Poor enforcement of China’s labor laws continues to expose workers to high levels of exploitation, driving sustained levels of labor unrest in the country, which threatens the continuity of business operations. In the first half of 2017, the manufacturing sector accounted for 21 percent of all labor unrest in China. Among all provinces, Guangdong and Shandong experienced the most labor unrest, in the form of protests and strikes, a continuation of trends from 2016. Unpaid wages were the most common grievance for labor unrest, outpacing other grievances such as social security payments or relocation, by 66 percent.
The growth of labor unrest in other sectors further underscores the role that poor enforcement of China’s labor laws plays in exposing workers to abuse, driving protests across the economy. The services and retail sectors now account for 22 percent of all labor unrest, growing in comparison to last year’s rate, and unpaid wages are common grievances in these sectors as well. The recent reorientation of economic growth strategies in Beijing has contributed to this trend. Since 2015, China’s government has focused on using domestic consumption to drive GDP growth, encouraging economic initiatives that increased the demand for services such as delivery services, including package delivery and cargo shipping.
The widespread gaps in the enforcement of labor laws in China suggest that large amounts of labor unrest will continue in the country until the government makes a greater effort to deter businesses from exploiting workers. Most notably, officials apply and enforce penalties for violations of the law inconsistently, failing to motivate employers to comply with workers’ rights regulations. While China implemented a Labor Contract Law over a decade ago guaranteeing worker protections from unpaid wages and cuts to social security, workers, particularly migrant workers, frequently work without a formal labor contract, are not paid wages on time, and suffer a variety of other predatory employment practices. Clients operating in the region should continue to monitor for labor violations and unauthorized sub-contracting among their business partners, as the recent trends in unrest suggest that government enforcement of the relevant labor laws remains poor.