numbers of women, such as service and manufacturing, since 2002.

Table 5: Number of Trade Union Membership by Gender in Malaysia, Year 2001 - 2006

Year Number Total Male Female of Trade Membership Unions 2001 592 785,441 472,401 313,040 2002 595 807,802 504,305 303,497 2003 609 789,163 479.607 309,556 2004 611 783,108 474,470 308,638 2005 621 761,160 464,308 296,852 2006 631 801,585 484,016 317,569

Source: Tables 2 to 5 from http://jheks.mohr.gov.my/BI/english/indexBI.html 172 Asian Labour Law Review 2008

The trade union movement has also been slow to respond to protect the rights of workers in the informal sector. Labour laws were written for the formal sector. As the informal economy has expanded in recent years it has escaped the notice of the union movement. In unionized factories some contract workers receive benefits equal to those of the permanent workers. However over a long period of time these benefits get eroded as employers increase the number of contract workers, those hired from agencies or homeworkers and reduce the ranks of permanent workers.

Informal Women Workers

Profile of informal women workers

According to Lee Loh-Ludher, in her article entitled ‘Women in the Informal Sector in Malaysia’,12 the typical urban or rural woman in Malaysia’s informal sector has a primary level education and belongs to an average household of five members. The woman entered the sector after she married and began bearing children; now she contributes substantially to her household income. Approximately one third of such women have incurred debt to provide capital for their businesses. Most urban women have worked previously in the formal sector.13

The Malaysian home-based worker’s profile conforms to the needs of capital in the global restructuring process. Home-based workers are former factory workers, the majority of them in their 40s. Thus they are familiar with a factory and production discipline environment and are largely reliable in terms of quality output. Also they are not a sought-out category in the labour market given their age. Furthermore, these workers possess limited education and come from poor households that require additional remuneration to improve their quality of life and standard of living. Thus the ‘human capital assets’ of home-based workers pushes them towards a vulnerable job environment, but one that favors capital.14

Box 1. A Case Study 15

Mrs. L is a 45-year old home-based worker with only Standard Six education and has been making shoes for more than 30 years in Ampang, Kuala Lumpur. Through these years, she has worked for four sub-contractors. She started sewing shoes at the age 14 and she remembered getting paid 2 ringgit (3.8 ringgit = US$1) She was paid a little over 2 ringgit during peak periods in the 1990s but now she earns 1.5 ringgit per pair.

Mrs. L makes about 12 to 13 pairs of shoes a day by working for more than nine hours. Sometimes, when the order is large and urgent, she works longer hours including weekends and public holidays. Besides, she has to attend to her duties as a housewife.

She chose this job because it gives her the flexibility to attend to household chores and care for her children and work at the same time. She herself pays all the expenses of doing the work, including purchase of a second-hand sewing machine, monthly electricity charges, thread, machine oil and scissors. After all these job-related costs, which are not compensated for in the piece rate, her net monthly income is just 500 ringgit. Malaysia 173

Mrs. L says the piece rate has not been increased for over 20 years. She thinks her employer and the shoe company are making huge profits when she compares the piece rate paid to the homeworkers and the price of shoes in the market. Some shoes are tagged at 80 ringgit per pair in the market. She would have demanded higher piece rates and social protection plans but is afraid she might lose her job if she questioned her employer. However, she would welcome government intervention to get her a better deal.

She complains of headaches and skin irritation caused by the thinner and glue. Some of her friends use masks when applying the glue due to its strong smell. Though she thinks the use of glue is safe, she remembers that a home-based worker got badly injured when the glue caught fire and burnt her skin, obliging her to spend more than10,000 ringgit on burn treatments.

There is no employment contract but she gets paid once a month. There is a pay slip but with no detailed information about the company or the employer. The employer keeps a record of the number of pieces completed in a small pocket book and computes her salary monthly. She earns around 600 ringgit per month without any benefits such as contributions to the Employees Provident Fund and Social Security. Unlike workers in the formal economy, she is not entitled to paid leave, public holidays and sick leave nor does she have medical insurance coverage.

2. Summary of Labour Laws and Their Application to Informal Work

Malaysia has a set of labour laws that apply to workers in general. The main ones are as follows.

Employment Act 1955 (Amended 1981, 1998)

The Employment Act is the main legislation which applies to employees in Peninsular Malaysia and the Federal Territory of Labuan earning a salary not exceeding 1,500 ringgit per month. Those whose salary ranges between 1,500 ringgit and 5,000 ringgit can consult the Labour Court, if they are seeking justice, or making inquiries.

The Act specifies the minimum standards for workers covered by it. These include hours of work, overtime rates, employment contracts, leave, maternity benefits, retrenchment, dismissals, deductions from wages, rest days and complaint and compensation procedures. This law is enforced by the Labor Department which is empowered to take up cases of non-compliance. The procedure is fairly simple and it has been perhaps the most useful complaint mechanism for workers. However the department is severely under-resourced and workers need to be organized to get the department to attend to issues of non-compliance.

The Labour Ordinance, Sabah and Sarawak

The Labour Ordinance is considered the Employment Act of Sabah and Sarawak and is largely similar to the Employment Act which applies to Peninsular Malaysia and the Federal Territory of Labuan, with some differences. Until 2005 this Ordinance provided lower benefits to workers in these two States. However since then amendments have been made to standardize them. The 174 Asian Labour Law Review 2008 main difference is that the ordinance covers workers earning up to 2,500 ringgit and their public holiday entitlement is more than in Peninsula Malaysia.

Industrial Relations Act 1967

This law regulates the relationship between employers and workers and their trade unions in the event of disputes and industrial relations. The regulations include voluntary negotiations between employer and the trade unions; conciliation procedure with the help of the Industrial Relations Department and arbitration of cases in the Industrial Court.

Employees Provident Fund Act 1991

The act makes it compulsory for employers who do not offer pension schemes to make compulsory contribution to the Employees Provident Fund account. The common applicable rate of contribution is as follows:

• Employers - at least 12% of the employee’s monthly salary • Employee - at least 11% of the monthly salary

Employees’ Social Security Act 1969

This Act covers workers who earn less than 2,000 ringgit. The Act makes it compulsory both for the employer and the employee to contribute every month to social security. Once registered under the scheme the worker remains part of it even if the earnings rise above 2,000 ringgit. The Act streamlines two social security schemes for workers, the Employment Injury Insurance Scheme and the Invalidity Pension Scheme, which provide medical coverage and financial protection in case of disability or death arising from workplace injury. However this Act protects the employer who cannot be sued for compensation by the worker. The fund has become a major source of financing for the government as it is often difficult for workers to receive adequate compensation for injuries and amounts paid out are a small fraction of what is received in contributions.

The Occupational Safety and Health Act 1994

This Act covers the whole of Malaysia for specified industries: Manufacturing; Mining and Quarrying; Construction; Agriculture; Forestry and Fishing; Utilities; Transport, Storage and Communication; Wholesale and Retail Trades; Hotels and Restaurants; Finance, Insurance, Real Estate and Business Services; and Public Services and Statutory Authorities.

The Act applies to both the private and public sectors. Only merchant shipping and the armed forces are exempted. Under this Act, the National Council for Health and Safety investigates complaints and makes policies to improve occupational health and safety. However, the Act works only when the mandatory Health and Safety Committee in each workplace implements the law in the workplace. It does not provide for a mechanism for complaints to be taken to a department for enforcement. As a result, the Act has done little to address health and safety concerns in the workplace. Most committees are nominated by the employer and even when there is a trade union, the workers’ representatives lack knowledge about health and safety to effectively raise standards in the workplace. Malaysia 175

Labour Laws and the Informal Sector

The labour laws do not provide for any kind of protection for informal workers. The only people who are covered by the law are documented migrant workers and contract workers who have proper papers and details about their employer. Though the laws provide for migrant workers there are other conditions which make it difficult for them to seek redress. The main obstacle is the immigration laws which an employer can use to send back a worker who is taking legal action against him. Most contract workers do not have proper documentation. This prevents them from taking action against errant employers.

Meanwhile, home-based workers have contact with only the subcontractor. In addition workers in the informal economy are not registered with any government agency. While the statistics department has promised to come up with a plan to gather data about the informal sector, it has yet to be done. This is the first obstacle in the struggle for labour rights for informal workers. Information about who they are, where they work, what kind of work they do, what are their working conditions and who employs them is badly lacking.

3. Responses, Initiatives and Struggles

There are few initiatives and struggles to protect the informal workers in the country. The most prominent struggle is the effort by the Malaysian Trade Union Congress (MTUC) to formulate laws to protect migrant labour and to ensure that their working conditions are not inferior to those governing Malaysian workers. Negotiations are still taking place on this issue.

Persatuan Sahabat Wanita Selangor, a women’s support group, has done a brief study on women in this sector to trace the nature of work, the numbers of homeworkers and their working conditions in selected areas in Peninsula Malaysia. It is hoped that this mapping project will contribute to organizing women in this sector. The MTUC is also engaged in an effort to organize domestic workers into a trade union. This will require not only organizing the domestic workers but also dealing with the legal obstacles that may exist in forming a trade union of this type.

The challenge for the informal workers is to become more visible so that they are recognized as an important part of the labour force but lacking legal protection. The visibility needs to be built by giving these workers greater exposure in the mass media which can highlight their plight and vulnerability. Women’s groups too can be mobilized to work in this vulnerable sector. For example, one non-governmental organization, Pertubuhan Pertolongan Wanita or Women’s Aid Organisation (WAO) brought media attention to women migrant workers who were seeking protection at a shelter. The Immigration Department sought to forcibly evict these women from the shelter and to imprison them without regard for the violence these women had suffered. They were able to get some measure of protection because of the intervention of WAO, which has also highlighted the situation of migrant women workers who were sexually abused while under protective custody of the police. Without the intervention of women’s organizations the abuse that migrant women workers face will not come to light.

Such measures by workers and other organizations are still at an initial stage. It is hoped that with greater and more accurate information about the informal sector in the country organizing efforts will increase and result in the provision of much needed protection for workers in this vulnerable sector. 176 Asian Labour Law Review 2008

ENDNOTES

1. Loh-Ludher, L. (2007) Homeworkers Online: Utilization of ICT for home-based work in Malaysia, The Electronic Journal of Information Systems in Developing Countries, Vol. 32. See www.ejisdc.org/ojs2/index.php/ejisdc/ article/viewFile/466/234. 2. Chong Sheau Ching, Homeworkers and ICTs in South-east Asia, Corpcom Services Sdn. Bhd., (E-Homemakers) Malaysia, www.idrc.ca/panasia/ev-67367-201-1-DO_TOPIC.html 3. Lee, S. H. (2005) unpublished research for Persatuan Sahabat Wanita Selangor 4. Loh-Ludher, L. ‘Chinese Women in Industrial Home-based Subcontracting in the Garment Industry’ in Kuala Lumpur, Malaysia: Neither valued nor costed (based on field work done in 1992-1996). 5. The Star, 28 October 2008. 6. Own account workers are sometimes also referred to as dependent workers. They receive work from an intermediary, subcontractor or employer according to specifications. They are usually paid on a piece-rate basis. 7. See http://www.aseanfoundation.org/documents/homeworkers/Malaysia%20-I-%20Fin%20Report.pdf 8. Lee, S. (2005). 9. See Malaysia Economic Report 2007/2008 at http://www.treasury.gov.my/index.php?ch=22&pg=165&ac=2053 &tpl_id=93&lang=eng. 10. ‘Malaysia to cut foreign workers’, http://www.cnn.com/asia, 20 January 2008. 11. In Malaysia, employers’ associations are a form of trade union and are registered and recognized as such. The rules for forming and joining a trade union are the same whether for employees and of employers. 12. See http://info.bahai.org/article-1-7-6-12.html. 13. Berma, Madeline and Faridah Shahadan (1991) Meeting Women’s Needs in Development and Family Welfare in the Informal Sector: A Proposal for Action. Unpublished paper. 14. Kalis Gopal and Charles Santiago (2005), ‘Informalization and Individualization of Formal Work – The case of Home Based Workers in Malaysia’, unpublished paper for the ILO Subregional Office for East Asia. 15. Ibid. Philippines 177

Philippines

Philippine Laws and Policies from the Perspective of Women Workers in the Informal Economy

Rosalinda Pineda Ofreneo, Phoebe O. Cabanilla, & Josephine C. Parilla

1. A Contemporary Snapshot

nemployment and underemployment figures totaling more than 30 per cent of the labour U force in the Philippines reflect the current employment crisis. With little advance since 20001 the situation can be traced to a weak agro-industrial base, aggravated by liberalization policies that allowed cheap imports, resulting in the disenfranchisement of local producers and large numbers of workers.2

Participation of women in the labour force has been declining since 2002; the latest figures put women at at 49.8 per cent compared with 79.8 per cent for men. In terms of overall employment, only 46.1 per cent of women had jobs compared to 74 per cent of men in 2005.3 This indicates that education has not raised women’s status to better levels4 despite their seeming advantage in terms of simple literacy, and their enrolment and completion at elementary, secondary and tertiary levels, where they perform better than men. Women’s economic activity has been circumscribed by traditions that classify women as housewives who do not ‘work’, and hand over to women the demands of child care and domestic chores during their childbearing years.

Formal employment opportunities for Filipino women in export-oriented industries have increased but they are mainly consigned to the electronics sector, which in the last decade has been responsible for as much as two-thirds to three-quarters of total Philippine exports. These women comprise 80 per cent of the 545,000 employed workers concentrated in economic zones, where poor working conditions and violations of labour rights are commonplace. Where cheaper and compliant labour is desired, women are readily available. Lately, employment in the call centres is also registering a phenomenal growth with an estimate in 2005 of 162,250 jobs. Centres that are sprouting nationwide are mostly funded by big foreign players, perhaps drawn by the huge wage differential (where a Philippine customer service representative for example earns US$1,689 per year while someone based in the US will get US$25,000).5 Moreover, attrition rates reach as high as 50 per cent due to job-related stress and sleeplessness.

A process of de-unionization has accompanied changing employment patterns (flexibilization, which is most visible as contractualization, as well as informalization and migration) in a globalizing economy. Workers are affected by labour cost-cutting measures adopted by micro- businesses just to be able to keep up with increasing competition under globalization. The core of permanent workers is reduced to accommodate temporary and casual employees. The increasing use of cheap labour, such as apprentices and migrants’ is continuing. Somehow this is tantamount 178 Asian Labour Law Review 2008 to deunionization or controlling unions. Moreover, subcontracting production and services outside formal workplaces (outsourcing) is accompanied by an increased number of shifts per day, overtime and use of piece rates. All of these actions have an overwhelming impact on workers, women and men, in both formal and informal employment.

A mere nine to ten per cent of the employed are currently covered by unions, and only one-third of union members and one-fourth of union leaders are women. Worse, according to trade union leaders, only 230,000 of unionized workers are covered by collective bargaining agreements.6

Currently, there are ten registered trade union centres (groups of registered federations, or national unions).

These centres represent various segments of the broad spectrum of the Philippine labour movement, which has had a long history of ideological and organizational division.7 Some of these centres have ventured into organizing women informal workers but have not managed to sustain these mostly fund-driven initiatives.

From Informal Sector to Informal Economy

The ranks of unprotected informal workers in the Philippines as well as in the whole of Asia 8 are growing fast, even while those of regular formal workers are being depleted by the onslaughts of trade liberalization and the increasing flexibilization and contractualization of labour. Formal workers may become self-employed when they lose their jobs. Or they may continue working in the same industry as contractual, casual, agency-hired, or subcontracted homeworkers under precarious and insecure conditions. In this sense, they provide cheap and unprotected labour vulnerable to exploitation at the bottom of the production ladder while firms save on costs by maintaining just a few regular, organizable workers.

Formal and informal employment are often linked together by the subcontracting chain. And towards the bottom of the chain the distinctions between the two can often-times get hazy. This chain is negatively affected by the intricacies of international trade, where larger firms tend to exploit micro-enterprises by ordering at low prices or subcontracting certain stages of the production process to save on labour costs or to weaken the leverage of regular and/or unionized workers (see Figure 1).

Figure 1. The Subcontracting Chain

. Philippines 179

Note: In the garment industry, a foreign principal based abroad (a large enterprise) could order from a Manila- based exporter (a medium enterprise), which in turn could subcontract to a province-based factory (a small enterprise). This factory could order from outlying barangays, where agents could tap the productive capacity of microenterprises and/or home-based workers (HBWs). As the chain goes downward, so do the wages and benefits of the workers, who range from formal at the top to informal below.

High unemployment and underemployment due to the decline or stagnation of local industries faced with ruinous competition drive displaced workers abroad in an often uncertain diaspora. Many of these migrants, especially the undocumented ones, wind up in unprotected, informal, 3D (dirty, dangerous, and demanding) jobs in construction, service and other industries. Feminization of migration has been a phenomenon since the early nineties, and lately, women comprise almost three-fourths of newly deployed migrants. The dollar remittances of these vulnerable migrants help keep the Philippine economy afloat and resilient.

The majority of employed women are in informal employment, whether agricultural or non- agricultural. The informal economy is highly gendered, serving as a catch basin of women who have been among the first to be displaced from formal work, especially in the garment industry, as globalization progressed. Furthermore, women have also been the mainstay of the informal economy even before the onslaught of globalization, since informal work (e.g. home-based work) is compatible with their reproductive work (child care, domestic chores), and since their status as secondary or supplemental earners often deprives them of opportunities to find formal employment.

In the whole of ASEAN, informal work comprised 156 million or 63.7 per cent of total employment in 2006, according to the ILO.9 In the Philippines, figures based on the 2005 labour-force survey show that informal workers now comprise 76.34 per cent or 24.6 million of the country’s total employed, an increase of several percentage points from previous estimates.10 This rise in informal employment is accompanied by an alarming decrease in the ranks of formal workers.

The National Statistical and Coordination Board (NSCB) issued the following operational definition of the informal sector in 2002 after consultations with stakeholders:

Units engaged in the production of goods and services with the primary objective of generating employment and incomes to the persons concerned. It consists of household unincorporated enterprises that are market and non-market producers of goods as well as market producers of services.

These enterprises are operated by own-account workers, which may employ unpaid family workers as well as occasional, seasonally hired workers.

These enterprises may also be owned and operated by employers which may employ less than 10 employees on a continuous basis. (NSCB Resolution No 15, series of 2002)

The informal sector thus officially recognized and defined includes the following subsectors, among others: the micro-entrepreneurs, home-based workers (including subcontracted, own- account workers and self-employed), vendors, small transport operators (of tricycles, pedicabs and bancas), petty retailers, barter traders, small-scale miners and quarry workers, non-corporate construction workers, entertainers, beauticians, laundry persons, hairdressers, small and landless farmers, artisanal fisherfolk, on-call domestic helpers, volunteer workers, barkers, unorganized cargo handlers, etc. 180 Asian Labour Law Review 2008

In recent years, there has been a shift in terminology from ‘informal sector’ to ‘informal economy’, the latter defined by the ILO as ‘all economic activities by workers and economic units that are – in law or in practice – not covered or insufficiently covered by formal arrangements’.11 The shift is underpinned by the realization that what used to be considered a transitory, marginal ‘informal sector’ did not disappear with industrial development but has become a permanent, expanding provider of jobs, goods and services for lower income groups not only in developing but also in industrialized economies. It is responsible for a significant portion of the Gross Domestic Product (GDP) and as the Philippine case suggests, accounts for a broad range of occupations from old resilient casual jobs in construction and subcontracted work done at home for the garment and handicraft industries, to new emerging forms such as temporary or part-time work and computer-based ‘tele-homework’ such as medical transcription. It also includes a wide variety of economic activity, from survival and livelihood projects to thriving micro-enterprises and stable businesses.

The informal economy covers ‘all work in informal enterprises as well as informal jobs (jobs that pay no benefits or provide no social protection), thus including the self-employed in informal enterprises (for example home-based workers or street vendors) and paid workers in informal jobs (for example casual workers without fixed employers, most domestic workers, even factory workers in unregulated and unprotected work)’.12 A worker therefore is no longer defined as someone in a formal setting having a regular job and with a clear employer, which is how the shrinking male minority of working people in the world see themselves. A worker is ‘anyone who lives by selling his or her capacity to work, either for wages or for other forms of income’.13 And as a worker, he or she deserves the full compendium of labour rights and entitlements irrespective of formality or informality.

Impact of Informalization on Women Workers

Women’s role as a significant income-source for the family defines the real extent of women’s work and their contribution to the economy. It is in this context that women are responding with efforts to create their own jobs or to make do with low-quality jobs. This is because women’s earnings are critical to ensuring family survival, especially during times of economic crises when their participation in the labour market noticeably increases.

Data gathered in 2002 show that the majority, or 6.2 million or 53 per cent, of employed women belonged to the informal economy.14 Women predominate among the unpaid family workers in agriculture, in the wholesale/retail trade, and social and personal services in the community. Many own-account or self-employed workers operating sari-sari or small variety stores and other micro-enterprises are women. Also included are the working children estimated at four million in 2001, of whom 1.5 million or 37.5 per cent are girls.15 Women and girls in the informal economy combine domestic tasks with income-generating work to sustain their families.

Problems of women workers in the informal economy are already common knowledge. They include: 1) lack of social protection due to the absence of clear employer-employee relations (no medical, maternity, and other benefits; no retirement pension); 2) irregular and unstable employment dependent on fluctuations in labour demand; 3) exposure to occupational and environmental health hazards, since their working and living conditions can hardly be monitored; 4) vulnerability to super-exploitation and abuse, such as below-minimum wages, non-payment of work done, etc.; 5) low awareness of their rights as workers and as women; 6) poor access to credit, markets, technology and other support services; 7 ) low levels of organization; 8) lack of Philippines 181 voice and representation in policy-making bodies; 9) lack of access to justice; and 10) vulnerability to gender-based violence such as domestic abuse and sexual harassment.

Aside from the cross-sector problems, specific subsectors of informal workers have other pressing issues. For example, many vendors are insecure in their workplaces, fearful of being driven away by authorities. Legislation meant to promote and protect the interests of construction workers has not really been implemented. Small miners are marginalized and disadvantaged by the Mining Act. Small transport operators (particularly of tricycles, habal-habal 16 and railroad trolleys) are vulnerable due to lack of safety regulations for both drivers and passengers. Vendors whose goods are arbitrarily confiscated by the authorities or drivers who are unjustly penalized for alleged traffic violations just resort to bribery because there are no mechanisms to hear and address their complaints and grievances. Volunteer workers in government service lack compensation, incentives and protection. Small farmers and fisherfolk are affected by environmental degradation as well as increasing conversion of farm land and decreasing fishing grounds. Informal workers in the entertainment industry are vulnerable to sexual exploitation and harassment.

Specific Issues of Women in Micro-Enterprises

In the Philippine context women micro-entrepreneurs experience gender-specific constraints, which according to the ILO largely originate from their socio-cultural context. These include lack of self-confidence, conflicting role demands and time limitations; lack of family support; limited mobility; fewer opportunities for vocational training and skills development; lack of information; and inadequate or fewer legal entitlements compared with men. 17

Due to flexible time and involvement, production work in micro-enterprises is often done at home. But combining reproductive and productive work simultaneously has advantages and disadvantages for women, as can be gleaned in an ILO document:

As the economic activity is most often undertaken in addition to household chores and, in rural areas, to agriculture, women are not able to dedicate continuous attention to it. There is a lack of clear-cut division between household and business, both in terms of allocation and financial flows (re-investment is often subject to prior fulfillment of the family’s basic needs). The total work load is heavy.

The owner-operator performs all the functions herself. The marketing and managerial functions are embryonic. 18

Other constraints have to do with lack of access to productive resources. Foremost is the lack of affordable and accessible capital that makes them vulnerable to usurers. They are also unable to purchase in bulk, so their supply of raw materials and other production needs are always limited. Oftentimes, they lack management skills as well as access to or control of technology in terms of production, design, equipment, etc. And when they cannot market their own produce, they lose control over their revenues.

Due to unbridled trade liberalization, women micro-entrepreneurs suffer from competition with foreign products and limited access to profitable markets. They often end up as victims of non-payment of goods delivered or non-acceptance of goods due to real or trumped up quality- control issues. When they are victimized in this way, they have no real access to justice as they do not know which authorities to approach or what legal mechanisms to use in order to redress their grievances. 182 Asian Labour Law Review 2008

Different forms of micro-enterprises abound. There are micro-enterprises found at the bottom of the subcontracting ladder supplying larger firms with raw materials or finished products at very low cost, employing unprotected labour comprised of women homeworkers, child labour, indigenous craftspersons and others similarly situated. A special category of a non- profit-oriented micro-enterprise is the social enterprise, which may take the form of a group or cooperative enterprise, community-based and anchored on solidarity, mutual assistance and social service. Then there are also the ‘free-standing’ ones that are not dependent on other entities for capital or for markets.

Workers of various categories are found in micro-enterprises. And because they have particular needs, ensuring their rights through specific interventions must be a priority concern. Organized wage workers in formal or registered micro-enterprises are the most advantaged because of the employer’s ability to provide for their basic legal entitlements like minimum wage, social security, and safe and healthy working conditions. Unorganized wage workers in informal micro-enterprises are the most disadvantaged since they do not receive the minimum wage, have no social protection and are subject to occupational hazards. One of the largest groups of unorganized wage workers, if statistics are to be the basis,19 is composed of unpaid family workers in family-based micro-enterprises. Perceptions differ as to whether they are advantaged or disadvantaged. They can be considered disadvantaged, especially in the case of women and girls due to lack of female labour valuation and persistence of child labour. On the other hand, they can be considered better positioned vis-à-vis non-related workers due to the positive effect of family relations on the meaning and experience of work. Finally, the self-employed or own- account workers, or micro-entrepreneurs who are also workers themselves comprise another large category of workers.

2. Analysis of Specific Laws and Their Implementation

The following discussion points out the gaps and biases in certain provisions of specific laws, and in one way or the other proposes recommendations towards revision and/or workable implementation.

Legislation of General Application

The 1987 Constitution of the Republic of the Philippines, as the fundamental law of the land, gives emphasis to the importance of labour as a primary social and economic force, which must therefore be protected and promoted. Section 3 of Article XIII on Social Justice and Human Rights states that: ‘The state shall afford full protection to labour, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law….’

Section 1 of the same article provides for ‘measures that protect and enhance the right of all the people to human dignity, reduce social, economic and political inequalities and remove cultural inequities’. Section 2 calls for the ‘promotion of social justice through creation of economic opportunities’. Philippines 183

Additionally, Article II, Section 9, provides for ‘policies that provide adequate social services, promote full employment, a rising standard of living and an improved quality of life for all’. Section 10 of the same article emphasizes ‘social justice in national development’, and Section 8 highlights the need to ‘protect the rights of workers and promote their welfare’. Article III, Section 1 of the Bill of Rights, enshrines ‘due process and equal protection of laws’.

The abovementioned constitutional provision makes no distinction between formal and informal workers, spreading the mantle of protection, social justice and human rights to all.

Labour Code: Presidential Decree 442

The basic policy of the Labour Code is that: The‘ state shall afford protection to labour, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employees. The state shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work.’

As observed by legal and labour experts, ‘One of the critical features of the Code is its emphasis on workers with employer-employee relationship, the elements of which are not usually present in the informal sector.’20 Even among formal workers, provisions of the Labour Code are weakly enforced in an atmosphere of stiff competition under globalization and the resultant ‘race to the bottom’ in terms of labour standards to save on production costs. Violations are rampant, especially among women workers in the economic zones. Recurrent worker complaints against below-minimum wage, non-regularization, labour-only contracting, forced overtime with or without pay, unreasonable pegging of quotas, working hours beyond eight hours a day and six days a week, non-remittance of Social Security Service (SSS) and PhilHealth contributions, denial of incentive leave, maternity leave and other privileges, non-compliance with occupational health and safety standards, etc. should be immediately addressed. Many of these clearly violate specific provisions of the Labour Code and should therefore be easy to penalize.21

The rise of flexible employment not only in the economic zones but in most other workplaces has led to the effective negation of the right to organize and to bargain collectively. The number of establishments employing non-regular workers increased from 65.5 per cent to 86.4 per cent in just a three-year period (1998-2000), highlighting the seriousness of the phenomenon. 22

Unionization is often limited only to regular workers, which now comprise a minority of employees on the shop floor, the majority being contractual, casual, or agency-hired workers. Seasonality and insecurity of employment, with contracts lasting at the most five months to avoid regularization of workers and therefore higher labour costs, have made it almost impossible for organizers to consolidate workers they are able to contact and educate into a cohesive force with representation and bargaining power. Difficulties and delays in registering unions, calling for certification elections, as well as harassment of union leaders by management, all comprise barriers to the transition from organizing to collective bargaining. Management can also refuse to negotiate, forcing workers to strike, but when they do the footloose nature of industry under globalization makes it very easy for firms to just transfer to other places where cheaper and more compliant labour can be found.

Informal workers in the Philippines in general are beyond the reach and scope of government legislation because there are no formal contracts, only verbal agreements. As a result, the terms and conditions of their employment become exploitative and further aggravated by the absence of an employer-employee relationship. This situation hampers their access to social protection. 184 Asian Labour Law Review 2008

Social Security Act of 1997 (Republic Act 8282)

Section 2 of this Act provides that ‘it is the policy of the State to establish, develop, promote and perfect a sound and viable tax-exempt social security system suitable to the needs of the people throughout the Philippines which shall promote social justice and provide meaningful protection to members and their beneficiaries against the hazards of disability, sickness, maternity, old age, death, and other contingencies resulting in loss of income or financial burden. Towards this end, the State shall endeavor to extend social security protection to workers and their beneficiaries.’

The branches of social security that exist and are being implemented in the Philippines consist of 1) medical care; 2) cash sickness benefits; 3) maternity benefits; 4) old-age benefits; 5) invalidity benefits; 6) survivors benefits; and 7) employment injury benefits.

Social security in the Philippines follows the principle of contributory social insurance. Those who cannot pay the cost of social security are not qualified beneficiaries or are automatically excluded from formal social security coverage. Women workers who have no access to such benefits are doubly burdened because they cannot avail themselves of maternity and medical benefits.

SSS figures for mid-2005 show that employees (mostly formal sector) covered numbered 20.63 million, while the self-employed members (the category to which most informal workers belonged) comprised a mere 5.28 million. 23

Social security should be provided to all workers in case of death, illness, disability, maternity and old age. Most informal workers, however, do not enjoy such social security, perhaps because they have no clear participation in both policy-making and implementation on this issue. The SSS Law should be amended to allow for informal sector representation in the SSS Commission, accreditation of informal workers’ organizations as collecting agents, improvement of benefit package and easier contribution terms for low-income earners. In order to facilitate informal worker membership, cooperatives and people’s organizations should be accredited as collecting agents of premiums; other collection mechanisms (through cellphones, couriers, etc.) should also be developed. Efficiency, transparency and effectiveness in service delivery need to be ensured. Initiatives such as the Automatic Debit Account (ADA) scheme whereby informal workers can open savings accounts at minimal cost in specific banks and have their SSS contributions automatically deducted and remitted to SSS should be assessed, improved and replicated.

National Health Insurance Act of 1995 (Republic Act 7875)

This Act instituted the Philippine Health Insurance Corporation (PHIC) to actively implement a programme that aims to provide universal health insurance for all. The Programme, called PhilHealth, provides free hospitalization benefits to members and their families.

Although PhilHealth is aiming for universal coverage, its membership is still mainly formal sector. In mid-2006, PhilHealth had a membership base of 12.5 million, and 54.5 million beneficiaries representing 64 per cent of the population. The majority of the members come from the formal employed sector (56 per cent). Overseas Filipino workers account for 4.9 per cent; the sponsored sector (or those paid for by local politicians and other benefactors) 24 per cent; and the non-paying (indigent) sector comprises 0.6 per cent. The individually paying sector, to which informal workers generally belong, comprises a mere 14 per cent. 24 Philippines 185

When informal workers and their family members fall ill and need to be hospitalized, they need health insurance to cover their needs otherwise they either fall into debt or are unable to seek necessary medical attention. Thus, they should eventually be covered by PhilHealth through universal, state-subsidized schemes such as the highly successful one in Thailand. In the meanwhile, the Kalusugang Sigurado at Abot-Kaya sa PhilHealth Insurance (KaSAPI) initiative (launched in 2005) and other PhilHealth programmes for indigents and the working poor should be expanded and improved in order to develop effective partnerships with organized groups and better serve their target populations.

Community-based health insurance and indigenous schemes such as the damayan should also be supported through technical assistance, subsidies, and other means by national and local bodies so that they can be of better service to their membership who cannot access or who need to supplement benefits provided by formal social protection mechanisms such as PhilHealth.

Legislation on Occupational Safety and Health

The right to minimum standards of occupational safety and health is guaranteed in Article XIII, Section 3 of the Constitution. Books III and IV of the Labour Code implement this mandate in general terms and prescribe maximum working hours, provision of protective equipment and clinics, among others. For specific occupations, the minimum conditions of health and safety are found in the Manual on Occupational Safety and Health Standards.

The occupational safety and health provisions mentioned, however, are applicable only to workers falling within an employer-employee relationship. Thus, workers in the informal economy are excluded from the coverage of the Labour Code.

The mandate of the Occupational Safety and Health Center, Bureau of Working Conditions, Employees Compensation Commission (ECC) and similar bodies should cover both formal and informal workers; resources should be made available for them to develop their programmes and services for informal workers. Such programmes and services, some of which are at the pilot stage, should also be institutionalized in the local government through budgetary allocations in their local health development plans. These should include the training of trainers among homeworkers and other informal workers as well as continuous awareness-raising to prevent and minimize work related and accidents.

Local Government Code (Republic Act 7160)

Significant in relation to the need for visibility and voice of workers in the informal economy is Article X, Section 9 of the Constitution. This article provides that Legislative‘ bodies shall have sectoral representation as may be prescribed by law.’ The Local Government Code passed in 1991 says in Section 41 that ‘...there shall be one (1) sectoral representative for women, one (1) from the workers, and one (1) from any of the following sectors: urban poor, indigenous cultural communities, disabled persons, or any other sector ay may be determined by the sanggunian concerned within ninety (90) days prior to the holding of the next elections, as may be provided by law...’ These representatives from local sectoral groups would be elected as members of municipal, city and provincial councils nationwide. The Local Government Code also mandates sectoral representation in local special bodies such as Regional and Municipal Development Councils, School Boards, etc. Enabling rules should be enacted to realize local sectoral representation in practice. This would increase opportunities for participation of women and informal workers in local politics and governance. 186 Asian Labour Law Review 2008

The Local Government Code also empowers local authorities to create development committees in order to strengthen the participation of its constituents in the development process. Its significance lies in the bottom-up decision making process whereby interventions generated are the product of consultations and consensus among stakeholders. Further, the creation of a committee for workers in the informal economy will assist the local legislative council in crafting a policy framework and in creating concrete interventions for the sector.

Philippine Country Programme for the Informal Sector

In the Philippine context, advocacy for informal workers has been going on for almost two decades, with the main impetus provided by organizations of such workers and their allies. In the beginning, this advocacy was an uphill climb producing little result, since decision-makers were not sufficiently aware of and sympathetic to the plight of informal workers. In recent years, this advocacy has been considerably strengthened with the more visible multi-sectoral involvement not only of informal sector organizations and other civil society groups, but also of national government agencies, local government units (LGUs) and United Nations agencies such as the International Labour Organization (ILO), United Nations Development Program (UNDP) and the United Nations Development Fund for Women (UNIFEM). Efforts from these various stakeholders converged in what is known as the Philippine Country Program for the Informal Sector, the longer title of which is Institutionalizing Programs and Policies for the Informal Sector through the Local Government. This programme came into being through Resolution No. 2 (Series of 2003) of the Social Development Committee (SDC) based in the National Economic and Development Authority (NEDA) co-chaired by the Secretary of the Department of Labour and Employment (DOLE) and the Secretary of Socio-Economic Planning.

The SDC, which has a sub-committee on the Informal Sector (chaired by DOLE and with secretariat and management support office lodged at the Bureau of Rural Workers – BRW- DOLE), also has five Technical Working Groups (TWGs), one each for social protection; productive resources; capability building, organizing and representation; policy and statistics; and resource mobilization and advocacy, consistent with the components of the Country Program.

The Country Program was rolled out at the LGU level with the involvement of 17 cities and municipalities in Metro Manila, plus Angono and Rizal, tasked with implementing their local action plans for the institutionalization of policies and programmes for the informal sector through CLIPPS (Capacity Development of Local Institutions to Promote and Protect the Informal Sector).

These local initiatives continue today under a more focused intervention called ‘Unlad Kabuhayan Program Laban sa Kahirapan’ (DOLE Worktrep Program) targeting the working poor in the informal economy in cooperation with LGUs so that their livelihood projects can grow into viable and sustainable enterprises.

Gender-Related Laws

Since many workers in the informal economy are women, it is important to see what gender- related laws are relevant to their situation.

At the international level, the Philippines is a state party to the Convention for the Elimination of Discrimination Against Women (CEDAW). It has ratified ILO Convention No. 100, aimed at eliminating gender-based discrimination in employment. It is also a state party to Philippines 187

ILO Convention (1953) prohibiting night work, but there is now a push to review the Labour Code provision implementing this Convention due to perceptions that it is discriminatory to women who want to take advantage of opportunities to work at night.

The Philippine Constitution provides for equality of women and men at work in terms of pay as well as working conditions. To promote this, the Labour Code, specifically Articles 135 and 136, prohibits gender discrimination in employment, particularly against married and pregnant women. However, pre-employment discrimination is not yet addressed, and could be prevented by prohibiting advertisements mentioning sex preferences for certain jobs.

Separate legislation also guarantees maternity protection and benefits for women. These are still inadequate when measured by international standards. The situation could be remedied by extending maternity leave with pay, providing pre-natal and post-natal services, breastfeeding entitlements and protection against harmful work.

There is a law providing limited paternity leave for husbands of women who have just given birth, but this benefit is still limited and could still be extended and expanded to include unmarried couples in common-law relationships.

There is an Anti-Sexual Harassment Act, but this could still be strengthened by including harassment between peers, providing penalties for non-enforcement in firms and institutions, and putting in safeguards against retaliatory acts.

Aside from the limitations and flaws mentioned above25 these measures normally apply only to women employed in formal establishments. Informal workers hardly benefit from them at all. It is important therefore to push for the Magna Carta for Women that has been pending in Congress for a number of years. It aims to affirm women’s rights and facilitate women’s political and economic empowerment. It includes chapters focusing on ‘marginalized sectors’, including women in the informal economy. The bill needs more extensive discussion and support among the sectors concerned, and should be made consistent with the provisions of the Convention on the Elimination of Discrimination Against Women (CEDAW).

Other Laws Pertaining More to the Self-Employed

The following laws can also be considered labour laws insofar as they cover micro- entrepreneurs, self-employed and other sectors in the informal economy.

The Social Reform and Poverty Alleviation Act (Republic Act 8425 of 1998) provides an entire section on microfinance services for the poor, and states that the protection and welfare of workers in the informal sector shall be one of the flagship programmes of the Social Reform Agenda, thus making it a clearly pro-informal sector policy. In its implementing rules, it was specified that the focus shall be on protection by labour laws, security at the workplace, protection against harassment and abuse, access to programmes and services catering to their special needs, and organization into unions, cooperatives and other forms of associations. It also provides representation for informal worker organizations in the National Anti-Poverty Commission (NAPC) through the Workers in the Informal Sector Council (WISC).

An Act for Women in Micro and Cottage Business Enterprises (Republic Act 7882) provides assistance to women engaging in micro and cottage business enterprises, and other purposes, particularly those who have been engaged for at least one year with a daily inventory of goods 188 Asian Labour Law Review 2008 worth not more than 25,000 pesos (~US$62.50) or with any business equipment with a book value of not more than 50,000 pesos (~US$1,250). (US$1= approximately 40 Philippine pesos, February 2008.)

An Act Promoting the Integration of Women As Full and Equal Partners of Men in Development and Nation Building (Republic Act 7192), better known as the Women in Development and Nation Building Act, is a related legislation to RA 7882. It seeks to provide, among other things, that:

women shall have the capacity to borrow and obtain loans and execute credit arrangements under the same conditions as men; women shall have equal access and rights to all government private sector programs granting agricultural credit, loans and non-material resources, and shall enjoy equal treatment in agrarian reform and land resettlement programs; and a substantial portion of official development assistance funds shall be utilized to support programs and activities for women, among others.

An Act to Promote the Establishment of Barangay Microbusiness Enterprises (BMBEs), Providing Incentives and Benefits Therefore, and for Other Purposes (Republic Act 9178), also known as the Barangay Micro Business Enterprises (BMBEs) Act of 2002, that lends legitimacy to what has been generally put aside as ‘underground’, thus, acknowledges the economic contribution of microenterprises, and expresses the need to ‘promote the establishment of Barangay Micro-Business Enterprises (BMBEs)’ in the communities.

RA 6810 or Kalakalan 20, enacted in 1989 as a special legislation for the informal sector, which attempts to formalize countryside and barangay business enterprises by exempting them from certain taxes and regulations. This law seeks to enhance entrepreneurial undertakings and promote self-reliance.

An Act to Strengthen the Promotion and Development of, and Assistance to, Small- And Medium-Scale Enterprises, Amending for That Purpose Republic Act No. 6977, Otherwise Known as the ‘Magna Carta For Small Enterprises’ And For Other Purposes, May 1997 (Republic Act 8289). The main feature of the law provides that all lending institutions, public or private, ‘shall set aside at least six per cent (6%) and at least two per cent (2%) for small- and medium- enterprises, respectively of their total loan portfolio’.

All of the laws mentioned need to be amended to ensure the rights of informal workers and micro-entrepreneurs (especially the women among them) as well as their access to credit and other productive resources.

As specific targets of assistance, women are not at all mentioned in the Magna Carta on SMEs, the BMBE Law, and to a large extent, the Social Reform and Poverty Alleviation Act (RA 8425). Women’s particular needs and interests as regards microfinance and microenterprise development, which are different from those of men, are not at all considered. Neither are the basic sectors covered by RA 8425 described as comprising women and men.

The manner by which microenterprise has been defined and redefined (from up to P150,000 to up to P3 million) surfaces the intersecting of gender with class-based discrimination, leading to a lack of clear access of women in poverty. Under this law, bigger business concerns (mostly owned and run by men) have more advantages and benefits at the expense of the smaller (micro) ones (mostly run by women who are at the lower rungs of the capitalization ladder), and workers, Philippines 189 mostly women in the informal sector (who need not be paid a minimum wage, for example). Moreover, most of the laws have a strong bias for credit or minimalist model of microfinance and microenterprise development, which is primarily concerned with the financial sustainability of the providing institutions, not really with poverty reduction and/or women’s empowerment. Women clients tend to be heavily disadvantaged by high interest rates and transaction costs, and low lending ceilings insufficient to lift them out of poverty.

Most of the laws are silent on the rights and entitlements of workers in micro-enterprises, and there is hardly any articulation of the needs and interests of workers in the informal economy, much less of the women who comprise much of this sector. The informal sector is mentioned in the BMBE Law only in one line in the declaration of policy which says that it should be integrated into the mainstream economy. The Social Reform and Poverty Alleviation Act is better because it clearly identifies workers in the formal and informal sectors as basic sectors with clear representation and participatory mechanisms in the work of the National Anti-Poverty Commission. On the BMBE law, which exempts micro-business from complying with the minimum wage, there seems to be a consensus among trade unions and informal sector groups that this exemption should be withdrawn.

Recommendations towards amendment strongly promote the inclusion of gender concerns in guiding principles, mandates, goals and objectives of the laws as well as in the implementing mechanisms. Women’s groups and enterprises as ultimate beneficiaries of the laws and the resources they provide must be specified. Also, women’s participation in decision-making bodies assigned to carry out such laws must be reflected. The laws must recognize the intersection of gender, class and other inequalities, and seek to redress discrimination based on all these inequalities. Specifically, the use of sex-disaggregated data and gender-based methodologies in research, planning, monitoring and evaluation must be prescribed and reporting on compliance by the concerned agencies must be mandatory. Not to be neglected is the use of gender-fair and inclusive language, mentioning the phrase ‘women and men’ as actors and beneficiaries whenever possible. Finally, there must be a stronger initiative for gender mainstreaming in microfinance and microenterprise development at all levels of governance in accordance with the state obligation articulated in Article 2 of CEDAW to ‘pursue by all appropriate means and without delay a policy of eliminating discrimination against women...’ 26

Subsectoral Laws and Policies

Aside from the laws of more general application analyzed earlier, there are policy issuances pertaining to specific subsectors of workers in the informal economy which deserve mention.

Department Order No. 5 on Home Work

Articles 153 and 154 of the Labour Code concern homeworkers and direct the Secretary of Labour to regulate employment of industrial homeworkers. It was in 1992 when the advocacy work of home-based workers’ organizations such as PATAMABA (Pambansang Tagapag-ugnay ng mga Manggagawa sa Bahay, or National Network of Homeworkers) and their supporters within and outside government finally bore fruit and then Labour Secretary Ruben D. Torres issued Department Order No. 5 substantiating and putting into operation the abovementioned articles. This Order now constitutes Rule XIV, Book III of the Labour Code’s Implementing Rules and Regulations.27 Among its salient provisions are: 190 Asian Labour Law Review 2008

1) The right to self-organization of homeworkers and the registration of homeworkers’ organizations which ‘shall be entitled to the rights and privileges granted by law to legitimate labour organizations’; 2) Registration of employer, contractor and subcontractor; 3) Immediate payment for home work after delivery of goods, and remittance by the contractor/ subcontractor or employer of contributions to the SSS, Medicare, and ECC; 4) Standard output rates determined by time and motion studies to equalize piece rates received by workers in the factory or main undertaking of the employer and homeworkers performing the same job or activity, individual/collective agreement between employers and homeworkers, or tripartite consultations with representatives of government, employers and workers; 5) Prohibition of any deduction from homeworkers’ earnings for materials lost, destroyed, soiled or damaged save for certain conditions; 6) Liability of the employer, jointly and severally with the contractor or subcontractor if the latter fails to pay the wages or earnings of his/her workers; 7) Regulation of employment of minors as homeworkers; and 8) Prohibition of homework in dangerous occupations.

Until now, however, this Rule has not been tested in action. It has to have penalties and sanctions against erring employers, contractors, and subcontractors to be effective.

The plight of homeworkers can also be further addressed through the ratification of ILO Convention 177 on Home Work.This seeks to uplift the conditions of homeworkers so that they can experience the same treatment, exercise the same rights based at the very least on the core labour standards of decent work, and receive the same entitlements workers in the formal and other sectors are legally enabled to enjoy. Among these are the following: 1) the right to establish or join organizations of their own choosing and to participate in the activities of such organizations; 2) protection against discrimination in employment and occupation; 3) protection in the field of occupational safety and health; 4) remuneration; 5) statutory social security protection; 6) access to training; 7) minimum age for admission to employment or work; and 8) maternity protection. The campaign for ratification in the Philippines started as early as 1996. It is now finally bearing fruit with the commitment of trade unions, employers, and government bodies, principally the Department of Labour and Employment (DOLE) and the Office of the President to pursue the ratification process. The campaign needs to be pursued to its logical end – concurrence by the Senate through the Senate President.

Executive Order 452 Providing Security of Registered Vendors

This promulgation provides security to vendors in their workplace. They are protected from being arbitrarily deprived of their livelihood by unjust ejection from their workplaces or demolition of their stalls, provided that they comply with existing national and local laws and ordinances. Under this law, vendors are encouraged to form an association in order to empower them. This issuance may in the long run prove beneficial to women who earn their income as vendors in the informal sector. One unique issue under this promulgation is security at the workplace which is properly the concern of the Local Government Unit (LGU). Some LGUs have actually provided vending sites around municipal halls and other vacant government spaces for their vendor constituencies as a result of informal worker advocacy.

To date, many of those who are supposed to enforce the Executive Order, and those who are likely to benefit from it, are not even aware that such a law exists. As a result, vendors are still Philippines 191 subjected to harassment coming from law enforcement agencies at the local and national levels. Furthermore, since the Executive Order does not have the status of a law passed by Congress, local government units are emboldened to contravene its spirit through their own resolutions. Conscious of this, vendors groups attempted to push for a bill in the 13th Congress to ensure their rights but this initiative did not prosper.

Republic Act 6685 and Department Order No. 13 on Construction Workers

RA 6685 was enacted to address the plight of construction workers. This piece of legislation aims to promote local hiring and enhance alternative skills that will open opportunities for construction workers towards an alternative form of employment.

To date, non-enforcement of RA 6685 (particularly on minimum wage and holiday benefits) is attributed to lack of understanding and appreciation of the merits of supporting construction workers. Likewise, contractors are fearful of organized groups. Among construction workers, the fear of not being hired at all prevents them from joining or being associated with an organization. Department Order No. 13 (1998), entitled The Guidelines Governing Occupational Safety and Health in the Construction Industry, prescribes the provision of personal protective equipment, construction safety signage, emergency facilities, mandatory certification and safety information. These guidelines, however, are not rigorously observed in informal settings.

Towards a Magna Carta for Workers in the Informal Economy

The absence of comprehensive legislation that can cover the cross-sectoral concerns of all subsectors has led to intensified lobbying and advocacy for a Magna Carta for Workers in the Informal Economy. A bill for this, crafted with the participation of Homenet Philippines, the Association of Construction and Informal Workers, as well as other stakeholders, was filed in the 14th Congress in August 2007.

The recent shift to a rights-based framework of development and the ILO’s decent work agenda emphasizing core labour standards, means the following fundamental rights of informal workers will be recognized, promoted, protected and fulfilled by this bill: 1) the right to self- organization; 2) the right to enhance their entrepreneurial skills and their capabilities to become more productive and self-reliant thereby ensuring participation in mainstream economic activities; 3) the right to be free from any form of discrimination, whether this be based on gender, age, ethnicity, political, religious or sexual orientation, etc.; 4) the right to just and humane working conditions, access to productive resources, and social protection, including occupational and reproductive health services; 5) the right to represent their organizations in a continuing process of consultation and dialogue towards maximizing the provision of a comprehensive package of reforms, interventions, and services in accordance with their articulated needs and interests; and 6) the right to access justice by enactment of national and local policies towards alternative dispute resolution.

This bill offers a comprehensive, integrated, rights-based and gender-responsive policy instrument to address empowerment issues and bring the workers in the informal economy closer to their dreams. 192 Asian Labour Law Review 2008

REFERENCES

Asper, Tony (2007). Power Point presentation on contractualization discussed during the Labour Agenda meeting convened by the FES, Manila, 7 November 2007. Battad, Leo (2006): Gender Analysis of the Philippine Labour Code. In Gender Analysis of Selected Economic Laws. Published by the University of the Philippines Center for Women’s Studies for UNIFEM. Betonio, Jr., E.R. (2004): Labour Flexibility and Representation in the Philippines. Cabanilla, Phoebe and Josephine Parilla. (2004) Legal Policies and the Situation of Women in the Informal Sector in the Philippines. A paper presented to the Committee on Asian Women, Bangkok, Thailand. Coordinating Committee on Human Rights (2006): Report of the Philippine Government on the Implementation of the International Covenant on Economic, Social and Cultural Rights. (ICESCR) Department of Labour and Employment. Bureau of Rural Workers. Inventory of Laws and Policies Affecting the Informal Sector. 2004. Department of Labour and Employment. Country Program: Philippines. Institutionalizing Programs and Policies for the Informal Sector through the Local Government. 2003. Farolan, Ma. Martha. ‘Social Protection and Legislation for Workers in the Informal Sector’, Chapter 2 in Handbook of the Informal Sector. Bishop-Businessmen’s Conference for Human Development and DOLE (1998). Gallin, Dan (2002): ‘Organising in the Informal Economy.’ http://www. wiego.org/papers.lab_ed.pdf. Homenet Southeast Asia (2006): Social Protection for Home-based Workers in Thailand and the Philippines, co- authored by Donna L. Doane, Rosalinda Pineda Ofreneo and Benja Jirapatpimol, published under the auspices of the Ford Foundation. Illo, J.F.I. (2005) ‘Prospects for People Living in Poverty to Participate in Growth-Oriented Enterprises’ in Review of Women's Studies, Special Issue on Gender, Globalization, Culture and the Economy (Vol. XV, No.2; July to December 2005). ILO (2002), Women and Men in the Informal Economy: A Statistical Picture, p. 20 (Table 2.2). Geneva: Employment Sector, ILO – based on data prepared by Jacques Charmes from official national statistics, 1994/2000. ILO Press. ILO Primer: The Challenge of Informal Work in the Philippines. Informal Sector Coalition of the Philippines. A Compilation of Laws and Issuances on Women and Children in the Informal Sector. (August 1999). Lazo, Lucita. Toward A Philippine Magna Carta for the Informal Sector. (Background Paper, June 2000). National Commission on the Role of Filipino Women (2004). State of the Filipino Women Report. Pineda Ofreneo, Rosalinda, with Jocelyn Bellin and Mylene Hega (2007): Women Garments Workers in Philippine Economic Zones – Towards an Organizing and Advocacy Agenda under Trade Liberalization. Part of a multi- country study sponsored by the Committee on Asian Women. Pineda-Ofreneo, Rosalinda (2001): ‘Confronting the Crisis: Women in the Informal Sector.’ in Carrying the Burden of the World: Women Reflecting on the Effects of the Crisis on Women and Children, edited by Jeanne Illo and Rosalinda P. Ofreneo. Quezon City: Center for Integrative and Development Studies, University of the Philippines. Pineda Ofreneo, Rosalinda and Phoebe O. Cabanilla. in Beyond the Crisis: Questions of Survival and Empowerment, edited by Jeanne Illo and Rosalinda P. Ofreneo. Quezon City: Center for Integrative and Development Studies, University of the Philippines and Center for Women Studies (2003), pp. 41-78. Pineda Ofreneo, Rosalinda, Joseph Lim and Lourdes Gula. ‘The View from Below: Policy and Program Implications of the Impact of the Financial Crisis on Subcontracted Women Home-based Workers’ in the Hidden Assembly Line- Gender Dynamics of Subcontracted Work in the Global Economy, edited by Radhika Balakrishnan., published by the Kumarian Press, 2001. Philippines 193

Pineda Ofreneo, Rosalinda. (2006): Gender Analysis of Philippines Laws on Microenterprise and Microfinance from the Perspective of CEDAW and Other International Instruments. In A Gender Review of Selected Economic Laws in the Philippines. University of the Philippines Center for Women s Studies. Proceedings on Metro Manila Workshops on the Promotion and Protection of the Informal Sector toward Action Planning (2002). The Republic of the Philippines.The Philippine Labour Code. The Republic of the Philippines.National Statistical Coordination Board 2005 Statistical Yearbook. Trinidad, Arturo Q. ‘Support Programs of NGOs, LGUs for the Informal Sector.’ In Handbook of the Informal Sector. Bishop-Businessmen’s Conference for Human Development and DOLE (1998). UNDP and DOLE. Resource Mobilization and Advocacy: Strengthening Good Governance in Local Government Units for the Promotion and Protection of the Informal Sector (Proposed Bilateral Program on Technical Cooperation).

ENDNOTES

1. In 2000, unemployment was recorded to be 10.14 per cent of the labour force, and underemployment 19.9 per cent. National Statistical Coordination Board. 2005 Statistical Yearbook (2005). Beginning 2005, unemployment figures became lower because of new criteria for defining the unemployed. Thus in April 2006, unemployment was placed at 8.2 per cent, but underemployment was at a very high 25.4 per cent. 2. The industrial sector – particularly manufacturing which is supposed to produce the greatest number of jobs as the country progresses – has been stagnant at 14 to 17 per cent since the 1960s; in 2003, the percentage was 15.7 per cent (National Commission on the Role of Filipino Women (2004), State of the Filipino Women Report. Chapter 2, p. 6). Agriculture showed a declining trend in employment from 1.7 per cent in 1980 to 37 per cent in 2003 (Ofreneo, R. E. ‘From core to periphery: Why has the Philippines failed to industrialize’ in A Nation in Crisis: Agenda for Survival published by the Fair Trade Alliance.) 3. Illo, J.F.I. (2005). See Table 6. Distribution of working-age population, by type of economy, October 2001. ‘Prospects for People Living in Poverty to Participate in Growth-Oriented Enterprises’ in Review of Women's Studies, Special Issue on Gender, Globalization, Culture and the Economy (Vol. XV, No.2; July to December 2005). The employment-population ratio has not improved since 2002, when only 46 per cent of women were employed compared to 73 per cent of men. 4. National Statistical Office. October 2002-2005 Integrated Survey of Households Bulletin, Table 6: Employment Indicators: Women and Men Aged 15 Years and Over, 2002-2005; National Statistical Coordination Board. Women and Men in the Philippines 2006 Statistical Handbook, Table 2.4: Labour Force and Labour Force Participation Rate by Highest Grade Completed and Sex, Philippines: 2002-2004 on p. 32. Note, however, that women who finished college had more participation in the labour force than other women with lower levels of education. 5. Sibal, Jorge V. (2006) ‘Strengthening Offshoring in the Philippines: Issues and Concerns.’ University of the Philippine Forum. July-August. 6. Proceedings of the Labour Agenda meeting sponsored by FES Manila, 7 November 2007. 7. On one side is the Trade Union Congress of the Philippines (TUCP) which comprises a moderate force enjoying representation in government and tripartite bodies. On the other side is the Kilusang Mayo Uno (KMU) which espouses a ‘genuine, militant, anti-imperialist’ mould of unionism. It belongs to the national democratic movement, which has taken the brunt of state repression in the form mainly of extra-judicial killings of trade unionists and other activists. Partido Manggagawa (PM) is another left-oriented party list group which used to have a seat in Congress. It takes a direct socialist line, which distinguishes it from KMU. Bukluran ng Manggagawang Pilipino (BMP) belongs to the PM formation. The Federation of Free Workers (FFW), formerly with the World Confederation of Labour (WCL), is identified with the Christian Democrats and like TUCP, has had relatively harmonious relations with government. The National Confederation of Labour (NCL) and KATIPUNAN are other progressive blocs of left-oriented federations. 194 Asian Labour Law Review 2008

8. Informal employment now comprises 71 per cent of non-agricultural employment in Asia. (WIEGO website – http://www.wiego.org/stat_picture) 9. Labour and Social Trends in ASEAN 2007: Integration, Challenges and Opportunities. (2007) International Labour Organization. 10. National Labour Force Survey of Business and Industry, 2005 (2005). Table IV. Comparative Sizes of Formal and Informal Sectors 1999 and 2005. 11. Resolution concerning decent work and the informal economy, document of the 90th session of the General Conference of the International Labour Organization (2 , 2002, Geneva. 12. Gallin, Dan (2002): ‘Organising in the Informal Economy.’ http://www.wiego.org/papers.lab_ed.pdf.. 13. Ibid. 14. National Commission on the Role of Filipino Women (2004). State of the Filipino Women Report, Chapter 2, p. 18. 15. National Commission on the Role of Filipino Women (2004). Chapter 2, p. 19. 16. The habal habal is a motorcycle outfitted with extenders on both sides as well as the back of the driver’s seat, where as many as six passengers are accommodated. 17. International Labour Organization (1998): Gender Issues in Micro-Enterprise Development, Briefing Note. http:///www.ilo.org/public/english/employment/ent/papers/gender.htm, pp. 4-5. 18. Ibid., pp. 5-6. 19. See Table 6. Distribution of working-age population, by type of economy, October 2001, in Illo (2005). 20. Department of Labour and Employment. Bureau of Rural Workers. (2004) Inventory of Laws and Policies Affecting the Informal Sector. 21. These minimum standards include: 1) Normal hours of work shall not exceed eight hours a day (Article 83. Normal hours of work); 2) If workers perform their job for over eight hours, they shall be provided with overtime pay and night differential pay for those working between 10 pm and 6 am. (Article 86. Night-shift differential and Article 87. Overtime work); 3) Workers are entitled to a rest period of not less that twenty-four (24) consecutive hours after every six (6) consecutive normal work days. (Article 91. Right to weekly rest day); 4) Night work prohibition for women workers (Article 130. Night work prohibition); Right to a yearly service incentive leave of five days with pay if a worker has rendered at least one year of service. (Article 95. Right to service incentive leave). 22. Betonio, as cited in Asper. 23. Homenet Southeast Asia (2006), p. 318. 24. Homenet Southeast Asia (2006), p. 320. 25. Largely based on Battad (2006). 26. A more comprehensive analysis of these laws can be found in Pineda Ofreneo.(2006). 27. DOLE (2004), p. 11. 195

Thailand

Extending Labour Protection to the Informal Economy in Thailand

Bundit Thanachaisethavut, Dr.Voravith Charoenlert & Suntaree Saeng-ging

1. Contemporary Snapshot

lobalization and economic restructuring have led to the growth of the informal economy G all over the world. There are many factors contributing to the rapid growth of the informal economy. Increasing competition has led companies to seek and adopt employment flexibility in order to cut costs, and in turn, informal relations between employers and employees. Economic crisis and company restructuring have caused massive lay-offs; new employment is often found in the informal economy. Labour law, social protection and governmental institutions are outmoded and ineffective in coping either with flexible employment or production chains running across national boundaries or regions involving producers in a variety of employment relations.

In Thailand, attention needs to be paid to the informal economy because of its importance to the Thai economy and society. The majority of its workers are not protected. Although the informal economy makes up almost 50 per cent of employment, the rights of workers in the informal economy are unequal to those in the formal economy.

Definitions of the Informal Economy

The International Labour Organization (ILO) defines the informal economy as economic activities that have no protection or regulation under the law or having insufficient protection because these activities are conducted outside the legal framework. It can also refer to activities covered by laws that are scarcely or not enforced because of inappropriate regulation, the burden for those concerned, or the high cost of doing so.

The ILO divides persons in the informal economy into three groups.1 1. Employers of small enterprises having few workers; 2. Self-employed/own-account workers and unpaid employees; 3. Workers in small enterprises of informal activities or workers with no definite employer or employment contract such as home workers or producers under production contract.

In Thailand, the Social Security Bureau of the Ministry of Labour has concluded its preparatory activities on the extension of social protection to informal economy workers in 2006 and set the definition as follows: Informal economy workers are those outside the protection of the social security law. These workers can be divided into two groups.

1. Those who are employed and receive income such as home workers, trade contract workers or seasonal agricultural labourers. 196 Asian Labour Law Review 2008

2. Those who are self-employed with no hired labour such as drivers with their own or hired vehicles, farmers with their own cultivated or hired land, street vendors, petty traders or pharmacists, lawyers, doctors or dentists.

According to the National Economic and Social Development Board (NESDB), ‘informal economy’ refers to the production of goods or services that generate income and employment occurring outside of the management or supervision of governmental bodies. They are generally small production units run by the community or self-employed persons who may hire workers or use family labour. They may be legally registered or unregulated by law. According to the NESDB, the informal economy is composed of:

1. Non-formal production of goods and services. This refers to economic activities that, while not illegal, are neither regulated by law nor taxed. There are no definite wage payments and no employment systems; production is in small units, vulnerable to volatile markets and uncertainty. These activities include: • Those engaged in production including small farmers and agricultural labourers, home workers, small producers, small family businesses, row-house shops, community businesses, group businesses and self-employed groups. • Those engaged in trade and services consisting of vendors, repairers of personal belongings or household equipment. • Those engaged in transport, consisting of for-hire motorcyclists, van, taxi and boat drivers. • Those engaged in domestic work, consisting of production for family consumption, remunerated domestic labourers, child care givers, and care giving for elderly and sick persons at home. Although these kinds of work are important for maintaining the family, they are neither paid for nor counted in the national income figures.

2. Production of illegal goods and provision of illegal services. These refer to production, distribution and services in illegal activities such as illegal gambling, drug trafficking, smuggling (including illegal trading in weapons, oil and pornography), sex and human trafficking (such as slave trading, child trafficking and prostitution), trading in wildlife and rare protected plants, corruption in the public and private sectors, money laundering and international crimes.

Overview of the Informal Economy in Thailand 2

Studies conducted by the NESDB find that the informal economy contributes almost as much to GDP as the formal economy (not including illegal activities). In 2001, the informal economy generated value amounting to 2.33 billion baht (US$ equivalent: US$75,161 million; 1 US$ = approximately 31 Thai baht), or 45.6 per cent of GDP. Part of this contribution, about 33.3 per cent, is accounted for in the GDP while the remaining 12 per cent is unaccounted for.

There are an estimated 34.67 million employed persons in Thailand. Around 22.10 million persons—67.8 per cent of all employed persons—work in the informal economy and outside the protection of the social security law. Of these, 42.1 per cent work in the agricultural sector and 31.2 per cent are employed off-farm.

Ministry of Labour statistics show that there were 8.52 million workers employed in the country. The Social Security Fund (SSF) covers establishments with one or more workers. In January 2005, it had registered 7.84 million workers under its coverage. Thailand 197

A survey on the demand for social security for 2003 conducted by the National Statistical Office estimated that 24.9 million informal workers—about 70 per cent of all employed persons—were outside social protection.

The legalized informal economy refers to the unregulated sector with limited protection; it is distinct from the illegal economy. The majority are small establishments such as household enterprises. Small farmers rely mainly on family labour and constitute a major source of employment and income for many of the underprivileged groups in society, especially those with less education, low skills and no capital.

Though these informal activities are not considered very productive, their numbers have recently swelled and are now growing rapidly. For example, the number of commuter motorcyclists in the Bangkok Metropolitan Area has increased over sevenfold in the past 20 years, i.e. from 16,000 motorcycles and 1,570 stations in 1984 to 108,506 motorcycles and 4,440 stations in 2003. The number of street vendors has increased from 24,192 in 1986 to 25,653 in 1998. Entry into this business is quite easy as it does not require much capital. Between 1999 and 2001, the number of home workers has increased by about 80 per cent, from 226,473 to 406,473 households. The majority of home workers are engaged in manufacturing, especially of textiles and garments. Community enterprises such as those the government supports through the OTOP or One Tambon (sub-district) One Product policy generate employment and income for rural and urban communities.

Activities in the informal economy play an important role in the increase in production and employment for a large part of the population, around 50 per cent of all employed persons. They are part of supply chains, providing labour, raw materials and intermediate products in the economic system, the starting ground of new entrepreneurs, and the provider of cheap, consumer products. At the annual NESDB conference in 2004, there was a recommendation of participants from many sectors, for the government to regulate the informal economy and to emphasize social protection over economic aspects of the phenomenon. According to this recommendation, the government should:

1. Alleviate poverty and promote income distribution. This can be achieved through product and service development of the informal sector and promotion of secure employment and income. 2. Provide those working in the informal sector rights and social protection equal to workers in the formal sector. 3. Create transparency in society by suppressing the illegal economy and its negative impacts.

2. Thai Labour Laws and Decent Work in the Informal Economy

The 87th International Labour Conference in 1997 upheld decent work in both the formal and informal economy as a goal and means of development. The International Labour Office supports policies and technical assistance to governments, employers’ and workers’ organizations to promote decent work and reduce decent work deficits.

The ILO Director General’s report entitled Decent Work in the Informal Economy was presented at the annual International Labour Conference in 2002. It stated four fundamental areas of the ILO’s efforts to promote decent work: labour rights, productive employment, social protection and social dialogue. The report noted particularly that the working conditions relating 198 Asian Labour Law Review 2008 to these four areas would improve if workers are organized and able to collectively bargain for improvements.

Labour Rights Protection

ILO conventions provide protection to all who work, without discrimination based on birthplace, nationality, ethnic, sex, age, religion, race, working status, economic or social status.

Thai labour laws do not protect all kinds of employees. The Labour Protection Act (LPA) covers employees in the private sector but does not cover some groups of private employees. They can be placed in three categories

The first group is employees protected under other special laws. These include persons ‘working for central administration, provincial administration, and local administration’ and those working for ‘state enterprises under the law governing state enterprise labour relations’. Others protected under special laws include teachers in private schools, and particular groups exempted from the LPA, including employees of the Airport Authority of Thailand who are exempted from labour protection and relations acts by the 1989 Airport Authority of Thailand Act 3 and directors, officials and employees in public transit organizations set up under the Public Organization Act of 1999, who are not covered by the labour protection and relations acts, social security law and workmen compensation fund.4

The second group is employees who receive limited protection on certain issues. One such example is those working in other peoples’ homes for non-commercial purposes such as domestic workers, child care, cooking, cleaning, washing, gardening, night watch or other work related to residential areas. Domestic workers receive some protection such as the requirement that the employer pays wages at least once a month and provides working facilities. Sexual harassment by the employer is prohibited as well as other types of discrimination against women and children. They must arrange for at least six days off each year for those working over one year. Employees employed in non-profit organizations such as foundations also fall into this second group, as they receive certain protection such as equal wage payment for women and men doing the same work. The Workmen's Compensation Act (WCA) does not extend protection to workers in non-profit organizations. (See below for more on the WCA.)

The third group is employees who have protection different from the LPA. Employees can be the subject of government regulations concerning employment relations, thereby receiving protection that is potentially different from those determined by the LPA. For example, pregnant workers who are employees in managerial positions, doing professional or secretarial work as well as those in all forms of financial or accountancy work, are protected against compulsory overtime work. As for employees in direct sales, employers must pay to these employees commission derived from the sale of commodities. These employees have no right to overtime work except when employers agree to pay for it. Special regulations are also made for employees in fisheries, home-based workers, and seasonal labour.

The Right to Organize and Collectively Bargain

The 1976 Labour Relations Act (LRA) deals with setting up worker and employer associations, collective bargaining, and dispute settlement. After 30 years of implementation the legislation is outdated as compared to the labour protection and social security laws, which were the result of the reforms that the labour movement demanded of the Ministry of Labour. Thailand 199

The Act has a number of significant limitations. The LRA is not applicable to employees employed in government and state enterprises, as well as other activities exempted by Royal Decree. Strikes are prohibited in the important economic sectors of the railway, post office, telephone and communication, electrical power distribution or water works, medical centres, cooperatives, land, water and air transport. The LRA gives employees with Thai nationality and older than 20 years the right to form trade unions and become union committee or sub- committee members. Thai workers younger than 20 years old and foreign workers have the right to become members of trade unions but may not form unions or be members of union committees.

Right to Social Protection

Workmen's Compensation Act: The objectives of the Workmen's Compensation Act (WCA) are to pay compensation to employees who suffer from work-related injuries or diseases, or work-related death or disabilities. The Fund covers employees of contributing employers. Coverage is required of all private enterprises with one or more employees. The following groups are exempted from coverage: domestic workers; central, provincial and local governmental administrative bodies; state enterprises; employers in private school businesses; employers in not-for-profit ventures; employers who are ordinary citizens that employ workers in non-business ventures; and employers in the vendor business.

Social Security Act:

As for social security funds, its objectives are to provide benefits to insured persons in cases of injury, disease or death that are not work-related, and includes maternity, invalidity, child allowance, old age pension and unemployment insurance. For employees of registered employers, the social security fund is pooled from a three-part contribution, which is to say, equal parts by employers, employees and the government. Covered enterprises include those with one or more employees, with a number of important exceptions.5

The Social Security Act (SSA), which has an office under the Ministry of Labour, permits employees who were previously covered by the social security law (but have since been removed from work) to become voluntarily insured. Article 39 sets the following qualifications and conditions for this coverage:

1. Being previously insured according to Article 33 (i.e. employee in a covered establishment) and having paid contributions for not less than 12 months 2. Not receiving invalidity benefits from the Fund 3. Must apply personally within six months after terminating employee status 4. Paying contributions, calculated on the basis of the monthly wage rate for all persons 5. Fulfilling a duty under Article 39 to send a monthly contribution by the 15th of every month 6

Four reasons are found in Article 39 for terminating the status of an insured person. Contributions are not made in three successive months; leaving the job; death; and re- employment as an insured employee under Article 33.

In practice, contributions are based on a monthly minimum wage rate of 4,800 baht. Five benefits are set out in Article 39—sickness, invalidity, child birth, child allowance and retirement; 200 Asian Labour Law Review 2008 unemployment insurance is not included. An insured person under Article 39 must pay a contribution of 9 per cent of the monthly minimum wage (4,800 baht) or 432 baht a month. This is in contrast to employees benefiting from employers’ contribution and pay only 4-5 per cent of his or her wage to be entitled to six benefits (Article 33). At present, the number of persons insured under this article has increased from 19,436 persons in 1996 to 179,512 persons in June 2004.

Many labour organizations and the Unemployed Workers Network have sought to have the Ministry of Labour revise Article 39 so that unemployed workers are required to pay only one part of the normal tripartite contribution, arguing that the unemployed already face economic hardships and have low income that barely make ends meets. Most of the unemployed workers had been insured, and had paid contributions for a long time; some may not have used their rights for sickness or maternity benefits. Therefore, they should be able to receive the benefit from their past contributions, which may be lost during a period of unemployment. It has also been argued that it is the government’s duty to accommodate unemployed workers in the Social Security scheme in the name of equalizing social benefits.

The Social Security Board decided in August 2004 to oppose a revision of the SSA that would have reduced the contribution of the unemployed to one part. The reason given was that the benefits paid to insured persons according to Article 39 are higher than the contributions and that the use of the service is increasing every year.

The SSA allows self-employed persons to be voluntarily insured. This includes taxi drivers and street vendors among others. Article 40 of the Royal Decree (the SSA) states that self-employed persons may pay the entire contribution at a high rate, without support from government budget or an employer. They are entitled to only three benefits: invalidity, death and maternity. Health benefits were not included. The reason given for not covering health at that time (prior to 2001) was that health care was made available through health cards which anyone could buy at the price of 500 baht for a family of five persons. Since 2001, health care was made available to everyone through the universal health insurance scheme, better known as the 30 baht scheme. In 2004, there were only seven insurers covered under Article 40.

The Definition of Employer

The definition of ‘employer’ is the same in all the four labour laws discussed in this section. An employer is a person who agrees to accept an employee for work by paying him or her wages, including a person entrusted by the employer to act on his or her behalf and, where the employer is a juridical person, a person authorized to act on behalf of that juridical person and a person entrusted by an authorized person to act on its behalf.

Article 5(3) of the LPA, also defines employer to include labour contractors, that is, an entrepreneur who makes an arrangement against payment of a lump sum, with a person entrusted to supervise the performance of work and to be responsible for the payment of wages to an employee. The employees who have been procured by persons, not employment service agencies, to work even a part of or the whole of the production process or business under the responsibility of the entrepreneur, are also the employees of the employer.

Therefore, under the LPA, there are several types of employers, including those who recruit workers to work directly under them and/or those who recruit intermediaries as the employers’ representative. In conclusion, an employer can be a labour contractor, subcontractor or contractor. Thailand 201

Table 1: Definition of employer and employee in four Thai labour laws

Name of the law Definition of employees 1998 Labour Protection Act Accept to work for employer and receive wage payment in any kind 1975 Labour Relations Act Accept to work for employer and receive wage payment 1994 Workmen Compensation Act Employed to work for employer and receive wage payment in any kind but do not include domestic worker in house with no business operation 1990 Social Security Act Employed by employer and receive wage payment in any kind but do not include domestic worker in house with no business operation

Another type of employment relationship, the ‘hire of service’, falls under the Civil and Commercial Codes. It can be summarized as a contract where it is assumed that the two sides of it, an employer and an employee, have the following characteristics:

1. The employment contract can be a written or verbal agreement, excluding trade contracts between employers and home-based workers. 2. The employer has the authority to contract and oversee how his or her employee works. The employee can be punished or discharged from the job if he or she does not comply with, for example, the employer’s setting the number of working or leave days, hours of work, how work is to be performed, etc. 3. The employee will receive payment according to duration of work or by piece rate. The employer has to pay the agreed wage even though the work is unfinished. 4. The employer is required to provide tools to his employee and the employee must work in the employer’s establishment or a location provided by the employer. 5. An employer cannot send his or her employee to work for another employer without consent from the employee and the employee cannot ask another worker to work in his or her place without consent from the employer. 6. The employer is responsible for any damages caused to third persons by an employee working under the orders of the employer.

The main difference betweenhire of services and hire of work are: 1. Hire of work aims at the result of the performance of work while hire of services aims at the labour of the employee, not necessarily the work that is to be done. 2. Hire of work gives the contractor no power to interfere in the work process of the subcontractor. With hire of services employees work under the supervision of the employer.

On the basis of these principles, the authority of an employer to control the work of the employee is the most important element of an employment contract. If a worker works independently outside the control of the employer or contractor, can independently organize the work process, can choose working time, and must find raw materials or tools, he or she is not an employee under the existing labour protection law. Many of these workers are those found in the informal economy outside the scope of labour law. The problem is that at present many employers have changed employment contracts so as to avoid the responsibility of paying wages and welfare 202 Asian Labour Law Review 2008 contributions according to the labour law without giving up real authority to supervise the work of the worker concerned.

In general, informal economy workers are workers who are under neither hire of services contracts nor employees of employers within the definitions of persons protected under the four main labour laws, that is, the Labour Protection Act, Labour cAct, Social Security Act and Workmen Compensation Act. These four laws have the same definition of ‘employee’, meaning those workers who are employed by employers and receive a wage. The WCA and SSA do not include domestic workers in their coverage.

Progress and Limits of Protection to Informal Economy Workers

Based on the specific authorization in the LPA,7 the Ministry of Labour has drawn up Ministerial Regulations to provide protection to home workers8 and agricultural workers, effective 8 August 2004 and 13 April 2005 respectively. The protection given to these two groups of workers will need a different approach from that taken by the LPA.

The Case of Home Workers The home workers to which the 2004 Ministerial Regulation refer are: 1. Workers who receive work contracts from an employer to produce, assemble, repair or process; 2. Those who work at a location that is not the establishment of the employer; 3. Those who work to earn a wage; 4. Workers who use all or part of raw materials or production instruments of the employer; 5. Those who work, contracted to be performed at home, are a part or a whole of the production process or business in the responsibility of the employer.

Self-employed workers are thus excluded from this definition of home workers.

This Ministerial Regulation has divided home workers into two main groups. These are first, those who use raw materials or tools of the employer, who are thus considered employees under protection of the ministerial decree, and second, home workers who buy raw material or tools on their own, who will not receive protection from the Ministerial Regulation.

The Ministerial Regulation establishes certain protection for home workers. Employers who contract work to be performed at home must make a declaration to the labour inspectorate according to the requirements set by the Director General of the Social Welfare and Labour Protection Department. The employer must report by sending a letter seven days before delivering work and every time work is delivered thereafter. The report must contain the names and number of employees, the types of work performed, the date of delivering work, the method of payment, and the workplace of the employees, the raw materials or instruments provided.

An employer who contracts work to be performed at home must make a written employment contract that must be signed by both the employer and the employee, and a copy of the contract must be given to the employee. The work contract must contain at least eight specified items.9 Any other items will depend on the agreement between the employer and employee and can be mentioned in the contract. The employer has the responsibility to pay the employee the wage according to time and location specified in the work contract within 15 days after the completed work is delivered. The employer has the right to deduct money from an employee’s wage in the following cases: Thailand 203

1. To pay personal income tax of the employee; 2. To pay debt to a credit cooperative or welfare fund which benefits the employee, provided that the deduction is accepted by the employee; 3. To compensate for damages to machinery, equipment or raw materials of the employer caused by negligence of the employee, but with written agreement from the employee.

For 1. and 2., deduction cannot be over 10 per cent for each item, and for all items must not be above 20 per cent of wages unless with the agreement from the employee.

Employers are prohibited from giving hazardous work to the employee, including work related to explosives or fireworks, dangerous chemicals or poisonous materials, or cancerous substances, including 13 items under the supervision of the Minister of Labour and Social Welfare, such as benzene, chromium, etc.

Employers have the duty to oversee safety of the workplace by providing safety equipment and setting safety standards for home workers.10

The Regulation also upholds home workers’ rights according to the LPA. For example, 1. The employer must provide equal treatment of employment between men and women employees. 2. The employer must provide the same wage for the same work between men and women. 3. Sexual harassment of women and young workers by the employer, foreman, or supervisor is prohibited. 4. The employer has the duty to provide safety equipment as required by law. 5. The employment of children less than 15 years of age is prohibited. 6. The employee has the right to make a complaint with labour inspectors for disputes concerning wage payment or file a complaint in court.

Analysis of the Ministerial Regulation on Home Workers and ILO Convention No. 177 The ILO Home Workers Convention No. 177 and Recommendation No.184, 1996, establish a definition for home workers and the perimeters for their protection. Home work is defined in the Convention, and can be summarized as:

1. Work carried out by a person, where: • the workplace is in the worker’s home or a place chosen by the home worker, but not the workplace of employer; and • payment is received. No account is to be taken of who provides equipment, raw materials or other inputs for the work.

2. Home work does not include: • employees who occasionally take work home rather than working at the factory or establishment of the employer. • persons who have the degree of autonomy and economic independence necessary to be considered self-employed under national laws.

3. ‘Employer’ refers to an ordinary or legal person who contracts out work, directly or through an intermediary. 204 Asian Labour Law Review 2008

The scope of Thai law has at least two shortcomings as compared with Convention No. 177.

First, it defines the employer as one who provides raw materials and working equipment; the ILO Convention does not set this requirement, specifically conveying home worker status ‘irrespective of who provides the equipment, materials or other inputs used’.11

Second, Thai law does not define the employer to include an intermediary; Convention No. 177 defines the term employer as ‘a person, natural or legal, who, either directly or through an intermediary, whether or not intermediaries are provided for in national legislation, gives out home work in pursuance of his or her business activity’. 12

In order to protect the rights of home workers, Convention No. 177 proposes that a national policy on home work be formulated to promote equal treatment between home workers and other wage employment, especially with respect to: (a) the rights of home workers to establish or join organizations of their own choice and to participate in the activities of such organizations; (b) protection against discrimination in employment and occupation; (c) protection in the field of occupational safety and health (OSH); (d) remuneration; (e) statutory social security protection; (f) access to training; (g) minimum age for admission to employment or work; and (h) maternity protection.

An examination of the Ministerial Regulation and the SSA reveals that Thai law does not provide home workers with protection in the areas of remuneration, training, social security or maternity leave. Indeed, the bulk of the Ministerial Regulation’s content does not enhance the protection of home workers.

Discussions with home workers reveal a lack of understanding about the objective of the law, as some home workers see this law as a way to register home workers just so that taxes or social security contributions can be collected. This is perceived to be the overriding objective since in practice employees may not comply with the particular requirements under the written contract, because it is complicated and the employer may not be accustomed to the requirements. If the employer refuses to make written contracts, the employee or home worker may well not demand them, fearing that the employer will retaliate by reducing or ending work orders. Finally, most home workers cannot find their employer so that written contracts can be made, since most home workers get orders through an intermediary and not directly from the factory.

In December 2004, a training workshop for labour inspectors was organized by the Department of Labour Protection and Welfare to prepare for enforcement of the new Ministerial Regulations. The following example problems and obstacles in labour inspection among home workers were identified at the training workshop:

1. The labour inspectors lack knowledge about and an understanding of home workers, and guidelines for enforcement are unclear. For example, it is unclear whether or not intermediaries are employers of the employee, or whether labour inspectors have the power to go and inspect the workplace since the residence and workplace are identical. 2. Home workers’ workplaces are difficult to access. They are often very far away and widely dispersed; working hours are very irregular. These factors prevent labour inspectors from Thailand 205

carrying out their duties effectively. 3. Employers do not cooperate. They prohibit their employees from revealing information on employment, suspecting that the authorities will use this information to collect taxes and/or social security contributions, or for trade competition. 4. Employers may feel that these provisions increase administrative burdens by, for example, requiring the preparation reports to inspectors or written work contracts. Employers are also obliged to have permission before sending hazardous work out to home workers. 5. Not wanting to be bound by written contracts which may be used in court, employees do not cooperate in preparing them. They wish to avoid having to pay taxes on the basis of such contracts.

In 1997, the Ministry of Labour created a home workers’ section within the Labour Protection and Welfare Department. It was then responsible for promoting the organization of home workers and exploring appropriate ways to protect them. This section was dismantled after the reform of the government structure in October 2002 and the work placed instead under the Job Promotion Section within the Employment Department, which plays the role of promoting employment for home workers. The role of protecting home workers falls on regular labour inspectors under the Bureau of Labour Protection. To this day, there continues to be no link between labour protection and employment promotion.

In 2003, the Employment Department established a policy to promote home work and to set up a home workers’ fund. The latter was intended to provide home workers access to credit. Both regulations are in force today.

Finally, the Labour Protection Bureau of the Labour and Social Welfare Department is responsible for the enforcement of the law. Without close cooperation with the Employment Department of the Ministry, the work of the Bureau protecting rights in line with the Ministerial Regulation may have an impact on home workers’ employment security and organization; that is, employers and home workers might find it difficult to maintain the employment for fear that compliance with the Ministerial Regulation will increase the cost of labour (e.g. OSH equipment) as well as taxation. Therefore, the work on employment promotion e.g. orders, marketing, skills development and loans, will be necessary for both home workers and employers.

Box 1. Approach and procedures for the implementation of the measures to promote home workers The following procedures were some of the concluded outcomes of the training workshop on the procedures in implementing the Ministerial Regulations on home workers held in December 2004. 1. Set up a registration bureau for home workers, in the official employment bureaus in the provinces and Bangkok. 2. Nominate the employment bureau and the director of the Bangkok Employment Bureau to become the registrar of home workers in order to give advice and suggestions to home workers, promote and support home workers to organize and to promote skills development. 3. Register home workers’ organizations meeting the following qualifications. 1) The group must have not less than 10 members. 2) Members must not be under 15 years old. 3) The group has clearly stated occupationally-related objectives. 4) The group has named leadership. 206 Asian Labour Law Review 2008

4. Qualifications are needed for borrowing from the home workers’ fund. They should include: 1) being a home workers’ group registered with the employment department; 2) being a group with clear management; 3) being a group organized for not less than six months; 4) being a group owning assets or capital not less than 10,000 baht; and 5) having a contact address.

The Case of Agricultural Workers 13

The Ministerial Regulation for the Protection of Workers in the Agricultural Sector, 2004, covers agricultural work, including work related to cultivation, animal husbandry, forestry, salt farming and fishing, but not sea fishing. Employers covered by the Ministerial Regulation are those who neither hire workers year round, nor are engaged in agro-processing enterprises. (The LPA, on the other hand, covers agricultural enterprises that hire workers all year round or those which process agricultural products such as canning pineapples or processing fish in a factory.)

Workers covered by the Ministerial Regulation have the following protections:

1. The right to at least three days of holidays after working 180 days continuously. Authorized holidays are included in the 180 days. In case the work is discontinued, the counting of the working day will also stop unless there is proof of the employers’ intention to avoid application of the Regulation. 2. Double the usual wage must be paid if the employer demands his worker to work during a holiday or to have holidays of less than three days. 3. Employees have a right to be paid sick leave of not over 15 days. 4. The employment of children less than 15 years old is prohibited. Children between 13-15 years old can be employed during school vacation but not to do hazardous work which may have a bad impact on health or work that prevents the proper development of children. Parents must give permission for such work. 5. Employer must provide clean drinking water. 6. In the case of employees staying with the employer, the employer must provide a clean and safe place for them. 7. The employer needs to provide other welfare benefits to his employees as required by the Director-General of the Department of Labour Protection and Welfare. 8. Covered agricultural workers receive certain rights under the LPA, mostly the same protection as home workers but with additional benefits such as rights to maternity leave, the exemption of pregnant women from dangerous work, and a prohibition on the termination of pregnant women. Maternity leave is provided to workers without pay. 9. Wages must be paid at least every 15 days, and wage deductions are prohibited, unless the employee agrees. No advance wage payment may be given for work to be done. 10. There is no requirement for a written agreement or contract. 11. In the case of subcontracting or contract farming, the principle contractor is held responsible for all workers in case the subcontractor fails to pay wages to its employees.

The OSH regulations in LPA (Regulation No. 103) are also applicable to agricultural workers covered by the Ministerial Regulation. Workers under the Ministerial Regulation are also eligible for the Workers Welfare Fund (Regulation No. 134). Thailand 207

Analysis of the Regulation

The Ministerial Regulation for agricultural workers is quite different from that for home workers. It was not designed to resolve issues arising from the nature of agricultural work, as was the case with home workers. With its focus on extending protection to agricultural enterprises excluded by the LPA, the Regulation has plainly targeted small-scale agricultural employers, and is not aimed at resolving more complex relational issues associated with the employment in the informal economy.

Consistent with self-employment, there is no standard wage set for agricultural workers. Yet workers are dependent on the employers for their means of making an income. Despite there being no clear definition of ‘employer’ in the Regulation, the burden to comply with it simply falls on small farmers who need to employ labour at certain times.

The Ministry of Labour organized a workshop on the Ministerial Regulations on 30 June 2005. Participating agricultural workers identified several problems and demands much in line with a view of them being ordinary employees entitled to benefits given to agricultural workers engaged by larger enterprises.

They included: • having holidays for every 60 days of work since there is no crop that lasts for 180 days; • having social security benefits with the accident compensation fund from the employers. • changing the regulation so as not to allow the employer to lay off women because of pregnancy; • increasing publicity given to the Ministerial Regulations.

There are two things that workers in the informal economy most desire: • representatives of agricultural workers at the village level to look after their interests, in coordination with the village council and local authorities; and • a guaranteed market price for agricultural products.

3. Informal Labour Network and Demand for Extension of the Law

The movement of Informal Labour Network (ILN) with the Foundation for Labour and Employment Promotion, the non-governmental organization (also called Homenet Thailand) working on informal labour rights, and the Working Group on Law finally and successfully pushed to have the 2003 Ministerial Regulations on Home Workers and the 2004 Ministerial Regulation for the Protection of Workers in the Agricultural Sector as the two first laws for informal workers; yet the limitations of those laws are still high. There is still lack of clarity about the definition of ‘home worker’ and the regulations cover only workers who are working with employer’s raw materials and tools, and do not cover ‘contracting farmers’ in the case of agricultural workers. There are also important elements such as, for instance, unfair pay and access to the Social Security Fund (SSF), and the lack of effective implementation of ensuring compliance with the regulations.

ILN, Homenet Thailand, and their alliances see the needs and demands and continue to advocate for improvement of the Ministerial Regulations’ implementation and law amendments.

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1. Draft and advocate for the Labour Protection and Homeworker Promotion and Development Act Based on the decent work principle ratified by the ILO Home Workers Convention No. 177 and Recommendation No. 184, and the fundamental rights of labour to eliminate all limitations that exist, the movement has developed a draft containing the following essential elements:

- Redefinition of home worker to include the family members who are assisting a home worker, and improvement of the definitions of employer or hirer, because some persons in the production line do not aim to earn monetarily from the business; and on the purposes of work distribution and occupational assistance and promotion. Definitions must also cover different patterns and types and contract of home work as well. Furthermore the draft stipulates: - Wage payment administration based on the decent work principle. Its aim is that payment for the same decent work be re-classified and re-scaled to be the same or similar according to value and quantity. - The concept and principle of informal labour and home worker promotion and development within the labour protection law. The concept of promotion and development must include access to information, technology, skills, credit loans, capital funds and organization development; thus home workers would be strengthened through their occupations and result in better work and life quality and security. - Greater responsibility taken up by the employer’s side on health and on a safer working environment, and on any sickness, disability and death caused from work, as well as prohibition of hazardous material and chemical substance delivery and preparation of personal protective equipment, as already indicated in the 2003 Ministerial Regulations on Home Workers. - The establishment of two committees as national mechanisms, in order to work laws out at the policy level and supervise law enforcement, and a local committee to work on labour conflict and bargaining mechanism. The local committee should be composed of informal labour representatives, employers, attorneys, lawyers, academia, NGOs and related authorities.

Movement on the Act demanded While the Informal Labour Network,IHomenet Thailand and its alliances have been drafting their demands for amendment of the ministerial legislations, the Ministry of Labour has its own draft as well. The difference is in the concept and major principle. The Ministry of Labour’ s draft still has unclear definitions of employer or hirer and pattern of work. There is no fair pay protection and promotion and development of home workers, and no labour bargaining or conflict mechanism. Thus ILN, Homenet Thailand and the Working Group on Law organized a series of exchange forums with the Ministry of Labour between November 2006 and March 2007.

In the meantime, Thailand’s temporary Constitution of 2007 has stipulated that the submission of the new law to the National Council (NC) must go through three channels: - the Ministry which authorized the draft law submits it to the Cabinet for acceptance in principle and the NC works on it before announcing the effective date and enforcement of the law which the Ministry of Labour has processed. The Cabinet accepts the law since 24 April 2007. - At least 25 NC members propose the draft law to the NC for review and announce the effective date of the law. - The Commission of Labour and Social Welfare submits the draft to the Parliament, which Thailand 209

is the channel that Homenet Thailand utilized through the Commission Chair, on 25 April 2007, for considering and effectiveness of the law.

After 21 May 2007, the Meeting of the Commission appointed a sub- committee to work on the Draft and it was agreed that Informal Labour Network representatives and Ministry of Labour representatives would work together to integrate and modify the two drafts by 1 August 2007. However the Network representatives and Homenet Thailand had a meeting with the Decree Committee considering the drafts and agreed to support the draft of ILN and Homenet on the decent work principle and confirmed their support to the Cabinet.

In the meantime, the Decree Committee and NC and all the law-issuing procedures have been stopped and suspended by the election law according to Thailand’s temporary Constitution of 2007. ILN, Homenet and their alliances in the movement on informal labour law demand that the government must plan for further movement in the newly-elected Thai Parliament and possibly have the Ministry of Labour and the former Decree Committee in the process. They also demand citizens’ rights under the new Constitution to advocate for the desired laws through a given procedure (i.e. notwithstanding the temporary suspension of law-issuing procedures under the 2007 temporary Constitution).

2. Recommendations on Contract Farmers

Co-mechanism to develop protection pattern for contract farmers The 2004 Ministerial Regulations for the Protection of Workers in Agricultural Sector does not really extend to protecting contract farmers. Homenet Thailand has moved forward continuously proposing its demands and advocating the concepts in the amended law.

Following two meetings with the Labour Minister on 28 February and 18 March 2007, a working team was established composed of Ministry of Labour officials, contracting farmer representatives, academics, agricultural NGOs and Homenet Thailand representative to work on the amendments.

Proposal from Homenet Thailand and Alliances on Contract Farmers The Contract Farmers Group (CFG) in the Network with Homenet Thailand and the Law Working Group analysed the labour relations in the contract system and found relations that fall outside the definition of employment. The relations provide for no supervision and control and involve two types of contracts: 1) hire to produce for the purpose of completing pieces of work and 2) advance trading for the purpose of ownership transferring. These processes are based on conditions and time agreement with limited bargaining power on the agricultural workers’ side and no fair rules nor regulation from the state’s law enforcers. Companies offer workers unfair contracts, written to make sure they absolutely controlled and assured any damage would be paid in any way by the farmer contractee. These contracts force, violate and limit the farmer contractee’s rights and decision-making. Every single detail of the agreement is stipulated solely by the company and all risk, damage and unexpected burdens are the contracting farmers’ responsibility. Moreover, some regulations and measures may have been written down as amended agreements and added to the contracting farmers’ burden. The proposal of Homenet and alliances is a demand for a ‘fair contract’ under the state authorities’ legal protection, providing for a fair relationship between contract farmers and business companies. Some details are:

- All companies holding contract farm business or similar must be registered under the law that could be under Ministry of Labour, Ministry of Agriculture, Ministry of Commerce or 210 Asian Labour Law Review 2008

any states’ appointed mechanisms. - All contracts signed between two parties in these business must be registered by state authorities. - All contract agreements must include the price of the produce. - All contract farmers should be able to access necessary information, for instance, product price administration, risks and dangers of the production process and anticipated costs in the production process. - Unfair treatment and actions should have clear remedies, for instance, for termination in the middle of the contracting period, quotas cut without good reason or explanation, forcing a worker to produce only for one specific company, etc. - No black-listing or termination of the contract when a contract farmer demands rights protection. - Assign a mechanism for and have fair processes of conflict resolution, to be worked out by a board or committee composed of three parties:

These are the proposals to protect the rights of contract farmers, which need to be pushed to be effective in the law.

3. Demand for Extension of Social Security to Informal Labour

Extension of law proposed by Homenet Thailand Homenet Thailand continues to demand that the law extension be fixed to include these following concepts:

1. Based on the fundamental principle of equal shares in all negative and positive parts of the same business, all informal labour from every occupational group should be included in the Social Security Scheme and their contribution to the Social Security Fund thus established should be rated based on income and they should be able to receive social protection and welfare in their worst times. 2. The state and employer must be responsible for contributing partially to the Social Security Fund, in addition to the worker. 3. Based on equal treatment and non-discrimination among labour, formal and informal, workers of all occupational categories working in the informal economy should be covered by the amendment of the Social Security Act. The social security system must cover all seven types of informal labour contingencies; sickness, disability (the two including work-related injuries and diseases), death, child birth, child care pension and unemployment. All these must be included in the compensation fund. The contribution rate of the worker must not be over five per cent of income. 4. Home workers, contract farmers and other informal labour groups who are challenged by the risks from having no social security, must be the first few groups that should be provided access to the social security system. 5. The Bureau of Social Security must design the administration of the Social Security Fund to be established, emphasizing participation of the informal workers as the true owners of the fund. 6. Bureau of Social Security, Ministry of Treasurer and concerned authorities must support community welfare as another social security system for informal labour and citizens.

Present situation of the extended law Following the persistent activities of Homenet Thailand and its alliances, the Bureau of Social Security Scheme has prepared for the law extension since 2004 and set up two sub-committees Thailand 211 to work on the law extension; 1. A sub-committee for feasibility study on the extension of the social security law, and 2. A sub-committee for drafting the law extension, respectively. Both sub-committees have Homenet Thailand’s representatives’ participation. The sub-committee draft mainly concerns privileges, the rate of contribution to the SSS and opening of the draft to participation from all parts of the informal workers. The draft has been revised several times. Several issues in the draft include: 1. Voluntary entry to the SSS, which tends to create the risk that the only poorer economic status informal workers would see the importance of entering. 2. Only informal workers would send their contribution to the SSS but the state and employer would send none, and 3. In fact informal workers have the same risks as formal workers. But the Bureau of Social Security Scheme has prepared to implement provision of pensions in the form of financial management or savings.

The political changes in September 2006 opened a new opportunity for the second sub- committee to develop the latest draft as detailed: 1. Agree to recruit all informal workers into the formal SSS system on the principle of equal treatment and non-discrimination. 2. The contribution rate to SSS based on income, at the rate of about 4.5-5 per cent of the income and based on studies of estimated incomes of informal workers. 3. Contribution from the government. 4. The concept of compensation of earning deficit during sickness and maternity leave, which is a progressive concept at this stage.

There is worry about government budget allocation on the contribution, sustainability of the fund and the funding of administration and management. These lead to 1. Reluctance to protect in case of unemployment, and 2. The start of a pilot scheme on informal workers who are in better economic situations; a body of about six clearly defined groups, such as taxi driver cooperatives and the tour guide groups, for example.

Right now, with a relatively new government in office, the draft sub-committee cannot perform its duties. ILN is thus using this opportunity to revise its proposals and make them more concrete so that real implementation can be enabled after the new government has settled down.

4. Conclusion

It could be said that none of the major labour laws of Thailand – Labour Protection Act 1998, Labour Relation Act 1975, Workmen Compensation Act 1994, or Social Security Act 1990 – cover workers in the informal economy. They get stuck within the old-fashioned labour relation concepts, such as control and supervision and administration by employers, ownership of production inputs, i.e. tools, equipments and raw material, and the assumption that the purpose of the production is for wage payment. At present, the relationship has been shifted to other complicated forms to avoid responsibility and take advantage of the weaknesses and gaps in labour laws, which are outdated and exclude more than half of Thailand’s labour from protection.

With their own awareness and demands to mutual help, these informal workers have set up their own groups and networks. They demand nothing more than the fundamental rights of labour. They have strong support from academia, labour law and legal aid organizations and individuals, NGOs and the ILO. The movement of labour protection alliances has brought about 212 Asian Labour Law Review 2008 great changes in the concept of labour protection in Thailand and in the progress towards pushing a new draft law.

However, the capacity of the state’s own mechanisms is still limited. A new vision, concept and practice is required on the part of concerned authorities, i.e. the Ministry of Labour, Bureau of Social Security and Parliament. The question remains as to how a new amended law can be efficiently and effectively implemented. The ILN and its alliance must work harder in putting the new law into effect once it is passed.

References

Tajgman, D., Ed., (2006), Extending Labour Law to All Workers: Promoting Decent Work. 2 in the Informal Economy in Cambodia, Thailand and Mongolia, Bangkok: International Labour Office. Bundit Thanachaisethavut, ed. (2002). Enforcement of the Labour Protection Law. Bangkok: Arom Pongpangan Foundation - Labour Resource Centre (APFLRC) and American Centre for International Labor Solidarity (ACILS). ______(2003). ‘Comparative Studies on Workman’s Compensation Fund and Social Security Fund.’ Studies on Social Security Related Royal Decrees and Ministerial Regulations. Bangkok: APFLRC/ACILS. ______(2003). ‘Proposed Draft Labour Relation Law by Workers’ Organisations in Thailand, APFLRC, Workers’ Solidarity Committee and Federation of Electrical Appliance and Electronic in Thailand.’ ______(2003). ‘Problem of Enforcement of Labour Laws under Globalisation.’ Paper prepared for the Labour Group’s Meeting during the 4th National Law Conference on Legal Measures Concerning FTA Negotiation. Held at the U.N. Convention Center, Bangkok, 15-16 September 2003. ______(2005). Thai Labour Movement in 2004. Bangkok: APFLRC-Friedrich Ebert Stiftung (FES). Chalit Meesith (2003). ‘Subcontracting and Impact on Law and Policy on Women Workers.’ Paper presented during the Seminar on Textile and Garment Industry under the Quota System. 21 December 2003, Bangkok. Chalit Meesith and Sitthisak Samsri (2000). Preliminary Report on Labour Law and Home worker, HomeNet, supported by ILO. International Labour Organization (2003). Decent Work and Informal Economy. Bangkok, International Labour Office. National Economic and Social Development Board (2003). Annual Report for 2003, Mid-Term, Ninth Economic and Social Development Plan, 2002-2006. Bangkok: NESDB. Social Security Office (2005). Preparatory Documents for the Extension of Social Security to the Informal Sector. Institute for Health Research ‘OTOP and Health of the Thai People’ article inHealth Knowledge (January 2005). Thailand 213

ENDNOTES

1. International Labour Organization, Decent work. Report of the Director-General to the 87th Session of the International Labour Conference. International Labour Office (Geneva, 1991). 2. Tajgman, D. Ed., (2006) Extending Labour Law to All Workers: Promoting Decent Work in the Informal Economy in Cambodia, Thailand and Mongolia, International Labour Office, Bangkok. 3. Article 6. 4. Article 38. 5. Domestic workers; government officials and regular employees of the central administration, provincial administration and local administration except for temporary employees; employees of foreign governments or international organizations; employees whose employers’ office is in the country but being stationed abroad; teachers or headmasters of private schools under the Private School Law; students, nurse students, undergraduates, or apprentice doctors who are employees of schools, universities or hospitals; employees of Red Cross Society; employees of State Enterprises; employees of agriculture, forestry, fishing enterprises who are not employed all year and who are not engaged in other work; employees employed for temporary or seasonal work; employees of Chulaporn Research Institute; employers who are ordinary citizens, who employ workers in non- business ventures; vendor businesses. 6. Contributions falling delinquent are subject to a charge of 2 per cent per month. 7. Article 22 which states ‘agricultural work, sea fishing, transport work or sea transportation, home-based work and other works stated in the royal decree will in the ministerial regulations provide the protection to workers in various cases different from this Act’. 8. The Ministry of Labour used the word ‘home workers’ because this ministerial regulation focuses on subcontracted workers and excludes self-employed workers 9. 1. Date, month, year and location where contract is done 2. Name and surname, age, address of employer and employee 3. Workplace of employer and employee 4. Types of work 5. Date, month, year and location where work is contracted 6. Wage 7. Date, month, year and location where work completed is delivered 8. Date, month, year and location where wage is paid. 10. Such as safety equipment with the same standard as formal workers and providing employees with a safety manual which provides guidelines for the use of material or equipment to prevent accidents. 11. Article 1(a)(iii). 12. Article 1(c). Emphasis added. 13. Some of the information presented in this section is derived from the Workshop on Labour Protection for Workers in Informal Economy, Home Workers and Agricultural Workers, June 2005, in Khon Kaen province. 214 Asian Labour Law Review 2008 Viet Nam 215

Viet Nam

Van Thu Ha

1. A Contemporary Snapshot

ince the launch of the Renovation (‘doi moi’) Policy in 1986, Viet Nam has quickly entered S the whirlwind of globalization with its export-oriented economy and the fast development of its private sector. Viet Nam has become a WTO member in 2006 and has been ranked sixth among the most attractive economies in the world in terms of foreign direct investment (FDI). It will be a rising star in Southeast Asia in terms of attracting FDI in the coming years.1 From 2003 to 2006, there was an addition of 260,800 workers in FDI enterprises, i.e. a 37 per cent increase, and many domestic private enterprises became sub-suppliers for transnational corporations (TNCs).

Viet Nam is a young nation having a labour force of more than 43 million people (2006), which is 51.5 per cent of the total population. One million new labourers joined the labour force every year from 2003 to 2006. The unemployment rate declined from 5.78 per cent (2003) to 4.82 per cent (2006) in the urban areas. The number of unemployed women was higher than that of unemployed men.2 The economy developed very fast, with a yearly average GDP growth rate of 7.9 per cent (2003 – 2006) and a declining general poverty rate (28.9 per cent in 2002, 19.5 per cent in 2004).3

The informal sector mobilizes a major part of the labour force: about 33 million people (77 per cent), including the farmers. The informal economy contributes more than one third of GDP (37 per cent on average in 2003-2006). These figures are only an approximate reflection of the reality, due to unreliable statistics. According to the World Bank, it was more than 50 per cent in 2003.4

Who are regarded as the workers in the informal economy? All economic activities that, in law or in practice, are not at all or insufficiently covered by formal arrangements,5 – the informal sector comprises much more than 33 million people. It includes seasonal, casual, domestic and home workers, workers in unregistered enterprises (family/micro enterprises, craft villages), self- employed workers such as street vendors, small traders and producers, as well as farmers and a part of the workers active in the formal sector, but who, for some reason or another, are out of any formal arrangements, especially workers in labour-intensive enterprises, and migrant workers.

In 2005 and 2006, the strong equitization (a kind of privatization) process6 in the state economy transferred a great number of redundant workers to the private sector. Many if not a majority of them (100,400 redundant workers, according to the statistics7 ) joined the informal sector due to age limits set for entry into the formal sector. According to one research, two thirds of redundant workers, after state-owned enterprise (SOE) equitization, said their life became worse,8 their situation changing from stable to unstable jobs.

While the cultivated land for households in rural areas is already very small in size (about 350-500 square meter per head), because of the ongoing urbanization and industrialization 216 Asian Labour Law Review 2008 process, the government is narrowing down even more the land allocation for agricultural production, forcing rural people to move out in order to look for new kinds of jobs. From 2000 to 2006, about 2.5 million farmers lost their jobs. In some areas of the Red River Delta region, 17 per cent of farmers became workers after losing agricultural land, compared to 10 per cent before that process.9 On one hand, the women farmers join the groups of seasonal workers, domestic/home workers or vendors, scrap-iron dealers; on the other hand, men farmers join groups of casual and mobile construction workers at certain periods of the year, while continuing to do farm work. Young people from the rural areas seek jobs away from home, out of agriculture. Quite a portion of them have the opportunity to work abroad through the State labour export programme or private labour enterprises.10 After a few years working abroad, they seek other labour export opportunities or start small businesses with their savings. But the majority of them become workers in family/micro/small enterprises, shops, restaurants, or migrant workers in export-processing zones (EPZs) and industrial zones (IZs), which are mushrooming all over the country.11

In labour-intensive enterprises, especially in IZs and EPZs,12 young female migrants from rural areas arrive to work, hoping that with an independent and stable job, they can save money and send some of it back home to support their families. But because of the common practice with the employers to follow orders at short notice and minimize production costs, they make a precarious living and suffer from bad working conditions, therefore they spend limited spans of time at their workplace. In short, they are classified as formal workers, but in practice, they are informal workers. They can be considered informal workers as they have short-term contracts or even no contracts at all, and accordingly also have no social or health insurance and are faced with poor working conditions and low salaries that force them to return home or find other jobs after a few years of work. Many girls and women end up seeking jobs abroad or agreeing to marry foreigners (e.g. Taiwanese and Koreans), and then get exposed to slavery work or precarious living conditions overseas.

Generally speaking, informal workers in Viet Nam are facing the following concerns:

- Bad working conditions. Farmers, especially women, are chronically or in long-term contact with pesticides due to the misuse of the recommended restrictions and their unawareness of the existence of regulations to protect them. Women workers in labour-intensive enterprises also suffer from exhaustion and stress affecting their health in the long term.13 Workers in small and medium enterprises, handicraft and traditional job villages, are affected by the highest ratio of lung and nose diseases (40 per cent) due to a polluted working environment, as well as by muscle and bone diseases (13 per cent) due to wrong working posture.14 Eighty- four per cent of small and medium construction workers are farmers (working during non- busy agricultural periods of the year). More than 90 per cent of them have no instructions on occupational safety and health (OSH). In 2002-2006, 18 per cent of accidents happened in the sector of construction (34 per cent in civil, industrial and transportation constructions), with 23 per cent of total death rate.15

- Unstable income and precarious living. Eighty per cent of the population is earning less than 515,000 VND (Vietnamese dong) —approximately US$33 per month.16 The average monthly income of women is equal to 85 per cent of the income of men (66 per cent in agriculture and 78 per cent in industry). Many of them, especially migrant workers, have difficulties in getting access to basic social services.

- Lack of appropriate legal mechanisms for social security. Informal workers only have access Viet Nam 217

to voluntary medical insurance. For OSH protection, they can legally have access to compensation mechanisms in case of accident, but in practice, the mechanisms are rarely used.

- Lack of organization for the informal workers to help them claim their rights. There are several socio-political organizations and local NGOs paying some attention to informal workers. The Women’s Union organizes women, the Youth Union organizes young people and the Farmers’ Union organizes farmers in general. These unions are considered semi-governmental bodies, similar to Vietnam General Confederation of Labour (VGCL), because they are paid for by the government. But at the same time, they collect membership fees from their members. So, they all have dual responsibilities: one towards the Communisty Party (which leads both the government and these mass organizations), and one towards their members. Very similar to in China, the unions have high membership rates, but their programmes focus more on disseminating the Party’s and the Government’s directives and policies on social issues, such as family planning and HIV/AIDS, as well as on job creation for the members, rather than focusing on labour rights and creating conditions for decent jobs. In principle, the Labour Union allows informal workers to join the organization through professional unions, but in practice this is not successful. The dual responsibilities of the above organizations (towards the Party and the Government and towards their members) makes it difficult for them to be the real voice of their members.

2. Summary of the Labour Laws in Relation to Informal Work

The Labour Code of Viet Nam, approved by the National Assembly’s ninth term on 23 June 1994, came into effect on 1 January 1995. The Code institutionalized the Vietnamese Communist Party’s ‘renovation’ direction after 1986 regarding the labour relations and management. It covers issues such as employment, apprenticeship, labour contracts, collective bargaining agreements (CBAs), wages, working time, rest time, labour discipline OSH, specific provisions on women labour, children/adolescents and other types of labour, social insurance, labour unions, settlement of labour disputes, state management of labour and inspections, and handling violations of labour legislation. The Code regulates labour relations between workers and employers and directly related social relations, and applies to all workers, organizations and individuals using contracted labour in all economic sectors and all forms of ownership, as well as to apprentices, domestic workers, and a number of other jobs, with the exception of workers doing outwork (i.e. work done at home which is done at the order of factories) (Articles 1-2 and 137). The Code is considered one of the most comprehensive and progressive labour laws in the region, creating a more suitable legal framework for labour relations during the transitional stage from a centralized economy to a market economy. This is reflected in the ILO membership status of Viet Nam. From 1980 to 1985 and from 1992 up to date, Viet Nam ratified 18 conventions among 188 ILO’s conventions, including five out of the eight fundamental conventions (see Appendix 1).

The current Labour Code (amended in 2007) still keeps the same structure of 17 chapters, as in the original one. However, its contents were revised, adjusted three times (in 2002, 2006 and 2007).18 Several contents have been specified in separate laws such as the Law on Vocational Training (2006), the Law on Vietnamese Employed on Contract Abroad (2006), and the Law on Social Insurance (2006).

The Labour Code version of 2002 included revision of almost all the chapters of the 1994 one, with minor changes and additions, in order to better match the new situation of the country’s 218 Asian Labour Law Review 2008 economy, with its rapidly growing private sector. The 2006 Labour Code comprehensively amended Chapter 14 on labour dispute resolution, reflecting the fact that, with the yearly increase of FDI and flourishing domestic private enterprises, the violations of the labour laws have caused an increasing number of strikes, especially in 2005 and 2006, while the law regulating labour disputes has proven helpless.

The review of the Labour Code directly related to informal work is mainly based on two amendments, including relevant decrees, circulars and specific laws. It focuses on two main aspects: arrangements for social security and mechanisms for enforcement. The first aspect includes how to ensure good working conditions, a decent income and effective social protection. The Labour Code tries to ensure this with detailed regulations on OSH, working time, minimum wage and social insurance. The second aspect refers to institutions dealing with Labour Code violations and labour disputes, the legal framework for collective action and labour union work.

How the Labour Code Arranges For Social Security of Workers

Working Conditions Seen From the Angles of Work Time and Occupational Safety and Health Conditions

1. Work Time

Work time should not exceed eight hours per day or 48 hours per week (40-44 hours per week for administrative and non-productive agencies and state-owned enterprises).19 Workers and employers can agree on extra work time, but this should not exceed four hours per day and 200 hours per year. The 2002 Labour Code added some exceptional cases granting extra work time of up to 300 hours per year (Article 69) to enterprises producing and assembling export products in the garment and textile, footwear and leather, and seafood processing sectors. However, this is far from what was actually happening. Long working hours were quite common, especially in the garment and footwear sectors. Workers had to work extra 400-600 working hours per year. A research study conducted in 2003 in six footwear factories revealed that all the factories still relied on long working hours, especially in the footwear sector where workers claimed to work 11 hours a day on average, six days per week.20 The employers claim this was due to short notice of orders and inflexible deadlines. Extra working hours are supposed to be agreed on a voluntary basis, but in fact are often forced, as the employer had informed the workers at too short notice. Forced to accept, the workers often worked in such tense conditions that the only way to defend themselves was through a work stoppage. There were clear cases where workers participated in a strike because of exhaustion as they just wanted to get some days off.21 Workers were also not allowed to take annual leave, or even sick leave, due to a complex procedure for approval. In practice, sick workers dared not stop working or they would decide to take a day off without specifying the reason and receive a salary that was reduced by 60,000-100,000 VND at the end of the month.22

But this is only one side of the picture. In labour-intensive enterprises, workers have to work perfunctorily and discontinuously for several months, for an income of less than US$20 and they have to accept extra shifts in other months of the year. This leads to a practice of ‘borrowing money in the summer and paying back in the winter’, as one female worker said.23 Such a practice increases the vulnerability of the workers and pushes them towards the informal sector.

2. Occupational Safety and Health (OSH)

Regarding OSH, the Labour Code clearly stipulates the responsibilities in OSH of all the Viet Nam 219 parties concerned, including the Government, the employer, the workers and the labour union. The Government integrates an OSH programme into its socio-economic development plans and its state budget. It also invests in scientific research, supports the production of OSH equipment and issues OSH standards, procedures and mechanisms.24 The employer must fully provide employees with individual labour protection tools and knowledge, and ensure and improve OSH at the shop floor, coupled with several specific conditions for women workers. In 2006, the Labour Code was improved thanks to new laws on social insurance and on gender, which give detailed regulations for the protection of female workers (in the cases of pregnancy, maternity, feeding a baby under 12 months, etc.) and for people working in hazardous and noxious conditions. Workers have the right to refuse a job or to leave the workplace if they become aware of the threat of an occupational accident. When suffering from occupational accidents or diseases attested by a doctor’s certificate, the worker has the right to be assigned an appropriate job and to benefit from social insurance, or an allowance equal to it paid by the employer if the enterprise is not yet part of a social insurance system. The employer is responsible for covering all the medical costs of first aid and any treatment due to occupational accidents and diseases. The employer has to pay at least 30 monthly salaries to workers whose working capacity has been reduced by at least 81 per cent. The 2002 Code added the responsibility of the employer and his legal obligation to compensate for occupational accidents and diseases that reduced the worker’s working capacity from five per cent up to 80 per cent.25 In the 2002 Code the social insurance had already covered 21 occupational diseases and the 2006 Code added four new ones. This, in theory, has broadened the target group for OSH compensation to informal workers. However, not many of them benefit from the law (as will be explained further below).

According to a recent OSH survey done by MOLISA (Ministry of Labour, Invalids & Social Affairs), the working conditions and environment at national level are worrying, with 30 per cent of enterprises offering bad to very bad working conditions, 50 per cent of enterprises offering average working conditions and only 20 per cent of them working conditions meeting legal standards.26 Another survey by NILP (National Institute for Labour Protection) conducted in 2,036 small and medium enterprises (SMEs), home industries and traditional craft villages reveals that almost all those enterprises do not pay any attention to acquiring individual OSH equipment for workers. 27

Occupational accidents are increasing at an alarming rate. In 2003-2006, 2,119 people were killed at the work floor and 18,451 injured in 20,052 accidents. Compared to 2002, the number of deaths increased by 4.5 per cent in 2003, 17 per cent in 2004, one per cent in 2005 and nine per cent in 2006.28 This severely underestimates the real number of victims, as even the Vice Minister of MOLISA Le Bach Hong has stressed, only 3,400 out of 160,000 enterprises (2.13 per cent) provided OSH reports.29 The common practice of the employers is to cover up serious accidents in order to avoid punishment and reduce the compensation to be given to the affected people. The highest risk sectors are construction, electricity and natural resources, and the most vulnerable workers in these sectors are the mobile workers.

5,018 out of 53,863 workers who had a health check were reported to have contracted job- related diseases in 2006 (up 381 per cent compared to 2005).30 This sudden rise can be explained partly because of the four new officially recognized occupational diseases approved in 2006.

The most common OSH violations mentioned by MOLISA in its 2006 labour inspection report include: absence of OSH training, of declaring, surveying or listing occupational accidents, no organization of regular health checks for workers, or medical examinations to discover occupational diseases, etc.31 As for female workers, the most common violations included the 220 Asian Labour Law Review 2008 dismissal of pregnant workers and workers feeding their children less than 12 months old.32 In 2003, they also faced limited access to the toilet with ‘toilet cards’, and no payment for workers during breastfeeding time (though by law 30 minutes breastfeeding time during work is paid).33

3. Social Protection

By law, the workers receive social insurance in the case of sickness, occupational accident and disease, maternity, retirement and death. This is regulated in more details in the Law on Social Insurance (Articles 21-68).34 The compulsory social insurance mechanism before 1 January 2003 applied to people working in enterprises employing ten workers or more. In enterprises of less than ten workers, this insurance was added to the salary. This article was amended so that for workers with less than a three-month contract, the social insurance money is added to the salary, but if afterwards the workers go on working or sign a new fixed-term contract, the compulsory social insurance must be applied as above (Article 141). In the case of people working abroad, the rules in the matter of social insurance still prevail if they benefit from paid social insurance before leaving (Law on Social Insurance, Article 2). This change helped to include many workers from the informal sector into the social insurance target group, because there are many small-scale enterprises that have less than ten workers. The Law also included people working abroad.

Compulsory insurance for unemployment is a new regulation that was added to the 2002 Labour Code and will come into effect on 1 January 2009. By this, the State specifically regulates the re-training of jobless workers (Article 140) and the social insurance becomes compulsory. Under this new insurance regulation, the State has to contribute to the unemployment insurance fund. Labourers will thus have a right to receive unemployment benefit, which provides support for their vocational training and finding a new job. But only workers having 12 to 36-month contracts or open-ended contracts and working in enterprises employing at least 10 workers can have access to this insurance (Law on Social Insurance Law, Article 2).

According to the Assembly’s committee in charge of social affairs, currently, more than 40 per cent of the labourers having a right to compulsory social insurance do not really benefit from it. Even among the workers benefiting from it, a number of them cannot get the full payment from the employer. Many enterprises use the money intended for social insurance payments and the workers’ contributions to social insurance for other purposes.35 This means that more than 40 per cent of the formal workers become informal workers in a sense because they can not have access to social security. There are many ways to avoid paying social insurance, such as declaring a false number of workers, reducing the salary fund (real payments are higher than the salaries shown in the wage scale and wage table, which is the basis for calculating social insurance payment), not signing a labour contract, extending the probation period, signing fixed-term contracts for long-term jobs, accepting to pay a fine rather than social insurance. Being indebted to the social insurance scheme is a common practice in enterprises. The Social Insurance Office of Ho Chi Minh City just handed over to the local Department of Labour, Invalids and Social Affairs (DOLISA) a list of 39 FDI enterprises owing 37.5 billion VND for nearly 10,000 workers. Many of these enterprises appropriated the six per cent of the workers’ salaries which were supposed to be the workers’ contribution to social insurance.36 That six per cent of the workers’ salaries together with an amount equal to 17 per cent of workers’ salaries paid by the employer were supposed to be submitted to the social insurance office, but the enterprise used it as part of capital for their business, and so when workers would get sick or suffer accidents, they could not get compensation from their social insurance. This is a serious problem because the plunder by the enterprises of the workers’ social welfare system could be punished and deterred if there were more inspections and if the fines for violating the law were not so low. (Employers can earn Viet Nam 221 interest from depositing the workers’ insurance money (17% of workers’ salaries) in a bank, and use that interest to pay for the low fines in case inspectors discover their violation of the law.)

The main issue of female workers is the maternity policy. On top of the fact that employers avoid signing labour contracts and paying social insurance, very few female workers benefit from the maternity policy. In theory, they are supposed to have access to maternity benefits within the social insurance scheme or through payment by employer. However, in practice, employers evade their obligations in many ways, such as offering fixed-term contracts, dismissing pregnant workers, or forcing female workers not to have any children during the first three years of work.37

The Workers’ Income Seen From the Angle of the Minimum Wage Policy

The State has introduced a minimum wage system based on the cost of living.38 The minimum wage is used to calculate the salary of any type of labour and subjected to adjustment when a rise of the cost-of-living index (consumer price index - CPI) causes a drop in the real value of the workers’ wage. The Labour Code of 2002 allows private enterprises to work out their own wage scales and tables, and their own production norms based on certain principles given by the State, instead of following wage scales and production norms directly dictated by the State. Decree 3/2006/ND-CP regulates that the lowest salaries to be paid to workers who received vocational training (including workers trained by the enterprise) should be at least equal to 107 per cent of the minimum wage.

There are two minimum wage systems, one applied to SOEs and domestic private enterprises and the other to FDI enterprises. The latter has been changed four times (see Appendix 3). In Vietnamese dong (VND) the minimum wage in FDI enterprises is supposed to be adjusted each time the cost-of-living index rises by ten per cent—in order to attract FDI—but it has not changed since 1999. So, in 2003, this minimum wage was not changed39 although the CPI from 1999 to 2002 was 4.76 per cent.40 It was not adjusted in 2005 either, though the CPI by then had risen to 17.26 per cent (since 1999),41 and though the minimum wage in SOEs and the domestic sector had already been adjusted twice. According to VGCL and MOLISA, while from 1999 to January 2006, the market wage had increased by 40 per cent, the CPI by 28 per cent, and the VND/US$ exchange rate by 14 per cent, the minimum wage in the FDI sector was still the same.42 On 6 January 2006, the minimum wage was finally adapted, rising to US$45.5 (in FDI enterprises), but this rise is nothing compared to the growth of the profit made by of the enterprises. The revised minimum wage is still too low and not fair, given the fact that the average profit of the enterprises during the last few years increased by 41.2 per cent a year and the work productivity by 18.3 per cent, while the workers’ salaries only increased by 12.6 per cent.43

From 1999 to January 2006 the state kept the the minimum wage level at US$45-40-35 in FDI enterprises and allowed the enterprises to use VND for paying salaries. The state fixed the minimum wage level due to the consideration of the rise of CPI and inflation. The Law demands adjustment of the minimum wage in accordance with the rise of the cost-of-living index by 10 per cent up, but it does not clearly say that whether the State or the enterprises is obliged to adjust it. On one hand, neither the State nor the enterprises respects the law. On the other hand, the State did not revise the unrealistic ten per cent rule nor establish a systematic yearly adjustment system based on the changes in CPI. So, compared to the 1999 salary level, the real income of the workers obviously declined every year. Moreover, the workers’ income was greatly lowered due to the exploitation methods commonly applied to intensive labour. The common methods included increased production standards and extended working hours, lower payment per unit in order to force the workers ‘voluntarily’ work overtime if they wanted to get higher income, as well 222 Asian Labour Law Review 2008 as lack of clear policy regarding payment of overtime work. This all explains why, in spite of long working hours and more intense working speed, the average income of the workers in the FDI sector is still low, not higher anyway than the income of workers in other sectors (earlier on, they had been quite different).44

Most workers in the industrial zones earn an average monthly income of 600,000-700,000 VND in Vietnamese private enterprises and 800,000-1,000,000 VND in FDI enterprises (including the bonuses). With that income, only residential workers can meet their basic needs, but for migrant workers, it is even more difficult because they have to cover other expenses such as the house rent.45 With such low salaries, the workers have to live in very bad conditions in order to minimize their costs. They are generally accommodated in an average living space of 2 to 2.5 square meters, five or six workers often sharing a room of 12 square meters, having no light or ventilation.46 This badly affects the workers’ health in the long term.

However, apart from the minimum wage, another problem is that the government uses a very complicated salary scaling system. The minimum wage is only a base for calculating salary levels that differ according to different types of labour and working skills, as well as for calculating wage tables and scales that take into account the workers’ experience and seniority (minimum wage multiplied by coefficients of position, skill level, working shift food, yearly increase, etc.). Only ten per cent of the enterprises (mainly SOEs) apply this system to develop their salary scaling table for workers.47 The complexity of calculation and consequent neglect of the system leads to the development of not two but three salary systems: in SOEs, domestic private enterprises and FDI enterprises. Under the very general guidelines of the State,48 each enterprise develops its own salary tables and scales, but there is a common point between all of them, which is the very small difference between salary levels (only US$0.6 to 1.2).49 Some FDI enterprises in Bac Giang province show a difference of only 5,000 VND (US$0.3).50 In Hai Phong City, only two per cent out of 6,000 domestic private enterprises and 4.7 per cent out of 210 FDI enterprises registered their salary scaling table with DOLISA.51 Neither did the employers consult the labour unions when preparing the salary scaling table, nor did they publicly inform the workers as required by the law. Normally, FDI enterprises pay their workers at a salary level that is a little bit higher than the minimum wage, but they use it as the floor level for basic salaries, so that almost all the workers receive the basic salary of 800,000 VND, while the criteria for salary increase are education, labour productivity and ranking but not experience (which is rarely used). For the last three years, only 70 per cent of the workers had their salary scaled up.52 There are enterprises in Da Nang province where the workers have not received any salary increase in ten years.53 Questioned by the labour union why the Labour Management Office could accept that kind of salary scaling, the reply was that they did not have any mechanism to deal with it. Thus, salary increases have added almost nothing to the workers’ income in the private sector.

This explains why migrant workers who want to have a job that allows them to send some money back home to support their families, must accept to work in bad conditions for long hours. With starvation wages, no housing allowance, no kindergarten, this can only be a temporary solution and can hardly ensure their position in the formal sector in the long run.

Institutions Dealing With Labour Code Violations and Labour Disputes

The Labour Code gives a clear description of a labour inspection and a labour dispute resolution system.

Several improvements have been made in recent years to strengthen the labour inspection system. The number of labour inspectors has increased and the organization is being restructured. Viet Nam 223

Since 2003, the inspection of labour sanitation has been combined with the inspection of labour safety in order to simplify the mechanism. However, up to now, no guidelines for its operation have been enacted and there has been no implementation.54 The inspectors are responsible for certain areas/regions, so they can understand better the local situation and be more proactive in dealing with labour issues. A self-monitored checklist on the respect of the Labour Code has been developed to support labour monitoring in the enterprises.55 In 2006, the ministerial and the provincial inspectors increased respectively by 160 per cent and 190 per cent the monitoring of the implementation of the labour legislation, compared to 2005. The number of law violations discovered by the provincial inspectors increased by 389 per cent and the administrative penalties by 170 per cent, in comparison to 2005. The total of the fines is 4.333 million VND.56 However, the Government has not yet fulfilled its inspection role. The whole country has only about 300 inspectors. To cover 20,000 private enterprises and 5,000 FDI enterprises, it would need at least 10 years.57 As an example, if the five inspectors in Khanh Hoa province want to inspect all the companies having at least 50 workers, at a speed of 20 enterprises per year, it would take them 100 years to inspect them all.58 Thus the informal workers as well as workers in smaller factories benefit very little, if at all, from the government inspection system.

Besides this administrative tool to enforce the law, the State provides a legal framework and mechanisms for solving individual and collective labour disputes for all kinds of labour. The Grassroots Reconciliation Committee (grassroots C) and the Labour Reconciler of the District Labour Management Office have the right to help solve labour disputes at their first stage. Ath the second stage, the District People’s Court can do it if the reconciliation endeavours have failed in the case of individual labour disputes, or the Provincial Arbitration Committee (PAC) and the Provincial People’s Court in the case of strikes or collective labour disputes. The Labour Code of 2002 tried to simplify the labour dispute-solving system. The whole Chapter 14 on labour dispute solution was comprehensively revised in the Code amendment of 2006, aiming at strengthening the role of the State in law enforcement by dividing the labour disputes into three types: individual labour disputes, collective labour disputes about rights, and collective labour disputes about benefits. According to this system, there are three labour dispute solution procedures, in which, the People’s Committee President of a district or town has the right to solve the dispute at the second stage, i.e. in case of collective disputes about the workers’ rights, instead of the PAC. The 2006 Code shortened down almost by half this procedure of three stages and gave detailed regulations about strikes and strike resolution.

From 2003 to 2006, the number of strikes was much higher than during the six previous years (798 strikes compared to 567). The number of strikes has progressively increased (in 2006 alone, there was more than one strike per day on average), mainly in FDI enterprises (73 per cent of the strikes, compared to 61 per cent from 1999 to 2002 and 55 per cent from 1995 to 1998 - see Appendix 5). Ninety per cent of the strikes were due to the employers violating the law and the rights of the workers59 in matters related to low salary, late payment, long working hours, bad working conditions, lack of social and health insurance, lack of sick leave, maternity leave or annual leave, ‘bad’ behaviour of the managers, etc. Recently, the strikes have become more frequent, are of a larger scale and duration, include more workers and are more critical.60 Almost all the strikes are considered spontaneous and illegal because they do not follow the legal procedure, which is generally considered too complicated and unfeasible: ‘In practice, it has been prove that during the last ten years and more, the grassroots reconciliation committees and reconcilers have not been able to solve collective labour disputes, and the Arbitration Committees and Courts were almost jobless’.61 Only one legal case out of hundreds of illegal strikes was reported in the media. In enterprises where there are grassroots labour unions, the workers went on strike without any involvement of the grassroots labour unions. 224 Asian Labour Law Review 2008

The 2006 Labour Code adjusted the dispute solution mechanisms by allowing to use better legal tools and limiting spontaneous strikes. However there are many questions about their feasibility. When Grassroots Reconciliation Committees are established by the employers on a 50/50 (employers/workers) per cent basis, the labour union people dare not intervene directly to defend the workers, so the workers lose trust in them. In order to overcome this problem, the 2006 Code proposed the appointment of a ‘third person’, agreed by the employer and the labour union. Another new point in the 2006 Code is that, in the case of collective disputes about the workers’ rights leading to a work-stoppage (Article 159), the president of the District People’s Committee is responsible for seeking a temporary solution.62 ‘Temporary collective work stoppages’ are not considered by the labour union as strikes because they do not include a set of different steps of which the work stoppage is only considered as the final one. From a practical point of view, this allows the workers to take a warning action to call for the support of the Government if the employer does not respect the law and the Grassroots Reconciliation Committees do not work properly. However, strict requirements about the organization of strikes can be seen as a challenge to the workers and the labour union movement.

Informal workers can have access to the mechanism for individual dispute solution based on the labour contract and termination conditions, which are considered as legal evidence for the worker. There are four types of labour contracts. Three of them are written: open-ended contract, 12 to 36-month contract, seasonal or under 12–month contract. The fourth one is verbal and the most common to informal workers: less than 3-month contract, or housework.

Several studies and investigations show that in different kinds of private enterprises, between 16 per cent and 92 per cent of workers have not signed labour contracts63 due to the fact that the employers extend the probation time and do not sign or do not fully sign the labour contract; in some cases employers simply sign it with key staff, or sign only a less than 3-month contract with workers doing regular long-term jobs. The workers without a formal contract are actually informal workers. In principle, a verbal contract is a very weak legal evidence for workers in case of labour dispute, making it impossible for them to be protected by the legal labour dispute system.

What Institutions Provide a Legal Framework for Collective Action and Labour Union Work?

Organized workers can negotiate with the employers through collective bargaining about working conditions, and workers’ rights and benefits. Although three of the eight fundamental ILO conventions have not been ratified by Viet Nam, including the Right to Organize and Collective Bargaining Convention of 1949 (No. 98), the main contents of the convention are reflected in the Labour Code. The obstacle for signing this convention is the mechanism for the development of CBAs. The representative of the workers in collective bargaining and in signing the agreement must be delegated by the steering committee of the enterprise labour union or the temporary grassroots labour union, which has legal status only when it is established under the labour union law, officially recognized by the higher level labour union.64 Thus, the right to organize and to collectively bargain falls under the sole authority of the labour union.

A collective bargaining agreement (CBA) mainly consists of commitments about employment and security of employment, working time, rest time, salary, bonus, labour norms, OSH and social insurance that are in line with the Labour Code and elicit more favourable terms for the workers (Articles 44, 46). The 2002 Code added some amendments in order to make the CBA more workable. The CBA takes effect on the date it is signed, and the signed CBA is considered invalid when it contravenes the law. The Provincial Labour Management Office has Viet Nam 225 the right to declare the CBA partly or wholly invalid, while the rights of both sides have to be defined in accordance with the law.65

According to VGCL, only 20 per cent of the enterprises of the private sector have CBAs66 and in general they only formally meet with the legal requirements. Most CBAs are only copies of the legal stipulations and very few clauses provide any additional benefits for the workers. Several agreed items bestowed by the employer are not put in the CBA, such as shift meals, transportation, housing, hard work bonus, so that they are easily forgotten. The CBA negotiation procedure is violated and getting workers’ approval is just a formality. Moreover, even when there is a CBA, the employers do not strictly follow what they have signed. 67

The CBA mechanism functions at work floor level where there is a labour union, which, as said before, works in the framework of a ‘one-union system’, in accordance with the Labour Union law. Thus the labour union has the right to participate in the development of the Labour Code (regarding minimum wage and OSH) and to monitor the Labour Code enforcement, to participate in the State management of labour and to solve problems regarding labour relations. The law guarantees the legal status of a grassroots labour union if its establishment follows the labour union law regulations, and the employer must recognize the labour union, cooperate with it, provide favourable conditions for the labour union’s activities and not discriminate nor interfere in the labour union’s organization and activities.

The 2002 Labour Code amended one important article about enterprises having no grassroots labour union and about newly registered enterprises where, after six months of operation, the local or sectoral labour union must organize a grassroots labour union and have the right to appoint a temporary labour union steering committee while waiting for the establishment of a normal labour union. The employers must provide favourable conditions for the early setting up of a grassroots labour union and not block the establishment and operation of a labour union in an enterprise (Article 153). The Vietnamese national labour union system has four levels, from the centre down to the grassroots level (see Appendix 2). Workers in enterprises and organizations have the right to set up and join a labour union in the framework of the Vietnamese labour union regulations.

The Labourers’ associations (i.e. professional unions gathering freely and labourers working in a same geographical area or professional sector) established in accordance with the law have the right to join the labour federations (Article 1– Labour Union Law, Article 14 – Labour Uunion Regulations). This is an important channel for informal workers to organize themselves and join the labour union, although the efforts by the labour union to organize the informal workers has been very limited until now due to their lack of experience and capacities, but also because this is not considered as a priority. Moreover, a CBA can only be negotiated within one enterprise, so it is not yet a tool for informal workers to negotiate better conditions, in accordance with the law and the regulations.

Although the 2002 Labour Code (Article 153) requires the establishment of labour unions, the ratio of grassroots labour unions in the private sector is still very low. Ms Hoai Thu, Director of the Assembly’s Social Affairs Committee declared that 85 per cent of Vietnamese private enterprises and 65 per cent of FDI enterprises still have no Labour Union.68 The employers of the private sector, especially FDI enterprises, do not want to set up grassroots labour unions and deliberately ignore the law or even create obstacles for the establishment of grassroots labour unions; or they imitate the labour union style in SOEs, meaning that the grassroots labour unions are led by the company’s vice director or personnel manager. Another kind of violation is the 226 Asian Labour Law Review 2008 organization in private SMEs of ‘family-style grassroots labour unions’ led by the employer’s relatives. There was only one such legal strike reported, but there were cases where the presidents of a grassroots labour union and staff were dismissed because they participated in a strike or supported it.69

Although the labour union has an important position in Vietnamese society and Government structure, its dual function weakens its role towards its members. For the labour union, protecting the workers’ rights is only one among many objectives, which are to ‘stabilize production and business, see to the rights and the benefits of both sides in labour relations and of the State’.70 This duality explains why, in the last few years, the role of the labour union in labour dispute solution has been very weak. There is very little information available about the number of professional grassroots labour unions and the way they perform. In the case of one handicraft union in Ho Chi Minh City (10th District Labour Union), the professional union helped the workers have access to a labour contract, get information about OSH and jobs.71 The labour union took some other initiatives to organize the informal workers under professional unions.

3. Responses, Initiatives, and Struggles

Legal Initiatives

There are several legal initiatives in favour of the informal sector. The most remarkable ones are the Law on Social Insurance of 2006 and the Decree on Medical Insurance of 2005. As mentioned above, the Labour Code has tried to offer social insurance to a larger target group. However, there is still a huge number of people who have not yet accessed to this social security network (about 33 million workers in the informal sector, including the farmers, a group that is almost three times bigger than that of the workers joining compulsory social insurance.72 The Law on Social Insurance of 2006 developed a new mechanism of voluntary social insurance that allows all labourers to have access to it (effective from 1 January 2008). However, it only covers the last two items, i.e. retirement and death, but not the whole list of items that are considered as compulsory.

The voluntary medical insurance was introduced in 1994. Its first target group was the school students, but the aim was to expand it later to all the people. In 2003, there were more than five million people benefiting from this insurance, and in 2007 more than 11 million.73

In 2005, a broader target group benefiting from the compulsory medical insurance and a new scheme for voluntary medical insurance applied to all people, with government subsidy to support the poorest, was introduced by decree.74 The compulsory medical insurance applied not only to workers having a contract of three months or more and to children less than six years old, but also to other target groups such as the poor, aging people, veterans, commune kindergarten teachers and other commune officials, health workers, etc. That increased the number of people benefiting from the policy from 18 million to 34 million (the percentage of the beneficiary population going up from 20 per cent to 40 per cent). The objective is that, by 2010, 100 per cent of the population will benefit from medical insurance.75

With these two legal initiatives, the informal sector has access to some aspects of social security, such as sickness, retirement and death. Other issues such as occupational accidents and diseases, and maternity are still out of reach.

Other legal documents related to the informal sector are the Law on Vietnamese Employed Viet Nam 227 on Contract Abroad (2006), and the draft Farmer Law.

The Law on Vietnamese Employed on Contract Abroad of 2006 was an attempt to formalize the situation of the informal workers in this sector. It clearly regulates the working conditions and guarantees the labour rights of those workers. However, its enforcement is a big problem, especially when the host country offers no legal protection for foreign workers, e.g. for domestic work. Also, a new decision was issued on 31 August 2007, setting up a fund to support the workers working abroad in case of death or sickness, when they have to be repatriated before the end of their contract (Decision144/QD-Ttg).

In 2006, the Farmer Union started drafting a new Farmer Law, but it has not been finalized yet. This law will define the rights and responsibilities of the farmers, the Farmer Union and the Government. It will cover important issues such as employment, social insurance, land use and management, promotion of agriculture and agricultural products. However, it is not clear yet how the labour rights of the farmers will be addressed.

Labour Union Advocacy and Movements

VGCL remains the main and only government-recognized labour union federation. VGCL has increased free and paid legal aid services for labour union members, labourers and labour unions. In 2004, there were two important decrees of VGCL on the organization and operation of union legal aid services.76 In 2007, the union had set up 13 centres, 30 offices, and created 375 groups for legal aid, employing 838 counsellors and collaborators from the central down to the grassroots level, and providing legal aid to 14,914 people.77 This is a good mechanism to support workers in general and informal workers in particular. Apart from this, located next to the door of EPZs and IZs, there are labour union offices providing information and advice to workers in a more proactive way.

Some of the priorities of the labour union strategy are:78 1) to strengthen the worker and labour union movement through law dissemination and legal aid support, so as to make the workers be aware of their own rights and help them defend themselves; 2) to develop models in grassroots labour union and professional unions, so that they can organize themselves and operate in an appropriate way within enterprises, especially in the private sector, but also for informal workers; 3) to raise awareness among the workers and the labour union staff about the legal mechanisms and polices directly related to their rights; 4) to monitor the implementation of the policies related to the workers, in particular in matters of salary, CBAs, labour contracts, policies regarding workers made redundant during the restructuring of SOEs, social insurance, medical insurance and the policies for female workers.

We can already see some encouraging results, such as a more successful advocacy for the wage and the housing policy for workers, and the signing of pilot sectoral CBAs. The labour union newspapers had informed the public at large about the destitute living conditions of the workers. The government agreed to develop a special housing programme for workers in EPZs and IZs, through policies regarding master planning, land, tax, finance, credit, etc. The sectoral CBA that will be tested in 2008 in the garment sector will be of utmost importance for the collective action of the workers, including the informal workers. The labour union widely consulted labour unions at different levels and among its members regarding the Labour Code amendment of 2006 to canvass support for its recommendations—even though, according to some labour union staff, the labour union recommendations were only partly taken up in the amended Code. For example, workers are allowed to go on strike to protect their rights and benefits and a work stoppage can be 228 Asian Labour Law Review 2008 accepted as a first step in a labour dispute solution process, which is a practical solution so long as the full strike procedure is still too complicated.

The labour union also developed other initiatives, such as disseminating the Grassroots Democracy Decree in stock and private enterprises in order to make them aware of the democratic rights of the workers, heighten their awareness on the importance of signing CBAs, increase blue collar participation in the grassroots labour union steering committees, establish reconciliation committees in order to assist grassroots labour unions in solving labour disputes, and creating a fund for the protection of the union staff.

Although the national labour union goes on playing multiple roles, in the current debates in preparation of the coming Labour Union Congress in 2008, labour union leadership and staff have been arguing a lot about what should be the first priority of the labour union, i.e. representing and protecting the workers’ rights. They look quite straightforwardly into the current weaknesses of the labour union. As said in the VGCL website, ‘when translating the labour union directives, many labour union levels ‘unintentionally’ forget the ownership role of the workers, are not close enough to the grassroots level and so don’t understand the essential needs of the workers, adopt a mainly ‘top-down’ and bureaucratic approach, consider the workers as having to meet the targets fixed by the management rather than having the right to be protected and represented by the labour union’, and it should affirm that ‘the workers have the right to elect their own leaders, especially at the grassroots level, the labour union’s role not being to assign staff for leading the grassroots labour unions’.79 Having seen the above discussions, we expect that the Viet Nam labour union can improve its role in the future.

Other New Ways of Organizing Workers

A new way of organizing workers outside the work floor has been initiated in several provinces by mass organizations such as the Youth Union and the Women Union, which are centralized state-established unions of similar nature to the VGCL as a Labour Union. So, migrant workers in dormitories are organized in clubs, in which workers have the opportunity to discuss in regular meetings on different topics, including the labour law, the law on women and family, on gender, health and HIV, and to share their concerns about the workplace. The clubs also give the workers the opportunity to negotiate with the dormitory owners on issues such as security, hygiene or the access to water. In these kinds of activities with migrant workers, the Women Union and the Youth Union cooperate with each other and also with the labour union, according to the issues. This work allows workers to organize themselves around issues that cannot easily be discussed at the workplace.

Several local NGOs and foreign NGOs have been working with informal workers, such as migrant workers, street vendors and small traders, on basic social services, micro-credit, productive health and HIV/AIDS. This provides workers with the opportunity to analyze their situation and to learn practically how to organize themselves.

4. Recommendations

The above survey is a quick look at the informal sector in Viet Nam from 2003 to 2006, seen from the angle of the Labour Law. Here are some initial recommendations regarding the informal sector: • Based on case studies of the different target groups, the Government should provide an appropriate mechanism for giving access to social security to all the workers, translating it Viet Nam 229

into specific stipulations of the Labour Law or into a separate law; • OSH protection should be developed in a separate law to cover the formal and the informal workers; • The Government should promote appropriate maternity policies for the informal female workers; • The Government should merge the different current minimum wage systems into a single one, adjust it yearly, and propose clear regulations for a simplified salary scale and table system that can be used as a reference by the workers, including the informal workers, in their negotiations. The minimum wage should reflect appropriately the economic growth and the cost of living, and address the basic needs of the workers; • A more effective mechanism to encourage the informal workers to organize themselves should be developed; • An appropriate mechanism should also be developed for the informal workers to help them negotiate collective agreements and protect their rights and benefits; • The Government should better support the informal workers in having a better access to information and resources, as well as to basic social services; • The Farmer Law should include regulations ensuring a decent job to farmers, good working conditions and mechanisms to empower them in their relationship to buyers and suppliers. 230 Asian Labour Law Review 2008

Appendixes Appendix 1. List of Ratifications of the International Labour Conventions by Viet Nam

Of eight fundamental conventions, five have been ratified (C100, C111, C182, C138, C29), and one is under consideration (C105). Of four priority conventions, one has been ratified (C81). Three conventions have been newly ratified since 2003 (C138, C29, C144).

Viet Nam - List of Ratifications of International Labour Conventions Member from 1980 to 1985 and since 1992, 18 Conventions ratified (17 in force) Convention Date of Ratification C. 6 Night Work of Young Persons (Industry) Convention, 3 October 1994 1919 (No. 6) C. 14 Weekly Rest (Industry) Convention, 1921 (No. 14) 3 October 1994 C. 27 Marking of Weight (Packages Transported by Vessels) 3 October 1994 Convention, 1929 (No. 27) C. 29 Forced Labour Convention, 1930 (No. 29) 5 March 2007 C. 45 Underground Work (Women) Convention, 1935 (No. 45) 3 October 1994 C. 80 Final Articles Revision Convention, 1946 (No. 80) 3 October 1994 C. 81 Labour Inspection Convention, 1947 (No. 81) 3 October 1994 C. 100 Equal Remuneration Convention, 1951 (No. 100) 7 October1997 C. 111 Discrimination (Employment and Occupation) 7 October1997 Convention, 1958 (No. 111) C. 116 Final Articles Revision Convention, 1961 (No. 116) 3 October 1994 C. 120 Hygiene (Commerce and Offices) Convention, 1964 3 October 1994 (No. 120) C. 123 Minimum Age (Underground Work) Convention, 20 February 1995 1965 (No. 123) Minimum age specified: 18 years C. 124 Medical Examination of Young Persons 3 October 1994 (Underground Work) Convention, 1965 (No. 124) C. 138 Minimum Age Convention, 1973 (No. 138) 24 June 2003 Minimum age specified: 15 years C. 144 Tripartite Consultation (International Labour Standards) 9 June 2008 Convention, 1976 (No. 144) C. 155 Occupational Safety and Health Convention, 1981 3 October 1994 (No. 155) C. 182 Worst Forms of Child Labour Convention, 1999 19 December 2000 (No. 182)

In the last few years, ILO has supported and is still supporting Viet Nam in its efforts to renovate the labour inspection mechanism, to introduce the tripartite consultation model, to promote labour relations and mechanisms for improving working conditions, as well as conduct specific projects for children and women. There is a framework document about the national cooperation between VN and ILO from 2006 and 2010 for the promotion of decent work (signed in July 2006), regarding job opportunities for all, the freedom to choose, effective and equitable work, OSH, social security and respect of workers’ dignity. Viet Nam 231

Appendix 2: Labour Unions

The Vietnamese Labour Union (labour union) has four levels: Viet Nam General Confederation of labour (VGCL); national sectoral labour unions and provincial/city labour federations; above-grassroots labour unions (including local sectoral labour unions, district labour federations, EPZ labour unions, company labour unions); grassroots labour unions (with at least five members) and professional unions (with at least ten members). The labour unions at each level are established and directed by higher level labour unions and have specific rights and duties. The rights and duties of the grassroots labour unions differ according to their type, whether labour unions in state administrative offices, social organizations, state-owned enterprises, cooperatives, or private enterprises.

The responsibility of the grassroots labour union in a private enterprise is mainly focused on disseminating the labour laws and policies, helping the workers sign a labour contract, representing workers collectively in negotiating and signing CBAs, monitoring the enforcement of the laws, policies and CBAs, participating in grassroots reconciliation committees and in solving labour disputes.

Labour union leaders are elected by secret vote for two years in grassroots labour unions and for five years in higher level labour unions. The highest decision-making role is played exclusively by the labour union Congress and the labour union Steering Committee which has the leading role between two congresses. Labour unions cover their operational costs thanks to the membership fee (equal to one per cent of the workers’ monthly salary). They also do their own fund- raising and get support through the compulsory contribution of the enterprise regulated by the Government (equal to two per cent of the salary fund of the enterprise). However, since 1999, in order to encourage FDI, the government has waived this two per cent labour union fee.80 This measure is currently being reconsidered, but there has not been a final decision yet.

Vietnam General Confederation of Labour (‘Congdoanvn’) Contact Information

Headquarter Office: 82, Tran Hung Daostr., Hoan Kiem district, Ha Noi Tel: 04 9421 181 Fax: 04 8223 323 Email: [email protected] Website: http:/www.congdoanvn.org.vn

Branch Office in the South: Address: 85 Cach Mang Thang Tam Road, District 1, Tp Ho Chi Minh Tel: 08 8395 005 – 08 8395 006 Fax: 08 8398 272 232 Asian Labour Law Review 2008

Labour Union Statistics

There are 64 provincial labour federations, 20 central sectoral labour unions, about 2,000 labour unions at the above-grassroots level.

2002 2005 (June) 2006 (after half of the labour union term 2003-2008): Grassroot labour 61,791/ 76,678/ 81,781 unions and 9,609 14,543 occupational associations: total/ in the private sector Union membership/ 4,345,081/ 5,245,592/ Added 769,037 members of total of workers in 5,078,834 7,828,201 which 550,000 members in enterprises having a private sector; 265,000 members labour union in administrative sector; and decrease by 52,000 members in SOEs due to re-arrangement and equitization Percentage of union 11% 12.3% 13.9% membership compared to total workforce

Source: Congdoanvn, 14 January 2006 and 20 June 2006; Statistics 2006. Viet Nam 233

Appendix 3: Minimum Wage Adjustments from 2003 to 2006*

Sector 2003 2005 2006 2008 Domestic 290,000 VND 350,000 450,000 620,000-580,000- enterprises (increased by VND VND 540,000 VND and the 80.000VND (US$28.5) (US$38.3-36-33.4 ) government compared to the sector minimum wage set in 2001) FDI 626.000-556.000- 870,000 – 1,000,000 – enterprises 487.000 VND 790,000 – 900,000 – and foreign (the same as the 710,000 VND 800,000 VND agencies minimum wage (US$55.5 (US$62-55.7-49.5) set in 1999) and 45)

*Note: Three levels of minimum wage are given, based on living costs in the big cities, smaller cities or towns, and other places. 234 Asian Labour Law Review 2008

Appendix 4: Main Events Since 2003

1. Medical Insurance Decree 63/2005/ND-CP, issued on 16 May 2005 2. 2002 Labour Code and decisions, circulars to guide on the Code implementation 3. 2006 Labour Code and decisions, circulars to guide on the Code implementation 4. Law on Vocational Training, approved by the National Assembly on 29 November 2006 (effective from 1 June 2007) 5. Law on Vietnamese employed on contract abroad, approved by the National Assembly on 29 November 2006 (effective from 1 July 2007) 6. Law on Social Insurance, approved by the National Assembly on 29 June 2006 (effective from 1 July 2007) 7. labour union regulations (13 October 2003, 9th Congress of Viet Nam labour union) 8. ILO Minimum Age Convention No. 138, ratified on 24 June 2003 9. Agreement of the revised ILO regulations to remove old conventions dated 15 March 2006, signature of the national framework document of cooperation between Viet Nam and ILO for the period 2006-2010 on the promotion of decent work, on July 2006 10. National programme on OSH until 2010 (approved by Decision 233/2006/QĐ-TTg dated 18 October 2006) 11. ILO Forced Labour Convention No. 29, ratified on 5 March 2007 12. Law on Gender Equity approved by the National Assembly on 29 November 2006 (effective from 1 July 2007) 13. Enterprise Law approved by the National Assembly on 29 November 2005 (effective from 1 July 2006) 14. Environmental protection law approved by the National Assembly on 29 November 2005 (effective from 1 July 2006) 15. Revised Law on Labour Disputes approved by the National Assembly on 29 November 2005 (effective from 1 June 2006) Viet Nam 235

Appendix 5: Strikes From 1995 to the End of June 2007, by Type of Enterprise

Year Number State Owned FDI Domestic of Enterprises Enterprises private Enterprises Strikes Number % Number % Number % of of of Strikes Strikes Strikes 1995 60 11 18.3 28 46.7 21 3.5 1996 59 6 10.2 39 66.1 14 23.7 1997 59 10 16.9 35 59.4 14 23.7 1998 62 11 17.7 30 48.4 21 33.8 1999 67 4 6 42 62.7 21 31.3 2000 71 15 21.1 39 54.9 17 23.9 2001 89 9 10.1 54 60.7 26 29.2 2002 100 5 5 66 66 29 29 2003 139 3 2.2 101 72.7 35 25.1 2004 125 2 1.6 93 74.4 30 24 2005 147 8 5.5 100 68 39 26.5 2006 387 4 1 287 74.2 96 24.8 30 06 2007 154 1 0.6 111 72.1 42 27.3 Total 1519 89 5.8 1025 67.5 405 26.7

Source: Legal Department, VGCL; Lao Dong No. 194, 22 August 2007, Thu Huong 236 Asian Labour Law Review 2008

REFERENCES

Legal Documents

1. The Updated Regulations on the Revised Labour Code in 2007, Law on Vietnamese Employed on Contract Abroad, Labour Union And Labour Union Organization Law. (2007) Social-Labour Printing House, Hanoi. 2. Grassroots Democracy Decree in stock and private enterprises (attached to Decision 87/2007/ND-CP) dated 28 May 2007 (www.mot.gov.vn, accessed 6 June 2007) 3. Decision 40/2005/QD-TTg dated 28 February 2005 on the establishment of the National OSH Committee. 4. Decision 233/2006/QD-TTg dated 18 October 2006 on the National OSH Programme until 2010. 5. Decree 135/2007/ND-CP dated 16 August 2007 on administrative punishment in social insurance (Dongnai- Industry), 2 October 2007.

Studies and surveys

1. ActionAid International Vietnam (AAV) (2003, 2004, 2005) Migrant workers in Viet Nam (a summary research report), Ha Noi, September 2005 and five full reports in Ha Noi, Hai Phong, Da Nang, Binh Duong, Ho Chi Minh City, Hanoi. 2. VGCL (2002) Issues to know about the Labour Code, Labour Printing House, Hanoi. 3. Institute for Workers and Labour Unions (2007) Survey research on labour relations in FDI enterprises, 14 August. 4. Institute of Development Studies (2006) Report on the Ethical Trading Initiative Impact Assessment 2006, University of Sussex, part 2b VN. 5. Nguyen T.C. (Ed.) (2003) Working conditions and occupational health of women workers, NILP.

ENDNOTES

1. NGO Resource Centre (NGORC), 8-14 October 2007. 2. The unemployment rate in urban areas in 2003 was 6.9 per cent women and 4.4 per cent men.Gender Statistics for the FirstYears of the 21st Century (2004) Committee for Advancement of Women. 3. Percentage of the population living in poverty: general poverty rate is 28.9 per cent in 2002, 19.5 per cent in 2004 (calculation based on the monthly average expenditure per capita in different years, as follows: 2002: 160,000VND; 2004: 173,000VND); food poverty rate is 9.9 per cent in 2002 and 6.9 per cent in 2004 (measured on the basis of the monthly average income per capita and food poverty line, with monthly average income per capita in different years, as follows: 2002: 146,000VND in urban areas, 112,000VND in rural areas; 2004: 163,000VND for urban, 124,000VND for rural dwellers). 4. Vietnam Chamber of Commerce & Industry (VCCI) (2004) Report on Formalization of the Private Sector in Vietnam and the Role of the Local Government. 5. International Labour Organization. (2002) 90th Conference. 6. Under the equitization process in Viet Nam, many heretofore state-owned enterprises became joint-stock companies with 49% ownership by private partners. 7. Government Statistics Office, 2006. 8. Vietnamforumcsr.net, 16 July 2007, Development and Integration Centre. 9. Statistics of Deputy Minister of Agriculture and Rural Development (MARD), Tran Luu-Van Phuc (SGGP), Kinh Te Nong Thon, 22 April 2008. Viet Nam 237

10. From 1999 to 2005, there were about 350,000 exported labourers. The Vietnamese government’s plan for labour export in 2006-2010 was 100,000-120,000 workers per year, mainly to Taiwan, Malaysia, South Korea, Middle East, Japan. Source: Ministry of Labour, War Invalids and Social Affairs (MOLISA), www.cesti.gov.vn, Labour export of Viet Nam – Cam Thuy. 11. On average, 37 per cent are migrants from other provinces, but more than 50 per cent of them are migrants working in IZs and EPZs of Ho Chi Minh City, Dong Nai and Binh Duong provinces. Ngyuyen, V.T. (2007) Tap chi cong san, No. 10 (130). 12. EPZs are bigger and export-oriented, legally established by the Prime Minister, the IZ are smaller, can be both exported and domestic and are legally established by provincial authorities. 13. Nguyen, T.C. (Ed.) (2003), Working Conditions and Occupational Health Of Women Workers, National Institute of Labour Protection (NILP). 14. NILP (2007) Survey in 2036 small and medium enterprises, handicraft, and traditional job villages, 8 August. 15. VnEconomy, 6 December 2007, according to a MOLISA survey in small and medium construction companies. 16. Government Statistics Office, 2004. 17. Survey 2002 figures,Congdoanvn , 15 June 2007. 18. The Labour Code of 2002 is the first revision and adjustment of the Labour Code of 1994. It was passed by the Assembly’s 10th term on 2 April 2002 andcame into effect on 1 January 2003, adjusting and revising 50 out of 198 articles and adding six new articles. The Labour Code of 2006 is the second amendment, approved on 29 November 2006; it came into effect on 1 July 2007, adjusting and revising 21 articles, adding 21 new articles and keeping two original articles (160 and 161) of Chapter 14. Finally, the Labour Code of 2007 is the third amendment, approved by the Assembly’s 11th term and coming into effect on 2 April 2007. This is a very minor amendment. The National Ancestor Memorial Day has been added as a public holiday, bringing up to nine the number of days off that workers have the right to take per year. 19. Decree 188/1999/QD-TTg dated 17 September1999 and Circular 23/1999/TT-BLDTBXH dated 4 October 1999. 20. Institute of Development Studies, University of Sussex, 2006. 21. Dong Nai newspaper, 25 July 2007. 22. Action Aid International Vietnam (AAV) (2005), research in Hai Phong. 23. Ms. Le Thi Tuyen, worker in the export footwear company Huu Nghi, AAV (2005), research in Da Nang. 24. The State issued regulations on chemical safety (68/2005/ND-CP dated 20 May 2005), security for fishermen and fishing shifts (66/2005/ND-CP dated 1 April 2005), a list of individual OSH equipment (different regulations of MOLISA 955/1998, 1320/1999, 722/2000, 205/2002.etc.), a list of dangerous goods and regulations for shifting them (decree 29/2005/ND-CP dated 10 March 2005), mechanisms for the registration of machines and equipment, materials and chemical products requiring strict OSH rules (Circular 23/2003/ TT-BLDTBXH dated 3 November 2003), administrative punishment in industrial exploration materials management (64/2005/ND-CP dated 16/5/2005), etc. 25. From five per cent to 10 per cent: a compensation of one and a half month salary, then an additional amount equal to 0.4 of one month salary for every further one per cent – Circular 10/2003/TT-BLDTBXH. 26. Sai Gon Giai Phong, 4 March 2005. 27. NILP, 8 August 2007. 28. Figures from MOLISA, VTC News, 6 February 2007, VnMedia, 24 February 2006, SGGP (Organ of the Communist Party, Viet Nam), 4 March 2005, TTXVN (Viet Nam News Agency), 18 February 2004. 29. VnMedia, 24 February 2006. 30. 700/28.653. Source: Ministry of Health. 31. MOLISANET, 31 January 2007. 32. Lao Dong, 9 September 2006. 33. According to a 2003 survey by MOLISA, 50 per cent of workers in 170 enterprises experienced the problems of limited access to the toilet by the use of ‘toilet cards’ and non-payment of workers during breastfeeding time. 34. Sickness (30-60 days per year). Occupational accident and disease (an allowance equal to five months of the monthly salary if the working capacity is reduced by five per cent and an additional amount equal to 0.5 months of the monthly salary for each further percentage; besides that, there is a monthly allowance equal to 30 per cent of the monthly salary if the working capacity is reduced by 31 per cent and an additional amount equal 238 Asian Labour Law Review 2008

to two per cent of the monthly salary for each further percentage; an additional monthly nursing allowance equal to 100 per cent of the monthly salary if the working capacity is reduced by 81 per cent or more. One allowance of 36 months of the monthly salary in case of death, the relatives inheriting the death benefit); - pregnancy; - retirement (45 per cent -75 per cent of the monthly salary on average) and - death (10 months of the monthly salary, the relatives inheriting an amount equal to three months of the monthly salary at least or a monthly allowance for four relatives (maximum), each one having the right to an amount equal to 50-70 per cent of the monthly salary). 35. MOLISA, 26 July 2007. 36. Nguoi Lao Dong, 20 September 2007. 37. Lao Dong, No. 300, 31 October 2006. 38. Articles 56 and 57. 39. Article 4, Decision 53/1999/QD-TTg. 40. Department of Planning & Investment (DPI), Ho Chi Minh city, 9 November 2007. 41. Consumer Price Index (CPI) increased 3% in 2003, Ministry of Finance (MOF), 29 December 2003, 9.5% in 2004, Thaibinhonline, 27 December 2005. 42. Letter to the Prime Minister, No. 4510/BL DTBXH-TLDLDVN, 31 December 2005. 43. 5 September 2006, Ministry of Finance (MOF) website, 23 August 2007. 44. Workers and labour union Institute, 2007. 45. Nguyen, V.T. (2007) Tap Chi Cong San, No. 10 (130) 2007. 46. ActionAid International Vietnam (AAV) (2005), Research in Binh Duong. 47. Assembly Report, 2006. 48. Methods of developing salary tables and salary scales, as well as production norms, attached to the circular 13/2003/TT-BLDTBXH. 49. Workers and labour union Institute, August 2007. 50. Lao Dong, No. 248, 9 September 2006. 51. Ibid. 52. Workers and labour union Institute, August 2007. 53. Lao Dong, No. 248, 9 September 2006. 54. NILP, 27 October 2005. 55. Decision of 1/2006//QD-BLDTBXH dated 16 February 2006 and its regulation 31/2006/ND-CP dated 29 March 2006; and, Decision 02/2006/QD-BLDTBXH dated 16 February 2006. 56. MOLISANET, 31 January 2007. 57. Bui Ngoc Thanh, Director of the Assembly’s administrative department, Assembly meeting on 29 March 2006 58. Lao Dong, No. 34 dated 9 February 2007 59. MOLISA conclusion on the presentation of the law amendment project in the Assembly meeting – Lao Dong, No. 91 dated 21 April 2007 60. Vietnamnet, 4 May 2006. 61. VN Economy, 13 February 2006. 62. Decree 133/2007/NĐ-CP dated 8 August 2007. 63. AAV research (2005) in Binh Duong; Cong An Nhan Dan, 3 March 2007; Dien Dan Doanh Nghiep, 3 November 2006; Lao Dong, No. 279, 10 October 2006; Lao Dong, No. 119, 26 May 2007; Lao Dong, No. 175, 31 July 2007. 64. Decree 133-HDBT dated 20 April 1991 guiding on labour union law. 65. Article 48, Decree 93/2002/ND-CP dated 11 November 2002. 66. Nguoi Lao Dong, 19 September 2007. 67. Workers and labour union Institute, August 2007. 68. Thanh Nien online, 11 August 2006; Manh Quan. 69. Such as the case of the footwear company Thuan Thanh in Hung Yen,Lao Dong, No. 79, dated 7 April 2007. Viet Nam 239

70. Decision 5A/NQ-BCH, 7 July 2005. 71. Quan10.hochiminhcity.gov.vn, 17 November 2006. 72. Voluntarily social insurance: adaptability to economic integration - Kim Thoa. Ha Noi electronic newspaper, 6 June 2007 (accessed 12 September 2007). 73. Voluntary medical insurance, situation and solution for development, MOH website, 2 December 2004; the government covered the cost of voluntary medical insurance for a minimum amount of 800 billions dong each year, Lao Dong, No. 288, 11 December 2007. 74. Decree 63/2005/ND-CP, issued on 16 May 2005. 75. Farmer Union website, 12 July 2005 (accessed on 12 December 2007). 76. Decision 785/QD-TLD and Decision 786/QD-TLD dated 27 May 2004. 77. Lao Dong, No. 210, 11 September 2007. 78. Represented in decisions and action programs such as the Decision 5A/NQ-BCH dated 7 July 2005 about strengthening law related tasks of the labour union in the new situation, Decision 04/NQ-DCT dated 3 April 2006 about strengthening the dissemination and education work of labour union in the new situation, and Action program of Vietnam labour union to implement decisions of the 10th congress of the Communist Party (Paper 1245/TLD dated 1 August 2006). 79. Nguyen, Q. N., Congdoanvn, 17 July 2007 and 20 September 2007. 80. Article 4, Decree 53/1999/QD-TTg. 240 Asian Labour Law Review 2008 India 241

South Asia 242 Asian Labour Law Review 2008 India 243

India

Pallavi Mansingh

ndia’s economic development model that was guided by state intervention and trade protection I until the 1970s underwent a major shift in 1991 when the country opted for liberalization and introduced economic reforms. The reforms resulted in a fundamental shift in the development strategy – replacement of an import–substitutive industrialization strategy by an export-oriented one.1 Architects of the reforms argued that the new market-led growth model of India’s economy driven by the private sector and foreign investments would lead to a higher growth rate and the effects of this would trickle down to the masses. India’s economic performance in the post- reforms period indicates increasing growth rate. The average growth rate in the ten year period from 1992-93 to 2001-02 was around 6.0 percent, and India became one of the fastest growing developing countries in the 1990s.2 The growth rate has moved up further during the last five years and between 2002 and 2007, an average 7.8 per cent growth rate was recorded. 3

The resultant wealth generation in several sectors has helped India add a few hundred billionaires and a few thousand more millionaires, thus creating a façade of a Great Leap by the White Tiger. But this reorientation in the policy framework has had major implications on employment and social security. While the reforms focussed on economic efficiency, it is argued that they led to a ‘jobless growth’.4 With regards to the labour market, it was argued that rigidities constrain large industrial investments. Thus since the 1990s, there have been attempts to attract investments by informalizing employment. It is important to note that India had a huge informal sector even in the pre-reform period. Since the start of liberalization the organized sector has witnessed stagnation or even decline in employment because of retrenchment, displacement of labour, growing casualization of workers, and organized attempts to curtail workers’ rights including freedom of association and the right to collective bargaining. All these have weakened the trade union movement.

The following account attempts to capture some of these dynamics of informalization. The first of the three sections, entitled Contemporary Snapshot, outlines the increasing informalization in India’s economy, particularly in the organized sector, and highlights the worsening working conditions in the informal sector. Section 2 discusses the existing labour laws and how they apply to informal sector workers. Section 3 examines the responses, initiatives and struggles in the context of increasing informalization.

1. Contemporary Snapshot

The Informal Sector in India

The informal sector in India has been defined in several ways. As per the System of National Accounts (1993),5 it refers to productive units characterized by a) a low level of organization, b) little or no division between labour and capital and c) labour relations based on casual employment and/or social relationships as opposed to formal contracts. These units belong to the household sector and cannot be associated with other units.6 The Directorate General of Employment and Training (DGET) which is a key source of data on the informal sector, reports 244 Asian Labour Law Review 2008 employment within the unorganized sector derived as a residual of the total workforce minus the workers in the organized sector. But the DGET definition does not take into account informal employment in the organized sector.7 The National Sample Survey Organization (NSSO), adopted the following criteria for identification of the unorganized sector: 1) in the case of manufacturing industries, the enterprises not covered under the Annual Survey of Industries are taken to constitute the unorganized sector and 2) in the case of service industries, all enterprises, except those run by the government (central, state and local body) and in the public sector are regarded as unorganized.8

The National Commission for Enterprises in the Unorganized Sector (NCEUS) recently defined the sector and unorganized workers as follows: the ‘Unorganized Sector consists of all unincorporated private enterprises owned by individuals or households engaged in the sale and production of goods and services operated on a proprietary or partnership basis and with less than ten total workers.’ Unorganized Worker is defined thus: ‘Unorganized workers consist of those working in the unorganized sector or households, excluding regular workers with social security benefits provided by the employers and the workers in the formal sector without any employment and social security benefits provided by the employers’.9

The ILO defines the informal sector as large-scale economic activities that remain outside the world of full time, stable and protected employment.10 According to the Self-employed Women’s Association (SEWA), the informal sector in India includes home-based workers, vendors, manual labourers and service providers. It accounts for up to 70 per cent of gross domestic product and over 40 per cent of exports; of the total workforce, 93 per cent operate within the informal sector, and 60 per cent of these are women. 11

These definitions indicate the complex nature of informal employment in India. It is clear that the lack of job security and social security are key characteristics of informal employment. However, in order to understand informalization in India we need to go beyond these definitions as they do not provide sufficient insights to understand the conditions of informal workers. It is important to look at the dynamics of the informal economy including informalization in the formal sector and the vulnerable working conditions of informal workers.

Growth of the Informal Economy – Some Recent Trends

Employment trends indicate that growth of employment has largely taken place in the non- agricultural segment and the growth of jobs in agriculture has been significantly slow. The growth rate of the workforce in agriculture is estimated at 1.73 per cent from 1999-2000 and 2004-2005 compared to 4.53 per cent in the non agricultural segment (Table 1).

Table 1. Total Workforce in Agricultural and non Agricultural Sector by Activity Status in 1993-94, 199-2000 and 2004-05 (million) 12

Activity Status Agriculture Non-agriculture Total 1993-94 Self-employed 143.19 60.94 204.13 Regular wage workers 3.31 47.83 51.13 Casual employee 91.84 27.22 119.06 Total 238.34 135.99 374.33 India 245

1999-2000 Self-employed 137.28 70.93 208.21 Regular wage workers 3.46 55.59 59.05 Casual employee 96.93 32.57 129.5 Total 237.67 159.09 396.76 2004-05 Self-employed 166.18 92.07 258.25 Regular wage workers 2.83 66.72 69.55 Casual employee 89.91 39.75 129.67 Total 258.93 198.54 457.46

Besides, most of the employment growth taking place is located in the informal segment of both the organized and unorganized sectors. According to the DGET, the organized sector employment declined by 910,000 during the period 1997 to March 2002 (more than half of this decline was in the manufacturing sector); during the single year 2001-2002 it declined by 420,000.13 While there is a manifold increase in investment, output and profit in the organized sector—e.g. capital intensity has grown—the NSSO reports that employment intensity has come down.14 Downsizing and cutting costs through practices such as substitution of regular employment through fixed terms or contracts is becoming increasingly common in both the public and private sectors. The dominant perception of the trade unions is that much of the economic growth is ‘job-less’ rather than ‘job-led’.15

Table 2 indicates how formal employment is declining even in the organized sector. Out of a total of 394.9 million workers in the unorganized sector only 1.4 million fall in the formal worker category, i.e. those having access to social security. In the case of the organized sector actually only 33.4 million workers fall in this category. Hence only 7.6 per cent of the workers in India can be called formal; the rest 92.4 per cent fall in the informal category.

Table 2. Estimated Number of Workers by Sector and Type of Worker 16

Informal/Unorganized Formal/Organized Total workers workers 1999-2000 Informal/ Unorganized 341.3 (99.6) 1.4 (0.4) 342.64 (100.0) Sector Formal/Organized 20.5 (37.8) 33.7 (62.2) 54.12 (100.0) Sector Total 361.7 (91.2) 35.0 (8.8) 396.76 (100.0) 2004-05 Informal/Unorganized 393.5 (99.6) 1.4 (0.4) 394.9 (100.0) Sector Formal/Organized 29.1 (46.6) 33.4 (53.4) 62.57 (100.0) Sector Total 422.6 (92.4) 34.9 (7.6) 457.46 (100.0) Note : Figures in brackets are percentages Source : NSS 61st Round 2004-05 and NSS 55th Round, 1999-2000, Employment Unemployment Survey Computed 246 Asian Labour Law Review 2008

Table 3 reveals a reduction in the number of formal or regular workers in the organized sector. The employment growth of 7.82 million in the organized sector between 1999-2000 and 2004-2005 includes a negative growth of 0.5 million in its formal segment.

Table 3. Increase and Growth Rate of Employment in the Organized Sector, by Activity Type 17

Activity Status Informal Workers Formal Workers Total Increase in employment between 1999-2000 & 2004-05 (million) Self-Employed 0.23 0.59 0.82 Regular Wage employee 6.01 -1.09 4.92 Casual Labour 2.07 0 2.07 Total 8.31 -0.5 7.82 Growth Rate between 1999-2000 & 2004-05 (%) Self-Employed 8.95 6.46 7.01 Regular Wage employee 12.42 -0.75 2.53 Casual Labour 3.99 0 3.99 Total 8.05 -0.32 3.02

In the informal sector, self-employed workers are a huge category. They account for 56.5 per cent of the workforce. They constitute: a) those employed in agricultural occupations such as farmers doing marginal, small and big work in agriculture on their own land and obtaining a major part of their income from own cultivation and not wage labour.18 Their number is 166 million for 2004-05; b) self-employed in the non-agricultural segment who are own account workers, unpaid family workers and employers (with one to ten workers). They number 92 million.

In addition, growth of informal employment is also accompanied by increasing levels of poverty and vulnerability. According to the latest reports of the NSSO, while the overall poverty ratio of the workers was 19.3 per cent, there was a sharp difference in the poverty ratio among unorganized workers (20.4 per cent) which was almost five times higher than that of the organized workers (4.1 per cent).19 It is also important to note that in 2004-05 the poor and vulnerable comprised 77 per cent of the population (totalling 836 million people, with an income roughly below $2 in purchasing power parity terms).20 The NCEUS notes that while the percentage of population below the poverty line has come down, albeit at a slower rate in the 1990s compared to the 1980s, the movement is within the category of broadly poor (41 per cent) or the poor and vulnerable (77 per cent). ‘There is no doubt that this ‘Shining India’ has expanded in the past and is still expanding at a very high rate. But this picture is spoiled by a virtually stagnant consumption expenditure and miserable working and living conditions of the 77 per cent of our population who are poor and vulnerable. This group includes the overwhelming population of the dalits and adivasis, Other Backward Classes and Muslims. This is the other world which can be characterized as the India of the common people, constituting more than three-fourths of the population and consisting of all those whom the growth process has by and large bypassed.’21 India 247

Figure 1: Ratio of Female to Male Income 22

T h i s i n c re a s i n g informalization has some gender dimensions. M a c r o d a t a s h o w s low levels of female workforce participation rates – 28.3 per cent as compared to men 54.7 per cent in 2004-05.23 This indicates that a large proportion of women in India continue to engage in flexible forms of work and household work which is unaccounted. NSSO data also indicates a concentration of employment of women in lower paid jobs – 56 per cent self-employed; 25 per cent casual workers, 19 per cent employees.24 There is also an increasing gender gap in wage (See Figure 1).

The following section examines conditions of work in the informal sector in India with an emphasis on women in the sector.

Conditions of Work in Informal Sector

Increases in the labour force in informal employment settings are characterized by low wages and earnings and lack of job security and other benefits.25 Informal workers are systematically denied the status of regular workers by their employers – engaging them as trainees, recruiting through contractors and engaging subcontractors.

Table 4: Comparisons of Characteristics of the Formal and Informal Sector 26

Particulars Formal sector Informal sector Job security High Low Working hours Fixed/regulated Not fixed/not regulated Wages Regulated/minimum wages Not regulated/no minimum Social security including medical Most provided None or little Allowance and sick leave Labour laws including right to Protective No or little legal protection Freedom of association and Collective bargaining Employee-employer’s relation Issue of appointment letter Without appointment letter With employment control Safe work environments Safer and secure working Vulnerable to dangerous and conditions Hazardous work Unionization Homogeneous, highly organized Heterogenous, unorganized And better networked And scattered

248 Asian Labour Law Review 2008

The above table (Table 4) shows how workers in the informal sector are prone to vulnerabilities and insecurities. According to the ILO report—The Other India at Work (2005)— job security, good working conditions, remuneration commensurate with the work, adherence to workers' rights, social protection and conducive human resource management -- are missing in the informal sector.

In export-oriented industries such as garments, conditions of work are extremely tough and challenging. The industry has managed to keep working hours extremely flexible. Industry argues that seasonal flexibilities in the industry demand deregulation of working time. A study done by the Centre for Education and Communication (CEC)27 which looks at the working conditions of 14 Tier-I garment manufacturers and exporters in Delhi, NOIDA (New Okhla Industrial Development Area) and Gurgaon reveal that out of a total sample of 159 workers, for a whopping 64.78 per cent of the workers, working hours stretched up to 16 hours or more a day (including overtime). Though both permanent and contract employees work long hours, among those working for more than 16 hours a day, the percentage of contract workers was double that of the permanent workers. Considering that the statutory minimum wage is for a nine-hour working day, only 0.63 per cent of the workers are actually getting the minimum wage. The rest of the workers worked from 10 to 16 hours or more a day to get the minimum wage. Workers are forced to work overtime, which is not compensated at the premium rate.28 Almost half (46.54%) of the workers said they were deprived of social security benefits. Even among the workers who receive social security benefits, it is observed that social security is understood only in terms of Provident Fund (PF) and Employees State Insurance (ESI). Workers getting other social security benefits such as gratuity, crèche, maternity benefits, coverage under accident schemes and retrenchment benefits are negligible in number. In case the workers try to form a union, the management resorts to unfair practices such as declaring an illegal lockout or closure or retrenching workers. Out of the sample, only 3.14 per cent of the workers regularly participated in trade union activities. Conditions are worse in subcontracted units and home-based work.

In the case of the leather industry, a study by CEC29 reveals that in Chennai, taking the total emoluments (including wages, benefits and overtime) into account, almost one fourth of the respondents earn less than Rs.2,000 per month and half of them earn less than Rs.3,000, significantly lower than the minimum wages set in the industry. Combined with the fact that about 50 per cent of the respondents were employed on casual terms, this makes it a highly informal labour market even in the large units that were studied.

A study on the electronics industry reveals that employers in the industry have resorted to several manoeuvres to deter workers from organizing. They have segregated them in terms of nature of employment, wage, annual increment and systems of wage payments.30

Women in Informal Sector

Among informal workers, women represent a more vulnerable group. Women workers in the informal sector constituted 91.38 per cent of the total women workers. Women often enter the labour market as secondary earners in the household but they soon become important contributors to the family income. The choice of women to work is often constrained at two ends—their domestic and child care responsibilities and lack of education and skill and their being often obliged to undertake less productive, less remunerative and more vulnerable forms of work.31 Following are some of the recent trends in employment of women:

First, from the 1990s, export-oriented industries such as garments and leather have employed India 249 women in huge numbers. Employers prefer women workers as they are docile, willing to accept inferior work conditions and a lesser wage and do not engage in unionization. Women do not demand permanent contracts. They are easier to hire and fire at will and also—according to external demand conditions—life cycle changes such as marriage or child birth can be used as proximate causes to terminate employment.32 A study shows that in the garment industry in Bangalore the number of females working in the industry declines as age increases. Most of the young women work only for a few years and then discontinue their jobs due to marriage, childbirth etc. The trend was exactly the reverse in the case of male workers whose proportion tended to increase as their age increased.33

Second, gender discrimination enters at the time of their entry into the labour market itself. In the lowest jobs in the garment manufacturing hierarchy such as helpers and thread cutters women comprise more than half of the workforce.34 In Delhi women were mostly engaged in moti work (similar to hand embroidery and embellishments) which were also the jobs with the highest rates of casualization: women were employed and thrown out frequently.35

Third, gender discrimination is manifested in the form of lower wage, poor working conditions and restricted avenues for promotions to supervisory positions. In the textile industry, the jobs of supervisors and machine operators are male-dominated, while the preparatory work of making of fibre and yarn, spinning and winding are dominated by women.36 The ILO 2005 study37 quoted earlier based on a field study in small manufacturing clusters (engaged in production of textiles, garments and carpets) notes that more women than men reported injuries at work. Two-thirds of the women surveyed said the average duration of maternity leave was 90 days, but without remuneration. Women reported harassment through verbal comments and remarks. Another study on the automotive industry reveals that women were made to stand and work in shifts ranging from 8 to 16 hours.38

Fourth, according to the NSSO data, female workers in the informal sector were found to be working more from their own dwellings compared to the male workers. In the rural areas nearly 66 per cent of the female informal sector workers were found to be operating from their own homes and in the case of males this was only 20 per cent. In the urban areas the corresponding proportions were 52 for females and 12 per cent for males.39 This indicates that more women than men are engaged in home-based work. Home-based workers are one of the most vulnerable categories of the workforce. In the absence of a formal employer-employee relationship, job insecurity, income insecurity and absence of social security become more pronounced in this sector.

Fifth, new practices amounting to bonded or slave labour can be seen emerging in export industries. In the textile and garment industry in Coimbatore and Tirupur, a scheme called Sumangali has been introduced by the employers in which jobs are given to young, unmarried women, mainly between 16 and 20 years of age, for a period of three years. They are promised Rs 30,000 to Rs 50,000 to be paid in bulk at the end of three years. During the period of employment they are kept as apprentices. They are entitled to only nine days of leave including all festivals.40 These women often do 12-hour shifts standing in front of machines. Many of them are unable to cope and leave midway.41 This needs to be seen in conjunction with the reduction of the permanent workforce in the last few years through retrenchment and voluntary retirement schemes. When demand rises, the mills appoint apprentices.

Thus we see that as the labour market processes are moving towards more insecure and vulnerable forms of labour utilisation, and the condition of women is worsening. Household 250 Asian Labour Law Review 2008 duties and reproductive responsibilities predominate even the engagement of women in economic activities is increasing. Employers’ preference for female workers emanates from cost cutting strategies and results in the persistence of gender discrimination at the workplace. The ILO has identified women as the largest discriminated group at the workplace.42 Discrimination in terms of wage, working conditions and career development persists even in the new employment opportunities generated by exports.

Section 2: Labour Law and Administration

Socially oriented policy directives at the time of India’s independence called for legislations to protect industry and workers. The state acted as a custodian of workers’ rights. Labour rights were enshrined as part of the constitutional framework and many laws were made to protect workers, though most were applicable only to the organized sector. This policy orientation has changed since India adopted economic reforms. In order to provide an enabling environment to industry, the state has been gradually withdrawing from its role in labour administration. In the following section we examine the existing legislations for workers in India and the ground realities of implementation and how far these legislations serve the informal sector workers.

Core ILO Conventions ratified by India: India is a founding member of the ILO and has ratified the following four of the eight Core Conventions: ILO Forced Labour Convention (No. 29), Abolition of Forced Labour Convention (No.105), Equal Remuneration Convention (No.100), Discrimination (Employment Occupation) Convention (No.111). But it has yet to ratify Freedom of Association and Protection of Right to Organized Convention (No.87); Right to Organize and Collective Bargaining Convention (No.98); Minimum Age Convention (No.138) and Worst forms of Child Labour Convention (No.182).

The Industrial Disputes Act 1947 (IDA): This is a key legislation which seeks to defend the rights of the workers and ensures job security. It enumerates the procedures for conciliation and arbitration in a dispute, closures, lockout, retrenchment and compensation and is applicable to units which have more than 10 permanent workers or ‘workmen’. After an amendment in 1982, it was made mandatory for any employer to seek the prior permission of the government before a closure, in case it employs 100 or more workers (IDA Section 25 O).

Trade Union Act: This 1926 legislation sets out procedures for registering trade unions. It gives a legal status to them and facilitates unionization both in the organized and the unorganized sectors. The Act lays down that no legal proceedings in a court can be held against a union, its officer or member for any act done in furtherance of a trade dispute.43

The Contract Labour (Regulation and Abolition) Act, 1970: The Act seeks a progressive abolition of contract workers. It prohibits the engagement of contract workers for core activities of the firm. Contract workers can legally be engaged only in jobs that are outside the core activities (such as loading unloading or gardening). It was enacted following the recommendation of the first National Commission on Labour in 1969 and is applicable to establishments where the work is carried out by 20 or more workers as contract labourers. It specifies that the principal employer and the contractor have to register the establishment and obtain a licence. This act aims to prevent denial of job security in cases where it is feasible and of social security where it is a legal entitlement. 44

Factories Act 1946: This Act deals with health, safety and conditions of work. It is applicable to all units having 10 or more workers and all units having 20 or more workers which lack power India 251

(such as electrical power). The act limits the hours of work to 48 in a week and up to 60 including overtime.

The Payment of Wages Act 1936: This Act seeks to ensure that wages are disbursed by the employers within a stipulated time frame and without any unauthorized deductions.

The Minimum Wage Act 1948: This Act requires appropriate authorities to fix minimum wage rates. It also requires that the government should review and revise the minimum wage rates at intervals not exceeding 5 years.

Equal remuneration Act 1976: This Act states that employers must not discriminate on the basis of sex in the recruitment of workers for the same or similar work, or in any terms or conditions of employment, such as promotion, training or transfer. However, priority reservation in recruitment is allowed in relation to any ‘class or category of persons’.45 Employers are also subject to record-keeping requirements. But in practice this is limited to the organized or rather the public sector.

Employees State Insurance Act 1948: The ESI Act provides for compensation in the event of sickness, maternity and employment injury. It covers all industries except those which are seasonal in nature. The Act entitles employees to benefits such as treatment in hospitals maintained by the Employees State Insurance Corporation. It states that the employer is obliged to give a stipulated maternity leave with pay and that employees cannot be dismissed during period of sickness or maternity.

Employees' Provident Funds and Miscellaneous Provisions Act, 1952: The act is applicable to any employee in any kind of work, manual or otherwise, in an establishment and who gets wages directly or indirectly from the employer. All the employees (including casual, part time, daily wage contract etc.) other than those excluded by a wage ceiling are required to be enrolled as members of the fund.46

Payment of Bonus Act (1965): This Act says any person who has worked a minimum of 30 days in a financial year and whose salary is Rs 3,500 per month is eligible for bonus. This is at the rate of 8.33 per cent of the wage.

Workmen’s Compensation Act, 1923: The Act provides for compensation to workmen or their survivors in cases of industrial accidents and occupational diseases resulting in disablement or death.

Maternity Benefit Act, 1961: The act regulates employment of women before and after child birth and provides for 12 weeks maternity leave, medical bonus and certain other benefits.

Payment of Gratuity Act, 1972: The act provides for payment of gratuity at the rate of 15 days’ wages for every completed year of service or part thereof, in excess of seven months. No wage ceiling for coverage under the Act.47

Industrial Employment (Standing Order) Act 1956: This regulates the conditions of recruitment, discharge and disciplinary action applicable to factories employing 50 or more workers. It requires employers to classify workers under different categories such as permanent, temporary, probationary, casual, apprentice and substitutes.

252 Asian Labour Law Review 2008

Child Labour Prohibition and Regulation Act 1986: This act bans the employment of child labour in certain occupations and regulates it in certain others.

The Ground Realities – Some Recent Trends

For the past decade and a half, based on an assumption that the existing structure of labour laws is rigid, the industry has been pushing for a whole set of reforms. A huge case is built up in favour of these reforms. It is argued that some labour laws have become archaic and counterproductive and need to be changed in order to enhance productivity. Another argument is that a flexible labour regime will promote employment generation—to quote from the speech of the prime minister Dr. Manmohan Singh to the 40th Session of the Indian Labour Conference in 2005, ‘If our manufacturing base has to grow and if employment opportunities have to be created, we must make our labour laws less rigid.’ 48 Two examples49 illustrate the position of the industry: 1) With regards to the IDA, industry has been arguing that the threshold limit for closures should be removed. Permission should not be a prerequisite for lay offs (IDA Section 25 M) or for retrenchments (section 25 N). Furthermore in section 2 (q), industry seeks that the term ‘strike’ be redefined to include ‘go slow’, ‘work to rule’ and mass casual leave. Also, 2) in further proposed Amendments to the Factories Act: employers seek an increase in working hours to 60 hours a week and a maximum of 12 in a day. This is also in line with what many export industries are practicing, namely, a two-shift system of 12 hours each.

What is missed in this assumption is the fact that even within this existing ‘rigid’ regime there is a huge amount of flexibility. Any further reduction in these standards may lead to further squeezing of the workers in terms of wage or working conditions.

Some important points that must be noted: First, labour in India is a subject under the purview of both the central government and the states. While there are central legislations in place, the outlook and political orientation of the state government often determines the functioning of the labour machinery. With an overall policy directive to favour industry and foreign investments, several states such as Andhra Pradesh, Maharashtra, Uttar Pradesh, Rajasthan and Gujarat have taken initiatives to make changes in the labour laws and inspection procedures.

Second, the judiciary in India too is playing its complementary role in the globalization process by giving some judgments against the workers. One example is the Supreme Court order in 2003 that said government employees had no fundamental, legal or moral right to go on strike. While there are some instances of pro labour judgements—in a 1997 judgment (Vishaka v. State of Rajasthan), the Supreme Court directed the central and state governments to adopt suitable measures including legislation on sexual harassment at the workplace—such instances are few.

Third, the tripartite mechanism is non-functioning. Many statutory and non-statutory tripartite committees including those on implementation of ILO conventions have not been called for years, by the government. One example is the tripartite committee on textiles.

Fourth, figures on strikes and lockouts also suggest that the power of employers vis-a-vis the workers is increasing. During the decade 1981-90, prior to the phase of economic reforms, India lost 402.1 million man days due to industrial conflicts. In the subsequent decade 1991-2001 the number came down to half—210 million—largely as trade unions and workers were hesitant to go on strike due to the fear of job loss or closure of the unit. In fact 60 % of the man days lost in the post reform period was due to lockouts and less than 40 % due to strikes.50 In addition, there is a plethora of cases that lie pending in the labour courts. In May 2000 there were 5,333,038 India 253 cases pending in the Indian Labour Courts, out of which 28,864 had been pending for over 10 years. 51

The collective bargaining power of the worker is shrinking as trade unions are becoming weak. Even in what was their stronghold, the public sector, their strength has been declining as new recruitments are not taking place and old workers are being offered voluntary retirement schemes and the like. In industries where new employment is being created, retention of their present job has become the primary agenda for workers. Since 1992 to date, more than 100 of the 240 public sector corporations did not have wage revisions. The government announced that companies had to mobilize resources to pay for workers’ wages and that the government would no longer subsidize wage increases.52

Fifth, in India informal workers in both the organized and unorganized sectors are denied any protection which would accrue to a worker who fits the legal definition of a ‘workman’ or has a permanent contract. Employers use various tactics to deny workers the status of a ‘workman’ such as hiring them as trainees or apprentices and hiring through contractors or subcontracting work.

Subcontractors and labour contractors form the second layer in the production chain are able to ignore all labour laws. Such units are unregistered. In many cases they have licences for jobs such as loading and unloading but they engage in other production activities such as stitching. In case of legal proceedings against them, they can declare bankruptcy and close the unit and thus there is no way the workers can get their claims addressed.

The informal workers usually have no proof of being workers; they are not given appointment letters, sometimes even after being in service for long periods. And even in cases when they are given contract letters, they may not be authentic; they may not carry the seal or logo of the company. The workers are not given wage slips, the provident fund account is not maintained, ESI card is not given, and employers try to show a break in service.

The administration sides with the employers in restraining collective actions of the workers. Trade unions are denied registration. In many cases there are bureaucratic delays and workers’ files are kept pending for months at a time.53 The TU Act has been recently amended and the number of people necessary for registration increased from seven to 100 or 10% of the workforce of a unit. 54

Following are two instances which indicate that where the government has tried to integrate concerns of the unorganised workers in the policy framework, there are huge gaps:

The National Policy for Urban Street Vendors, 2004: One of the main objectives of the policy is to provide facilities for appropriate use of identified space including the creation of hawking zones in the urban development/zoning plans.55 The policy argues against forced eviction of hawker/street vendors. It talks about ward committees in large cities and town committees in smaller towns with representatives of street vendors to deal with issues of vendors. It recommends a system of registration of street vendors and non-discretionary regulation of access to public spaces in accordance with the planning standards and nature of trade/service. However, while the policy tries to promote a supportive environment for earning livelihoods to the street vendors, the social security, which is one of the most critical needs of the unorganized sector, remains a gap left by this policy. It is suggested that social security schemes should be financed by contributions 254 Asian Labour Law Review 2008 from street vendors as they are self-employed. In other sectors, employers contribute to the schemes along with their workers.56

Unorganised Sector Workers Social Security Bill 2007: The government of India has floated 14 legislations in eight years57 for a comprehensive legislation on social security for Unorganised Workers. In 2007 the Government of India put forth a revised version of the Social Security Bill. It addresses some of the social security provisions, such as old age, pension, medical needs, etc, but it offers social security in the form of welfare schemes. The bill lacks a comprehensive character. Moreover, clarity on crucial issues such as budgetary provisions, coverage and a time frame for implementation is missing.

Section 3: Workers’ Response, Initiatives and Struggles

Trade unions in India have traditionally concentrated on organizing workers within the fold of a formal employer-employee relationship. Collective bargaining and negotiations through trade unions have defended the rights of the workers in terms of their wage, working condition, job security and social protection. But clearly the focus has been on organizing where the status of a worker is clearly defined as a wage earner, the central point of organizing being the workplace. Women workers have been neglected and even in industries where women dominate in employment such as garments and textiles, the unions have been dominated by men.

The situation of informal workers is very different from formal workers: first, their nature of employment is different from regular workers—they could be temporary, casual, contract or part time. They shift their workplace frequently. They could be working under layers of subcontractors and split in different units and that creates the problem of tracing the accountability. Second, the concerns of these workers are different and are related more to income security, job security and protection of livelihoods rather than issues like increments and bonus. Third, in the organized sector there is often a clear divide between the concerns of the regular workers and the casual workers as the casual and contract workers are hired to replace the regular ones. Fourth, for a huge portion of the informal sector workers, a formal employer-employee relationship is absent and they are often self-employed, involved in home-based work.

Initiatives to organize informal sector workers and women workers have come from both the central trade unions as well as the new unions of the unorganized sector. At the policy level the trade unions in India have played a key role in protesting against the proposed labour reforms, against judicial decisions and against employers’ action at the central level, at the state level and through their federations. Trade unions often form joint action committees and address common issues on contractualization and informalization. Trade Unions have also organized contract workers along with regular workers, including workers in Special Economic Zones (SEZs). The Centre of Indian Trade Unions organized workers in the Chennai Export Promotion Zone in 1995. They took up the issues of minimum wage, social security (ESI) and child labour among others and were successful in negotiating with the government and management.58 The All India Trade Union Congress is organising workers in garment units in the NOIDA SEZ. Some trade unions have women wings, which function by and large according to their own priorities and programmes. But participation of women in the central leadership of the movement remains restricted.

The central trade unions have organized Anganwadi workers. These are an all-women workforce working under the Integrated Child Development Scheme of the Government of India engaged in teaching pre-school children, maintaining records of children and taking care India 255 of their nutritional needs. They received less than the minimum wage and were denied the status of a government employee by being called volunteers or part-time workers. They demand the government for regularization, increase in remunerations and introduction of retirement benefits. The struggle of anganwadi workers spread across several states of India and was taken up with much enthusiasm by trade unions. Several heroic struggles such as a 10-day hunger strike in July 2006 in which around 20,000 anganwadi employees from 22 states participated59 and the action of 10,000 anganwadi workers in May 2007 courting arrests60 have taken place, putting critical pressure on the government.

Another key initiative is that of SEWA, which links the products of its self-employed members to the market. It presents a model of providing community social protection, job security, access to credit and marketing support. Micro credit schemes are extended through the SEWA Bank. SEWA represents the combination of strategies of a cooperative and a trade union. D. Saini in a case study of SEWA61 identifies the following elements: 1) organizing for empowerment, 2) credits and savings through the SEWA Bank, 3) capacity – building of members, 4) facilitating formation of cooperatives by SEWA members, 5) women’s leadership, 6) healthcare, 7) childcare, 8) work security assurance, 9) food security and 10) education and knowledge acquisition. As a trade union, SEWA offers its members a combination of services including organization into trade groups, cooperatives or producer groups, collective bargaining and opportunities for members to develop local leadership abilities. In urban areas SEWA’ s early street vendor campaigns were based on organization and mobilization, and focused on negotiations with the local state and suppliers.62

Another case is of the garment industry in Bangalore. A study63 on the Bangalore garment industry notes that the sector had failed to attract the mainstream trade unions because of the predominantly female and semi-rural nature of the workforce as well as the decentralized nature of the industry which was spread out in small units rather than concentrated in large ones. NGOs in Bangalore are building networks and organizing women using neighbourhoods and creating Self Help Groups, or SHGs. A women trade union called Mahila Garment Workers has been formed. It acts as a pre-union body to address issues related to civic life. Workplace related issues are dealt with by the Garment and Textile Workers’ Union (GATWU). GATWU represents a strategy different from the traditional unions – struggles at the workplace including dharnas and strikes are not a part of its active strategy. It tries to mobilize international opinion and transnational agreements to bear on local manufacturers.64 GATWU is affiliated to the New Trade Union Initiative (NTUI).

The NTUI is a mainstream national union with no political affiliations. NTUI believes that in the current context of globalization it is necessary to go beyond national boundaries, and seek to deepen international solidarity and alliance of labour movements.65 In its founding conference in 2006 it was emphasized that unions must address broad-based social issues such as caste and gender that have a direct bearing on labour issues. At the industrial level, the major focus of the initiative is to build a single industrial federation to facilitate an industry-wide collective bargaining strategy.66 The initiative’s main concern is to build a national federation of all independent unions through a participatory process of the unions themselves.67 The NTUI along with GATWU concentrates on wage as a strategy for organizing through building a transnational solidarity among garment workers.

To sum up, several efforts are being made by trade unions to organize informal sector workers and women workers. Central trade unions and their women’s wings are taking up these issues. Labour activists and new initiatives are taking up issues left unaddressed by the 256 Asian Labour Law Review 2008 traditional unions and using new strategies including distancing themselves from political parties and forming international alliances. But it is crucial for these initiatives to sustain themselves while operating within the larger context of the declining role of the state and the dynamics of globalized capital.

Conclusion

India has a huge informal economy as more than 92 per cent of its population is engaged in informal work. With economic growth there is increasing informalization of employment and a reduction in formal or regular workers even in the organized sector. Workers in the informal sector are prone to vulnerabilities. They lack job security, wage security, social security, labour rights including right to freedom of association and collective bargaining and a safe work environment. In industries which operate through subcontracting chains, the condition of the workers worsens as we move down the chain.

Women workers in the informal sector constitute 91.38 per cent of the total women workers. They have to combine both productive and reproductive roles and this makes them more vulnerable. There is a sexual division of labour at the workplace manifested in the nature of work performed and remuneration for it. Women are largely confined to low paid jobs involving less skill than men.

While there are national laws to protect the rights of the workers, the state is gradually withdrawing from its role in labour administration. The informal sector workers are not protected through the existing legislations.

Trade unions and labour support organisations are making an effort to organize workers in the informal sector including experimenting with new strategies. The case of anganwadi workers reflects the importance of the approach to regulate any form of employment. SEWA is an example of how cooperatives and unionization can be integrated. As part of their strategy GATWU and NTUI are experimenting new ways of organizing garment workers. In a situation where capital is located across national boundaries and where the state is playing a regressive role in defending workers’ rights, there can be no one method for organizing workers. Any organizing effort should be sustained and practical and leading to social protection and job and income security.

ENDNOTES

1. India Economic Reforms and Labour Policies, a report prepared by ILO SAAT under UNDP: International Labour Organization’s South Asia Multidisciplinary Advisory Team under the United Nations Development Programme, Technical Support Services – 1, 1996. 2. Ahluwalia, M.S. (2002) Economic Reforms in India since 1991: Has Gradualism Worked? Source: www. planningcommission.nic. 3. Government of India. Economic Survey 2007-08, p. 4. 4. Declaration adopted by the national assembly of workers against anti-labour policies held in New Delhi on 15 July 2002, source: http://pd.cpim.org/2002/july21/07212002_tu_declaration.htm India 257

5. This is a conceptual framework that sets the international statistical standard for the measurement of the market economy. It is published jointly by the United Nations, the Commission of the European Communities, the International Monetary Fund, the Organization for Economic Cooperation and Development, and the World Bank. 6. Kulshreshta, A.C. and Singh, G. (2001) ‘Informal Sector in India: Its Coverage and Contributions’ in Informal Sector in India – Perspectives and Policies, Kundu, A. and Sharma, A.N. (eds.), Institute of Human Development 7. Dutt, R. (2007) ‘Unorganized Sector and Informalisation of the Indian Economy’ in Indian Journal of Labour Economics, Vol. 50, No. 4. 8. Raveendran, G. et al. (2006) ‘Redefining of Unorganized Sector in India’, National Commission on Enterprises in the Unorganized/Informal Sector, India Expert Group on Informal Sector Statistics (Delhi Group), 11-12 May 2006, New Delhi, India. Source: http://mospi.nic.in/Manual%2002.doc 9. National Commission for Enterprises in the Unorganised Sector (NCEUS) (2006) ‘Report on Social Security for Unorganized Workers’. Source: http://nceus.gov.in/Social%20Security%20-%20Cover%20and%20index. htm 10. International Labour Organization (2001). Reducing the Decent Work Deficit: A Global Change. Geneva. 11. www.tradeforum.org/news/fullstory.php/aid/625/In_India,_Integrating_the_Informal_Sector_into_the_Globa l_Economy.html 12. Srivastava, R. (undated) Widening Exclusion: Informalization in the Indian Economy, NCEUS 13. Papola, T.S. and Sharma, A.N. (2004) ‘Labour and Employment’ in Labour File Vol. 2, No. 4. 14. Thakur, C.P. and Venkata R.C.S. (2007) ‘Conditions of Work in the Unorganised Sector in India’ in Indian Journal of Labour Economics, Vol. 50, No. 4. 15. Ibid. 16. NCEUS (2007) ‘Report on Conditions of Work and Promotion of Livelihoods in the Unorganized Sector’, p. 4. 17. Srivastava (2007) 18. Dutt (2007) 19. Dutt (2007) 20. NCEUS (2007), p. 6. 21. Ibid., p. 8. 22. Government of India, NSSO 55th Round; Institute of Social Studies Trust (ISST) & United Nations Development Fund for Women (UNIFEM) (2007) Progress of Women in South Asia. 23. NCEUS (2007), p. 76. 24. ISST & UNIFEM (2007) 25. Raj, A. and Kapoor, R. (2001) ‘Productive Linkages of Indian Industry with Home-Based and Other Women Workers through Subcontracting System in the Manufacturing Sector’, In Alternative Features, National Commission on Labour. 26. Ahn, P.S. (2007) ‘Organising for Decent Work in Informal Economy’, ILO Subregional Office and Bureau for Workers’ Activities, New Delhi, as quoted in Thakur and Venkata (2007). 27. Field study was conducted in 2005-06, a study by the CEC on Wages and Structural Changes in Garment Industry in Delhi and NCR Region, source: www.eias.org/publications/bulletin/2006/julyaug06/ebjulyaug06. pdf 28. The premium rate is double the regular hourly rate. 29. The field study was conducted in 2006-07: CEC’s Study on Leather Industry in India. 30. Vanamala, M. (2001) ‘Informalization and Feminisation of a Formal Sector Industry: A Case Study’, Economic and Political Weekly, pp. 2381-2383 31. India Rani, U. and Unni, J. (2003) ‘Women, Work and Insecurities’ in Working Paper no 135, Gujarat Institute of Development Research, GOTA, Ahmedabad. 32. Ghosh, Jayati (2005) Informalization and Women’s Workforce Participation: A Consideration of Recent Trends in Asia, source: www.policyinnovations.org/ideas/policy_library/data/01178 33. Karnataka , Rajashekhar, D. et. al. (2007) ‘Women Workers in Informal Employment: The Status of Agarbathi and Garment Workers’ in, Indian Journal of Labour Economics Vol. 50, No. 4. 258 Asian Labour Law Review 2008

34. Garment Industry and Labour Rights in India- The Post MFA Context, Krishnamurthy, Sujana, Centre for Education and Communication 2006. 35. Ibid. 36. NCEUS (2007) p. 82. 37. International Labour Organization (2005) ‘The Other India at Work’ 38. Vanamala (2001) Op. cit., p. 2385. 39. NSSO, press note on the informal sector conditions of employment 2004-05 40. http://labourfile.org/ArticleMore.aspx?Id=826 41. www.hinduonnet.com/fline/fl2420/stories/20071019508010700.htm 42. Trade Union Record, Vol. 61 (11) 43. ‘Major Labour Legislations of the Century’, Labour File January-April 2000. 44. Papola, T.S. and Pais, J. (2007) ‘Debate on labour Market reforms in India’, Indian Journal of Labour Economics, Vol. 50, No. 2. 45. www.ilo.org/public/english/employment/gems/eeo/law/india/equal.htm 46. http://epfindia.nic.in/epf.htm 47. http://siadipp.nic.in/publicat/invpub/lobourlaw.htm 48. Prime Minister’s address to the 40th Indian Labour Conference, (New Delhi : 9 December 2005), pp. 3-4. Source: http://labour.nic.in/lc/40ilc/40ilcpmspeech.doc 49. Background Document, Seminar on Labour Laws for Textile and Clothing Sector, CITI, 24 August 2006 50. Shenoy, P.D. (undated) Globalisation and its Impact on Labour in India. Source: www.ris.org.in/India_Globalis ation_Its%20Impact%20on%20Labour%20in%20India_P%20D%20Shenoy.pdf. 51. Sivananthiran and Ratnam as quoted in Fagernas, S. (2007) Labour Law, Judicial Efficiency and Informal Employment in India, Centre for Business Research University of Cambridge, September. 52. Venkatratnam (2005) as quoted in Shenoy, P.D. Globalisation and its Impact on Labour in India. 53. CEC’s Study on Griziano Case (upcoming in 2008) 54. http://indiacode.nic.in/fullact1.asp?tfnm=200131 55. Source: http://www.nationalstrategyforurbanpoor.org/yashada/html/informal_sector/i_s_schemes.htm 56. Bhowmik S.K., Social Security for Street Vendors source: http://www.india-seminar.com/2006/568/ 568_sharit_k_bhowmik.htm 57. Press Release, Social Security Now Campaign Source: http://www.socialsecuritynow.org/inthe%20press.htm 58. CEC (2004) Proceedings of the on First National Exploratory Meeting for an All India Garment Workers Welfare Board, 26-27 March 2004, India Habitat Centre, New Delhi. 59. http://pd.cpim.org/2006/0813/08132006_anganwadi%20workers.htm 60. Hemlata, K. (2007) ‘Dynamics of trade Unionism Among Anganwadi Workers’ in Labour File, Vol. 5, No. 5 and 6. 61. Saini, D.S. Securing (2007) ‘Working Class rights for Informal Sector Workers in India: A Case Study of Self Employed Women’s Association’ in Indian Journal of Labour Economics, Vol. 50, No. 4. 62. Devenish, A. and Skinner, C. (2004) Organising Workers in the Informal Economy: The Experience of the Self- employed Women’s Union, 1994-2004, School of Development Studies, University of KwaZulu-Natal. 63. Roychowdhury, S. (2005) ‘Labour Activism and Women in the Unorganized Sector: Garment Export Industry in Bangalore’ in Economic and Political Weekly Vol. XL, No. 22-23. 64. Chowdry, S.R. (2007), ‘Informality in Globalised Forms of Production’, Indian Journal of Labour Economics, Vol. 50, No. 4. 65. www.revolutionarydemocracy.org/rdv12n2/ntui.htm 66. http://ntuiindia.org/For%20a%20New%20Initiative.doc 67. http://ntuiindia.org/For%20a%20New%20Initiative.doc Pakistan 259

Pakistan

Azra Sayeed

1. Contemporary Snapshot

akistan has finally emerged from an eight-year military dictatorship with a democratic P government after elections were held in February 2008. The previous regime had heavily favoured the neoliberal agenda of developed countries, particularly the United States. Ordinances and policies adopted by the previous regime had widespread impact on the social conditions in Pakistan. In 2007, there had been a rise in political turmoil in the country, which escalated with the suspension of the Chief Justice Iftikhar Chaudhary in March 2007. On 3 November, under the Provisional Constitutional Ordinance the chief justice along with more than 50 other judges were removed and replaced by a puppet judiciary. The assassination of Benazir Bhutto, Chairperson of the Pakistan Peoples Party on 27 December 2007, further heightened the political as well economic chaos in the country. Although, there is now a democratically elected government in place, the country remains under turmoil, with foreign exchange reserves at low levels, as well as military operations in the northern areas of Pakistan in a continuation of the so- called US ‘War on Terror’. Washington has provided nearly US$10 billion to control the so- called terrorists operating in the northern regions. There have been air strikes by the US military as well inside Pakistan territory. As a result of continued military operations, more than 500,000 people have been displaced and are taking refuge in various parts of the country against military attacks of their own government.

Impact of Globalization

The political and military turmoil is a result of the many years of dictatorial rule of (retired) General Pervez Musharraf. The trade liberalization agenda of the Musharraf regime can be seen through the various anti-people, anti-labour ordinances passed in the past eight years. The Industrial Relations Ordinance of 2002, considered to be a draconian labour law, has not granted the agricultural labour force and the informal sector workforce the right of association, which means that 90% of the workforce is unprotected.

Another example is the Corporate Farming Ordinance passed in 2001, under which the government has allowed all stock exchange-listed companies to lease a minimum of 1,500 acres of agricultural land in Pakistan for 50 years, renewable for another 49 years. This ordinance in essence has bypassed land reform for a vast majority of landless peasants in Pakistan in favour of leasing land to the corporate sector. Earlier governments had already allowed the seed sector to be liberalized in Pakistan. With the seed sector declared an industry that could face liberalization, free imports of expensive seeds followed. Privatization in the agriculture sector has allowed inundation of expensive imported agriculture inputs from transnational corporations, as well as further mechanization of labour processes. Deregulation policies along with high fuel prices have resulted in astronomical price increases of agriculture inputs. For example, fertilizer cost in Pakistan has gone up from approximately US$17 to US$53, rise of more than 300% in a one- year period (2007 to 2008). This increase comes on top of a steady increase in the prices of all agricultural inputs in the past five years. Alongside, there has been a decrease in employment of 260 Asian Labour Law Review 2008 the agriculture labour force. This has had an immense impact on wages, especially for the female labour force. In Sindh province, daily wages can be as low as US$0.50 a day, which is not enough for even a single meal for two persons, let alone a family.

The phasing out of the Multi-Fibre Arrangement (MFA) in 2004 has further impacted the labour force, especially in the textile and garment sector. According to trade statistics, the overall textile and garment sector exports account for 66.65% of total exports.1 The US and EU are the major recipients of Pakistan’s textile and clothing exports, amounting to US$1,882 million and 946 million Euros in 2006.The textile industry is mainly based in non-mill (cottage industry) and small and medium-sized plants. Cottage industry accounts for 90% of cloth and 80% of apparels.2 The term ‘cottage industry’ by itself defines the presence of informal labour.

A majority of the workers in the garment sector are women. The phasing out of the MFA has led to a decrease in jobs for them. No government statistics are available for the number of women employed in the sector, According to Rubina Jamil, Chief Executive Officer of the Working Women’s Organization, a vast number of units have closed down in the past few years, which means fewer jobs available in the sector. Mechanization has further shrunk job availability.

A summary of the impact of trade liberalization, especially in textile and agriculture would be as follows: on the one hand the cost of production in all sectors has increased, with emphasis on the agricultural production sector, while on the other hand the downscaling of the textile industry has resulted in a decrease in available jobs. Both agriculture and textiles remain the major sectors in which a vast number of male and female labour are employed and both sectors have been unable to either increase employment opportunities or the quality of life of workers.

Similar liberalization has been seen in transport, education, recreation and health sectors. Foreign companies are now running long route services connecting various towns in the country. Trade liberalization has opened the country to a large number of international food chains including Pizza Hut, McDonald’s and Subway.

The few job openings in the recreation and transport industry hardly provide a viable job opportunity or security for the vast number of unemployed in the country. The internationally- owned transport and recreation companies provide jobs for a very small number of workers. For example, Sammi Daewoo, a South Korean-owned transport company, was reported in 2006 to operate a fleet of 150, employing approximately 3,000 employees.3

In addition, the few jobs being opened up by the transport and recreation sector, are exploitative and oppressive for women, given the strong patriarchal feudal biases prevalent in the country. An example is that of locally owned and operated bus services vying to compete with international chains. They hired women to provide hostess services. Generally, these routes were run from Karachi, to smaller cities. It was observed that these women faced sexual innuendoes and molestation. Most of these women were being paid no more than US$50 per month and had minimal education.4 Young women in fast food chains are required to wear trousers as part of their uniform, and do not wear a long scarf (called dupatta). They come from low-income households and their westernized uniforms would be unacceptable in their communities. This exacerbates social tensions.

In essence the increase in new jobs has taken place in a sector which does not really provide a large number of jobs. Given that fast food chains such as McDonalds and Pizza Hut have more than a 100-150 outlets in the entire country, and generally, not more than 10 waitresses/ Pakistan 261 waiters at each outlet, one can assume that there are no more than 5,000 to 7,000 staff in the sector. Hence, in essence they do not provide employment opportunities to a large workforce. The largest expansion in services has been in the financial sector which has opened avenues for just the educated professional classes. As was predicted, globalization has meted out harsh living conditions to the unskilled, semi-skilled and uneducated working class. Industrialization has failed to take root in Pakistan. The current year 2008 shows starkly that the much publicized growth in this decade was superficial. According to the Asian Development Bank,

The first half of fiscal year 2006 was marked by a slowdown in both industry and agriculture. Output of cotton declined by an estimated 10.9% from an all-time high of 14.6 million bales harvested in fiscal year 2005. Production of sugarcane, another major summer crop, is also estimated lower than last year. The growth of large-scale manufacturing slowed to 8.7% in the first quarter of fiscal year 2006 from 24.9% in the same period of last year, primarily due to capacity constraints.... Among individual industries in the first quarter, growth of textiles tumbled to 7.2% from 29.6% year on year. Automobile assembly and electronics, which has shown the fastest expansion among subsectors in the last two to three years, also decelerated.5

The impact of privatization and deregulation policies in Pakistan has led to steady increases in the prices of household goods and services, and this has forced labour to accept poor conditions of work in the formal as well as informal sectors. The year 2007 was marked not only by political turmoil, but some of the highest price increases on record for food items. In early 2007, under the trade liberalization-driven policies of (former) Prime Minister Shaukat Aziz, 500,000 tonnes of wheat were exported. By late 2007 there was an acute shortage in the country of wheat, which is the staple for 160 million Pakistanis. Now the government has been importing wheat at double the price at which it had been exported. By mid-2008 the cost of flour has escalated to as high as Rs (Pakistan rupees) 30 to 40 per kilogramme (US$0.4 to 0.5). Prices of basic items including onions, tomatoes and other vegetables, pulses and edible oil have all escalated. Red meat, poultry and fish range from Rs 150 to 300 per kg (US$1.80-3.75), out of the reach of Pakistani workers. Similarly milk is selling at US$0.50 per kg and eggs at US$0.80 per dozen. Khaleeq Kiani, quoting World Bank data, has reported in the Pakistani newspaper, Daily Dawn, that ‘average earnings for salaried employees in 2003-04 were Rs 4,088 per month (US$68). This would place a typical family of six with one person employed, below the poverty line. (Statistics on) earnings (by the) self-employed are not available but are believed (to be) much lower’.6 The current high increase in prices has no doubt further impacted the life of the working class.

With the average earnings of labour in the informal urban sector estimated at no more than US$60-70 per month and with rural workers barely making US$37 per month, the rising cost of living means further deprivation, hunger and misery for a vast majority of the working force in Pakistan.

The State of Labour in Pakistan

According to the Pakistan Statistical Yearbook 2007, the country’s population stands at 158.7 million, with the male and female distribution at 82.1 million and 76.1 million respectively. However, it should be noted that the last census was held in 1998 and the next census was due this year (2008). The Pakistan Economic Survey 2006-7 estimates the total population at 151.55 million, of whom 105.37 million are categorized in the working age (which is defined as 10 years or above). The labour force is estimated at 48.95 million and of this, 46.94 million are deemed to be employed. Of the employed workforce, 69.2% are in the rural areas and 262 Asian Labour Law Review 2008

30.8% are in urban areas. The total workforce in agriculture is 43.37%, of which 41.43% is rural- based.

The informal sector in Pakistan is the same as defined by the International Labour Organization (ILO), and refers ‘to modes of production and enterprises that range from small- scale production units, home-based work in production chains and self-run micro-enterprises to bare minimum economic survival activities such as street vending, rag-picking and domestic work.’ 7

The total informal sector workforce in non-agricultural work in urban and rural areas is 41.25%. The entire rural agricultural labour force is categorized as informal. Thus the non- agricultural informal workforce and the rural agriculture workforce together comprise 82.7% of the total labour force. The urban-based agriculture workforce is being reported at 1.95% but the Pakistan Economic Survey does not define this group. But if it is included, the strength of informal labour goes up to 84.6%. (See Table 1.)

Table 1: Pakistan Informal Workforce 2005-6

Rural workforce Urban workforce (%) (%) Employed Workforce 69.2 30.8 Agriculture Workforce 41.43 1.95 43.38 Informal Workforce 20.77 20.48 41.25 Total Informal Workforce 84.6 Source: Pakistan Economic Survey, 2006-7.

Meanwhile, the Government of Pakistan admits the number of unpaid family helpers, especially women, is increasing.8 The figures are a stark indication of the impact of trade liberalization polices on the labour force in Pakistan. The past few years have seen a sharp escalation in imports. For instance, in 2005-06 Pakistan exported US$16.5 million worth of goods and imported US$28.6 million. This shows the high trade deficit the country is facing.

The Informal Sector

Rural Informal Sector: Non-Agriculture

A major part of the workforce is employed in agriculture, but considerable numbers are engaged in other occupations in rural areas. These include carpet-making, sports goods and surgical equipment. There are also cottage industries engaged in embroidery work, handicrafts, bangle-making and various ethnic handmade products including bed linen, rallies (quilted blankets) and women’s wear. Each of these occupations contributes to not only the national income but to foreign exchange earnings, but the contribution of workers in the rural areas is ignored and their labour rights and human rights grossly violated.

A prime example is the carpet industry, which produces a high value product, aimed basically for export. Although the industry yields rich revenues, there is tremendous exploitation of the workforce in this sector. The carpet industry is comprised of the weaving sector and the stitching and washing sector. According to trade unionist Niaz Khan, it is possible to form trade unions in the stitching and washing sectors albeit with difficulty, but not in the weaving sector.9 Much Pakistan 263 of the weaving sector is based in rural areas with the handlooms set up in people’s homes. The labour in this sector includes men, women and children. According to a research report, there are approximately 1.2 million children under the age of 15 years working in this sector. 10

The general practice is to either lease a handloom to a household, or women from that household or others from adjoining homes work on it. Two or three women work on a handloom. However, there could be more than nine workers engaged on one loom. Wages are paid on a daily basis with rates as low as Rs 80. The work is being shifted more and more to the rural sector as labour there is cheaper, willing to work at much lower rates than in urban areas.

Similar patterns are seen in football manufacture. Women and girls make footballs on a piece-rate basis. A large number of women and children are involved in this sector and the final product is exported. Kits for making footballs are supplied by sub-contractors, and women are paid per piece based on the quality of the football being made. Generally, there are three qualities: The highest quality of football is produced for international games, and then there are lower qualities for consumers. Women work on all qualities of balls, but there is a biased view that the best quality of football cannot be made by women. This keeps women from being paid the highest piece rate. Earnings from football can be as high as Rs 4,000 per month which is equivalent to the average Pakistani income for labour. One woman takes the responsibility of household chores and others work on the piece rate product. This pattern is also seen in the carpet industry.

A large number of workers in Sindh and Punjab provinces are employed in brick kilns. A whole family works in the kiln and working hours are not specified. People work all days of the week and are paid per brick delivered. A family of three or four members can produce about 1,000 bricks in a day and earn Rs 200 (US$3.3) per day. However, payment system varies. In some areas workers are paid Rs 1,000 at the end of the week and the rest of the payment is withheld. This is a way of ensuring that they return to work. Brick kilns are known to employ bonded or slave labour. The low wages in this sector lead workers to take loans from the brick kiln management which ends in the whole family becoming indebted. They cannot leave the kilns without paying off the accumulated debts. In addition, as the workers are unable to read or write they do not know the full extent of their debts. Children as young as six years old are engaged in brick kilns. Families are not allowed to leave the premise. The ILO says Pakistan has 1.7 million bonded labourers.11 No concrete figures are available as to the number of people working in brick kilns, but older studies show nearly one fourth of bonded labourers are in the sector. Women and children comprise a large share of the workforce.

Rural Informal Sector: Agriculture

The biggest number of workers is engaged in agriculture. In the two major agricultural provinces Sindh and Punjab, women work along side men in preparing the land, sowing, looking after the crops and finally picking or cutting the harvested grain. Animal husbandry remains largely informal, with a high participation of women in the caring and breeding of animals. However, the sale of animals in local markets is a task carried out entirely by men. Livestock work is shared by women in the provinces of Balochistan and North Western Frontier Province as well.

The situation of the agriculture workforce is among the worst in Pakistan. Growing trade liberalization has resulted in massive increase in the cost of production. For instance, the cost of diesel alone has gone up from Rs 10.8 in 1999 to Rs 24.76 in 2004. Diesel now sells at Rs 38. In other words from 2004 to 2008 the cost of diesel rose by 53.4%. Given the emphasis on green revolution technologies and use of tractors, seed drills and tube wells, the cost of diesel is critical 264 Asian Labour Law Review 2008 in determining the cost of agricultural production. Chemical fertilizers too have become dearer by almost 300% in a year. The cost of wheat seed has risen from Rs 600 per 40 kg to in 2006 to Rs 1,200 and then Rs 1,600 per 40 kg in 2008. In US$ equivalent, the increase is from US$10 to US$13-20. However, the cost to the common people is reflected more accurately in rupees, as wages have more or less remained stagnant in rupees.

An important indicator with respect to labour is the decline of sharecropping patterns in Pakistan. According to renowned agriculture economist Mahmood Hasan Khan, the overall trend in Pakistan has been a decline in sharecropping. Land which had been cultivated by sharecroppers has now been taken over by owners themselves. At present, 90 per cent of owners cultivate their own land, whereas 30 years ago this number was 75 per cent. Of the two big agricultural provinces, in Sindh the tenant-operated area has gone down from 63% to 21%, and in Punjab from 48% to 23%. This data is indicative of the increasing number of landless peasants in the country. Those who were tenants have now become labourers working on daily wages or seek non-agriculture work.

The increase in the number of agricultural workers has been a direct result of the increased cost of production as detailed above. A case study on sunflower production documents the impact of liberalization in the seed sector. The cost of sunflower seed imported from transnational corporations such as ICI has risen to Rs 1,200 for one acre. In addition, the introduction of seed drills has wiped out the work for women who used to be largely responsible for sowing seed. Thus during the sunflower season (August to February) the only work available for women is in harvesting. For this work a family is paid Rs 250 per acre. The per person wage does not come to more than Rs 40 to 50 or US$0.50 a day. In addition, the work is arduous: it entails cutting the sunflower head at the tip of the stalk. Women have to work with their hands raised above their heads. The result is muscular pain especially in their necks and shoulders. Moreover, the sunflower plant is thorny and leaves abrasions and cuts on their hands. All this for a mere Rs 40 which does not even get them a single full meal. Workers often say they had been sharecroppers but with mechanization as well as increasing cost of production land owners have reduced them from tenancy to mere casual labour.

Similar working conditions prevail in other crop operations, be it onion picking, cotton picking or sowing and harvesting wheat or rice. Wheat harvesting is the most revered work, although it means toiling under the terribly hot summer sun in Punjab and Sindh. For cutting one acre of land, workers are given 40 to 60 kg of wheat. Agricultural labour migrates from district to district seeking wheat harvest work. As workers are short of cash it is difficult for them to buy wheat from the market. Their food security is ensured only possible if they are able to store wheat while the harvest is going on. Constant migration in search of work is a strenuous activity for women as they take their children with them. A family sets up camp in the fields wherever they find work. They make temporary shelters around poles, covering it with quilts or sometimes grass. For nearly two months they go from one place to another. This can lead to friction between workers belonging to the area and those who have come as migrants, who are willing to work for even lower wages (in kind).

Urban Informal Sector

Although a vast number of people working in the informal economy is rural-based, many urban workers too are engaged in informal labour. Men, women and children are all represented in such work even in urban areas. Women can be home-based as well as working in small units in their neighborhoods. The home-based work includes bangle-making, garment work such as Pakistan 265 cutting and sewing bulk orders, packaging of goods (such as candies), candle-making, embroidery work, aprons, key chains, home decorations, bead jewelry, integrated circuits processing, incense- making, cardboard boxes, paper and cloth bags. These are a few examples of the items made in informal work places in cities and small towns around Pakistan.

The payment is on piece rate basis and the range varies drastically based on the product. However, no matter what the product, wages are extremely low, and workers face great exploitation. For instance, intricate embroidery work on a women’s shirt can fetch a mere US$2 or $3 a day. Tailoring charges (cutting and stitching) for ready-made men’s wear (shalwar and kameez) are Rs 25 (US$0.42) and for boys Rs 15 (US$0.25). The labour chain is spread from big urban centres to small towns. Middlemen access shop keepers, taking orders for ready made garments and pass the work on to women in small towns, villages and squatter settlements, depending on their own links to particular communities. If the middlemen buy fabric themselves at wholesale prices from urban centres, they are able to get Rs 70 (US$1.20) and Rs 150 (US$2.50) for small and big suits.

Fisheries

A very different informal sector work which caters to global markets is the shrimp industry in Karachi. Once the shrimp has been caught (an operation monopolized by international trawlers working in Pakistani waters) it is brought to shanty sheds in squatter settlements close to the Karachi coastal belt or to fisher folk communities. Women and children are the main, if not only, workers in this sector. Their chore is to shell the shrimp. For one pail of shrimp (generally 10 kg of shrimp) women and children are paid Rs 10. The working conditions are abysmal. The shrimp peeling huts have huge blocks of ice to stop the shrimp from rotting. The hut is dank and cold and pervades with a fishy stench hard to put up with. Women and children are seated on low stools with rivulets of dirty water sloshing around, soiling their their feet and clothes. The workers suffer many cuts and abrasions working with shrimp scales. Working hours stretch from early morning (as early as 3:00 a.m.) when the shrimp catch comes in. In most cases the work finishes by noon. However the work is seasonal and there are months when shrimp peeling continues in the afternoon as well.

Labour is drawn from the Sindhi fisher folk communities but in the squatter settlements there are many migrants from Bangladesh and Myanmar. They are undocumented migrants escaping the harsh economic and political conditions of their own countries.

All contracts are based on verbal negotiations. Delays in payment and paying less than agreed terms are common hazards. Women often work late into the night as they are forced to ensure some amount of the house work is done too after they have toiled on the shrimp.

Arbitrariness

A large number of factories, especially those in the garment and textile sectors have closed down in the past decade or more. Thus more and more formal units have taken to operating as informal ones, beneath the radar of state authorities and legal supervision, even though they are supposed to be governed by the labour laws of Pakistan.

A common problem is that workers are not given an appointment letter and thus are unable to have proof of employment based on which they can demand their rights. Such violations are common in both national and international companies. Another method of evading the law is to 266 Asian Labour Law Review 2008 terminate workers before the probationary period of 90 days ends and rehiring the same workers after a few days. It is also quite common for workers to be employed for long periods without being given confirmation letters or any other proof of employment.

The government has raised the minimum wage to Rs 6,000 (US$75). However, this remains very much unenforced. Even if minimum wages are given to government employees, the vast labour force employed in the private sector both in the formal and informal sectors is unable to demand it.

2. Labour Laws for the Informal Sector

As has been pointed out above, more than 80% of the workforce is employed in the informal sector. The trend is for more and more work being created in the informal sector.

The World Bank has been advocating flexible labour policies which favour rules that would be beneficial to the business sector. According to Khaleeq Kiani:

The World Bank has advised the government to reduce regulations on labour market, cut down hiring and firing costs and allow redundancy as fair ground for dismissals as it believes the tight regulation is resulting in lack of investment in the workforce and reducing regular jobs….The Employment and Services Conditions Act 2006 is a consolidation of 11 separate laws governing conditions of employment and wages for a number of sectors into a new draft act. It focuses on consolidating existing laws, removing overlapping and inconsistencies and allows greater flexibility, particularly on the hiring and firing side and working hours tilting towards the capitalist and proposes restrictions on women’s working hours. The nine-month limit on contract term is considered as one of the most inflexible hiring legislation in South Asia, the term ‘temporary worker’ has been abolished to increase labour market flexibility by eliminating the time limit on term contracts. The new laws would increase the maximum hours per week to 60 hours from 48 hours and maximum hours per day from 10 to 12, increasing the maximum number of overtime hours from two to four per day. 12

The Employment and Service Conditions Act 2006 was passed in 2007 and is being criticized for protecting the business sector over the working class. One of the most contested amendments is the increase in working hours for women. In a strongly feudal and patriarchal culture increased working hours for women will result in extreme hardship on them, as they still have the burden of rearing and caring for their children as well as the entire household.

An international standard which can provide some safety net to some of the people engaged in the informal sector is the Home Based Work Convention 1996 (C-177), adopted by the International Labour Organization. The Home Work Convention calls for national policies promoting the equality of treatment between home workers and other wage earners, in areas including: • the right to establish or join organizations of their own choosing • protection against discrimination in employment or occupation; • protection in the field of occupational safety and health; • statutory social security protection; • minimum age for admission to employment or work, thereby preventing the use of child labour in home work; and Pakistan 267

• maternity protection.

However, Pakistan has not ratified this convention as yet, which means there is no legal protection available for a large section of informal workers, of whom a majority are women.

3. Strategies for Informal Labour

In the period 1990-2007, it has become amply clear that labour rights groups have had to find new and creative means to defend workers’ interests. This process has started in Pakistan. A major thrust has come from women’s rights groups, as the living conditions in communities has deteriorated drastically. It is the informal sector that employs most women.

In Pakistan, women workers’ rights activists have sprung from among both the trade union movement as well as those working for people’s rights in the informal sector. One such organization is the Women Working Organization (WWO), formed by trade union activists. The WWO works with 3,200-3,500 women in the informal as well as the (so-called) formal sector by focusing on the communities they come from. They engage with women working in government and semi-government sectors such as the Pakistan Telecommunication Corporation Limited, Water and Power Development Authority as well as women working in small enterprises such as beauty salons. WWO’s work is spread in seven districts of Punjab. According to Rubina Jamil, Executive Director of WWO, it is difficult to access women at work places as company transport takes women from inside the factory and drops them in their localities. It offers a convenience to workers but also prevents women from being organized with outside help, as only people identified as company workers are allowed to enter those vehicles. As workplace organizing is difficult, it thus becomes most effective to organize women in the communities they come from. The WWO organizes town and district committees which interact with women in their homes. Women in the many units which mostly operate outside the purview of labour laws are advised to ask for appointment letters. It is now common practice in Pakistan not to provide workers with appointment letters, the most basic requirement for employees putting forward demands to their employers.

The WWO also approaches home-based working women such as those providing services to the carpet or football industries. The organization conducts awareness-raising strategies for these women jointly with trade unions working in a specific industry, such as the Itehad Workers Union Carpet Industries Pakistan.

Some other methods of organizing home-based women has been employed by many non- government organizations. A common tactic is for the NGO itself to provide work and then organize the workforce to recognize various rights. For instance, women rarely have a sense of the number of hours they work and do not compute their wages as per the time they have spent on the job. Patriarchal control prevents them from knowing the true worth of their work. Women themselves tend to judge their skills to be of little value.

One example of such an NGO initiative is that of Roots for Equity, which works with home- based workers in Sindh and peasant women in Sindh and Punjab Province. It interacts with more than 3,000 women, motivating them to reach the market themselves with their products. The members produce articles ranging from bead jewellery to handicrafts, which are sold by women who are willing to go to the market. As for those women who are not willing to go to the market themselves, they are taken to various markets and shown the value of their work. Women are taught to compute the cost of the raw materials they use, add in their own labour costs and be 268 Asian Labour Law Review 2008 able to set a sale price for their products. Apart from making women understand the market value of their skills, Roots for Equity also seeks to politicize the women, to help them understand the exploitative and oppressive strategies they are up against.

Similar strategies are being used by NGOs to politicize small farmers and landless peasants to be able to understand the impact of agriculture trade liberalization policies on their lives. Groups from different political orientations (radical to reformist) are forming farmer networks and associations. The strategy differs based on the NGOs’ political orientation. Those believing that globalization will win the day are teaching workers, both men and women, to cope with the onslaught of capitalist policies as well as to teach them how to serve the business sector better. On the other hand, those that believe trade liberalization policies embedded in the WTO framework as well as the IMF World Bank policy framework need to be challenged and dismantled are concentrating on resistance tactics. For example, in the agriculture sector, where a majority of the informal workforce is to be found, the clarion call is for food sovereignty demanding total control and access over land, seed, water and other agricultural input. Land reform is now being demanded as a key policy intervention to halt the rising hunger and poverty.

REFERENCES

Chimni, B.S. and Das, B.L. (eds). (2006) ‘Multilateralism at a Crossroads: Reaffirming Development Priorities’, The South Asian Yearbook of Trade and Development 2006, Centre for Trade and Development (CENTAD), pp. 114- 145. Hisam, Z. (2006) ‘Collective Care Arrangements in the Informal Labour Market: Road Transport Workers in Pakistan’, Economic and Political Weekly, 27 (May), pp. 2099-2106. IRIN (2008) ‘Pakistan: Bonded Labourers, Children Eke Out Existence at Brick Kilns’, 17 January cited at http://www. irinnews.org/report.aspx?ReportId=76296. Javed, T. (2005) ‘Strengthening Democracy and Democratic Institution in Pakistan’, Islamabad, Pakistan Institute of Legislative Development and Transparency, June. Khan, M. H. (1981) Underdevelopment and Agrarian Structure in Pakistan. Vanguard Publication Ltd. Kiani, K. (2006) Daily Dawn, 25 December. Klein, N. (2000) No Space, No Choice, No Jobs, No Logo. London: Flamingo. Pakistan. Pakistan Statistical Yearbook 2007. Pakistan. Pakistan Economic Survey 2006-2007. Roots for Equity (2005) ‘Sunflower: The Smiling Face of Lucre, A Study on the Impact of Sunflower Seeds on Women Farm Labour’, in Intensifying Working Women’s Burden: The impact of Globalization on Women Labour in Asia, Taguiwalo J. (ed), Manila: Asia Pacific Research Network, pp. 281-320. Society for the Protection of the Rights of the Child website. http://www.sparcpk.org/crs_child_labor_1.php. Pakistan 269

ENDNOTES

1. Chimni B.S. and Das B.L. (eds), ‘Multilateralism at a Crossroads: Reaffirming Development Priorities’, The South Asian Yearbook of Trade and Development 2006, Centre for Trade and Development, p. 114. 2. Ibid, p. 117. 3. Hisam, Z. (2006) ‘Collective Care Arrangements in the Informal Labour Market: Road Transport Workers in Pakistan’, Economic and Political Weekly, 27 (May) p. 2102. 4. Until early 2007, the Pakistan rupee was stable at Rs 60 per US$. Since then it has been steadily depreciating and in late 2008 stands at Rs 82 per US$. 5. Asian Development Outlook 2006: II. Economic trends and prospects in developing Asia: South Asia: Pakistan, at http://www.adb.org/Documents/Books/ADO/2006/pak.asp. 6. Kiani, K. , Daily Dawn 25 December 2006. 7. Javed, T. (2005) Strengthening Democracy and Democratic Institutions in Pakistan’, Islamabad, Pakistan Institute of Legislative Development and Transparency, June. 8. Government of Pakistan (2007) Pakistan Economic Survey 2006-7. p.198. 9. Personal communication with author. 10. http://www.sparcpk.org/crs_child_labor_1.php. 11. IRIN (2008) ‘Pakistan: Bonded Labourers, Children Eke Out Existence at Brick Kilns’, 17 January. http://www. irinnews.org/Report.aspx?ReportId=76296. 12. Kiani, Op Cit. 270 Asian Labour Law Review 2008 Contributors 271

Contributors

Introduction: Rights for Asia’s Invisible Majority, Social Justice for All Working Women and Men

Rene E. Ofreneo, Ph.D. is Professor at the School of Labor and Industrial Relations, University of the Philippines. He has published widely in academic journals and ILO publications relating to flexibilization, informal work and industrial relations. He is a Regional Council member of Asia Monitor Resource Centre. His email address is: [email protected].

Reclaiming Labour Law and Beyond

Dae-oup Chang, Ph.D. is Lecturer at the School of Oriental and African Studies, London. He has published widely in academic and labour journals, as well as books with themes covering Asian transnational corporations, the Asian construction industry, and informalization of labour. He is the former Research Coordinator and also former Board member of Asia Monitor Resource Centre. His email address is: [email protected].

East Asia

China Prof Ye Jing-yi is Professor of Labour Law and Social Security Law at the School of Law, Peking University. She is involved in anti-discrimination law and several ILO projects. She is the Secretary of the Social Legislation Society and editor/writer of several books and journals on the topic of labour law. Her email address is: [email protected].

Hong Kong Wu Mei Lin has been involved in the women workers’ movement since the 1980s. She is now Coordinator of the The Hong Kong Women Workers’ Association (HKWWA). Founded in 1989, HKWWA has been working with grassroots women in Hong Kong to fight for their rights as women and as workers. Besides working on policy advocacy, HKWWA works with grassroots women at various fronts to tackle the problem of marginalization and pauperization of women. It organizes casualized women workers for collective action. Her email address is: workwomen@ hkwwa.org.hk.

Japan Kazuko Sakai is a researcher on women’s work-related issues, particularly problems of part-time workers. Michiko Hiroki is Representative of the Asian Women Workers’ Center (AWWC), Japan. The email address of Ms. Hiroki is: [email protected].

Both Ms. Sakai and Ms. Hiroki have been concerned with women’s work-related issues and have been actively involved in the labour and women’s movement since the early 1970s. They are secretariat members of Equality Action 21 and AWWC. 272 Asian Labour Law Review 2008

Established in 2000, Equality Action 21 is a nation-wide NGO working for legal change in order to eliminate discrimination against female workers and to achieve gender equality. The membership consists of several opposite-party Diet members, academics, lawyers, female activists and female workers. Its activities include lobbying, conducting research and organizing study sessions and symposiums.

AWWC was formed in 1983. As a network member of the Committee for Asian Women, AWWC has been engaged in activities such as publishing newsletters and brochures, and organizing exchange programmes to connect the working women of Asia and Japan.

Korea Aehwa Kim is currently working for Committee for Asian Women, a Bangkok-based labour network, as an Executive Committee member. At the same time, she is working for Korea Alliance of Progressive Movements and Korea Alliance against FTAs. Her activities usually include research and campaigning on trade issues. Prior to this position, she worked for Asia Monitor Resource Centre in Hong Kong and Korea Immigrant Workers Advocates based in the USA. Her email is [email protected] or [email protected].

The Korea Alliance of Progressive Movements is a permanent solidarity structure made up of coalitions and organizations of various regions and sectors, including labour, farmers, women, students, and a progressive political party.

Macau Alex H. Choi teaches politics and third world development at the University of Macau. His research interests include political economy of development, migrant workers, globalization, and democratization. He worked with Asia Monitor Resource Centre as a research associate in the 1980s. His email address is: [email protected].

Mongolia B. Batkhishig is a lawyer, advocate and master of law. She has been working as a law teacher, advocate in a law institute and human rights organizations, since 2001. Now she has been working as a lawyer in the Human Rights Advocacy programme of the Centre for Human Rights and Development (CHRD). The CHRD is a non-partisan, non-governmental and non-profit organization for the protection of human rights and promotion of social justice in Mongolia. It was established at the initiative of human rights activists, researchers and lawyers in 1998. The email address of CHRD is: [email protected].

Taiwan Liu, Wan-Ling started her career in labour activity since working in Ching-Jen Labor Health & Safety Service Center. Since the closure of Ching-Jen Center, she is a now a reporter and researcher of Taiwan Labor Information & Education Association (TLIEA). TLIEA is well known in Taiwan for Coolloud Web (http://www.coolloud.org.tw), which is TLIEA’s most important work. On Coolloud Web, you can find updated reports and reviews about Taiwan social movements. Besides Coolloud Web, TLIEA also takes part in labour research, education and advocacy for international labour solidarity. The email address of TLIEA, through which Ms. Liu can also be contacted, is: [email protected]. Contributors 273

Southeast Asia

Cambodia Dennis Arnold is currently a PhD student in the Department of Geography at the University of North Carolina at Chapel Hill. His research interests include the political-economy of development, global production networks, labour and migration, and industrial transitions in Southeast Asia. Prior to his position at UNC-Chapel Hill, Dennis was the International Coordinator of a Bangkok-based labour NGO, the Thai Labour Campaign, and a researcher with the Asian TNC Monitoring Network. Dennis is a 2006 graduate of the MA in Human Rights Programme at Mahidol University. His email is [email protected].

Indonesia Dr. Hesti R. Wijaya is the Head of the Women's Studies Programme, Post Graduate Studies, Brawijaya State University, and also is currently a member of the National Advisory Board of Homenet Indonesia. Her email address is: [email protected].

Laos The Special Correspondent resides in Laos after a career of 30 years in labour issues. Labour is an issue of particular sensitivity in Laos, so the writer prefers to remain anonymous.

Malaysia Irene Xavier is a woman worker activist from Malaysia. She is currently Coordinator of Transnationals Information Exchange Asia. The email address of Ms. Xavier is: tieasia@streamyx. com.

Philippines Rosalinda Pineda Ofreneo is Regional Coordinator of Homenet Southeast Asia. She is also Professor and Chair, Department of Women and Development Studies, University of the Philippines Diliman. Her email address is: [email protected].

Phoebe O. Cabanilla, who has an M.A. in Women and Development from the University of the Philippines, serves as technical consultant of Homenet Southeast Asia.

Josephine C. Parilla is sectoral representative of the Workers in the Informal Sector Council (WISC) of the National Anti-Poverty Commission (NAPC). She is the National Education Coordinator of the PATAMABA (National Network of Informal Workers) and the Finance Officer of Homenet Southeast Asia.

Thailand Bundit Thanachaisethavut is from Arom Pongpangan Foundation.

Dr.Voravith Charoenlert is Professor at the Faculty of Economics, Chiang Mai University.

Suntaree Saeng-ging is from Foundation for Labour and Employment Promotion and Coordinator of Homenet Thailand. Her email address is: [email protected]. 274 Asian Labour Law Review 2008

Vietnam Van Thu Ha is Vietnamese and has a MA in Philosophy and Bsc in Economics. She has 11 years of experience working with the Viet Nam government as a researcher and 12 years of experience in the development sector, working with several foreign NGOs and local organizations such as women unions, farmer unions and labour unions. She spent five years working specifically on labour issues, focusing on worker organization and labour union capacity-building.

This paper presents her own ideas and reflects her own positions, not those of the organization she is working for now.

South Asia

India Pallavi Mansingh is Programme Manager, Trade and Labour Rights at the Centre for Education and Communication, New Delhi. Her email address is: [email protected].

Pakistan Azra Sayeed is Executive Director of Roots for Equity. She is an activist working for the rights of small and landless peasants, especially women. She currently serves on the Programme and Management Committee of the Asia Pacific Forum on Women Law and Development. Her email address is: [email protected].