Saturday, August 18, 2012

The Role of Dispatched Labor in the Exploitation of Chinese Workers

By Erin Wigger and Peter Schnall

Our recent blogs have highlighted the many difficulties that must be faced by Foxconn as well as other Chinese manufacturers to assure healthy working conditions for their labor force. One often-overlooked issue in the way work is organized in China is the problem of dispatched workers.

The past several years have seen a sharp rise in the use of dispatched labor in China. Under the dispatch system, a worker is officially contracted by a dispatch agency and then sent to companies recruiting new workers for what is, under the Labor Contract Law, supposed to be “temporary, auxiliary or substitute job positions” (1). This stipulation, meant to protect the jobs of direct hire workers which are contracted and permanent, has clearly failed to hold back the tide of new dispatched labor hires as shown by the swelling numbers of unregulated dispatch companies and recorded dispatched hires. These numbers, already high, are also very likely to be underestimated given that many of these hires are off the books. In fact, since the law came into affect in 2008, several large state and privately owned companies have fired many of their own direct hire workers in order to replace them with less-costly dispatched workers (2).

Why is dispatched labor so appealing? The rights of dispatched workers are harder to uphold since the regulation of dispatch agencies is so poor, and thus companies are able to exploit them with ease under China’s current system. For instance, though a dispatched worker might be performing the exact same job responsibilities as his direct-hire peer, the company in which they work is not required to make social security payments on their behalf, is not held responsible for workplace injuries and may fire them without severance. This makes it difficult for these workers to organize and also puts them at risk for mistreatment at the hands of management. Several independent audits of dispatched labor workers found that dispatched workers received greater bullying, harder working conditions as well as less pay than direct hire workers (2, 3).

According to the China Labor Watch’s recent investigation, labor dispatching is rampant in Apple’s supply chain with dispatched labor representing 70% of the entire labor force in China (3). However, a recent report from The All-China Federation of Trade Unions paints a somewhat more conservative picture with the total number of dispatch workers nationally only at 20%, or 60 million (2).

This is all very discouraging for those keeping an eye on progress in China. As Li Qiang, director of China Labor Watch recently pointed out in his recent July 31 testimony for the Congressional-Executive Commission on China. His 135-page analysis of working conditions at Foxconn and nine other Apple suppliers revealed that, “Foxconn is hardly an exception, as deplorable working conditions characterize all the factories examined, with conditions often even worse than those uncovered at Foxconn” (4).

One might then ask in what way Foxconn is better than other factories in China? It has
made one positive change since the plant’s working conditions received worldwide exposure; the plant has shifted from using dispatched workers to contracted, direct-hire workers.

With Foxconn now hiring workers directly, rather than through a third party intermediary, it assumes more responsibility for their health and is subject directly to Chinese labor laws. This constitutes a genuine win for the Foxconn labor force. In a country where the rights of dispatched workers have clearly slipped through the cracks and most companies have, in the last decade, taken up dispatched labor hiring practices with gusto, this is unusual indeed.

Though this blog is meant to conclude, for now, our series on Foxconn as we move to address problems in the United States, we feel we must remark that there has also been a recent boom of contingent labor in America. The Chicago Tribune reported on August 12 that the contingent labor force now accounts for 10 percent of the nation's workforce and is growing (5). While China’s working conditions are, arguably, worse than those experienced in the U.S., the United States Department of Labor succinctly points out, “current tax, labor and employment law gives employers and employees incentives to create contingent relationships not for the sake of flexibility or efficiency but in order to evade their legal obligations” (6).

Similar to what we see in China, American companies use contingent labor to save money by not having to make contributions to Social Security, unemployment insurance, workers' compensation, health insurance, withholding, and are relieved of responsibility to the worker under labor and employment laws (6). Though this type of employment is less desirable to American workers and offers little to no job security, it has become increasingly acceptable in the face of unemployment.