As the economy of the People's Republic of China has developed, issues of labor relations have evolved. Prior to the reform and opening up, Chinese citizens were only allowed to work where they originated from. Since 1978, when China began labor force reforms, the overwhelming majority of the labor force were either working at state-owned enterprises (SOEs) or as farm workers in the rural countryside. However, over time China began to reform and by the late 90's many had moved from the countryside into the cities in hopes of higher paying jobs and more opportunities. The only connection between the countryside and the city soon became that there was a huge floating population connecting them. Independent unions are illegal in China with only the All-China Federation of Trade Unions (ACFTU) permitted by the Chinese state and the Chinese Communist Party to operate. China has been the largest exporter of goods in the world since 2009 and the largest trading nation in the world since 2013. As China moved away from their planned economy and more towards a market economy the government has brought on many reforms. The aim of this shift in economies was to match the international standards set by the World Trade Organization and other economic entities. The ACFTU that was established to protect the interests of national and local trade unions failed to represent the workers, leading to the 2010 crackdowns. However, these strikes were centered around foreign companies.
Background
One of the hallmarks of China's socialist economy was its promise of employment to all able and willing to work and job-security with virtually lifelong tenure. Reformers targeted the labor market as unproductive because industries were frequently overstaffed to fulfill socialist goals and job-security reduced workers' incentive to work. This socialist policy was pejoratively called the iron rice bowl. The iron rice bowl in 1978 ended collective farming and was then replaced by the "household responsibility system". It provided an informal market for farmers to increase prices above government ceilings placed on goods.
In 1979–1980, the state reformed factories by giving wage increases to workers, which was immediately offset by sharply rising inflation rates of 6%–7%. In the previous year, the inflation rate only rose a small one percent. This was largely because of two elements, price controls were adjusted and there was limited economic reforms that regarded SOEs expenditures. The state remedied this problem, in part, by distributing wage subsidies.
The reforms also dismantled the iron rice bowl, which meant it witnessed a rise in unemployment in the economy. In 1979, immediately after the iron rice bowl was dismantled, there were 20 million unemployed people. Official Chinese statistics reveal that 4.2% of the total urban workforce was unemployed in 2004, although other estimates have reached 10%. As part of its newly developing social security legislation, China has an unemployment insurance system. At the end of 2003, more than 103.7 million people were participating in the plan, and 7.4 million laid-off employees had received benefits.
The 10-percent sample showed that approximately three-fourths of the labor force worked in the agricultural sector. According to the National Bureau of Statistics, in the mid-1980s more than 120 million people worked in the non agricultural sector. The sample revealed that men occupied the great majority of leadership positions. The average worker was about thirty years old, and three out of every four workers were under forty-five years of age. The working population had a low education level. Less than 40 percent of the labor force had more than a primary school education, and 30 percent were illiterate or semi-literate.
In mid-1982, the overall unemployment rate was estimated to be about 5 percent. Of the approximately 25 million unemployed, 12 million were men and 13 million were women. The unemployment rate was highest in the northeast and lowest in the south. The unemployment rates were higher than those of East Asian, Southeast Asian, and Pacific island countries for which data were available but were lower than the rates found in North America and Europe. Virtually all of the unemployed persons in cities and towns were under twenty years of age.
By the 1990s and 2000s, agriculture has remained the largest employer, though its proportion of the workforce has steadily declined; between 1991 and 2001 it dropped from about 60% to 40% of the total. The manufacturing labor force has also become smaller at a slower rate, partially because of reforms implemented at many of the state-run enterprises. Such reforms and other factors have increased unemployment and underemployment in both urban and rural areas. Women have been a major labor presence in China since the People's Republic was established. Some 40–45 percent of all women over age 15 are employed.
China's estimated employed labor force in 2005 totaled 791.4 million persons, about 60% of the total population. During 2003, 49% of the labor force worked in agriculture, forestry, and fishing; 22% in mining, manufacturing, energy, and construction industries; and 29% in the services sector and other categories. In 2004 some 25 million persons were employed by 743,000 private enterprises. Urban wages rose rapidly from 2004 to 2007, at a rate of 13 to 19% per year with average wages near $200/month in 2007.
In the Seventh National Population Census conducted by the National Bureau of Statistics of China the population in China is 1.4 billion. China's population growth has slowed since the 20th century and has maintained a mild growth in population. The average household size in China is 2.62 people, this can be attributed to the rise in better work opportunities and conditions for those living in the city. In higher education, there were 218.36 million people with a university level of education. In addition, illiteracy rates dropped from 4.08% to 2.67%. The reform and push for education in China has led them to create more skilled workers centered around urban areas. Regarding Urban and rural populations there are 901.99 million living in urban spaces which account for 63.89% of the population compared to 509.79 million people living in rural areas of China which account for the 36.11% remaining percent. The continuous shift between rural workers migrating into cities for more opportunities continue. This can be attributed to growth in industrialization, information, and agricultural modernization. Many of these rural residents permanently left their homes to gain permanent urban residency.
However, not all have been able to move the transition smoothly. The number of people who fall under the "floating population" meaning they are living in an area that is not where they are originally registered from totals 492.76 million. Of this population 124.84 million work in other provinces in China from where they live. Furthermore, this exhibits that China needs to reform much of their labor as migrant workers are moving all around the country in search of work. This is a result of market forces penetrating into China in the early eighties that have brought on a plethora of issues, one of them including the "floating population". The basis for these workers are that they theoretically could not access housing and other things that urban hukous could access.
As of at least 2024, China has one of the lowest retirement ages among major world economies, with many working women eligible for retirement at 50 and men at 60.
All-China Federation of Trade Unions The All-China Federation of Trade Unions (ACFTU) was established in 1925 to represent the interests of national and local trade unions and trade union councils. It is China's only legal union. As of early 2024, it has 300 million members and one million officials, making it the world's largest union. Membership is open to those who rely on wages for the whole or a large part of their income, a qualification that excludes most agricultural workers. In theory, membership is not compulsory, but in view of the unions' role in the distribution of social benefits, the economic pressure to join is great. The lowest unit is the enterprise union committee. Individual trade unions also operate at the provincial level, and there are trade union councils that coordinate all union activities within a particular area and operate at county, municipal, and provincial levels. At the top of the movement is the ACFTU, which discharges its functions through a number of regional federations.
In theory the appropriate trade union organizations have been consulted on the level of wages as well as on wage differentials, but in practice their role in these and similar matters has been insignificant. They have not engaged in collective bargaining or general strikes, as their principal duties have included assisting the party and promoting production. In fulfilling these tasks, they have had a role in enforcing labor discipline. From the point of view of the membership, the most important activities have concerned the social and welfare services. Thus, the unions have looked after industrial safety, organized social and cultural activities, and, provided services such as clinics, rest and holiday homes, hostels, libraries, and clubs. They also administer old-age pensions, workers' insurance, disability benefits, and other welfare schemes. More recently, however, reforms of the social security system have involved moving the responsibility for pensions and other welfare to the provinces.
Trade union law The Trade Union Law in China mandates all trade unions in China to be linked to the Chinese Communist Party. According to Article 4 of Trade Union Law of the People's Republic of China, which was passed in 1992, and revised in 2001 and 2009, "The trade union must abide by and uphold the Constitution, take the Constitution as the fundamental activity criterion, center on economic construction, adhere to the socialist road, adhere to the people's democratic dictatorship, adhere to the leadership of the Communist Party of China, adhere to Marxism-Leninism, Mao Zedong Thought and Deng Xiaoping Theory, adhere to reform and opening up, carry out work independently in accordance with the trade union charter."
Labor laws
Generally, labor disputes must go through arbitration before they can be litigated in court.
In China there exist labor laws which, if fully enforced, would greatly alleviate common abuses such as not paying workers. In 2006, a new labor law was proposed and submitted for public comment. Enacted in 2008, the Labor Contract Law of the People's Republic of China permits collective bargaining in a form analogous to that standard in Western economies, although the only legal unions would continue to be those affiliated with the All-China Federation of Trade Unions, the Communist Party's official union organization. The new law has support from labor activists, but was opposed by some foreign corporations, including the American Chamber of Commerce and the European Chamber of Commerce. There is some expectation that the law would be enforced."China Drafts Law to Boost Unions and End Labor Abuse" . New York Times. 13 October 2006"New labor law introduced in China" article in The New York Times retrieved 5 June 2010 In 2010 a substantial increase in labor related cases brought to court in 2008 was reported."Global Crisis Adds to Surge of Labor Disputes in Chinese Courts" article by Edward Wong in The New York Times 15 September 2010, accessed 16 September 2010