Overview

China is currently facing an unprecedented employment crisis in the urban areas, mainly as a result of reform of state-owned enterprises. The official urban unemployment rate is around 3.1 per cent, but the actual rate would seem to be higher. In 2000 the laid-off workers from SOEs amounted to 10.18 million, of which 3.61 million were re-deployed. It has been estimated that in the year 2001, there will be 10 million newcomers to the labour market as well as 5 million more laid-off employees from state enterprises. There is widespread underemployment in rural areas and the rural labour surplus is estimated between 120 to 130 million. This adds to the pressure to migrate to the cities and other urban areas.

The State has taken a series of measures aimed at increasing employment, such as promotion of the tertiary sector and labour-intensive programmes, promotion of cooperatives and private-sector employment, as well as strengthening of vocational training and employment services.

Although the past ten years have seen much progress in the field of social security, many problems remain. These are: coverage is reserved mainly for state employees; management is scattered in different sectors and regions; contributions are mainly the responsibility of public and state enterprises; there is a lack of benefit adjustment mechanisms; and social security in rural areas is in its very early stages. The reform of the social security system is one of the major challenges facing the Government, which is counting on ILO's continuing cooperation in this regard.

The 10th Five-Year Plan (2001-05) was presented, discussed and adopted by the National People's Congress in March 2001. It differs significantly from the previous nine five-year plans and consists of the following elements:

• Maintaining well co-ordinated reform, development and stability;
• Seeking economic efficiency at the same time as maintaining high-speed growth and sticking to the strategy of developing the country through science and technology;
• Market mechanisms should play a bigger role in the country's economic development;
• Economic development should be in harmony with the population growth, exploitation of national resources, ecological constructions and environmental protection in line with sustainable growth;
• The development of the country's vast central and western areas will be sped up to narrow the regional gap, and
• The opening and reform policy should be unswervingly implemented and state economy safety should be safeguarded.

The government will actively encourage and guide private investment. Except for areas related to national security and those that must be monopolized by the State, all other areas will be opened to private capital. The government will eliminate all restrictive and discriminatory regulations that are not conducive to private investment and private economic development in taxes, land use, business start-ups and import and export. In the areas of stock listing, private enterprises shall have the same opportunities as State-owned enterprises.

The top priority for the government work of 2001 is to continue the reform of the state-owned enterprises. The first target was achieved at the end of 2000 to turn around, in a three-year period from 1998 to 2000, most of the large and medium-sized state-owned enterprises operating at a loss and the implementation of a preliminary modern enterprise system in most key large and medium-sized state-owned enterprises.

ILO Constituents

During the Chinese Government's institutional reform in 1998, the Ministry of Labour and Social Security was established with almost 50 per cent less staff compared to the former Ministry of Labour. The new Ministry was assigned overall responsibility for social security reform besides traditional labour administration functions. The ILO is, therefore, expected to provide more technical assistance in the field of social security. Mr. Zhang Zhouji was appointed Minister of Labour and Social Security in March 1998. He had served twice in the Ministry previously, where his last post was that of Vice Minister of Labour from February 1993 to October 1994.

The employers' organization in China, which represents the employers at the ILC, is the China Employers' Confederation (CEC). It had changed its name from China Enterprise Directors' Association (CEDA) in April 1999. It is also the employers' organization with which the ILO collaborates on technical cooperation. CEC became a member of the International Organization of Employers in June 1999. Training for improving enterprise management emerged as an important issue in the process of reform. Mr. Chen Jinghua, former Minister of the State Development Planing Commission, was elected as the President during the celebration of the organization's 20th anniversary in April 1999. Mr. Zhang Yanning is the Director-General.

There is only one workers' organization in China - the All China Federation of Trade Unions (ACFTU). This organization is not affiliated with the ICFTU nor with any other international trade unions. ACFTU's ambition is to be a member of the ILO GB (it lost its seat as deputy member in 1990). The Chairman of the ACFTU is Mr. Wei Jianxing. Mr. Xu Xicheng was designated, after the 13th ACFTU national congress held in October 1998, as the worker delegate at ILO meetings and he holds the rank of Vice-Chairperson for international affairs of ACFTU. At the invitation of ACFTU, Mr.Bill Jordan, General Secretary of the ICFTU, visited China in February 2000.

Technical Cooperation

Currently there are three major on-going technical co-operation projects on employment in China.

1. ILO/Japan Intercountry project on Strategic Approaches towards Employment: Rural Employment Promotion - a 5-year project funded by Japan (US$2.3 million). The project focuses on poverty alleviation in rural areas through supporting employment and income generation using micro credit and revolving funds. The emphasis is to make the schemes self-sustaining. Discussions are under way for a second phase, covering the urban employment sector.

2. Small Enterprise Reform and Development, a 3-year project funded by UNDP, approximately US$1 million of which is nationally executed. The project is technically backstopped by ENTERPRISE.

3. Improved Human Resource Development and Management and Labour Management Relations in Chinese Economic Development Zones. This is a three year project funded by the Swiss Government to assist enterprises in Special Economic Zones to compete in an international market through improved human resources and labour relations. The project is currently in its beginning stages.

The two main priorities for China at present are: employment promotion, particularly for laid off workers, and social security reform. The workers' representatives have highlighted promoting democratic and economic rights of workers and capacity building of the trade union movement as their priorities. For employers, management development and small enterprise promotion were identified as priority concerns.

International Labour Standards

China has ratified C. 100 and C. 138. Two tripartite workshops were held on C. 111 in September 2000, during which national laws and practice were closely examined. The tripartite constituents have further reviewed the feasibility of its ratification. A tripartite high level seminar on C. 182 was held in April 2001 to study the feasibility of ratification. The government does not give high priority to the issue of child labour. It considers that its laws are adequate in this regard and that this is a complex and sensitive issue.

Additionally, China has ratified C.122. Technical assistance has been provided on C. 167 (Safety and Health in Construction), C. 150 (Labour Administration) and C. 81 (Labour Inspection), which have received government's priority for ratification.

There are currently two complaints before the Committee on Freedom of Association concerning alleged infringements of trade union rights in China (Cases Nos. 1930 and 2031). While in Case No. 2031 the Government's reply has been received, the Committee is currently awaiting the Government's observations and follow-up information in Case No. 1930.

In addition, China signed the UN fundamental covenants on human rights, civil and political rights, a second on social, economic and cultural rights, as well as the International Covenant on Economic, Social and Cultural Rights, albeit with some reservations on trade union freedoms.

Other important matters

During his official visit in May 2001, the Director-General Mr. Juan Somavia signed with Mr. Zhang Zhuoji, Minister of Labour and Social Security, a Memorandum of Understanding for Cooperation between the International Labour Office and the Ministry of Labour and Social Security of the People's Republic of China. For the implementation of the MOU, regular meetings of the Joint Committee, which is led by the Director-General and the Minister, will be held every year starting from 2001 alternately in Geneva and in Beijing.

The Special Administrative Region of Hong Kong exercises the political system of "One Country, Two Systems" with the People's Republic of China as a result of the Sino-British Joint Declaration, signed on 19 December 1984, which established that China would take control over Hong Kong on 1 July 1997. Hong Kong has a Chief Executive (from Hong Kong), an Executive Council (made of Hong Kong citizens) and a Legislative Council (also of Hong Kong citizens). In addition, Hong Kong handles its international trade affairs and retains its membership of international trade bodies (WTO and Asia-Pacific Economic Co-operation Forum). China, however, controls all matters of defence and foreign affairs. Hong Kong has its own "constitution" in the form of the Basic Law and is technically independent from Beijing in most policy making and governing issues.

Hong Kong has a free market economy with few tariffs or non-tariff barriers. Natural resources are limited and food and raw materials have to be imported. GDP growth has increased as well as growth in imports and exports of goods and services. Although employment is growing in some sectors, in the construction and manufacturing industries it has continued to contract. Nominal wage inflation has eased, but consumer prices have fallen. In 2000, the unemployment rate was 4.4%.

In terms of labour legislation, Hong Kong has experienced great controversy over some pieces of legislation passed shortly before the hand-over. Worried about what Hong Kong's status would be after 30 June 1997, the Legislative Council passed legislation on all types of subjects, most of them moved by "private" members of the Council (this is allowed in the Hong Kong system). Among these last minute pieces of legislation, there were a few covering labour relations that were moved by Mr. Lee Cheuk-yan, a unionist, the most important (and controversial) being the ones on collective bargaining and anti-union discrimination. The Department of Labour, the employers and certain trade unions claim that they were never consulted on these bills.

While the Labour Department and all the employers' organisations can be said to oppose these bills on mandatory collective bargaining and anti-union discrimination, the trade unions are divided. The Provisional Legislative Council took up the matter since the Council which passed these laws was ousted. Legislation was approved on 29 October 1997 scrapping the two controversial labour laws and amending the third.

The Labour Department is the government agency responsible for the execution and co-ordination of labour administration. It covers the following areas:

• Labour relations: the Labour Department provides conciliation services for the settlement of employment claims and labour disputes as well as promoting harmonious labour relations,
• Safety and health,
• Employment services,
• Employees' rights and benefits.

The Labour Department is headed by a Commissioner for Labour and participates in 18 external advisory boards and committees dealing with labour issues. The most important of these boards is the (tripartite) Labour Advisory Board. Apart from advising the Commissioner for Labour on legislation and other labour-related issues, members of the Labour Advisory Board also represent Hong Kong's employers and employees at ILO meetings, including the International Labour Conference.

In Hong Kong, the Trade Unions Ordinance is administered by the Registry of Trade Unions, which is part of the Labour Department. In the Registry's terminology and statistics, the term "trade union" is used to describe employees' unions, employers' unions, and mixed employers'/employees' unions.

There is no central organisation representing workers in Hong Kong. Instead, they are represented on various advisory bodies, such as the Labour Advisory Board, and several different organisations. The two largest movements are the Federation of Trade Unions (FTU) and the Hong Kong Confederation of Trade Unions (CTU). These two organisations are represented on the Labour Advisory Board together with three other representatives of trade unions and one member appointed "ad personam". They diverge in very important issues such as the relation between the Hong Kong trade union movement and international labour bodies such as the ILO. Mr. Lee Cheuk-yan of the CTU is favourable to strong relations with international organisations, from which his union expects support in solving problems arising from alleged non-observance of labour laws and conventions. Mr. Cheng Yiu-tong, Chairman of the FTU, is against what he calls the "internationalisation" of local labour issues and external interference in Hong Kong's affairs. The division between the two largest unions may yet prove to be the workers' worst enemy in Hong Kong.

Although employers, like the workers, are not grouped into one central representative body, they seem to present a more united front.

In recent years, the ILO has provided technical assistance to the constituents in Hong Kong, mainly to the Labour Department and the CTU, in the fields of industrial relations (particularly on mediation and conciliation of labour disputes), human resources development in small and medium-sized enterprises, occupational safety and health and youth employment guidance.

Four ILO fundamental Conventions, i.e. C.29, C.87, C.98 and C.105, are applied in Hong Kong SAR.

One complaint (Case No. 1942) is before the Committee of Freedom of Association concerning alleged infringements of trade unions rights in Hong Kong SAR and the Committee is currently awaiting the Government's observations and follow-up information.

Macao SAR

Updated by CHW. Approved by RD. Last update: 27 July 2001.