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China¡¦s development model flawed
By Wu Jieh-min and Liao Ching-hua §d¤¶¥Á ¡A ¹ùë¾ì
Sunday, Jun 06, 2010, Page 8
The suicides by employees at Taiwanese company Foxconn¡¦s
plant in China are only the tip of the iceberg when it comes to the negative
social effects generated by the Chinese development model. Three characteristics
of this model are a lack of human rights, high levels of exploitation and few
social welfare benefits.
China has been called the world¡¦s factory. It sits at the end of almost every
production chain in the world. The shiny exterior of the Chinese model is
supported by hundreds of millions of workers laboring under the pressures of
streamlined production and cost cutting. Many of these workers are not
registered as permanent residents in the cities where they are employed and
therefore do not enjoy the benefits granted to city residents.
The many foreign companies and the local Chinese export industry are exploiting
this national brand with the support of the Chinese national government, which
is seeking to strengthen and enrich itself by increasing its income.
China has set a modern working hour policy, but the minimum wage is very low.
The legal weekly working hours in China are less than 40 hours, and monthly
overtime is limited to 36 hours. This superficially advanced work hour policy is
used as a skillful cover for the exploitation. The official minimum salary
regulations are very rigid, and the adjustment never keeps up with inflation.
Someone on the minimum wage working only regular hours will have a very low
income. Although illegal, it is very common to work more than 100 hours of
overtime per month.
Taking Foxconn as an example, an ordinary worker only earns 950 yuan (US$139)
per month. However, if they work 98 hours of overtime ¡X 66 hours on weekdays and
32 hours on weekends ¡X they can earn about 1,840 yuan. Under this wage system,
there is a 1:1 ratio between salary and overtime pay.
The monthly GDP per capita in Shenzhen, where the Foxconn plant is located, is
6,637 yuan and the average nominal professional salary is 3,233 yuan per month.
Life for a worker would be very difficult if he or she didn¡¦t work overtime.
Many Taiwanese told us during our field study that Chinese workers really like
to work over time and that they would be unhappy if there was no extra work to
be done.
This is the situation at Foxconn. According to an undercover investigation by a
Chinese-language newspaper, the Southern Weekly: ¡§Chinese workers would ask the
capitalist for overtime work. They would even flatter their line managers or
team managers for the opportunity.¡¨
Because the minimum wage is so low, companies request employees to work overtime
to boost productivity. For the same reason, employees are forced to do overtime,
resulting in employees doing too much overtime.
Another factor is social insurance. Guangdong provincial authorities offer
outsiders very meager social welfare benefits. Enterprises are requested to sign
a legal work contract with employees. According to Chinese labor legislation,
companies must sign contracts with their employees, and once such a work
contract is signed, the employee must be given social insurance coverage.
However, the Guangdong authorities are not strict in this regard.
Shenzhen divides its social insurance into two categories. About 2 million
residents registered in Shenzhen are given ¡§city workers¡¦ social security,¡¨
while over 10 million non-registered residents are either ¡§ghost workers¡¨
receiving no coverage, or outsiders covered by ¡§general social security for
non-resident workers.¡¨
There are big differences in the premiums and benefits between the two. Similar
dual systems are used in Shanghai and other big cities. In other words, China¡¦s
residence system saves capitalists around the world from spending a lot of money
on social benefits.
The social insurance issue illustrates the Chinese model¡¦s biggest problem ¡X the
dual system that differentiates between urban and rural areas and does not
extend residency status to out-of-town workers.
It¡¦s easy to see why this system cannot be changed. Once residency rights are
deregulated, who would pay for the cities¡¦ increased social welfare expenditure
for the workers? The national government does not want to foot the bill and
local governments only care about the interests of their own city and residents.
In an anonymous open letter, nine Chinese sociologists urged the government to
let workers become real citizens regardless of where and which company they work
for. The sociologists hinted at the oppression and exploitation that such a dual
social security system creates. However, they didn¡¦t go all the way, and they
didn¡¦t blame the state.
Some may say that Foxconn is a victim because it offers good benefits, pays high
salaries and has people lining up to work for them, but why has misfortune
struck this ¡§exemplary high-tech company?¡¨ Let us not forget that it is an
industrial behemoth sitting at the end of the global production chain. It
imprisons and alienates workers and compels them to work overtime in an inhumane
enclosed park where they loose sight of the purpose of their work.
Foxconn slashes prices to win orders, but who should take responsibility for the
resulting problems? Who designed the system? We should be looking to the foreign
manufacturing companies of the packaging industry, the multinational capitalists
that earn huge profits and the Chinese government that only cares about
increasing its wealth and strength.
Wu Jieh-min is an assistant professor at National Tsinghua
University¡¦s Institute of Sociology and Center for Contemporary China. Liao
Ching-hua is a graduate student at the Institute of Sociology at National Tsing
Hua University.
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