MAKING CHINESE LABOR LAW WORK:
THE PROSPECTS FOR REGULATORY
INNOVATION IN THE PEOPLE’S
REPUBLIC OF CHINA
Sean Cooney *
INTRODUCTION
China’s extraordinary economic success is marred by widespread
labor abuses, epitomized by the manufacturing sweatshop
staffed by ill-treated workers migrating from China’s hinterland.1
Many kinds of abuse occur in apparent defiance of Chinese
labor law. Firms breach labor contracts and wage
regulations by underpaying their employees for work performed,
or not paying them at all. They violate legal provisions on working
hours by requiring staff to work for extreme periods of time
without rest. They ignore health and safety law by operating
egregiously dangerous workplaces.
In China, domestic pressure for reform of the labor laws is
powerful and increasing. Workers dissatisfied with the lack of
remedies for their mistreatment are resorting ever more frequently
to self-help measures such as spontaneous protests,
many of which turn violent.2 These events are sufficiently serious
to induce government officials and labor law scholars to develop
an array of proposals for improving law enforcement.
Some of these proposals are ill-considered and makeshift; others
are carefully crafted and highly sophisticated. As the latter have
some potential to elicit broader compliance with the law, they
merit international attention and analysis.
This Article examines the capacity of Chinese labor laws and
* Associate Professor and Associate Director, Asian Law Centre, University of Melbourne.
The author would like to thank Mark Barenberg, Sarah Biddulph, Charles
Sabel, Ben Liebman, Lance Liebman, Richard Mitchell, and Randall Peerenboom for
their comments, as well as the Chinese scholars who participated in labor law roundtables
he attended at Peking University Law School and Wuhan University Law School.
1. See, e.g., ANITA CHAN, CHINA’S WORKERS UNDER ASSAULT: THE EXPLOITATION OF
LABOR IN A GLOBALIZING ECONOMY (2001); STEPHEN FROST, WORKERS’ RIGHTS FOR THE
NEW CENTURY 16-36 (2002); KAI-MING LIU & SHEN TAN, KUAGUO GONGSI DE SHEHUI
ZEREN YU ZHONGGUO SHEHUI [CORPORATE SOCIAL RESPONSIBILITY IN CHINA] (2003).
2. See, e.g., China Rioters Clash with Police over Unpaid Wages, ASIANEWS.IT, Sept. 30,
2005, http://www.asianews.it/index.php?l=en&art=4234 (last visited Mar. 7, 2007).
401
\server05productnFFIN30-3FIN304.txt unknown Seq: 2 2-APR-07 7:27
402 FORDHAM INTERNATIONAL LAW JOURNAL [Vol. 30:401
labor institutions to combat abuses. It finds that the Chinese
regulatory framework pertaining to work relationships is impeded
by a failure to clarify key norms, a bureaucratic “command
and control” approach to inspection and dispute resolution,
and a narrow and ineffective range of tools for inducing
compliance. The Article, however, also finds evidence of emerging
regulatory innovation and sophistication that may lead to a
much more effective legal response.
The legal material relevant to China’s labor abuses is vast
and highly complex, so it is necessary to choose specific abuses
to render the analysis manageable. This Article focuses on underpayment
of wages for work performed for three reasons.
First, underpayment of wages is among the most common labor
abuses, affecting many millions of workers. Second, systematic
underpayment of contracted wages is a practice that is generally
acknowledged, within and outside China, to be unjustifiable.3
Third, underpayment of wages is apparently a violation of Chinese
law, and thus raises the central question of this Article:
What is it about Chinese labor law norms and institutions that
inhibit better compliance with the law?
Part I of the Article briefly describes the extent of the wage
underpayment problem in China. Part II concentrates on the
internal structure of the legal rules and the legal institutions that
regulate work, especially with respect to remuneration. It analyzes
the nature of the relevant legal rules, the enforcement
work of the bureaucracy, the principal labor dispute resolution
institutions, and the functions of the official trade union organization
(which is treated as a quasi-regulatory agency). Part II
concludes by discussing a new draft national law and a promising
regional initiative. Part III sketches out several reform proposals.
Drawing on successful international examples of regulatory
innovation, as well as the recent creative Chinese experiments in
labor enforcement, Part III proposes regulatory initiatives that
3. Some neo-liberal lawyers and economists believe that minimum wages are
counter-productive, in which case their non-observance is unproblematic, even desirable.
See, e.g., RICHARD POSNER, ECONOMIC ANALYSIS OF LAW 361-65 (5th ed. 1998). For a
more positive evaluation of minimum wages, see, for example, United Kingdom Low Pay
Commission, National Minimum Wage: Low Pay Commission Report 2005 (on file with author).
Even given this neo-liberal view, however, the problem of wage arrears in China
must be addressed because it is not simply a case of payment below the minimum wage;
frequently workers are not paid at all for work performed. The issue goes to the enforceability
of contracts, which neo-liberals, too, uphold. See POSNER, supra, at 101-08.
\server05productnFFIN30-3FIN304.txt unknown Seq: 3 2-APR-07 7:27
2007] MAKING CHINESE LABOR LAW WORK 403
have realistic prospects of inducing greater adherence to the law
in China’s current political and economic context.
Of course, no legal reforms will definitively close the gap
between the letter of labor law and workplace practice. Deficient
implementation of, and compliance with, labor law (and
law in general) is universal. Even in developed countries, labor
regulation frequently fails to induce change in workplaces or
provokes unintended outcomes.4 This is unsurprising: work relations
are characterized by disparate social systems (or frames of
reference).5 Workplace participants determine their actions not
just with a view to legal validity, but also, or even more so, on the
basis of such matters as cost-benefit calculations, concordance
with organizational decision-making and politics, consistency
with local “custom and practice,” and perspectives about appropriate
gender roles. In light of this complexity, attempts to invoke
law to achieve a change in work relations practices may be
ineffective, counterproductive, and incoherent.
Nonetheless, there is now a rich literature that identifies
which forms of legal interventions are more likely to achieve positive
outcomes in a given context.6 That literature informs this
discussion of reform in China. Regulatory scholars have suggested
that, in many circumstances, “responsive,” “reflexive,” or
“decentered” forms of regulation have proved to be superior alternatives
to traditional “command and control” style rule-making,
with its emphasis on State-based standard setting, coupled
with the imposition of sanctions. Chinese labor law heavily emphasizes
“command and control,” so there is certainly a need to
consider alternative approaches.
The analysis in this Article is important for at least two reasons.
First, China is frequently criticized for its labor abuses, yet
this criticism is frequently unaccompanied by specific reform
proposals that are feasible in the Chinese context. This Article
assists those who want to see improvements in Chinese labor law
4. See, e.g., REFLEXIVE LABOR LAW (Roger Rogowski ed., 1994); Cynthia Estlund, The
Ossification of American Labor Law, 102 COLUM. L. REV. 1527 (2002).
5. See, e.g., Christine Parker et al., Introduction, in REGULATING LAW 1 (Christine
Parker et al., eds., 2004); Gunther Teubner, Juridification: Concepts, Aspects, Limits, Solutions,
in JURIDIFICATION OF SOCIAL SPHERES: A COMPARATIVE ANALYSIS IN THE AREAS OF
LABOR, CORPORATE, ANTITRUST, AND SOCIAL WELFARE LAW (Gunther Teubner ed.,
1987).
6. See infra notes 195-205 and accompanying text.