Rights for Two-Thirds of Asia:
Asian Labour Law Review 2008
ii
Asian Labour Law Review 2008
ASIA MONITOR RESOURCE CENTRE
The Asia Monitor Resource Centre (AMRC) is an independent non-governmental organization which
focuses on labour concerns in the Asian region. The centre provides information, research, publishing,
training, labour networking, and related services to trade unions, labour groups, and other development
NGOs in the region. The centre’s main goal is to support democratic and independent labour movements
in the Asian region. In order to achieve this goal, AMRC upholds the principles of workers’ empowerment
and gender consciousness and follows a participatory framework.
Rights for Two-Thirds of Asia: Asian Labour Law Review 2008
Published by Asia Monitor Resource Centre 2008
Editorial Team:
Doris Lee, Apo Leong, Rene Ofreneo, Anoop Sukumaran
Steering Committee:
Dae-oup Chang, Doris Lee, Lucia V. Jayaseelan, Apo Leong,
Rosalinda Ofreneo and Irene Xavier
With grateful acknowledgement of the teamwork and contributions of all AMRC staff to this project in
diverse ways, from identifying chapter writers to editing and fact-checking, and all the necessary work in
between and beyond until the publication could be completed: Sally Choi, Omana George, Ah-king Law,
Apo Leong, Annie Luk, Sanjiv Pandita, Anoop Sukumaran and Winnie Wo. Also deep thanks to our
interns who contributed during this time: Diana Beaumont, Agung Hermawan and Sri Wulandari.
With grateful acknowledgement of copy-editing/translation assistance from:
Suki Chung, Carol Dyer and N. Jayaram
Layout by Clear-Cut Publishing & Printing Co.
Cover Design by Clear-Cut Publishing & Printing Co.
Copyright Asia Monitor Resource Centre Ltd, 2008
All rights reserved
Articles may be reproduced in non-profit publications; credit is requested
ISBN-13: 978-962-7145-36-3
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Cover photo:
Background photo: Asian Women Workers’ Center – part-time women and
youth workers marching for part-timers’ rights
Foreground photos, top to bottom:
Asia Monitor Resource Centre – Rally of Indonesian migrant workers in Hong Kong
Hong Kong Women Workers’ Association – home-based garment worker;
sub-contracted street cleaner
iii
Introduction
Rights for Asia’s Invisible Majority,
Social Justice for All Working Women and Men
Rene E. Ofreneo, Ph.D.
Asia’s Jobless Growth and Ever-Expanding Informal Economy
I
n its 2006 Human Development Report for the Asia-Pacific, the United Nations Development
Programme (UNDP) wrote that the fast-growing region has embraced free trade. Then it
asked rhetorically: Has free trade embraced Asia’s poor?
The answer by the contributors to the 2008 Labour Law Review is a uniform ‘no’. While
much has been written about the relative success of the Asia-Pacific region under globalization,
the reality is that growth has been unequal and exclusionary in most countries. The majority in
society have not benefited from the growth process even in the new dragon economies of China
and India. As the UNDP has observed, growth in the Asia-Pacific region is a ‘jobless’ one. Which
is the reason why International Labour Organization Director-General Juan Somavia, in his
Making Decent Work an Asian Goal1 remarked that there is a huge ‘decent work deficit’ in the
region, with employment creation lagging behind Asia’s vaunted trade openness. The observation
on the jobless growth pattern is further corroborated by the lengthy statistical analysis made by
Jesus Felipe and Rana Hasan of the Asian Development Bank, who documented the steep decline
in employment elasticities in Asia in the globalization decade of the 1990s.2 For example, China’
s employment elasticity went down from 0.33 to 0.129.
This jobless growth phenomenon, reflected in the high unemployment and
underemployment rates in the individual Asia-Pacific countries, is fuelling another startling
phenomenon – the swelling army of informal workers or ‘informals’ everywhere. The large
informal economy covers a galaxy of ‘unregistered’ and usually ‘unregulated’ economic activities
taking place in agriculture, industry and in the rapidly-growing service sector. Workers in the
vast informal economy include self-employed farmers, seasonal agricultural workers, home-based
producers, ambulant peddlers, unregistered migrants, backyard mechanics, informal construction
workers and others doing all kind of jobs unregulated by any protective labour laws. In their 2002
International Labour Conference, the ILO tripartite members approved the Resolution adopting
the more all-encompassing term ‘informal economy’, instead of the term ‘informal sector’, in
order to capture ‘all economic activities that are in law or practice not covered or insufficiently
covered by formal arrangement’.
Statistics on the informals vary and the statistical methods of counting them also vary in
the Asia-Pacific.3 In Bangladesh, formal employment applies only in establishments with 10
or more employees, meaning jobs in enterprises with less than 10 employees are by implication
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Asian Labour Law Review 2008
considered informal. Similarly, in Pakistan, the measurement for formal employment is
in terms of the number of employees – 20 or more for non-industrial and 10 or more for
industrial establishments. In India, informal employment is simply any employment outside
the ‘organized sector’ consisting of the public sector, recognized educational institutions and
enterprises registered under the Indian Factories, Co-operative Societies and Provident Fund
Acts. In Indonesia, the informals are the own-account workers, self-employed assisted by family
members, farmer employees and unpaid family workers. In the case of the Philippines, informal
employment includes the self-employed, unpaid family workers and those employed in enterprises
with less than 10 people. Thailand, on the other hand, has introduced a more nuanced definition:
‘informal sector’ includes enterprises operating with a low level of organization on a small-scale,
with low and uncertain wages and with no social welfare and security. China defines the informal
sector as the totality of small-scale economic units that are not legally established or registered,
consisting mainly of microenterprises, family enterprises and independent service persons.
Malaysia’s informal definition is focused on the individual workers – the unprotected workers
who are not covered by the social security system or the Employees Provident Fund and the selfemployed, including unpaid family workers.
The ILO estimates informal employment in the Asia-Pacific region to be around ‘65 per
cent of non-agricultural employment, as compared with 48 per cent in North Africa, 51 per cent
in Latin America and 72 per cent in sub-Saharan Africa’ (ILO, 2007).4 This the ILO said is one
reason why 50 per cent of Asia’s work force, roughly 900 million, subsist on $2 or less a day.
The India country paper in this Review gave the highest rate of informal employment in
Asia—a whopping 93 per cent of the total employed work force. This means the well-publicized
two million jobs in the ‘sunshine’ ICT-enabled BPO sector of India are just a drop in the
country’s 400-million labour market bucket, composed mostly of informal workers in the urban
areas and landless rural poor in the countryside. Other country papers reported high informal
employment – Cambodia, 85 per cent of the work force (or 6.8 million); Indonesia, 63.8 per cent
(60.7 million); Pakistan, 82.7 per cent (39.7 million); Philippines, 76.34 per cent (24.6 million
workers); Thailand, 67.8 per cent (22.1 million); and Vietnam, 77 per cent (33 million). Statistics
on informal employment in Bangladesh, Myanmar, Nepal and Sri Lanka are unclear; however, all
these countries are known to have high percentages of informal employment.
China, Laos and Mongolia, which, like Vietnam, have shifted to a market-oriented
management of the economy, have no precise statistics on formal-informal employment.
However, these countries are known to have large ‘floating populations’ consisting of workers
leaving the countryside and those displaced by the restructuring/privatization processes taking
place in the state-owned enterprises (SOEs), which used to provide employment for the majority
of workers. China alone has the formidable task of looking for jobs for the xiagang workers or exSOE employees and the more numerous rural migrants, estimated at one time to be around 100
million, endlessly streaming into China’s booming cities (Pringle, 2006: 13). These xiagang and
rural migrants are augmented annually by the entry in the labour market of around five million
young Chinese workers.
As to Japan and the Asian NICs (Hong Kong, Singapore, South Korea, Taiwan and
Malaysia), the expansion in informal employment is happening through two major routes —
the absorption of a large number of overseas migrant workers with short-term employment
contracts and the increased hiring of workers on a non-regular status (see discussion below),
especially those deployed in their growing service sector. The ILO Regional Office in Bangkok
(2007) estimated that there are at least 5.3 million overseas migrant workers eking out a living
Introduction
in the labour-receiving countries of Singapore, Malaysia, Brunei and Thailand. These migrants
literally constitute the ‘reserve army of labour’ for the Asian newly industrialized countries (NICs),
occupying the ‘3D’ jobs (dirty, dangerous and difficult) in the host countries.
The ‘Irregularization’ Mania Sweeping Asia
A third and related labour market phenomenon in Asia is the massive ‘informalization’ or
‘flexibilization’ of work in the formal sector in both developing and developed Asian countries.
The ‘regulars’ or ‘standard’ employees are now outnumbered by the ‘irregular’ or ‘non-standard’
agency, temporary, casual, part-time, migrant and subcontracted workers.
In a survey of the labour flexibilization processes in East Asia, Ofreneo (forthcoming) came
up with the following major findings: 5

Despite differences in their levels of economic development, the East Asian countries
are all moving towards increased downward or ‘external flexibility’ in labour hiring
and deployment in their formal labour markets. External flexibility means ease in the
hiring and firing of workers, including flexibility in wage and labour standard setting. In
contrast, ‘internal labour market flexibility’ means increased investments by corporations
on skills and new work arrangements to develop a multi-skilled, versatile and productive
work force. Internal flexibility usually leads to a very lean and mean work set-up, while
external flexibility encourages firms to outsource work to agencies using short-term
workers variedly called ‘casual’, ‘contractual’, ‘irregular’, ‘non-standard’, ‘dispatched’,
etc.

The use of old labour flexibility measures has been widespread. Per an early study by
Gus Edgren (1990) of the Asian labour market, these include the following:
reducing the core of permanent workers and increasing the proportion of

temporary and casual workers;
increasing the use of women, apprentices and migrants;

subcontracting the production of components previously manufactured within the

factory;
subcontracting services such as transport, packaging, maintenance and security that

are carried out on factory premises;
increasing the number of shifts per day or use of overtime;

replacing pay systems based on working time and length of service by systems

based on piece rates and bonuses;
introducing internal training systems that facilitate redeployment of workers within

the factory or enterprise; and
reducing influences from external trade union organizations by either eliminating

unions or establishing a controllable (company) union.

The informalization process in the labour markets of Japan and Korea has been massive
and dramatic from the 1990s onward.
o
In Japan, a 2003 government survey shows that more than 70 per cent of
companies ‘hire part-timers, contract employees, temporary workers or other
irregular employees’. As a result of the programme of labour market deregulation,
the ratio of ‘non-standard’ to regular employees surged to 1:3 in the 1990s,
and in 2003, to 1:2, meaning one in every three Japanese employees was a non-
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Asian Labour Law Review 2008
standard worker. The part-time workers, numbering 11 million in 2004, include
over two million ‘freeters’ (from the English word ‘free’ and the German ‘arbeiter’
for worker), young workers who do either temporary or part-time work. The
‘dispatched workers’, or those under contract to a dispatching agency, also number
more than two million. In addition, Japan has more than two million ‘guest
workers’ coming from Asia and Latin America. Overall, the old Japanese notion of
‘lifetime employment’ is now becoming a historical footnote.
o
In Korea, both the Korean Confederation of Trade Unions and the Federation
of Korean Trade Unions have been waging a campaign against ‘irregular
employment’. The government’s labour market deregulation policies in the 1990s,
including the relaxation of rules on employee dismissals, led to a massive shift in
the hiring patterns, with the ‘irregular’ workers outnumbering the ‘regular’ workers
since 2000. South Korea has around 2.7 million ‘temporary workers’, 2.9 million
‘contingent workers’ and 1.8 million part-time, dispatched, ‘temporary agency’ and
‘independent’ contract workers. In addition and like in Japan, South Korea allows
overseas migrant workers to work in the guise of apprenticeship or traineeship.

The transition economies of Cambodia, China, Lao PDR, Mongolia and Viet Nam are
all exhibiting signs of increased labour market flexibility. As mentioned earlier, China
and other formerly socialist-managed economies have a large ‘floating population’
of rural migrants and displaced SOE workers. The old ‘iron rice bowl’ policy (i.e.
guaranteed lifetime employment) of Communist China is gone. So is the concept of
bien che or work for a lifetime in the case of Viet Nam. In the latter, one study indicates
that 4.5 million Vietnamese changed place of residence in 1994-99, a clear indication
of intense rural-to-urban job-search migration. The paper in this Review also mentioned
that many Vietnamese workers log long hours of work, some working as much as 91
hours a week or participating in a 13-hour shift schedule with no rest days.

Hong Kong, Malaysia, Singapore and Taiwan are big employers of overseas migrant
workers, who are a big source of labour flexibility in business operations. Malaysia has
over two million overseas migrants workers, the majority coming from Indonesia, while
the migrants in Singapore constitute as much as 30 per cent of the total work force.
The hiring of migrants to do the 3D jobs is complemented by the hiring of non-regular
workers in the service sector of these countries as discussed in the various country papers
contributed to this Review.

The use of flexible labour is even more widespread in the formal labour markets of the
three big middle-income ASEAN countries of Indonesia, Philippines and Thailand, all
of which have large informal economies. In all the three countries, the direct hiring
of non-regulars is complemented by the outsourcing of work to agencies engaged in
providing short-term workers.
The Unending Race to the Bottom
The informalization mania taking place in the labour markets of both developed and
developing countries of the Asia-Pacific region is clearly a response of firms to the globalization
and economic liberalization processes. This has fuelled a ‘Race to the Bottom’ not only within the
individual countries but also across the region, with transnational capital hopping from one cheap
labour platform to another, usually in enclave export processing zones (EPZs), under their global
production chains.
Introduction
vii
Asian trade unions, generally weak and covering less than ten per cent of the employed
workers in the formal labour market, are further weakened by the obsession of both global and
national capital to outsource work, by the union inability to organize the ‘non-regular’ workers
for collective bargaining purposes and by the overt and covert anti-union policies in place in
most countries. With flexible hiring arrangements, employers are able to pit the non-regular
workers against the regular workers and threaten the latter with dismissal for any slight mistake,
or in extreme cases, closure of the business itself. Minimum wage and other labour standards
are routinely ignored by employers and subcontractors who have easy access to flexible and
replaceable labour. Thus, overall, the trade unions, under the deregulated labour market of Asia,
have become a movement for a distinct and shrinking minority in the formal labour market, even
as the ‘informalization’ process is disempowering the majority in the said formal labour market
through all kind of flexible contracting arrangements which subvert the rights of these workers for
tenure, unionism, bargaining and better working conditions.
The search by formal employers for flexible labour is further extended through the utilization
of even cheaper labour in the vast and unprotected informal economy. This is best illustrated
by the export-oriented global garments industry, where part of the work is done by homebased producers, mostly women and even children, under a complicated system of multi-level
subcontracting at the national and global levels, as documented by the different country papers
for South Asia and Southeast Asia. The industries covered by this formal-informal production
chain nexus are usually the labour-intensive ones and include the garments, leather, bag, toy, rug,
shoe and fashion accessory industries.
As to the labour situation in the informal economy itself, Asian governments pursuing
a deregulationist labour market programme are hardly able to provide a modicum of social
protection to the informals despite populist rhetorics on welfarism uttered by some leaders.
The different country papers in this Review paint a bleak picture of informal work—abysmal
working conditions, super-low wages and incomes, long hours of work, abuses and maltreatment
of women workers, absence of OSH standards and so on. The informals are often beyond the
reach of traditional unionism, which is governed by formal labour laws based on well-defined
employer-employee relations. In fact, employers have been resorting to varied ‘non-standard’
hiring arrangements—and utilizing part of the informal economy (via subcontracting)—partly
to obviate the influence of trade unionism, which is usually built around a collectivity of workers
enjoying regular tenure.
Overall, the Race to the Bottom penalizes virtually everyone in the labour force, particularly
those in the informal majority—in both the formal and informal economies. The informals clearly
deserve a modicum of social and labour protection, including social insurance as articulated by
most of the country papers. And yet, by and large, most of these informals are invisible before
the law. They are not getting the protection mandated by the United Nations, which 60 years
ago adopted a ‘Universal Declaration of Human Rights’, which provides under Article 21 that
‘Everyone, as a member of society, has the right to social security and is entitled to realization,
through national effort and international cooperation and in accordance with the organization
and resources of each State, of the economic, social and cultural rights indispensable for his
dignity and the free development of his personality’.6 Similarly, they are not enjoying any of
the ILO Conventions on minimum labour standards which are supposed to be enjoyed by all
workers. After all, human and labour rights are supposed to be universal in character and should
be applied universally.
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Asian Labour Law Review 2008
All this is not happening in globalizing Asia, partly due to the deregulationist character of
labour market and economic policy regimes in place. What then can be done?
Industrial Relations Reforms and Safety Nets for All
The country papers in this Review contain a long list of particulars on labour reforms and
safety net measures which need to be adopted and enforced in the different Asia-Pacific countries.
The labour situation in many countries is abysmal and dysfunctional: low and declining
levels of unionism, protective labour laws covering a distinct formal minority, subversion of the
rights of the informal majority in the formal labour market and absence of social protection for
the large number of informals belonging to the informal economy. These realities are at the roots
of endemic and deepening mass poverty in the region despite rosy statistics on economic growth
and export expansion.
It is abundantly clear, therefore, that no less than a radical overhaul of the existing labour
law regimes is in order, if governments want to embrace society’s poor. One direction of reform is
to strengthen existing protective labour laws and upgrade/modernize the labour laws in countries
with underdeveloped regulatory regimes. Another must-do is to extend unionism and the
application of protective labour laws for the informal majority in the formal labour market. There
are some positive developments in this regard.7 For example, Japanese trade unions have registered
increases in membership in recent years when they are able to negotiate with principals for the
collective bargaining rights of ‘non-standard’ employees. China, responding to massive pressures
from people from all walks of working life, enacted in 2007 a Labour Contract Law which seeks
to minimize tenure abuses affecting the short-term or temporary workers.
However, such measures are never enough. For the challenge is how to make labour laws,
especially laws favouring unionism and collective bargaining, truly universal. In the era of
segmented labour markets under globalization, this will require reform coordination as well at the
international and regional levels. In particular, this requires international unity on the setting up
of firm global standards of behavior for transnational corporations operating in various countries
based mainly on cheap labour incentives. This is one necessary step in halting the global and
regional Race to the Bottom.
As to the workers in the vast informal economy, the various papers in this Review have
extensive outlines on the importance of social protection or safety nets for these modernday ‘precariats’, holders of precarious and unprotected jobs. For example, there are successful
initiatives to organize and empower women in the informal economy such as the SEWA self-help
drive in India, which Homenet Southeast Asia is trying to replicate in the ASEAN region. SEWA
itself has succeeded in acquiring formal membership in the international trade union movement.
Thailand has also shown that a government, regardless of the level of development, can make
health insurance coverage a universal entitlement for all citizens, rich and poor.
But obviously, the wish list of the various paper contributors for meaningful social protection
and safety nets for the most numerous but unprotected informals can only happen if governments
have the fortitude to adopt their recommendations and go against the neoliberal advice of
technocrats and international financial institutions (IFIs) for a programme of economic and
labour market deregulation. For heavily-indebted Asian countries, this will entail a renegotiation
of their heavy debt service obligations and postponement of debt servicing a la Argentina so that
unfunded social protection and safety nets are given priority in the national budgeting processes.
Introduction
ix
As it is, most of the policy interventions being made by governments in the informal economy are
programmes entailing minimum government subsidies such as the promotion of ‘micro banking’
or microfinance, which can alleviate the credit requirements of poor women in business but
cannot fully eradicate poverty.
The ILO, in a programme dubbed as Rolling Back Informality (2007), outlined six major
‘decent work strategies’ for the informal economy, namely: local rural-urban development
strategies, organization and representation of informal workers, extension of social protection and
social security, business and market assistance, labour standards and growth strategies for quality
jobs. These strategies are more or less reflected also in the various country papers included in this
Review and are consistent with the above discussion.
On local rural-urban development, ‘the first level of engagement’ in dealing with informal
employment is indeed at the community, village or town/city level, for the truth is that many
local government councils are unable to address the concerns of the informals, much less
understand their situation. On organization and representation, this is a critical one as the best
way to further a development and empowerment agenda for the informals is to help the informals
organize themselves and push collectively for the advancement of their common interests as
illustrated above in the examples of SEWA and other self-help initiatives across the region. On
the extension of social security, this requires political will on the part of the national government
as this entails a certain amount of subsidy, which is easily offset by the greater stability society
and the economy gain. The same positive social and economic impact can arise out of the
development and enforcement of labour standards.
On business and market assistance, this is fine and is being done by a number of nongovernmental organizations as well as public institutions. There are some success stories on
business skills development and market expansion. However, by and large, such assistance is
unable to make a substantial dent on the large informal economy. For the reality is that many
in the informal economy are not in the business of becoming and remaining informal workers.
Most are in the said economy as a ‘coping mechanism’, as a means of somehow getting by or
subsisting on a day-to-day basis given the stark absence of better job and income opportunities in
the small and shrinking formal sector of the economy. Such a reality, therefore, requires a more
rigorous analysis of the growth and employment strategies being pursued by Asian governments.
Towards a Programme of Full Employment and Balanced Development
In the final analysis, the most important decent work strategy for the informal economy is
to have a programme for full employment for all based on a balanced, equitable and inclusive
development strategy. This will require a radical overhaul, if not recasting, of the dominant
neoliberal policy regime in place in most countries, which has deepened the Race to the Bottom
and has consequently contributed to the tremendous expansion of the informal economy in these
countries. This also requires an overhaul of the architecture of the global economic order based on
this neoliberal thinking favouring unregulated laissez-faire markets everywhere.
It should be noted that part of the neoliberal job creation recipe is the outright reduction of
regulations on labour market, including the removal of rules on employee dismissal. This is based
on the neoliberal belief that institutions such as unionism, collective bargaining and protective
labour standards, including social security, constitute ‘rigidities’ in the labour market and in
the larger economy, thus preventing the flow of the so-called job-creating foreign and domestic
Asian Labour Law Review 2008
investments. In this connection, the Pakistani country chapter citing the World Bank’s advice on
job creation is instructive:
‘The World Bank has advised the government to reduce regulations on labour market,
cut down hiring and firing costs and allow redundancy as fair ground for dismissals as
it believes the tight regulation is resulting in lack of investment in the work force and
reducing regular jobs.’
Based on the foregoing World Bank advice, the Pakistani government came up in 2006
with an Employment and Services Conditions Act, which allows greater business flexibility in the
hiring and firing of employees, eliminates time limits on employment contracts, and increases the
hours of work from 48 to 60 hours per week. And yet, this draconian law has failed to invigorate
job creation in Pakistani and has instead ignited labour and social unrest.
This World Bank neoliberal thinking on a deregulated labour market is clearly a throwback
to the situation of the 18th and first half of the 19th centuries when no labour rights were legally
recognized anywhere in the world. And yet, the World Bank is still pursuing this kind of thinking
as reflected in its annual publication project entitled Doing Business, which rates countries’
capacity and readiness for job creation. In this international benchmarking project, countries with
minimal labour regulations, with flexible hiring and firing policies and with long hours of work
are considered the most prepared for job creation. Thus, in the 2006 issue of Doing Business, Palau
and Marshall Islands rated highly because these countries happen to have minimal or no labour
rules. If one pursues the World Bank argument to its logical end, unemployment and informal
employment are endemic because of protective labour laws and assertive organizations of workers!
This is why a programme for full job creation requires confronting neoliberal
fundamentalism.
In this connection, the present global financial meltdown now washing mightily into
the Asian shores provides a historic opportunity for leaders of the Asia-Pacific region to
abandon neoliberalism and institute instead bold social and economic reforms in support of
full employment. The meltdown—and the earlier 1997-98 Asian financial crisis—have shown
how utterly wrong and disastrous for society to accept the neoliberal assumptions of growth
automatically fueling more growth in unregulated or unfettered markets. One undeniable root
cause of the Asian financial crisis and the present global financial meltdown is precisely the
irrational exuberant belief in the so-called growth-creating potentials of free financial, goods and
labour markets sans regulations.
Today, the United States and Europe, which preached to East Asia a decade ago for
governments not to intervene in the market, are doing the exact opposite, that is, intervening
decisively through all kind of bailouts and using job preservation as their main argument.
However, it is important for unions and civil society organizations to challenge the direction
that this Keynesian-style interventionism is taking. Interventionism should not be pursued to
safeguard the assets of a few and preserve an unequal global social and economic order.
Rather, it should be interventionism guided and tempered by the requirements of the
working people, formal and informal. Interventionism should be in support of a new global social
contract which recognize and enforce the rights of all workers. Interventionism should be used to
give developing countries maximum flexibility to calibrate trade and development priorities based
on their level of development and capacities in order to achieve full employment and balanced
development.
xi
Introduction
REFERENCES
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Asian Labour Law Review 2008
ENDNOTES
1.
2.
3.
4.
5.
6.
7.
Somavia (2005), presented at the 14th Asian Regional Meeting of the International Labour Organization,
Busan, Korea, October 2005.
Felipe and Hasan (2005)
Felipe and Hasan (2005)
International Labour Organization (2007)
Ofreneo (2008) forthcoming.
United Nations Human Rights Declaration, cited in Social Watch International (2007)
Ofreneo, (2008), forthcoming.
xiii
Reclaiming Labour Law and Beyond
Dae-oup Chang
T
he introduction to the previous Labour Law Review, published by AMRC in 2003, stated
that ‘labour laws and their capability to protect workers are under threat across the region.
New forms of work, increased mobility of capital and labour, the rising influence of FDI are all
changing the terrain upon which labour law functions’.1 Five years have passed since then. Have
labour laws gotten any more effective during the last five years?
As all contributors of this book would strongly agree, labour laws have become more
effective mostly in terms of mobilizing labour ‘flexibly’ in correspondence to the need of mobile
capital, but not as effective in terms of protecting workers’ livelihood in the region (with some
exceptions). We have been witnessing that more flexible labour arrangements have been invented
and have allowed, if not encouraged, more and more informal and irregular workers to be
excluded from protection by labour laws for the last five years.
In this chapter I try to reflect points made by following country chapters, however with
some more strategic points highlighted. The first part of this chapter deals with the intrinsic
contradiction of labour law in which labour features as a commodity to be protected from market
despotism, but nonetheless a commodity. The second part discusses the relations between formal/
informal labour and labour laws by tracing the historical trajectory of modern labour law and the
forms of ‘formal labour’ as a reference point for all the discussion about the informalization of
labour. The third part addresses the uneven development of the informalization of labour in Asia,
with particular focus on its impact on women workers. The last part of the tries to draw some
strategic implications of the informalization of labour on the future of the labour movement in
Asia.
Intrinsic Contradiction of Labour Law
Labour activists often believe that labour law is by nature good and is basically ‘for’ workers.
Many argue that a major obstacle against the realization of the good nature of labour law is its
implementation. If put this way, labour law becomes an inherently good thing and the problem
is perhaps either economic, i.e. lack of resource to train and pay labour inspectors or corruption
that allows local or national governments not to strictly monitor individual capitals to comply
labour law at the workplaces. This analysis has truth in it as labour laws are the most commonly
violated laws in Asia, perhaps only second to traffic regulations. However, the nature of labour
law may not be that simple. It is important to recognize that labour law itself, implemented or not
implemented, has dual aspects and an inherent contradiction even without corruption or ‘resource’
problems. On the one hand it is ‘the’ law which constitutes labour in modern society as a ‘private
property’ and labour relations as private property relations of buying and selling. Therefore it is
not simply a bunch of regulations and rules over the workplaces and ‘industrial’ relations, but it is
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at the core of organizing capitalist society the way it is: commodity-production and consumption
by workers who sell their labour power to capitalists for money income and purchase products
made by some other workers in some other places with the money paid for their labouring
activities. On the other hand, labour law reforms toward more protection and collective labour
rights of the workers shows the ultimate challenge, often imposed by the workers movement, to
labour being framed as a pure commodity exchanged through pure market relations.
There, we are able to see the clearly distinguished two poles of labour law: as a law that
defines labour as exchangeable and buyable private property just like any other property, on the
one hand; and on the other hand, labour as a particular quasi-commodity that is attached to
human body and soul and therefore cannot be completely subjected the rule of the market. The
pendulum of labour law reform swings in between those two aspects of the law and it reflects
power relations between labour and capital. Yet even if, after much effort made by labour, increasing
number of workers came under the protection of labour law, it could only be done by their
labouring activities becoming increasingly commodified in doing so. This intrinsic contradiction
of labour law is well reflected in the historical development of labour law. In this, a formal form
of capitalist labour, finally became established (and survived very briefly as a dominant form of
capitalist labour) in contrast to informal labour that is our concern in this book.
Labour Law, Formal and Informal Labour
If reforms in the last quarter of the 20th century and the early 21st century witnessed
capital claiming back labour laws as laws making labour into a property for sale, it was the early
20th century’s labour law reforms, mostly in developed countries, that had made many ‘real’
concessions to the working class Needless to say, it was the early labour movement that changed
the focus of labour law toward more protection for labour, so that labour would not to be treated
as merely an object for exchange, but as more of a quasi or ‘fictitious’ commodity that cannot be
entirely subjected to the rule of money and market. The early labour movement did so by turning
the area of ‘production’ into a frontline of struggle for political, economic and social rights of
ordinary people.
Factories became the most important arena of power struggle for labour, political and
human rights. The labour movement often put the reproduction of capital relations to a halt by
turning labour relations, which were supposed to be individual economic relations of exchange,
into collective and political relations, by challenging and testing the existing legal and political
boundaries and system. During this period, workers saw many illegal activities that could have
brought the death penalty to those involved become legal rights of workers.
The natural and technical outlook of capitalist social relations then needed to be compensated
for by the modern liberal-democratic state, which offered one vote to one person, without regard
to the property owned by the individual (While this was a gain for citizens who gained the vote,
it also effectively meant that workers’ only source of revenue, labour power, was recognized as a
kind of property). Political parties whose strength was based on organized labour soon grasped
or at least heavily influenced the state through class voting and then the state introduced more
protective labour legislations for worker-voters. It was this time that ‘modern’ labour laws started
being shaped.
With this modern labour legislation and socio-political rights which were enforced by the
state and treated labour as a ‘commodity’ but not as a ‘pure’ commodity, we saw the emergence
of ‘formal capitalist labour’, elements of which include regular hours and pay, the provision
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of a designed workplace, pensions, sick leave and payments, minimum wage, right to join a
trade union, right to collective bargaining, workers’ councils, tripartite committees, and most
importantly right to strike. In other words, labour became ‘formal’ with the introduction of
these legal and institutional protections that were described in labour laws and guaranteed by the
democratic state. The recognition of workers’ collective rights, especially the right to strike, was
nothing but the recognition of the stark difference between the ideal free-contractual relations
between property owners and labour relations in reality. While the rights earned were certainly
a great achievement of the labour movement as they really improved workers’ livelihood, these
institutional regulations were, importantly, ultimately backed by the solidarity-based power of
industrial trade unions. ‘The formal form of labour’ was thus ultimately a result of the power
of solidarity that involved not only industrial actions but also political and social alliances for
democratic control over capital.
It might seem as if it was only the working class which had made a great leap forward by
the mid-20th century. However, this was not the case, insofar as labour remained nonetheless
a commodity, whether protected or not protected. The irony of this period was that labour was
increasingly regarded as a ‘fictitious’ commodity with increasing protective legislation, but at the
same time work was becoming a ‘commodity’ more than ever before as more social services were
industrializing, livelihood commercializing, and circuit of capital expanding with the economic
boom.
Over the first half of the 20th century, capital also made great progress by continually
introducing organizational and technological innovations thereby subjected labour worldwide to
a greater degree of the control of capital. Capitalists in advanced economies introduced Taylorist
labour processes by which workers became deskilled and lost their control over the labour process.
Subsequently, so-called Fordist production made human labour an appendage to machinery. By
standardizing and fragmenting the labour process, these innovations enhanced capital’s control
over the labour process, if not over the society and politics, and promoted geographical movement
of capital within and beyond borders. Workers might have gained more income and job security
but not much control over work processes.
Although factory workers were increasingly becoming appendages to the Fordist labour
processes, most formal rights of the established unions were respected. Their efforts were more
firmly materialized later in the welfare state that guaranteed the rights to a certain degree of
human dignity without regard to one’s economic ability. The labour movement enjoyed its
heyday with more political, civil and social rights within capitalist social relations. This was the
social basis of the post-war boom then: a consensus, often disputed but more or less reasonably
managed, between institutionalized labour (trade unions), capital, and the state, for better
productivity (from union to capital) and distribution through welfare (from capital and the
state to workers). While the deal between more social rights for workers and more productivity
for capital may have been expensive, it soon turned out to be not a bad deal at all for capital.
Impressed by its own achievement for workers’ rights, the labour movement was increasingly
limiting its activities to ‘democratizing and dignifying capitalist social relations’. 2 In doing so,
it reaffirmed that labour was a commodity, however much protection it needed, rather than
challenging the commodity nature of labour itself. The labour movement which had initially
manifested the incomplete nature of capitalist social relations began to function as an example of
the sustainable and democratic nature of the same relations.
Furthermore, the traditional labour movement, once having achieved a protected and
secured formal form of capitalist labour in the core industrialized countries through labour
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legislation, began to concentrate mainly, if not exclusively, on securing industrial workers’
interests by regarding only ‘factory labour’ as ‘normal’ capitalist labour. Consequently, labour
rights never became universal rights but remained rights for some part of the working population
only. Protection for non-core members of the working class, often mostly women and migrants,
was either ignored or rendered to the state without social alliances supporting it. These workers
were permanently kept as ‘to-be-organized’.
While the union was gate-keeping the interest of industrial workers whose labour rights were
protected by labour laws, capital was going beyond the factory gates with increasing mobility,
which was perhaps the best way to get around increasing world-scale competition and expensive
deals with trade unions in the developed countries. In doing so, individual capitals started
utilizing more ‘fluid’ forms of labour outside the core industries, effectively isolating protected
formal labour. This trend accelerated in the late 1970s when the post-World War boom was
deemed to have reached an end and many individual capitals lost not only the willingness but also
the capacity to afford the deal between productivity and welfare.
Informalization did not start with the flexibilization of the core part of traditional industrial
workers in developed countries - therefore by the time they felt it, it was too late to stop.
While workers in the core industries were still enjoying much of labour protections, workers in
services and other peripheral industries had been experiencing employers using indirect forms
of employment, creating grey areas between employment and self-employment and detouring
protection of the labour law. More importantly, largely unorganized workers in those sectors
could not enjoy their rights even if they were ‘legally’ entitled to them as they have no power to
enforce it. This was all done amid the massive expansion of the (inter)national circuit of capital
during the post-World War economic boom period, during which almost all aspects of human
livelihood became commodity-dependent. This brought a lot more population into the expanding
circuit of capital, working directly or indirectly for the profit-making process. The direct
consequence of it was that increasing numbers and portions of population came under the control
of capital not only as manufacturing workers, but also as service providers, emotional labourers,
and then as mass consumers. At least in developed countries, society itself was already becoming
a factory where the entire population was subsumed to profit-making and the realizing process
of capital. With this, the distinction between factories and society or between working and living
spaces has been destroyed to a critical extent.
Another crucial fact was the informalization of ‘world labour’, i.e. the increasing portion
of the world population doing capitalist labour without labour protection. This had started
well before the late 1970s with the more serious industrialization of developing countries where
‘imported’ labour legislations lacked the most important element in establishing formal labour:
democratic alliance controlling and challenging capital. In those countries, labour laws and the
state in general merely had the function, if they had any, of incorporating local labour forces into
the world of capitalist labour and exposing local labour forces to market despotism often through
state violence. This was then accelerated by the widening international circuit of capital that led
to what we called the international division of labour on the basis of which some developing
countries, such as Korea, Taiwan and Hong Kong, initiated export-oriented industrialization.
This was possible based on what we have mentioned above: a fragmented and simplified labour
process for mass production that could be easily relocated and copied. Now, the more people
in developing countries were integrated into the domestic and then world market, the faster
informalization of world labour developed at the global level. An increasing number of workers
without clear employment relations and/or protection of labour law, entitled or not entitled,
was undermining the entire basis of formal form of labour and with it the modern ‘labour law’
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world-wide even during the heydays of formal labour in the West. What allowed this was indeed
the disintegrating social alliance for the democratic control over capital: capital expanded but not
the social alliance and support. Capital became increasingly mobile, internally and externally, but
the labour movement had become increasingly rigid. When informalization finally appeared
to be threatening the industrial heartlands, the ‘protected fictitious commodity labour’ already
accounted for too small a portion of the world labour force relative to that part of which was
subsumed to the control of capital without any protection.
Informalization of Labour
There are many different theories and explanations of the informalization of labour. The
definition of informal labour in fact varies country to country, union to union, and scholar to
scholar, as readers will observe in following country studies. The most common one though has
been the ‘informal sector’ understanding of the issue that focuses labour conditions in particular
economic sectors that were outside formal regulation and control in developing countries,
particularly in Africa and Asia, or developing countries in general. Initiated by the International
Labour Organization (ILO), this has been the most commonly used understanding until quite
recently. The reason why the ILO and its researchers began to look into this matter was that
the existence of a relatively large population working in unregistered and unregulated economic
activities was very interesting matter in contrast to the western counterparts where capitalist work
enjoyed by and large stable, secure, and clear-cut employment relations. The diagnosis for this
‘interesting’ problem was the problem of underdevelopment. It is important to note that during
this period enthusiasm about economic development on the basis of the Western model was
still high and almost all social problems were attributed to the problem of underdevelopment.
Therefore, the solution for the problems was obviously more economic development, backed
by the right policy to promote it. Then the formal form of capitalist labour would appear and
become dominant as it did in the west. However, this understanding soon came under heavy
criticism for many reasons. Let us mention a few of them here:
•
Informal labour was neither temporary in nature, nor a by-product of the lack of
capitalist development. Rather, the greater the capitalist expansion of the economy, the
greater the portion of the population that would come to work informally. It was rather
reflecting a way in which capitalist social relations expanded.
•
Informality was no longer to be constrained to unfortunate workers in the South, as
it once seemed, but expanded to the workers in the formally established economies
in developed and developing countries, often referred as ‘flexible’ labour rather than
informal labour. It was not an abnormal problem, but has been proven to be rather ‘a
tendency accentuated by globalization for work and workers to become informalized’
and ‘[recognition] that informalization is a critical component in capitalist globalization
today, particularly but not exclusively in the global south’.3
•
Most of all, an ‘imaginary’ boundary between formal and informal sectors on which
the informal sector argument was based has been increasingly dismantled by the crosssectoral penetration and expansion of the informality of labour.
These undeniable points were recognized later by the ILO, which has changed its focus
from the informal sector to the ‘informal economy’. The term ‘informal economy’ has come
to be widely used to encompass the expanding and increasingly diverse group of workers and
enterprises in both rural and urban areas operating informally.4 This means the focus of discussion
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of the informal labour has been transferred from the nature of enterprises or industries to that of
employment.5 As the concept focuses on ‘informal employment’, it now incorporates ‘all forms
of informal employment’, such as ‘employment without secure contracts, workers’ benefits, or
social protection, both inside and outside informal enterprises’. 6 Therefore, informal labour
came to refer not only to own-account (self-employed) workers, contributing family workers,
and employees in informal industries and unregistered enterprises, but also to family workers and
employees in formal enterprises.7
However, again, the informal economy framework cannot fully overcome the shortcomings
of the informal sector approach, in the sense that informal labour still appears to be a peculiar
phenomenon in a particular ‘realm of economy’. In other words, despite recognizing informal
labour an integral part of globalizing capitalist development, ‘informal economy’ theory
presents informal labour as something that exists outside of ‘normal’ economy. Therefore the
informalization of labour is described as an ‘object’ rather than a ‘process’.8
Accepting wholesale the concept of ‘separate’ economies, an informal and a formal one, has
the danger of allowing informal labour to continue being regarded an exceptional misfortune
of the ‘working poor’ or something related to the workers in backward individual capitals, i.e.
sweatshops. In doing so, this may blind one to the increasing informal nature in the works of
formal workers and create an imaginary distinction between formal and informal workers that
again creates barriers to solidarity between those workers in reality and therefore to united struggle
to confront informalization.
The growth of the informal sector is still described merely as a product of poverty as if
economic development will automatically remove the informal nature of labour in developing
countries, rather than as a consequence of a particular form of capitalist ‘development’. This
contains the implication that the existence of the informal sector the informalization of
employment stem from two different causes.
Rather, however, surviving jobs of the informal sector and the informalization (or
irregularization) of employment are two different aspects of the same origin: the expansion of
capital through more fluid forms of capitalist labour that can be treated as any other commodities,
selling, buying and disposing – this is the nature of the informalization of labour. The common
nature between those who working at some points of the expanded circuit of capital for the
creation and realization of profit as manufacturing or agricultural workers, street vendors,
service workers or tenant farmers is indeed much bigger than the differences between them. The
informalization of capitalist labour is the way that capital expands in the era of globalization: it
is not an abnormal or extraordinary phenomenon. Without informalization of capitalist labour,
capital will not and cannot expand the way it is now.
Of course, this is not to say that informalization is a natural process. It is a historical product
created by a particular development of conflict between capital and labour as described above.
Informalizing labour means effectively marketizing labour relations, and once again challenging
the once dominant idea that labour is a commodity needing protection. The informalization
of labour is a realization of the capitalist ideal where labourers, just like any other actors in the
market, can benefit the best from the market when they exchange their commodities, labour
power, according to the exchange rate that the market offers without distortion by non-market
factors such as the state or excessive labour legislations. The expanded circuit of capital is too
wide and expensive to be institutionally regulated and decently paid, and there are no significant
social alliances to pursue such regulation. This naturally results in an increasing number of people
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working under no regulation.
In spite of the dismal conditions of labour, it is more often than not necessary for workers
to sell labour power to survive as the entire swathes of human activity in society has been anyway
commodified and continuously needs money income to sustain lives in it. Capital moves through
these areas exercising its control yet less agreeable to paying much for them, at least not as willing
as it was for the workers in core industries during the heyday of the workers movement. In Asia,
the 1990s has a particular importance in shaping Asian labour because it was through this period
that capitalist labour finally became the common substance for the survival of Asian population.
At the same time it was through the accelerated globalization in 1990s when capitalist labour took
on a particular nature; it had become commonly informal, as particular historical forms, conditions,
and definitions of ‘labour’ as formal labour have been eroded worldwide. This development has
been faster in speed, bigger in scale and ‘smoother’ in process in Asian countries where ‘formal’
capitalist labour had not yet been firmly established. In this accelerated globalization, capital no
longer wanted or needed to rely on regular, protected and formal jobs in order to expand.
Uneven Development of Informalization in Asia and the Gender Question
Development of labour informalization in Asia has been highly uneven and accordingly
many different forms of informalization exist. Informal capitalist labour broadly includes mainly
two forms: labour in informal ‘employment’ and un-waged capitalist labour largely in the
informal sector. Informal forms of employment here refer to the wide range of people whose
working relation is based on direct and indirect ‘wage relations’. This includes the whole range
of workers who are not permanent and full-time employees. They can be categorized in many
different ways and in fact different countries have different systems to distinguish one from
another informal employment. According to the period of labour contract, there are short-term
contract workers, which again include many different forms such as seasonal agricultural workers,
project-based construction workers, and most migrant workers whose work contract is inherently
short-term in nature. According to the indirect nature of employment, there are dispatched
workers, in-company subcontract workers, agency workers, home workers, and disguised selfemployed. And according to the forms of labour service provision, there are part-timers, on-call
workers and so on. One form of informal employment does not exclude others. More often than
not, different forms of informal employment overlap. For instance, dispatched workers are mostly
short-term contracted.
While the forms of informal ‘employment’ just mentioned are those which appear in the
statistics as irregular employees, the ‘un-waged’ forms of capitalist work get excluded, even
though, it is a prevalent form of making a living particularly in low income countries, such as
many forms of self-employment in agricultural, manufacturing and service sector. Often, selfemployed workers are related to employers or corporation service users through commercial not
wage relations, even if they do work for corporations. Though their relations with employers may
be vague and untraceable, they are still doing capitalist work because their works provide essential
services to reproduce capital by reproducing labour power of others, distributing petty products
among consumers, cleaning the streets, providing cheap meals and transportation to workers,
etc. Often, they do not own any means of production, nor do they have employees under their
command. These are the people who constitute most of the urban poor and large scale reserve
army of labour in developing countries. They are often more vulnerable to market despotism and
bullying of authorities than informal employees in industrial establishments, lacking any form of
social security, not to mention union protection.
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As our country studies show, different countries present different dominant forms of
informal labour according to the pathways and degrees of capitalist development and power
relations between capital and labour. In low income developing countries in Asia, such as
Cambodia, India, Laos, Mongolia, Pakistan and Viet Nam, the lack of institutional labour
protection, the immaturity of industrialization, the often forced integration of the population into
capitalist social relations and the fast expansion of the circuit of capital that quickly commodifies
people’s livelihood deprive people of the means of production and subsistence, on the one hand,
and provide no decent jobs, on the other. This creates a particular form of development: an
increasing informal sector where different survival forms of incoming-earning activities are mixed
up with traditional self-subsistence and reproductive labour. This has, as Arnold points out in his
chapter on Cambodia, much to do with ‘disruption in rural-agricultural livelihood’. People in
rural communities lose their means of production and subsistence in various ways. Occupation
of land for property development or plantation often deprives small scale cultivators of their
inherited right to land and forces them to leave their lands. Many of them flow into urban areas
in search of jobs. Commercialization of agriculture often involves aggressive inroads by big agribusinesses and forces rural villagers to migrate to cities. Mega-scale development plans of the state
do the same, as described in the chapter on Laos.
Apart from rural-urban migration, other factors contribute to the increase of un-waged jobs
in the informal sector. Many workers once employed in the formal economy and laid off in the
process of restructuring, for example, become urban dwellers in search for survival jobs and often
permanently stay in the informal sector. As Van Thu Ha illustrated in the chapter on Viet Nam,
the privatization of former state-owned enterprises (SOEs) in Viet Nam forced many into the
informal sector due to different ‘private sector barriers’ against the former SOE workers. One of
the barriers is ‘age’ as private sector prefers young workers. Similar cases have been reported in
China as well after the state-engineered mass lay-offs of SOE workers that axed at least 27 million
workers between 1997 and 2003.9 Older workers and particularly middle-aged women workers
could not succeed in finding new formal jobs. Daily work experiences in the informal sector in
fact represent people’s livelihoods in Asia, as the size of population in this condition in the most
populated countries in Asia well exceeds people in formal employment in Asia. Informal jobs in
the informal sector accounted for 86 per cent of the total workforce in India between 2004 and
2006, according to Mansingh (see the chapter on India). More than 70 per cent of Indonesia’s
workforce is also known to be in the informal sector.10
Workers in Japan, as well as workers in core manufacturing industries in some high income
countries in Northeast Asia, were once known for secure jobs, since experiencing a period of
the formalization of labour with the emerging labour movement and democratization. The
institutional protection of labour which workers in the core industries had enjoyed later expanded
to the manufacturing sector in general and solidarity-based protection also appeared by the early
1990s, in the cases of Korea and Taiwan, and decades earlier in Japan. In these parts of Asia, the
growing informality of labour largely (though not exclusively) has meant the dissolution of regular
employment, as we see in the following chapters on Korea, Japan, Taiwan and Hong Kong. An
increasing number of workers, previously in standard forms of employment with institutional
protections, have now become disposable as they join the irregular workforce in dispatched,
contracted and part-time arrangements. Most striking is the collapse of the Japanese employment
system with emerging informal jobs and in particular the steep increase in the number of parttimers as described by Sakai and Hiroki. Kim’s chapter describes South Korea’s switch from one
of the countries with the highest job security during the heydays of the militant trade unions
to one with the highest level of irregular jobs among the OECD countries after neoliberal
reforms. It is also a striking example of informalization as South Korea has been known as a
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good example of new unionism that could survive the fast expansion of capital. With much less
active and politically divided unions and workers collective rights under threat, as Liu describes,
Taiwanese workers also have difficult choices between informal jobs or no jobs. This trend of
formal employment being replaced by informal employment is felt hard even in Hong Kong and
Macau where the portion of formal and secured jobs was relatively smaller than other Northeast
Asian countries. In particular, as Wu describes in her chapter on Hong Kong, Hong Kong’s swift
restructuring of economy from manufacturing to a service and finance-based economy appeared to
have accelerated the informalization of employment. In cases of Hong Kong and Macau, the fast
informalization of employment has more to do with weak trade unions and sluggish development
of collective labour rights during its industrialization. Workers in both Special Administrative
Regions of China – Hong Kong and Macau - lack the right to collective bargaining although both
cities have freedom of association that is missing in mainland China. Now with massive outflow
of capital to China, unions have even more difficulty in upholding labour protection. In Macau,
as described in detail in Choi’s chapter, continuous inflow of migrant workers from mainland
China to Macau opens the way to more informalization and puts the weak unions and labour
activists in a difficult position.
These different trends can also appear all together in one country. India is a good example of
this. The core manufacturing sector that developed with protected formal labour on the basis of
relatively strong union power and protected domestic market now faces increasingly informalizing
employment, whereas the vast majority of previously self-subsisting agricultural labour forces
dwell in the informal sector. By and large the middle income countries in Southeast Asia, such
as Malaysia, Indonesia, Thailand and the Philippines, share same experiences and problems with
India, however with unwaged labour of a smaller scale in the informal sector. In these countries, as
Xavier, Ofreneo, Bundit, Voravith and Suntaree succinctly show, subcontracting and outsourcing
of works to work units that cannot be monitored and regulated causes a major concern. Homebased work is a typical case of this. Existing labour laws often do not cover home workers and
new regulations and protective measures, if any, are highly selective and limited so that workers in
these particular strata of the supply chain work in risky and often fatal working conditions. In the
so-called least developed countries, the informalization of labour can be accompanied ironically
with more formalization of economy as the chapter on Laos presents. Countries like Mongolia
share the same experience. This means that more of the population previously engaged in selfsubsistence economic activities move to formalized work arrangements in more formal industries
often as waged workers. However, this does not mean that their labour relations will be formal
in the sense they are regulated, protected and unionized. It is very unlikely that newcomers from
largely agricultural self-subsistence or petty market economy to manufacturing industries or
other urban industries through the formalization of economy will have ‘formal’ jobs. Therefore,
workers in these countries are not free from the worldwide informalization process. Cambodia’s
experience is perhaps a good illustration of this. Cambodia is also experiencing the formalization
of economy with an increasing number of wage workers, which however goes together with
the informalization of labour. According to Arnold’s chapter on Cambodia, even jobs in the
garment sector which had been the driving force of Cambodia’s development and created most of
Cambodia’s foreign currency earnings are being informalized to a significant extent.
Perhaps the most important uneven development of informalization appears along the line
of gendered division of labour. As many contributors to this book have clearly pointed out,
informalization is not a gender-neutral process but a highly gendered process. Women’s work
tends to take more informal forms than men’s work and women tend to be the majority both
among the informal sector workers and informal employees. With no exception among Asian
countries, developed, developing or least developed, women workers are being targeted for the
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replacement of permanent full-timers with workers in non-fixed form of employment while
women’s survival forms of service provision are usually more mixed up with traditional household
or communal labour in domestic and other non-industrial spaces. The informalization of women’
s work is pre-contextualized in gendered-class hierarchy (or often classed-gender hierarchy). The
prevalence of women in informalizing employment and non-waged capitalist labour force is
precisely because women’s work has been traditionally counted as ‘informal’ in capitalist society.
The reason why women’s work is considered ‘informal’ is again because women’s work at
home is regarded as not ‘immediately’ creating capitalist value, a belief shared even by many
radicals and reformists. Women’s work at home is recognized not as producing ‘value’ or profits
but only creating ‘use value’ at home. Therefore, women’s work is regarded as perhaps important
but not as valuable as men’s work. This widespread and deeply rooted idea of women’s work
as ‘secondary’ imposes disadvantages to women at work. Women’s integration into the labour
market for ‘real jobs’ gave many women opportunities for economic independence but was also
used by capital to create a massive reserve army of labour that could guarantee a cheaper supply of
labour to capital. By and large, jobs given to women were largely humble unskilled jobs and this
tendency still remains strong with only a few exceptions. The more serious integration of women
into the labour market was then a product of the process in which many essential domestic
works done by women at home and communities got commodified and the service provision in
domestic and communal spaces became a domain of business for capital. Many women became
employees in these ‘women’ sectors but the gendered connotations of these women’s services
remained intact and therefore wages in these sectors remain cheap.
The gendered division also affects those who do the same jobs as men do in the formal labour
market, often reflected in slower promotion for women. There is also a strong tendency to sack
women workers during recession and re-employthem during a boom—largely treating women as
surplus labour. In this sense, the ‘secondary’ nature of women’s work is therefore inscribed from
the very beginning of capitalist development, rather than new to the informalization of labour.
However, this ideology of women being secondary labour force has been fully utilized in
informalization process as our country studies show. Although informalization is an overarching
development across the region, it is true that informalization attacks women workers first and
more effectively. One of the most common rationales given by employers and governments is
that women are more suitable for flexible arrangements for work and they themselves prefer
those arrangements. Indeed, our country studies show that in many cases women workers prefer
flexible arrangements. In particular, home-based work often makes a good example of informal
jobs offering ‘opportunities’ to women who cannot work full-time away from home. However
most women ‘have to’ prefer these forms of work arrangement. It is the combination of women’
s unshared obligation for work at home, which many men and women believe ‘natural’, and the
informalizing labour market, that makes informal work appears to be women’s own choice. The
real reason for women to ‘choose’ these jobs is the lack of decent jobs with a social system for
child care, the unshared burden of domestic work, and excessively long working hours with too
little wage for the male counterparts, rather than women workers’ ‘natural preference’.
Furthermore, the labour movement has not done much to prevent women workers from
being informalized. The labour movement, both radical and reformist, has not counted the
exploitation of women at home seriously, nor that of women at work. However, women’s labour
has been absolutely essential in the (re)production of capitalist social relations and therefore it is
not possible, contrary to the typical argument that resolving class contradiction would remove
gender inequality, to address the exploitation of capitalist labour without addressing women’s
exploitation both at work and home.
Reclaimin g Labour Law and Bey o n d
xxiii
Organizing women workers has long been regarded as a secondary, and women’s work
at home and work regarded as lower priority, by many trade unions; but as many feminist
activists and academics have found, the exploitation of women’s work at home and work is an
essential part of the exploitation of capitalist labour. Women’s unpaid and unwaged domestic
and emotional labour is indeed an important root origin of the value exploited from labourers
by capital. Profit comes not only from the non-paid work of male workers (as in the traditional
radical argument) but also from the unpaid labour of women that reproduces labour power
commodity at home. So the concept of exploitation has to always integrate the unpaid women’
s work. More importantly, it is urgent for the labour movement to recognize that the entire class
exploitation has been built upon the specific mediation of women’s exploitation and patriarchy
is an important and essential basis of capitalism. One of them cannot be overcome without
overcoming the other together. It is precisely because of this that the problems women are facing
in informalization of labour cannot be regarded as women’s problems only but as the problems of
all.
Reclaiming or Reforming Labour Law
In most of the Asian countries we have studied, we find that labour law is indeed a
contesting ground for capital and labour struggling for a better economic and political position in
the continual reformulation of conditions for development. Labour law reforms gearing toward
more flexibility and informality in most of the Asian countries manifest the power relations
between labour and capital after the Asian economic crisis of 1997-98. Organized labour has
been losing ground, if not been made irrelevant, whereas capital has taken full advantage of
the crisis to reformulate the basis of capital accumulation nationally, regionally and globally.
Neither the recovery from the economic crisis nor formal democratization following the crisis
has accommodated further political mobilization of the working class or improved labour
protection. However, as we see also in our country studies, struggles to create a new paradigm
of labour protection have already begun. They have begun with women workers organizing in
India, informal workers building alliances in Korea and Cambodia, regular workers campaigning
for informal workers’ rights, home workers networking throughout Southeast Asia and, most of
all, the increasing number of informal workers who are realizing that they are the ones who can
change the conditions that make their livelihood intolerable and our society unsustainable.
Then, where are these struggles leading us to? While there is a consensus that informal
workers should be organized to gain more protections and social rights, there are various
approaches to the matter of informalizing labour. Our particular concern in this book is indeed
about our strategy regarding the use of labour law. Where does labour law fit into these struggles
for better livelihood of informal labourers? Can a better labour law be achieved, and if achieved,
can its implementation stop the gendered informalization of labour in Asia? Few reader of this
book would argue against the idea that we need to reclaim those labour laws that have been
‘reformed’ toward labour informality in favour of capital and against the interest of the working
class. However there may be different ways to reclaim labour laws in the interest of the working
class. One way is perhaps to go back to where we were before the informalization of labour,
in other words, re-formalizing labour. In this strategy, labour law is indeed at the centre of
discussion. This strategy involves 1) expanding protective labour laws to cover not only existing
formal form of labour but also informal form of labour, on the one hand, and 2) restricting the
use of informal labour, on the other. The other possible strategy to reclaim labour laws on behalf
of labour is rather more fundamental in the change it seeks, as it involves ‘reinventing labour law’
to be a law that allows democratic control and allocation of social labour, rather than a law that
constitutes labour as a commodity to be exchanged through the market.
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Asian Labour Law Review 2008
The former strategy, i.e. restoring ‘formalization’ may look quite familiar; it is precisely
because we have, or, to be more correct, the labour movement in the West has, been there. This
strategy believes in putting things back into place, i.e. re-formalizing labour is the solution.
For this ‘global reformalization’ strategy, it is necessary to rebuild the social setting of statebased labour regulation and protection. For them the combination of the state, labour law, and
formal labour is presented as the ultimate form of democratic control and there is no intrinsic
problem with it. In this sense, this argument is in line with that of ILO and perhaps, that of the
US President-elect Barack Obama – the market and democracy as two wings of modern society.
The only problem is that they somehow lost the social alliances and solidarity upon which the
combination relied for being relevant. Informalization is problematic because labour law cannot
protect those workers at the edge of the legal boundaries of the old labour law. Things will get
better by ‘recovering’ the particular social settings in which protective laws could be powerful
and the state could implement the law. What concerns them then is the fact that particular
commodity was not protected enough.
However, there are serious problems with this strategy in spite of the immediate feasibility
and therefore persuasiveness of it. Firstly, this strategy does not seriously address the reason why
the seemingly perfect combination broke down in the first place. The given answer to the question
is rather too simple: too much market and too little state. Actually the power of social alliances
started declining as soon as organized labour tried to ‘democratize’ capitalist social relations with
clearly self-imposed limits, within which labour could be exchanged as commodity, nonetheless
protected commodity. Labour became a ‘protected’ commodity, but only at the expense of being
more like a commodity in nature (just like one can be ‘respected’ slave only by becoming a better
slave). This is what I named the intrinsic contradiction of labour law. As mentioned above,
labour law only covers labour insofar as it is sellable and buyable. As long as labour remains as a
commodity, labour only has two choices, to be protected or not protected. Reforming labour laws
can make this particular commodity more protected but cannot challenge the commodity nature
of labour. The solution based on labour law reform is therefore a solution within the inherent
contradiction of labour law.
Furthermore, it may no longer be possible to recycle this strategy even within the inherent
contradiction of labour law because it relies on the social form of labour that existed about a half
century ago. The combination of the state, labour law and formal labour might have been suitable
strategy for the industrial form of social labour. A particular form of democratic control over
capital developed on the basis of it. However, as the social form of labour evolved, the feasibility
of the same strategy is at best highly questionable. The very combination of the state, labour law
and formal labour that developed was a strategy pursued on the basis of the industrial form of
social labour that was the contemporary form of labour at that time—not designed on the basis of
any previous social form of labour, such as indentured labour or slavery. A new strategy is required
for the present era of informalization. Furthermore, having seen the recent development of socalled representative democracy in developed countries, it is also doubtful that the combination of
the state, labour law, and formal labour is the ultimate form of democratic control over capital.
Perhaps then it is time for us to reclaim labour law differently. This does not mean relying
on labour law to get things right or relying on the state to do the job. Rather this means we
reclaim the underlying spirit of the struggles for conditions that would not treat human labour as
commodity. This means that we widen the scope of labour rights and once again, just as the earlier
labour movement did, test the legal boundaries, establish a new paradigm of labour regulation
and protection that goes beyond the existing legal boundary of employment and the state power,
as imaginatively as the earlier labour movement went beyond the poor law with labour laws. In
Reclaimin g Labour Law and Bey o n d
xxv
so doing we can invent an alternative labour regulation based on a different form of democratic
control of capital. In this case, reclaiming labour law is to go beyond the inherent contradiction
of labour law. We need a lot more than the existing labour law. That is to say, challenging current
power relations between labour and capital is to be prior to legal reform. The former works for the
latter, not the other way around.
It is important for us to notice that workers in informalizing labour relations have indeed
employers even if it does not seem so. The employer is the society itself that is subsumed to
the process of making and realizing profit for capital. The labour movement needs to be the
movement of socialized labour that organizes all those who are working for capitalist (re)production
within the extended circuit of capital with or without institutional protection and rights. In
doing so, the labour movement perhaps needs to be almost completely reformed according to
the changing form of labour to effectively challenge the power relations. Even the old concept
of democratic/independent unionism that was used to define a ‘real’ union needs to be changed.
There are many ‘democratic’ and ‘independent’ trade unions that do nothing for workers
outside their territories and constituencies. The vast majority of informal workers are excluded
‘democratically’. In many cases unions appear to be just and only as democratic as the state whose
dictators are elected by universal suffrage. Almost all strategies, developed, written, and formalized
in text books and manuals of the labour movement are rarely useful as much as the protective
clauses in the labour law are now. The question is whether we are ready to change everything we
have or not.
Conclusion
The problem created by informalization is more about the effectiveness of ‘labour law in
general’ as a traditional means of enhancing labour standards, rather than the ‘quality’ of different
Labour Acts in different countries. The problem lies with the fact that protective elements of
labour laws have become more and more powerless. The reason why existing labour law is not
effective is that capital has left, or rather was allowed to supercede, the limited time-space dimension
that was the basis of modern labour law and formal labour. It is a consequence of the declining
effectiveness of the particular form of democratic control, based on social solidarity which had the
power of endorsing the state. That is why all the efforts to lobby parliaments to make ‘labour law’
better to ‘protect’ labour, without changing the existing system of politics and building wider
democratic alliances, have only limited impact even at their maximum. Indeed, all that matter is
not the law itself but the power relations between labour and capital behind the law, the relations
that appear to be legal relations in the law.
The meaninglessness of law is indeed one of the most common experiences of the working
people today when they try to claim their entitled rights. Then why do we need to study labour
law after all? We believe it is important to know labour law not simply because it is ‘the’ tool
to protect us from increasing attack on the labour movement and security of livelihood (not
job security) but because knowing labour law is a prerequisite to overcoming the intrinsic
contradiction of labour law, and to overcoming the social power that is reflected in it in general.
Amid the currently deepening world-scale crisis of capitalist development, the labour
movement once again faces great challenge: whether or not the crisis is to be overcome at the
expense of workers, particularly of the most vulnerable part of the working class including
informal, migrant and women workers. It is in this context that our study would like to enlighten
some strategic points and, in so doing, to assist labour activists across the region to develop a
strategic approach to future ‘labour reform’.
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Asian Labour Law Review 2008
REFERENCES
Castells, M. and Porters, A. (1989) ‘World Underneath: The Origins, Dynamics, and Effects of the Informal
Economy’, in Alejandro Portes, Manuel Castells, and Lauren Benton (eds.) The Informal Economy: Studies in
Advanced and Less Developed Countries. Baltimore: The Johns Hopkins University Press, pp. 11-37.
Chen, M. (2003) ‘Rethinking the Informal Economy,’ Seminar, 531, November, http://www.india-seminar.com/
cd8899/cd_frame8899.html, downloaded 24 July 2005.
Frost, S. (2002), ‘Introduction’, in Stephen Frost, Ed Shepherd and Omana George (eds.), Asia Pacific Labour Law
Review: Workers’ Rights for the New Century, Hong Kong: Asia Monitor Resource Centre.
International Labour Organization (2002) Decent Work and the Informal Economy, Geneva, ILO.
Munck, R. (2002) Globalisation and Labour, London: Zed Books.
Neary, M. (2002) ‘Labour Moves: A Critique of the Concept of Social Movement Unionism’, in Ana C. Dinerstein
and Michael Neary (eds.) The Labour Debate: An Investigation into the Theory and Reality of Capitalist Work,
Aldershot: Ashgate.
Sedane Labor Information Centre (LIPS) (2004) Indonesian Labor Update, First Semester 2004, Bogor, Indonesia.
Zhang, J. (2003) ‘Urban Xiagang, Unemployment and Social Support Policies’, a paper presented in China Labor
Market Policies Workshop, World Bank Institute, Beijing, 27-28 October 2003.
ENDNOTES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Frost (2002), p. 12.
Neary (2002), p. 244.
Munck (2002), p. 112, 115.
ILO (2002), p. 2.
Chen (2003)
Chen (2003), p. 4.
ILO (2003), pp. 121-9.
Castells and Porters (1990), p. 11.
Zhang (2003)
Sedane Labour Information Centre (LIPS) (2004).
xxvii
Contents
Introduction: Rights for Asia’s Invisible Majority, Social Justice for All Working Women
and Men
Rene E. Ofreneo, Ph.D. ............................................................. iii
Reclaiming Labour Law and Beyond
Dae-oup Chang ........................................................................ xiii
East Asia
China
Hong Kong
Japan
Korea
Macau
Mongolia
Taiwan
Prof Ye Jing-yi ........................................................................... 3
Wu Mei Lin ..............................................................................15
Kazuko Sakai ........................................................................... 25
Michiko Hiroki
Aehwa Kim .............................................................................. 43
Alex H. Choi ............................................................................ 57
B. Batkhishig ............................................................................ 77
Liu, Wan-Ling ......................................................................... 87
Southeast Asia
Cambodia
Indonesia
Laos
Malaysia
Philippines
Thailand
Vietnam
Dennis Arnold ........................................................................ 107
Hesti R. Wijaya ...................................................................... 125
The Special Correspondent ....................................................... 145
Irene Xavier ............................................................................ 167
Rosalinda Pineda Ofrenco ....................................................... 177
Phoebe O. Cabanilla
Josephine C. Parilla
Bundit Thanachaisethavut ........................................................195
Dr. Voravith Charoenlert
Suntaree Saeng-ging
Van Thu Ha ........................................................................... 215
South Asia
India
Pakistan
Pallavi Mansingh .................................................................... 243
Azra Sayeed ............................................................................ 259
Contributors ....................................................................................................................... 271
xxviii
Asian Labour Law Review 2008
China
East Asia
Asian Labour Law Review 2008
China
China
Informal Employment in China and Female
Workers in Informal Employment
Ye Jing-yi
1. Contemporary Snapshot
New Updates and Trend of the Labour Laws and Policies in China
I
n 1994, the Labour Law of the PRC was approved by the Standing Committee of the National
People’s Congress (NPC), the top legislature of China. After this, the Ministry of Labour and
Social Security released 17 implementation guidelines and supplementary regulations.
In 2003, the State Council enacted the Occupational Injury Insurance Regulation to
improve arrangements and management on occupational injury insurance, while in 2004, the
State Council enacted the Labour Protection Inspection Regulation, which is a higher-level
legislation regulating the enforcement and inspection of the fulfillment of employees’ labour
rights and interests. Other new laws including the Labour Contract Law and the Employment
Promotion Law were enacted on 29 June 2007 and 30 August 2007 respectively, both taking
effect on 1 January 2008. The Labour Contract Law requires employers to provide written
contracts to their workers, restricts the use of temporary labourers and helps give more employees
long-term job security. Under the Employment Promotion Law an employer may find itself in
court if it discriminates against a job applicant on the basis of sex, age, religion, race or physical
disability. The Labour Dispute Conciliation and Arbitration Law and the Social Insurance Law
have been approved by the Standing Committee of NPC on 29 December 2007. A series of
related laws and regulations will be released in the coming years which, together with the existing
laws on labour and security issues based on the Labour Law (1994), will provide a comprehensive
and sound labour and security legal system.
Besides related laws and regulations, the State Council also released a series of policies
covering some key issues regarding employment and social security such as:
• Notice on further improvement of employment and re-employment (2005),
• Decision on streamlining the arrangement of the basic social insurance associated with
old age (2005),
• Opinions of solving issues related to migrant workers (2006),
• Guidelines on pilot basic healthy insurance for urban inhabitants (2007).
China signed the International Covenant on Economic, Social and Cultural Rights in
October 1997, International Covenant on Civil and Political Rights in October 1998. Until now,
China has signed or ratified 25 international human rights conventions or treaties.
Asian Labour Law Review 2008
Table 1. Major Laws and Regulations Since 2003
Year Major Laws and Regulations since 2003
2003Occupational Injury Insurance Regulation
2004Regulations on Collective Bargaining
Labour Protection Inspection Regulation
2005Women’s Rights and Interests Protection Law
2007Employment Promotion Law
Labour Contract Law
Workers Paid Annual Leave Regulation
Labour Dispute Conciliation and Arbitration Law
Social Insurance Law
Note: Regulations are issued by authority of the State Council or Ministry of Labour and Social Security; Laws are
issued by authority of the National People’s Congress.
2. Informal Employment in China and Female Workers Engaging in Informal
Employment
China was established as a socialist country, and under the leadership of Mao Tse-Tung,
sectors of the economy were strictly delineated. Workers were employed by the state, which
provided workers with lasting job security and guaranteed livelihood—‘the iron rice bowl.’
However as China took the path towards opening its economy, the employment situation
changed dramatically. Millions of jobs were dropped from the state-owned enterprises, and
created in manufacturing and services in the private sector, but the new private sector jobs were
without the old guarantees of wages and benefits.
Fulfilling the promise of the neoliberal export-oriented model, China has truly been reaping
the economic rewards. GDP growth has exceeded 10% every year since 2003. (See Table 2).
Table 2. GDP Growth in 2003-2007
2003
2004
2005
2006
2007
10.00%
10.10%
10.40%
11.10%
11.40%
Note: GDP per capita = around US$2,010 in 2006 (Cf. US$50 in 1978)
A significant characteristic of employment in China now is the massive use of migrant
workers. There are estimated to be 150 to 200 million migrant workers—out of a working
population of 770 million in 2007.
Another major phenomenon is the level of labour unrest and disputes that has accompanied
the rapid economic development before sufficient safeguards had been built to ensure sufficient
protection for the working and living conditions of workers. In 2007, there were more than
450,000 cases of labour disputes, according to the Ministry of Human Resources and Social
China
Security. Most of the cases dealt with wage issues and Guangdong had the highest number of
cases. The desperation and discontent of workers has often been expressed through direct actions
such as work stoppages or public blockades (such as of highways), with participation of workers at
times reaching thousands.
The rapidly increasing number and scale of labour disputes have been a major reason for
the enactment of a major revision to the labour law, in spite of the strong opposition of foreign
business associations in China, such as the US Chamber of Commerce.
A. Definitions of ‘Informal Employment’ in China
Informal employment in China is usually officially referred to as ‘flexible employment’
(linghuo jiuye). Common views by researchers have been arrived at that informal employment
should comprise employment in informal sectors as well as non-standard employment in formal
sectors which is also shared in this article.
Employment in informal sectors: Informal sectors, according to the definition by the ILO
refers to those micro or small productive units which are always isolated unstable and vulnerable
engaging in production and distribution of goods and services. Lacking capital, managerial skills
and preferential supports from authorities, the managers of those units in informal sectors always
suffer from disadvantages regarding market access, fair competition and public services, while they
also provide their workers with highly unstable employment with low and unstable wages only
for subsistence not to speak of decent jobs. The informal sectors in China are mainly composed
of small-scale business units outside of the legally registered and separate bodies including
companies, public institutions government agencies and civil societies: (1) micro business units set
up by individuals, families or partnerships such as self-employed workers, family-based handicraft
operations and sole proprietorships with less than seven employees (ge ti hu): (2) public labour
organizations based on communities, enterprises or NGOs aiming at creating jobs and wages; (3)
casual workers, vendors and other workers working at all other labour organizations not covered
by the existing legal system.
Non-standard employment in formal sectors: Non-standard employment in formal
sectors refers to all the kinds of special employment that differ from standard employment in
working arrangements, ways of working and employer-employee relationships, including flexible
employment, temporary employment, non-fulltime employment, contractual employment and
seasonal employment. The formal sector is composed of independent legal bodies which are
legally registered have much more capital, advanced managerial skills and preferential support
from government agencies, and are able to provide their employees with more stable positions
and higher wages. In China, non-standard employment includes: (1) the informal workers in
formal enterprises, public institutions, government agencies and civil societies such as temporary
workers, seasonal workers and hour-paid workers; (2) workers working in flexible ways in formal
enterprises, public institutions, government agencies and civil societies such as flexible workers
and non-fulltime workers; (3) freelancers with high skills such as writers and interpreters. It
should be mentioned that the non-standard employment can also exist in the employment in the
informal sectors.
B. The Background and Development of Informal Employment in China
Before the introduction of reform and opening up policy in 1978, there had been distinct
separation between the urban and rural areas. Rural peasants mainly made their living on the land
Asian Labour Law Review 2008
while urban workers formed life-long and fixed labour relations with the state-owned enterprises
(SOEs) under the central planned economy, so both informal sectors and non-standard
employment rarely existed.
The opening up of the economy accelerated and deepened in the 1980s and 1990s, bringing
to workers a wrenching change as the economy changed from one where most workers had
guaranteed jobs with full state-provided benefits upon completing their education, to one where
one’s job and the terms of one’s jobs depended on market demand. With the rise of the private
sector, millions of industrial workers were laid off from unprofitable state-owned enterprises or
enterprises that could not withstand foreign competition, and thus lost their ‘iron rice bowls’. The
informal employment in China arose and gradually developed together with the development of
competitive labour market and diversification of flexible working relations after China set up the
socialist market economy.
1. Great employment pressure arising from the reform of SOEs, urbanization of rural areas and the
huge amount of newly added working population
The reform of SOEs is an important part of the whole market-oriented reform of economic
institution in China, during which many SOEs went bankrupt or underwent reconstruction and
a large number of workers were laid off. According to the estimation of the Asian Development
Bank, about 37 million workers were laid off or redirected from 1995 to 2001 while, during the
same period, only 17.5 million jobs were provided by private and foreign enterprises. In 2006,
there were still 8.4 million registered unemployed workers in urban areas. Besides the existing
employment pressure mentioned above, there is also the huge number of newly added working
population. Take the situation of 2006 labour market, for example: the whole newly added
productive population in urban areas over the country rose up to nine million and the number
of the whole labour population in urban areas waiting to work was more than 25 million, while
the newly added positions provided was estimated to be only 11 million, so the deficit of jobs
was as high as 14 million. During the process of urbanization, about 150 million rural migrant
workers in total rushed to urban areas to find jobs. The statistics mentioned above all demonstrate
the tremendous employment pressure facing the Chinese government which is no longer able to
provide enough formal job positions in the formal sectors and naturally turns to the new approach
of informal employment, which features easy access and large capacities to absorb productive
populations to alleviate the great employment pressure.
2. The influence of global trend of informal employment
A lot of workers engaging in simple and manual jobs were squeezed out by the advanced
technologies applied in the enterprises and transnational corporations, which, in order to
reduce company costs as well as keep their competitive advantage, always contract their noncore businesses to developing countries with cheaper labourers. Workers are dispatched from
traditionally formal working places to various small and flexibilized production units. The working
time, methods of wage calculation and management of workers also vary dramatically. China,
with its abundant and cheap labour resources, has been considered one of the best investment
destinations and has naturally been influenced by the related trend of informal employment.
C. The Scale and Composition of Informal Employment in China
There is a lack of official statistics specifically related to informal employment in China.
Concrete statistics supporting the present overview of informal employment such as the whole
China
scale of it and gender ratios, etc. are rare. This article is mainly based on other related official
statistics and some regional surveys which are also shared in the main existing research.
According to official statistics, it is estimated that the working population in urban areas
engaged in informal employment was about 80 to 100 million in 2002, while some scholars
consider the ratio of working populations engaged in informal employment to the whole
working population in urban areas to have risen from 13% in 1998 up to around 30%. Among
this number of workers in the informal sector overall is 27.07 million, accounting for 42% in
proportion while the number of workers in traditionally formal sectors accounts for 58% in
proportion. A newly released research report in 2007 by the Shanghai-based Fudan University
(FDU) claimed that the whole number of the working population engaged in informal
employment in urban areas is up to 130 million, accounting for more than 40% out of the total
urban populations in proportion, whose contribution to GDP is more than 35% of the whole
proportion.
The whole of the working population engaged in informal employment may fall into
categories as follows: 1) the migrant workers, 2) the urban laid-off workers (xiagang) and 3) the
newly added productive populations in urban areas among which the migrant workers account for
the majority. One distinct trait of the working populations engaged in informal employment is
that the average educational level is very low. According to the FDU report: half of the population
ended in junior high schools (46.4%) while only 8.5% of them received tertiary or university
education; for the rest of the population, 26.6% went to senior high school, 11.6% elementary
school and 7% below primary school or illiterate.
With the deregulation of the labour market since 1978, those entering wage labour have
been much more likely to enter informal work.
From the perspective of professions and employers involved, informal workers include
informal employees such as temporary workers (linshi gong) , hourly wage workers (xiaoshi
gong) and dispatched workers (laowu paiqian gong) in traditionally formal sectors and units;
workers in the urban working units offering household services without profit or creating
more positions for the unemployed; owners and employees of sole proprietorship or micro and
small-sized enterprises; street vendors; and those professions requiring special skills including
writers, interpreters and actors which is totally a very small amount, covering from the tertiary
industry, especially the wholesale and retail trade and catering, to labour-intensive construction,
manufacturing and mining of the secondary industry to some services requiring special skills.
Those statistics mentioned above fully demonstrate the important role in enhancing the
economic development and solving the employment issues for the huge capacity to absorb the
unemployed and broad coverage of industries and professions of the informal employment.
Below are further descriptions of the main groups of workers composing informal labourers
in China.
1. Migrant workers from rural areas
It is estimated that now in China there are totally 150-200 million migrant workers, the
majority of whom are engaged in informal jobs. Among all the labourers participating in the
secondary industry, migrant workers from rural areas account for 57.6% in number, even
with a higher proportion especially in the processing and manufacturing industry (68%) and
Asian Labour Law Review 2008
construction industry (80%) and among all the labourers in the tertiary industry, migrant workers
from rural areas account for 52% in number. In 2005, migrant workers are mainly engaged in the
following sectors construction (19%), manufacturing of electronic parts and appliances (17%),
manufacturing of clothing and footwear (15%), hotels and restaurants (11%) and business
services (9%), which in total comprise more than 70% of all migrant workers.
2. Urban laid-off workers (xiagang)
According to domestic surveys, 70% workers laid off by SOEs turned to informal
employment especially in local communities. A regional survey1 launched in Wuhan city, the
capital city of the Hubei province in central China, shows that only 20% of the workers laid off
by SOEs and collectively-owned enterprises could find other jobs in SOEs and collectively-owned
enterprises while the majority of them realize their re-employment through self-employment or
working at private enterprises. The laid-off workers got reemployed mainly in the tertiary industry
such as community services for public interests by ways of setting up own micro-businesses
(45.1%), short-term temporary workers (25.5%) and others (23.2%), covering from household
care (38.5%), management of community services (24.2%) to public service in communities and
others (22.8%).
Another survey launched in six communities of six different cities in 20022 reveals that
among the 918 laid-off workers engaged in informal employment involved in this survey,
only 28.9% of them had signed labour contracts. The survey in Wuhan also demonstrates that
only 25.1% of laid-off workers realizing reemployment through informal employment never
changed their jobs while 67% of them had changed jobs twice to four times. Such instability and
vulnerability of informal labour relations is partly attributed to flexible arrangement of informal
employment in terms of working time, workplaces, way of paying wages and administration,
which, without effective laws and regulations related in place, probably are conducive to the
infringement of labour rights and interests.
3. Newly added labour force in cities (university graduates and the informal workers engaged in
high-end industries)
The number of university graduates in 2006 was 4.13 million, was 4.95 million in 2007
and will hit 7.1 million in 2010. Employment pressure facing more and more university
graduates rose not only from the huge volume reflected in the statistics above but also from some
structural issues. Given the traditional obsessions with and preference for jobs in formal sectors
in developed cities, a majority of university graduates prefer doing casual jobs such as software
designer, translator and or artist in big cities such as Beijing and Shanghai rather than having a
stable and formal position in less developed regions in central and west China. But the group of
university students who voluntarily choose to take informal and highly unstable jobs, with their
greater competitiveness of education and professional training, on average are able to earn much
more while being less exposed to occupational risks than the other two groups mentioned above.
There are also some freelancers or part-time professionals with special skills such as interpreters,
tourist guides, writers and actors who voluntarily engage in paid non-standard work having strong
bargaining power in the labour market. Some researchers think that it is a trend of future ways of
employment in China. The total number and the proportion of this kind of high-end informal
employment is very small compared to the migrant workers and laid-off workers engaging in
informal employment.
China
D. Features of Informal Employment in China
1. Labour relations in informal employment is always unstable and vulnerable. Workers
engaging in informal jobs, whether high-end or low-end positions, are no longer fully
protected by nor do they abide by laws and regulations. A major reason for this is the small
number of signed labour contracts.
2. Those in informal employment have weak bargaining power and the employment quality of
most informal workers is very poor.
3. Workers are strongly polarized into low skill and low-paid, vs. high-skilled and highly paid.
Except for those freelancers or professionals with special skills, most informal workers,
lacking knowledge and skills, are engaged in the informal sectors or non-standard positions
of formal sectors. This non-standard employment helps to relieve the problem of subsistence
and the poverty of the workers but is far from providing decent work conditions.
4. Hard work with low compensation. Workers face discrimination compared to formal workers
for equal work done, and wages are subject to delay or deduction. It was reported that in
2004, the average annual income of migrant workers was around 8,000 RMB compared
to 15,000 RMB for their urban counterparts. The 2007 Fudan report (referred to earlier)
claims that there are huge income gaps between informal workers in different industries and
regions. According to the data of the report, totally 44.8% of them earn 401-800 RMB per
month and only 3.5% of them can earn more than 2,000 RMB per month.
Wages of informal workers are mainly calculated on the basis of working hours, and partly
on the basis of pieces they have finished. A survey in Zhejiang Province in eastern China also
reveals that among all the migrant workers in this province, 7.5% of them earn less than 600
RMB per month, which is even lower than the monthly minimum wage of this province.
In industries which absorb a lot of migrant workers, such as the construction industry, the
problem of wage deduction and back wages is serious. Those migrant workers working in
formal sectors or units as temporary employees are always discriminated against relative to
the formal employees in terms of wages and welfare. The laid-off workers who manage to get
re-employed by means of informal employment earn much less than before. According to a
spot check, 30.2% and 34.9% workers could earn 300-500 and 500-1,000 RMB per month
respectively before they were laid off, while up to 87.7% laid-off workers only got 300-500
RMB per month when they found other informal jobs in the communities.
5. Work having long hours and requiring great physical strength. It was reported that there was
a macro-sized private enterprise in Zhejiang province (a coastal province in China) hiring
more than 5,000 migrant workers who worked for ten hours a day with only one day for rest
every month. As their wages were paid according to the pieces they finished, migrant workers
had to extend working hours to get more wages. A survey published by the All-Sichuan
Province Federation of Trade Unions (Sichuan is an inland province) shows that a garment
limited company in that province worked continuously 13-17 hours a day for five days.
To our particular concern, it was reported that more and more migrant workers organized
collective work strikes against the heavy workload and wage delay or deduction. In other
words similar conditions of informal work are being found in all regions of China.
6. Poor conditions at workplaces, lack of proper occupational safety and health (OSH)
arrangements and frequent workplace accidents. A survey from Sichuan province revealed
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Asian Labour Law Review 2008
that 62.2% migrant worked had not been provided with labour protection items, 57.75%
had not been trained on safe working, and 9.3% had experienced occupational injuries
once while 4.23% twice. Because some small enterprises or workshops put the workplaces,
the dormitories and the warehouses together with disorderly management of chemical
substances, migrant workers working at such enterprises or workshops, directly exposed to
dangerous even exotic substances or gases, were subject to various occupational diseases.
Such illegal employment practices as forced labour and child labour were frequently observed
in small coal mines and workshops. Even those migrant workers offering simple services in
urban communities are mainly involved in such dirty and tiring work.
7. Workers involved in informal employment are mainly excluded from existing social security
arrangements. According to related research of the Ministry of Labour and Social Security
(now renamed the Ministry of Human Resources and Social Security), by 2004, only less
than 30% informal workers had been found to have the basic old age insurance scheme and
less than 10% in the basic medical insurance scheme, while the national average coverage of
these two basic social insurances were 46% and 31% respectively. Regional statistics revealed
more serious situations: Only 3.41% migrant workers working at enterprises of county level
and above in Sichuan province took part in the industrial injury insurance while 0.84% of
unemployment insurance and 2.99% of old age insurance. Apart from employers’ intent
to evade responsibility to insure their workers, reasons for such low coverage of migrants
in social security schemes include: low awareness of workers regarding such schemes; low
monitoring of companies and enforcement of relevant laws; and the tendency of migrant
workers to frequently change jobs and workplaces.
8. Informal workers, with their unset and flexible ways of working and some new and more
complicated forms of employment such as sub-contracted labour, are difficult to organize
to join trade unions. The legal and government-sanctioned All-China Federation of Trade
Unions functions in a top-down manner, rather than grassroots-upward, and has been
focusing on formal rather than informal workers. Most informal workers would rather turn
to their local relatives or hometown fellows when their rights and interests get infringed
upon.
9. Migrant workers engaging in informal employment also face some institutional obstacles
such as the hukou (household registration) system which administratively and economically
obstruct migrant workers from fair market access, competition and social protection. These
migrant workers are discriminated against in their children’s education, housing, and
subjected to abusive practices of the urban management forces (cheng guan).
E. Females Engaging in Informal Employment in China
In spite of lack of official gender statistics on informal employment in China, some features
can still be discerned as follows according to present research.3
The total number of female workers engaging in informal employment is slightly greater
than that of male workers. Of those in informal employment, female workers are more than
male workers among laid-off workers, while among migrant male workers are more in number
than their female counterparts. Of female workers as a whole, 63.7% of them are in informal
employment while only 49.5% of the male workers are in informal employment.
China
11
From the perspective of industries and occupations involved, female informal workers
distinctly differ from male informal workers. Female informal workers are mainly engaged in the
industry of agriculture, forest, herd and fishing, the industry of retail and wholesale trade industry,
the of restaurant and hotel industry as well as the social services industry. On the other hand,
male informal workers are mainly employed in the industries of construction, transportation,
warehousing post and telecommunications industries. From this we can find that female workers
are generally engaged in domestic and household-related work, especially in homemaking services
in which the workers involved are mostly female. Even in those industries and units without
distinct gender segregation, female and male workers still differ in the details of the jobs they do.
For example, male workers in restaurants can easily access such positions requiring certain special
skills such as chefs, while female workers are mainly involved in supplementary jobs like the
waitresses.
At the same time, within the manufacturing industry, which is composed of formal
workplaces, women tend to be concentrated in assembly line work of light industries such as
toys, garments and shoes, and are also found in large numbers in the information and technology
industry. These industries are characterized also by outsourcing, thus contributing to the process
of informalizing labour in China.
Gender segregation in industries and occupations in the end cause the gaps in terms of
income and social benefits between female and male informal workers. According to estimates
based on the Second National Survey On Chinese Women’s Status (2001), the annual average
income of female informal workers only accounts for 70.1% of that of the male workers in
1999—a gap that increased by 7.4% from 1990. The annual average wages of female workers
in such industries with mostly female workers is generally lower than that of the industries with
mostly male workers while in the manufacturing industry featuring no distinct gender disparity,
the average annual income of female workers only accounted for 48.47% that of the male
informal workers. Even in such industries where female workers are concentrated, such as the
industry of wholesale and retail trade, restaurant and hotel and the industry of social services, the
average annual income of female workers only respectively accounted for 74.02% and 60.39%
that of the male informal workers. Female informal workers also enjoy less social security and
benefits than male informal workers. Yet at one time, the average income of Chinese women was
about 80 per cent that of men.
Besides the general problems facing informal workers mentioned above, the rights and
interests to work, as well as the rights to the body and wealth of female informal workers are
subject to be more severely infringed. Take the housekeeping industry with highest rate of female
participation, for example; the Labour Law fails to apply to the relations between the individuals
and families, and housekeepers are subject to physical injury and sexual harassment from the hosts
of the families they serve.
Informal employment to some extent helps female workers to balance work and raising
children as well as housekeeping. But in all only a very small number of female workers
voluntarily choose to engage in informal employment and the majority of them are forced to
engage in informal employment with of low quality.
We may conclude that the female informal workers are the disadvantaged in the whole group
of informal workers, who themselves are the disadvantaged of the whole labour market. Given
the different physical features of their gender, shortage of knowledge and skills, traditional views
of women’s role and responsibilities as well as gender’ related discrimination, female informal
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Asian Labour Law Review 2008
workers are generally unfairly treated in terms of compensation, social security and benefits and
protection of legitimate rights and interests, causing them to suffer from poverty.
3. Official Responses to Informal Employment and An Overview Of Present
Related Laws and Policies
Given the huge employment pressure both in volume and structure, the Chinese government
tends to encourage the development of flexible employment by devising regulations and policies
to take advantages of the functions of informal employment in improving employment, alleviating
poverty as well as keeping social stability. The policies below are intended to provide positive and
institutional support to the development of informal employment:
1. Provide the laid-off workers with a series of preferential policies in the fields of finance,
taxes and business administration to encourage them to get re-employed or self-employed,
including offers of preferential treatment regarding tax and loans for laid-off workers
engaging in sole proprietorship and partnership, provision of wage subsidies, and tax
reduction or exemption to the small enterprises employing those laid-off workers.4
2. Intensify the protection of migrants’ basic rights and interests to work including the right to
wages and right to OSH. Government at all levels specifically issued administrative measures
regarding wage payment and industrial injury insurance of migrant workers and nationally
launched special checks on their enforcement.
3. Encourage the development of the informal working sector in communities to create more
jobs for public interests. At the national level, nine ministries including MOLSS and eight
other ministries in 2001 jointly published ‘Several Opinions On Improving Employment
In Communities’ in order to, by offering a series of preferential policies and training
programmes, encourage and support the laid-off and the unemployed to organize themselves
to set up some small units to provide simple services in communities. At the regional
level, since the mid-1990s, Shanghai has been issuing comprehensive preferential policies
to encourage the development of ‘informal labour organizations’ which absorbed urban
laid-off workers and rural redundant labourers to get them employed or self-employed in
communities and family-based workshops, providing socialized services for formal and big
enterprises as well as engaging in works for the public such as public services, to get basic
income and social security. The Shanghai municipal government provides the ‘informal
labour organizations’ with a package of preferential policies within the first three years
after the organization was set up, ranging from exemption from local taxes, preferential
payment of social insurance, and free training for owners and employees on necessary skills,
to securities for setting up loans. By the end of 2005, there were a total of 34,000 informal
labour organizations in Shanghai, involving up to 355,000 labourers. The development model
of informal labour organization in Shanghai was crowned as the ‘Shanghai model’ by ILO.
In reality, however, the success of ‘Shanghai Model’ is a rare case. Most of the preferential
policies are still far from effective and fall short of expectations.
4. A series of laws and regulations were promulgated to regulate non-standard employment
including Some Opinions on Issues of Non-fulltime Employment by MOLSS in 2003 and
the newly published Labour Contract Law in which special chapters are included which set
out rules regarding non-fulltime employment and contract labourers. However the Opinions
issued by MOLSS are not enforceable.
China
13
On the other hand, the new Labour Contract Law made effective in January 2008 has given
much hope to workers – in spite of various employers’ maneuvers to evade it. The new
Labour Contract Law stipulates that every employee should have a contract which lays out all
the workers’ rights and entitlements, and if any employer fails to do so must pay two times
more compensation to the workers. It also introduces more job security, regulates and limits
part-time and dispatch labour, and reduces use of of short-term contracting which had been
widely used by employers to avoid accident pay, health insurance and so on. Now, after two
short-term contracts, a permanent open-term contract must be signed.
5. The coverage and levels of policies and laws regarding social security were improved. The
MOLSS issued a series of circulars to regulate issues such as how to take part in the basic oldage and medical insurance for such flexible labourers as urban self-employed and freelancers,
including some new arrangements on the responsible for paying premiums, the base and rate
of payable premiums as well as the payment procedures.
Present laws and policies mainly focus on key groups involving informal employment such
as migrant workers and laid-off workers, and lack whole and comprehensive regulations and
supervision. Moreover, in spite of good government policies and incentives to encourage the
development of informal employment, laws and regulations for the protection of labour rights
and social security on informal employment remain inadequate and problematic. The major
problems are:
1. The present labour law, with a limited coverage, applies to the labour relations between
employees and their unit employers only and not to the labour relations between individuals,
especially housekeepers and the families they serve, who are explicitly excluded from the
labour law.
2. Labour standards regarding wages, work hours, rest and leave in the present Labour Law are
mainly defined on the basis of formal employment, failing to meet the requirements and
needs of flexibilized and informal employment.
3. The present social security arrangements can not match the development of informal
employment. The existing social insurance system involving old-age and medical insurance
etc., featuring high rates and payments, designed based on sole and formal employment
relations between employees and their unit employers. Those social insurances are registered,
declared and paid for the employers. But informal workers, which usually have no employer
(or are self-employed) or who have more than one employer (i.e. if they have part-time
jobs) with unstable positions and low income, are actually excluded from the present social
insurance system.
4. Existing laws and policies are far from fully implemented and enforced. Informal workers
applying for preferential treatments in tax and finance are always frustrated by the
complicated formalities and long period of waiting while related authorities award the
treatments without clear standards for doing so.
4. Conclusions and Suggestions
Given the severe employment situation in China as well as the role of informal employment
in improving employment and alleviating poverty, absorbing a large number of labourers,
informal employment will not be a temporary model but a long-lasting form of employment.
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Asian Labour Law Review 2008
We think that laws and policies should focus both on encouraging the development of informal
employment and the protection of related rights and interests of informal workers:
1. To make different policies and regulations regarding employment in informal sectors and
the non-standard employment respectively according to different key features and issues
in two fields. For informal workers in informal sectors, more preferential policies, such as
tax and financial policies for small enterprises as well as sole proprietors should be issued
and more efforts should be made to simplify the administrative registration formalities, to
reduce chargeable items and to low market access. Governmental agencies should provide
public services in the form of information, consultation and training to micro and small
enterprises in informal sectors and design a package of social insurance arrangements suitable
to informal labourers based on voluntary participation, while creating more preferential
policies to guarantee that more and more informal workers are likely to benefit from social
assistance and the social welfare system. For workers with non-standard employment (in the
formal sector), great efforts should be made to standardize enterprises’ employment practices
towards equal pay, social welfare and security among informal workers and formal workers
doing equal work.
2. To improve laws and regulations regarding protection of rights and interests of informal
workers.
• To expand the coverage of the Labour Law
• To get informal workers involved while efforts should be made to regulate those nonstandard labour standards so that they guarantee informal workers’ rights and interests.
Government of all levels should strictly implement related laws and regulations,
especially cracking down on such illegal practices as employing child labour and forced
labour and lower economical and administrative restrictions against migrant workers
while providing them with securities on housing and education of their offspring.
3. Government of all levels should create an educational and training system suitable to
informal employment to offer more opportunities for informal workers’ upward mobility,
fostering more technical talents to contribute to industrial upgrading of industrial skills.
ENDNOTES
1.
2.
3.
4.
http://www.nongjianv.org/old/club/publishing/lunwen/31.htm
Xue Shaoyun (2004) ‘Observation and Reflection on Informal Employment in China: A Survey on Informal
Employment in Six Urban Communities’. Wuhan Family Service Centre.
The statistics refer to ‘the Second Survey on Chinese Women’s Social Status’ and ‘The Yearly Book of Labour
Statistics in China’ which can also be found in the following articles: Jiang Yongping: ‘Informal Employment
and Gender Analysis of Chinese Labour Market’ and Tan Lin and Li Junfeng: ‘Gender Analysis on Informal
Employment in China’.
For example: ‘Notice on Preferential Policies For Laid-Off Workers Engaging in Self-Employed Business’ and ‘Notice
on Further Improvement of Small-Amount Loans for Laid-Off Workers’
15
Hong Kon g
Hong Kong
Wu Mei Lin
1. Contemporary Snapshot
Informalization and Casualization of Labour as a Result of Globalization and EconomicRestructuring
S
ince the mid-1990s, Hong Kong has transformed itself from a manufacturing centre to a
global financial and sourcing hub. This has come about with first, an exodus of manufacturing
activities to mainland China and Southeast Asia in pursuit of low-cost labour and resources
(43 per cent of Hong Kong’s manufacturing and trade companies have reported investments in
factory facilities in China);1 and second, the growing magnitude of the service sector in terms of
its share in gross domestic product (GDP).
The phasing out of the manufacturing sector has caused Hong Kong workers in general and
women workers in particular to be hard hit. In 2002, the manufacturing sector represented only
5.1 per cent of the total number of people employed, marking a steep decrease from 41 per cent
in 1980.2
Middle-aged women workers displaced from the manufacturing industries constitute a
massive reserve labour force for the service sector. Many end up as manual workers in retail,
catering and other services. From the statistics (see Table 1 below), it is clear that the new service
sectors cannot possibly absorb all the women workers laid off from manufacturing.
Table 1. Major Sectors Which Employ Women Workers
Major sectors open for women workers
% of the
labour force
(2005)
Within the sector, the % of suitable
posts for low-skilled women of low
educational level displaced from
manufacturing jobs
Wholesale, retail, import/export, catering and hotel
27.2%
36.3%
Finance, insurance, property and commercial services
16%
6.6%
Community, social and personal services 26.9%
34.5%
Source: Census and Statistics Department (2006) Quarterly Report On General Household Survey.
Jobs in the service sectors are characterized by two major unattractive factors: long working
hours with low pay; and casualized, part-time and contracted-out, work.
Employment on a part-time, temporary and subcontractual basis is on the rise. From 1997
to 2005, the number of part-time workers more than doubled from 67,800 to 150,900, while
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Asian Labour Law Review 2008
the proportion of part-time workers to the working population rose from 2.7 per cent to 5.2 per
cent.3 In government statistics, only 3.3 per cent of part-time workers are identified as having ‘no
financial need’;4 women make up over half (62.79 per cent) of the part-time workers; and 37 per
cent of the part-time workers earn less than HK$5,000 per month.5
As a result of casualization, more women are failing to get employment benefit protection.
From 1997 to 2005, the number of part-time workers increased by 32 per cent, from 82,000 to
150,700. The percentage of part-time workers in the whole labour force increased from 2.8 per
cent in 1997 to 5.2 per cent in 2005; many of these workers are middle-aged women displaced
from the manufacturing sector.6
It is expected that the trend towards casualization of women workers is going to become
more extensive, affecting not just women displaced from the manufacturing sector, but also young
school-leavers. Nowadays, many young women are employed as flexible hourly-paid workers with
no fringe benefits or employment security. Even clerks and nurses are employed on a contract
basis. Also, the trend towards ‘disguised self-employment’ is increasing, such that to get a job a
worker is required to pretend to be self-employed, because self-employed workers are excluded
from the existing Employment Ordinance protection and the employer can thus circumvent
obligations and costs under the Ordinance.
Gender Inequality in the Labour Market
According to government statistics, the median monthly earnings of employed persons
overall in 2001 and 2006 were US$1,282 and US$1,269 (US$1 = HK$7.8) respectively. In
2001, women earned US$1,090 while men earned US$1,538. In 2005, women still earned less
than men (US$1,028 compared with US$1,410), which represents a 27 per cent difference in the
median monthly earnings.7
There continues to be an occupational gender bias among managers and administrators.
In 2002, men made up 74.4 per cent of this category compared with 25.6 per cent women. In
2005, the figures were 73.2 per cent for men and 26.8 per cent for women. In more elementary
occupations, the trend is the reverse; women form a higher proportion of the workers. For
instance among clerks, 74.2 per cent were women in 2002 and 73 per cent were women in 2005.8
Of those employed earning less than US$384.60 (HK$3,000) a month, women made
up 64.9 per cent in 2002 and 66.4 per cent in 2005. Of those earning more than US$3,846 a
month, 68.3 per cent were male in 2002 and 67.8 per cent in 2005.9
The Post-1997 Hong Kong Government
The ideology of neoliberalism prevailed in Hong Kong under the colonial government
for decades. The doctrine of laissez-faire was upheld along with the principle of government
non-intervention in the market. Even after the return of sovereignty to China in 1997, the
new government has followed the same principles. The non-intervention principle is further
accentuated under the policy of ‘small government/big (and free) market’. Privatization of public
services in the form of outsourcing and corporatization are two main strategies to practice the
doctrine of small, i.e. minimal, government.
A typical example is the Hong Kong Housing Authority. Public housing has a long history
of outsourcing services to private companies. Since 1987, the Housing Authority has contracted
Hong Kon g
17
out cleaning services and security related services and confined itself to the role of management
and monitoring. The pace of privatization further expanded in the late 1990s so that the whole
management of the Housing Authority has been contracted out in line with the downsizing of the
government. The monitoring role is left to private companies, which are profit-oriented. In 2004,
the Housing Authority divested itself of its retail and car parking facilities.
There is a growing trend towards privatization of other social infrastructure as well, such as
the postal services, railway systems, cross-harbour tunnels, energy supply and telecommunications.
Trend in Feminization of Poverty within Economic Growth
The transformation of Hong Kong to a global city serving the interests of transnational
corporations (TNCs) makes the gap between rich and poor more acute. The gap has grown in
recent decades. The Gini coefficient (based on pretax monthly household income) was 0.518 in
1996, 0.525 in 2001, but 0.533 by 2006.10
From 2000 to 2006, there was a decrease in the unemployment rate but an increase in the
working poor. The lowest earning 20 per cent of the population owns only 4.4 per cent of the
wealth of Hong Kong, while the top earning 20 per cent of the population owns 57.1 per cent of
Hong Kong’s wealth.11
Between 1996 and 2006, the numbers living below the poverty line increased from 13.5 per
cent to 18 per cent.12 During the same period, the working poor population increased by 87.9 per
cent, from 222,800 persons in 1996 to 418,600 persons in 2006; and the majority of these were
women. The poverty rate increased during this time from 7.6 per cent to 13.1 per cent.13
According to government figures, the lowest paid jobs are mainly in the community, social
and personal sector, and the wholesale and retail sector. Not surprisingly, these two sectors can be
viewed as ‘women’s’ sectors in the sense that a large number of the employees are women.
As mentioned above, women workers make up the majority of the working poor. Of the
405,000 workers who earn less than half of the median monthly salary, i.e. HK$5,000 (US$641),
women make up 74 per cent. In other words, one out of seven employed women falls into the
category of the working poor. Moreover, the largest wage discrepancy exists between the sexes at
the bottom of the employment hierarchy. The median monthly salary of female unskilled workers
is just HK$3,900 (US$500), which is half of that of their male counterparts, who earn HK$7,500
(US$961).14
Within the working poor population, women are poorer than men. In 1996, the poverty rate
among women was 14 per cent; this increased to 18.4 per cent in 2006. Within a ten-year period,
poverty among women increased by 177,700 persons. In 2006, women accounted for 60 per cent
of older persons, and 63 per cent of the working poor were women, the majority aged between 45
and 59 years.15
Apart from being poorly paid, jobs are difficult to find, especially for middle-aged women.
Age discrimination is widespread in the service sector. Being young and having a beautiful face
are perceived as assets in getting a job as a saleswoman or waitress. Middle-aged women end up as
cleaners and general workers in public housing estates, offices, restaurants, and fast-food chains –
in other words, in the lower strata of the service sectors.
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Asian Labour Law Review 2008
Government’s Lack of Gender Sensitivity and Feminization of Poverty
Despite the rise in female employment since 2002, women continue to make up the largest
proportion in every sector of the poor population. About 80 per cent of the working poor are
female; more than 80 per cent of single parents receiving government financial assistance are
single mothers; and most of the ageing population receiving government financial assistance is
also female.
The Women’s Commission (WoC) and the Commission on Poverty (CoP) put emphasis
only on the need to build up individual capacity and to increase individual competitive power in
the labour market as the strategy for poverty alleviation. They have not considered tackling the
structural factors that push women into such vulnerability and into poverty.
The CoP, set up in 2004 and composed of people appointed in a closed-door process,
admitted that ‘among the low-income employees in mid 2005, relatively most of them were
female workers, persons aged 40-59’. The CoP has not defined a poverty line. Furthermore, the
CoP set their priorities on ‘Inter-generational Poverty’ and ‘Elderly in Poverty’ and formed two
task forces, namely, for ‘Children and Youth’ and a ‘District-based Approach’. Definitely, women’
s poverty is not on the government’s agenda.
The WoC shared a gender-mainstreaming checklist with the CoP.16 However, it is clear that
the CoP has not made any effort to tackle feminization of poverty as shown by the absence of a
task force for women’s poverty. In other words, the CoP did not respond to the WoC’s gendermainstreaming ‘checklist’, which is not mandatory. The CoP has failed to adopt a women’s
perspective in defining the poor population and in analyzing the structural causes of poverty. As a
consequence, no gender-sensitive policy has been proposed to address the problem of feminization
of poverty.
Employment Protection and Related Employment Policies
1. Ignoring the existence of the working poor
The Hong Kong government does not provide an official poverty line, while the Commission
on Poverty (CoP) considers an employee to be working poor if his/her monthly income
is below 50 per cent of the median income of all employees. Under the definition of the
CoP, women who ‘voluntarily’ participate in part-time jobs because of household duties
are excluded from being counted as working poor, even if their incomes are far below the
median income level.
2. Saying NO to legislation on minimum wage
The polarization of income/levels has become more and more serious. In 2005, the
government decided to set up a wage system stipulating that wages in government contracts
should not be lower than the average wage in the private market for similar occupations –
applying only to the cleaning and security sectors. The move virtually offers a HK$1,000
(US$128) wage increase for all subcontracted cleaning workers. In November 2006, the
Hong Kong government refused to legislate on a minimum wage level for all sectors; instead
they initiated the ‘Wage Protection Movement’ for cleaning workers and security guards.
Due to labour movement pressure, however, the government has recently agreed to legislate
a minimum wage. The details have yet to be worked out.
Hong Kon g
19
3. One-pillar retirement protection
The World Bank suggested that there should be three pillars to ensure basic retirement
protection,17 but in Hong Kong there is only one pillar in retirement protection, the
Mandatory Provident Fund (MPF). Under the MPF, both employers and employees
contribute 5 per cent of the worker’s wage to the pension fund; for workers whose wages are
below HK$5,000, only the employers need to contribute. This system excludes domestic
workers (local and foreign); 90 per cent of domestic workers are women.
From 1996 to 2004, unemployment among middle-aged workers increased sharply. The
unemployment rate of employees aged between 40 and 49 years increased from 2.2 per cent
to 6.5 per cent, while for employees aged between 50 and 59 years the rate has increased
from 2.7 per cent to 8.7 per cent. The MPF for low-income workers cannot provide a decent
living after retirement. Middle-aged poverty will progress as poverty into old age.
4. Employment Ordinance restricts protection targets
According to the Employment Ordinance, employment protection is given to all permanent,
casual, temporary and part-time workers as long as their working hours meet the requirement
of a ‘Continuous Contract’. That means a worker being employed continuously for four
weeks by the same employer working no less than 18 hours per week (simply called ‘4.1.18’).
Benefits under 4.1.18 include paid maternity leave, dismissal and redundancy protection,
paid annual leave, paid sick leave, sickness allowance and long-service payment.
Thus, 4.1.18 not only regulates the labour relations, it indirectly discriminates against
part-time workers. Employers can escape the responsibility by deliberately arranging for
workers to work less than 18 hours and to stop working at the fourth week. For example,
the hotline enquiries services of the Jockey Club betting agency or the PCCW telephone
company employ part-time workers for 17.5 hours per week. Such workers cannot benefit
from annual leave, holidays, or allowances for pregnancy or sick leave. Another example is
found in supermarkets: workers will be laid-off for one week after working for almost three
months; this disrupts continuous employment and no benefits are given for discontinuous
employment.
It is a common practice for employers to institute a discontinuation period between threemonth contracts or half-year contracts with their female employees so as to evade the
responsibility of giving employment benefits. For most female workers working irregularly on
and off in different industries for different employers for different durations, paid maternity
leave has become a luxury beyond their expectations.
5. Employment Ordinance excludes contractors and subcontractors
If workers become self-employed they lose employment protection. There have been cases
where employers force employees to sign ‘self-employed’ contracts, or to obtain business
registration, in order to evade the employment regulations. The most common cases are
reported by domestic workers, retail promoters, construction workers and cleaners.
6. Composition of wages
According to the Employment Ordinance, wages are a monetary remuneration to employees
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Asian Labour Law Review 2008
as a reward for work done. They include tips, commission, bonuses, travelling allowances and
overtime payment. Exclusion of housing allowance allows the employers to treat part of the
wages as a housing allowance to avoid responsibility.
7. Easy to form unions but not recognized for collective bargaining
By law, at least seven workers from the same industry or the same firm can form a union,
but there is no legislation on collective bargaining. That means an employer can ignore the
existence of the union, or the employer can choose a yellow union18 to negotiate no matter
how many members a self-formed union has.
The law indirectly limits the workers’ rights to strike: workers can strike at any time, but the
days on strike are counted as absent days and hence are unpaid; and the employer may fire
workers who are on strike.
Employers can be charged if they discriminate against workers based on membership of a
union. However, the burden is put on the workers to prove the discrimination, which is very
difficult.
Before 1997, unions in Hong Kong were broadly divided into three main confederations:
pro-mainland; independent; and pro-Taiwan. After ten years, they are now divided into: promainland (Hong Kong Federation of Trade Unions, The originally pro-Taiwan, Hong Kong
and Kowloon Trades Union Council has become very small in numbers - 5,000 in 2007.)
and independent (Hong Kong Confederation of Trade Unions).
The law protecting trade union right to collective bargaining and mandatory recognition by
employers was scrapped in 1997 after the return of sovereignty to China. Thus workers are
left without any weapons to even protect their gains.
8. The inadequacies of the Sex Discrimination Ordinance
The Convention on the Elimination of All Forms of Discrimination against Women
(CEDAW) has been implemented in HK since the 1980s. The Sex Discrimination
Ordinance was passed in 1995, legally prohibiting discrimination on the basis of sex,
marital status and pregnancy, and also prohibiting sexual harassment. The Family Status
Discrimination Ordinance, passed in 1997, makes it unlawful to discriminate against a
person based on ‘family status’, which is defined as the responsibility for the care of an
immediate family member.
The Equal Opportunities Commission (EOC) was established in 1996 to implement these
two Ordinances and the Disability Discrimination Ordinance.
The EOC can only take action on complaints lodged under the above Ordinances. Its role is
mainly investigation and conciliation. The EOC is required by law to investigate complaints
brought before it. But the EOC can decide not to conduct or to discontinue an investigation
into a complaint if the act complained about is out of the scope of the Ordinance. For
example, if a sexual harassment case is between two colleagues, then the EOC will investigate
the complaint and decide to proceed to conciliation or to start legal proceedings; but if the
case is between a customer and sales girl then the EOC will not make an investigation or take
any further steps. This is because the Ordinance does not apply to all environments. It only
Hong Kon g
21
applies to the workplace/employment related environment and educational establishments.19
It is unlawful for the goods/services/facilities providers to sexually harass their customers/
recipients.
The Sex Discrimination Ordinance gives no protection to workers against discrimination
according to age, race, religion, or sexual orientation. It also gives no protection to foreign
women workers.
Significantly, the law against sexual harassment does not apply to harassment of workers by
customers. This is a major area of shortfall, as the service sector has become the largest work
sector that employs women workers.
2. Impact of Informalization of Labour on Women Workers
The employment conditions for women have steadily deteriorated in two ways. First, a
casualized mode of employment has become the norm, such as work that is of a part-time,
temporary, or contract-based nature, and is excluded from protection under existing employment
laws. Second, there is a trend towards longer working hours and suppressed wages in full-time
employment, intensifying the pressures on women working under both sets of conditions.
Furthermore, job segregation by gender and sex discrimination are still prevalent and have had an
adverse impact on women. Many women are also subject to unfair employment conditions on the
basis of their age.
Women workers who are either underemployed or involuntarily taking part-time jobs
account for 20 per cent of the total female working population.20 The phenomenon of ‘hidden
unemployment’ is particularly serious amongst grass-roots women. Some studies have shown that
the unemployment rate of women actually reaches 25.8 per cent, a much higher figure than the
official unemployment rate of 4.6 per cent (figures for January to March 1999).21 The repeated
difficulties in finding jobs, combined with the heavy burden of family responsibilities and the
lack of appropriate social support, have discouraged many women from their job-seeking efforts.
However, unemployed women are not represented in the official unemployment statistics because
the government has deliberately categorized them as ‘housewives’. Consequently, these women
workers also lose their status as workers.
It is clear that women workers are being exploited for their multiple identities as working
women as well as poor labour and caregivers. Their plight is compounded by the fact that because
they are the principal child-carers their choices in job-seeking and their bargaining power are
seriously compromised.
Even for women working in different industries, common needs and demands are
identifiable, as they face similar hurdles to enjoying full employment rights. The number of
casualized women workers will most likely increase with full-blown privatization.
It is foreseeable that the trend towards casualization of women workers will become more
extensive, affecting not just women displaced from the manufacturing sector, but also young
school leavers. Nowadays, many young women are employed as flexible hourly-paid promoters
with no fringe benefits or employment security. Even clerks or nurses are employed on contract
basis.
Women move between unemployment, looking after the family and casual labour, but none
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Asian Labour Law Review 2008
of these situations offers any protection to them. Income disparity between the sexes increases
gender inequality, and lower economic power affects women’s position in the family and society.
Women’s self-esteem and positive self-image suffers as a consequence.
3. Policies Advocated for Addressing Problems Faced by Women Workers
Protection of employment rights:
1. Remove the requisite 18 hours each week for four continuous weeks (4.1.18)
restriction from the Employment Ordinance
The Employment Ordinance only provides protection for workers who work continuously
for the same employer for four weeks and for not less than 18 hours per week. Under the
current trend of casualization, many women are employed on a part-time or temporary
contract basis and are not protected by employment laws.
Countermeasures should be set up to address the problems faced by most of the women workers.
2. Legislate a minimum wage to ensure a reasonable wage
The Hong Kong government has evaluated the ‘Wage Protection Movement’ implemented
in November 2006. It is obvious that the ‘movement’ has been a failure since it has no legal
basis. Due to mounting pressure from the labour movement, the Hong Kong government
has agreed to legislate a minimum wage level, but there is concern that it will limit wage
protection to cleaning workers and security guards, and refuse to apply it to all work sectors.
There should be legislation for a minimum wage for all sectors to ensure a reasonable wage for
low-income groups. This will be a continuing campaign.
3. Set up a comprehensive retirement scheme
When formulating a retirement benefits scheme in 2000, the government ignored the call
for a comprehensive retirement scheme that would give basic protection to all sections
of the population. Instead, it developed the Mandatory Provident Fund (MPF), further
marginalizing the large percentage of grass-roots women engaged in unstable, low-income
employment, or those forced to be full-time housewives at various stages of their lives to take
up family responsibilities.
Comprehensive retirement benefits would guarantee basic living expenses for the aged, and those
persons who are unable to make contributions to the MPF.
4. Increase the budget for social services
Feminization of poverty has become much more acute and the marginalized position of
women in the economy denigrates their status in society. The weakening of women’s survival
tools only increases their dependence on families and, exacerbated by the lack of social
support, there will be many obstacles to women’s development in the future.
An increase in the budget for social services could increase job opportunities on the one hand while
extending social services to relieve women of their heavy burden of family responsibilities on the
other.
Hong Kon g
23
5. Stop sub-contracting public services to the private sector to put an end to the
continued exploitation of labour
The government, in its privatization of public services, spearheaded the casualization of
employment for women. Under the current trend towards privatization, government services
are usually subcontracted to those private contractors who offer the lowest tender. In order
to be highly competitive, subcontractors often make savings by cutting wages and benefits to
their workers.
6. Recognized union rights for collective bargaining
Laws protecting trade union rights to collective bargaining and mandatory recognition by
employers should be legislated, otherwise employers can ignore the existence of the union,
and workers are left without any weapons to even protect their gains.
Protection of Equal Opportunities in Employment:
1. Legislate against age discrimination
In 1994, Hong Kong acceded to the United Nations Convention on the Elimination of
All Forms of Discrimination Against Women (CEDAW), enacting legislation against sex
discrimination. However, protection against age discrimination is not included in the
provisions of CEDAW and yet this is the most acute problem confronting women in the
labour market. Employers often refuse to employ women because of their age or use it as an
excuse to cut their wages. Many women are forced to accept low wages if they are to find any
work at all.
It is necessary to legislate against age discrimination to promote the elimination of age
discrimination against women in employment.
2. Extend the law against sexual harassment
The law against sexual harassment does not apply to harassment of workers by customers.
This is significant, as the service sector has become the largest work sector that employs
women.
It is therefore important to extend the Sex Discrimination Ordinance.
3. Implement the principle of equal pay for work of equal value
Currently, women do not enjoy the same level of pay as men, even when their work is of
equal value. This must be remedied if Hong Kong is to truly be a place where women and
men have equal rights.
It is necessary to address the phenomenon of job segregation by gender and to ensure remuneration
for women’s labour which is not less than what men doing the same work receive.
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Asian Labour Law Review 2008
ENDNOTES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
Hong Kong Government. Census and Statistics Department, Trade Statistics; Hong Kong Trade Development
Council.
Hong Kong Government, Labour Department, 1992. Hong Kong Labour and Employment.
Hong Kong Government, Census and Statistics Department (2006) Population By-census.
Ibid.
Ibid.
Hong Kong Government, Census and Statistics Department (2006) Social Data Collected via the General
Household Survey – Special Topics Report No. 43: Casual Employment/Part-time Employment, March, p. 38.
Hong Kong Government, Census and Statistics Department. (2006) Women and Men in Hong Kong - Key
Statistics, p. 78.
Ibid., p. 59.
Ibid., p. 75.
Hong Kong Government, Census and Statistics Department (2006) Population By-census.
Hong Kong Government, Census and Statistics Department.
Hong Kong Government, Census and Statistics Department (2006) Women and Men in Hong Kong - Key
Statistics, p. 78.
Ibid.
Hong Kong Government, Census and Statistics Department (2002) Women and Men in Hong Kong - Key
Statistics, p. 48.
Hong Kong Government, Census and Statistics Department (2006) Population By-census.
Revealed in a paper submitted by the Health, Welfare and Food Bureau to the Legislative Council’s
Subcommittee to Study the Subject of Combating Poverty in March 2006 (LC Paper No. CB(2) 1706/05-06
(2).)
World Bank (1994) Averting the Old-Age Crisis: Policies to Protect the Old and Promote Growth. This report
recommended a three-pillar approach to protection of the aged, including: a publicly financed social security
net; a mandatory funded individual account system; and voluntary personal savings and insurance.
A company union, business union or, pejoratively, a yellow union is a union which is located within and run by
a company, and is not affiliated with an independent trade union.
See http://www.hklii.org/hk/legis/en/ord/480/sch1.html.
Women’s labour force participation rate and job opportunities are directly and adversely affected by family
responsibilities, child rearing and child-care facilities. Often, women are forced to give up employment
altogether and this results in the breaking up of their continuity of employment. The government simply evades
its responsibility by categorizing unemployed women as ‘housewives’.
Chan K. W. and Leung L. C. (1999). Women In and Out of Work: A Research Report, Hong Kong Young
Women’s Christian Association.
25
Japan
Japan
Kazuko Sakai & Michiko Hiroki
1. Contemporary Snapshot
Escalation of Employment Irregularization and Impoverishment
Increasing irregular employment
ssues concerning ‘income disparity’ and ‘poverty’ have been raised constantly in the media in
Japan over the past two years. These are serious issues, especially among women and youth. In
the early 1990s, after the bubble economy burst, the difficulty of youth in finding jobs became
a big social issue as the economy faltered. Those who could not become regular employees had
no choice but to work part-time or temporarily, but it was regarded as their own decision; these
workers have been dubbed ‘freeters’. ‘Freeter’ is a recently coined word from the English word ‘free’
and the German ‘Arbeiter’ meaning worker, which is used in Japan to refer to part-time jobs.
‘Freeters’ numbered over two million at one stage. Later in 2002, the economy began to recover,
and after the unemployment rate hit its worst at 5.4 per cent in 2002, it has recovered to 4.0 per
cent in March 2007. Statistically, the employment rate of new graduates has improved, but this
does not necessarily mean regular employment. Therefore, the situation remains the same, with
low wages and instability.
I
The labour force population in 2006 was 66.57 million; 38.98 million male, and 27.59
million female (41.4 per cent of the total labour force). By employment status, irregular workers
(part-time workers, temporary workers who might be contract or dispatched workers, etc.) among
men counted 5.17 million (17.8 per cent of all male workers), whereas that among women the
number of irregular workers was more than double, at 11.59 million (52.8 per cent of all female
workers). After 2003, the regular employment rate among women workers decreased to below 50
per cent, reversing the rate of irregular employment (irregular employment rate among all workers
was 33.0 per cent in 2006).1 See Table 1 and Figures 1 and 2.
Table 1. Change of Ratio of Irregular Workers by Sex
Female
Male
Year
1986
1990
1995
2000
2006
1986
1990
1995
2000
2006
Regular Employees
67.8
61.9
60.9
53.6
47.2
92.6
91.2
91.1
88.3
82.1
Part-time workers
28.8
34.4
35.5
42.1
40.0 3.6
4.7
5.2
8.0 8.5
Temporary and others
3.4
3.7
3.7
4.4
12.8
3.8
4.1
3.7
3.7
9.3
Source: Labour Force Survey, Ministry of Internal Affairs and Documentations-Statistics Bureau
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Asian Labour Law Review 2008
Source: Labour Force Survey, Ministry of Internal Affairs and Documentations-Statistics Bureau
Source: Labour Force Survey, Ministry of Internal Affairs and Documentations-Statistics Bureau
In Japan, ‘dispatched workers’ are those hired by dispatch companies and sent to the client
companies for work. The client companies have contracts with the dispatch companies, pay fees to
the dispatch companies and use the workers sent by them. This is a form of temporary work, and
of indirect employment (the legal employer and final user are different entities). Another kind of
temporary worker is the kind directly employed by employers (both private and public) with fixed
term contracts; they are contract workers. Some of the people are workers who have been re-hired
as temporary workers on contract for one year or less, after reaching retirement age. That contract
can be renewed many times.
Part-time workers dominate 70 per cent of all irregular workers, and 70 per cent of part-time
workers are women. They have long been synonymous with low wages and labour without rights;
eventually, the Part-Time Work Law was revised in the 2007 Diet (the details of this law will be
discussed later in Section 2).
Japan
27
Since the ban on hiring dispatched workers in the manufacturing industry was lifted by the
‘revised’ Temporary Work Law in 2003, the number of dispatched workers has sharply increased.
Of approximately 2.55 million dispatched workers (in 2005), 37.2 per cent are male and 62.8 per
cent female (in 2004).
In addition, ‘independent contractors’ – a type of consignment or contract workers, who are
not employed directly but working based on contracts – are increasing. Independent contractors
are regarded as ‘individual business owners’, who are not directed by employers; therefore, they
are deprived of protection by laws such as the Labour Standards Law and the Industrial Accident
Compensation Insurance Law. Although the working style is the same as regular employees or
dispatched workers, there are business enterprises which disguise these workers as independent
contractors in order to avoid the application of labour laws. Women, working at home or as
contributing family workers are predominant in the masses of workers uncovered by labour laws.
Japan is placing extreme restrictions on the acceptance of foreign workers. However, systems
concerning foreign trainees and technical interns have been introduced, and more than 150,000
have practically become part of the necessary labour force. Since trainees are not categorized as
workers, labour laws do not apply to them. In reality, the lectures that the trainees are supposed
to receive are not held, and often the wage due to them is not paid for the overtime work they put
in. Labour laws are applied to the technical interns, but there is no end to cases of violation such
as wages being paid below the required minimum, failure to provide paid holidays, and abuse of
human rights, including sexual harassment and illegal detention.
Box 1. Foreign Workers Employment Policy
Ever since the Plaza Agreement concluded at the G5 foreign ministers’ conference in
1985, the number of foreign workers in Japan has increased rapidly. Against the backdrop of
widening economic disparities among the countries, the strong yen has attracted many workers
from developing countries. At that time, Japanese government had a closed policy against
foreign workers, which was also supported by trade unions. Therefore, many of them were
treated as ‘illegal workers’ or ‘undocumented workers’ and they have been subjected to human
rights abuse, discrimination and adverse working conditions. Thereafter, several amendments
in immigration law as well as institutionalization of foreign trainees have been made. However,
the limited acceptance of foreign workers remains to this date, except for professional and
technical workers, and workers of Japanese origin from Latin American countries.
As of 2006, there are approximately 900,000 foreign workers who are categorized as
‘newcomers’, as distinguished from ‘old-comers’ who are mostly resident Koreans and Chinese,
who number about 700,000. The newcomers account for about 1.3 per cent of the workforce
in Japan. Among them, professional and technical workers amount to 150,000 persons while
foreigners of Japanese origin, student part-timers and undocumented workers account for
230,000, 180,000 and 200,000 persons, respectively.
Due to the different interests and stances of the concerned ministries such as Ministry
of Justice, Ministry of Health, Labour and Welfare, Ministry of Economy and Trade, and
Ministry of Foreign Affairs, the government has been slow in formulating unified policies
regarding foreign workers. Recently, however, new initiatives have been taking place in relation
to the necessity to review the programme of foreign trainees and to respond to labour shortages.
On the other hand, control over foreign workers has been strengthened by the amendment in
the Employment Measures Law, which obliges employees to report their employment of foreign
workers.
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Asian Labour Law Review 2008
Escalating Impoverishment of Women
Irregular employment has gradually become firmly established since the 1990s, and
consequently, the impoverishment of women is escalating.
The economic growth rate (the real growth of GDP) indicates that Japan recovered from
recession in 2003, reversing the negative growth to 2.5 per cent, and to 3.7 per cent in 2004.
However, the increase of wages has not followed. The salary of regular employees has increased
from the previous year 2003, by 0.1 per cent (318,800 yen), whereas that of irregular employees
excluding part-time workers has decreased by 0.2 per cent (191,000 yen). Economic recovery is
not reflected in the wages of irregular employees, thus widening the disparity. Among the irregular
employees, the salary of males has increased by 0.7 per cent (222,800 yen) from the previous year,
but on the contrary, it is sharply down 1.8 per cent (165,400 yen) for females. Even when the
economy is recovering, women remain as irregular workers with their wages unchanged.
Consider the hourly wage of part-time workers, for instance: it is 940 yen (US$1=107 yen
in January 2008) for females and 1,057 yen for males. Although the female part-time workers’
length of service is usually greater than that of males, their wage is lower. The hourly wage of
female part-time workers is closely linked to the minimum wage. The minimum wages differ
by prefecture. Even the minimum wage in Tokyo, which is 739 yen in 2007, if worked fulltime, yields an amount that is not sufficient to maintain the prescribed welfare standards. Female
part-time workers are the working poor below the welfare level, which is necessary to maintain
‘minimum health and cultural standard of living’ specified in Article 25 of the Constitution.
It sets out livelihood, housing and other criteria. For a single person in Tokyo in 2007, the
welfare payment including livelihood and housing was 137,400 yen per month, which adds up
to 1,648,800 yen per year. Although there is no official ‘poverty line’, an annual income of two
million yen is generally regarded as the line.
There are 10.23 million (22.8 per cent) private company employees, whose annual income is
less than two million yen; that is more than 10 million people in poverty, for the first time in 21
years. By gender, of those earning less than two million yen, males number 2.63 million (9.6 per
cent of all males), and females 7.6 million (43.6 per cent of females); of those earning less than
three million yen, males are 5.92 million (21.6 per cent), and females 11.49 million (66 per cent).
The average annual working income of single-mother households is 1.71 million yen, and
even when the child-care allowances or welfare payment are added, it is 2.13 million yen. Among
the single-mother households, 85 per cent of the mothers work, but regular employees make
up 43 per cent, and temporary workers or part-time workers 44 per cent. The rate of unstable
employment is high. Many single mothers have multiple jobs in order to support their children’s
education.
There is a growing number of youth who stay overnight at ‘internet cafes’, the so-called
‘internet café refugees’. Because they do not have a stable job nor a stable income, they are unable
to pay the rent for stable accommodation. The number of welfare recipients is increasing since
1994, and in 2006, it exceeded 1.5 million people (one million households). Japan is not an
exception in having an emerging class of ‘working poor’, but the phenomenon is more acute
among women than men.
Japan
29
Current Situation of Trade Unions
Three National Centres
Trade union density has been steadily decreasing in Japan. It was 25.2 per cent in 1990, and
has been below 20 per cent since 2003. In 2006, it was down to 18.2 per cent (number of unions;
59,019, members: 10,041,000; and ratio of women to total membership: 28.2 per cent). Among
them, part-time workers increased by 126,000 to 515,000, or 5.2 per cent of the total. But union
membership among part-time workers is estimated to be low at 4.3 per cent. The number of
labour disputes has decreased drastically from 284 (843,000 participants) in 1990, to 51 (7,000
participants) in 2004. There are three nationwide unions:
1. Rengo (Japan Trade Union Confederation)
Unionized in November 1989. The national union with three trends (Sohyo, Domei, and
Churitsuroren) was restructured and integrated. Membership: 6.55 million. It is affiliated with
ITUC, the International Trade Union Confederation. Representatives are sent to ILO, and
occupy a slot in councils consisting of three parties: public interests, business circles and workers.
2. Zenroren (National Confederation of Trade Unions)
Unionized in November 1989. When Rengo was restructured, Zenroren was founded as a
competitor. Membership: 930,000.
3. Zenrokyo (National Trade Union Council)
Unionized in December 1989. Membership: 150,000.
Newly Formed Unions
The unions mentioned above are all mainly company-based, but there are other types of
unions which individuals can join regardless of business categories: community unions which
organize workers or residents in specific areas, women-centred unions, dispatched workers’
unions, managers’ unions, and youth unions. Recently, a new union has been founded for
irregular workers, whose aim is mainly to fight against poverty. A number of community unions
are affiliated to Rengo, but others are independent or minority groups. These unions handle social
issues by organizing foreigners, ‘freeters’, and others, working in coalition in order to strengthen
their impact.
Major Labour Legislation and Public Consultation
Starting Point of Labour Protection Legislation
It has been 140 years since Japan opened up and established the Meiji government in 1868.
In 1872 (Year Meiji 5), the first governmental silk-manufacturing plant was built, and ever
since, the textile industry has sustained Japan’s industrial development and capital accumulation.
Most of the workers in the textile industry were young single women from poor rural areas.
They suffered from extreme low wages, long working hours and severe conditions such as being
chained to the dormitory. In order to protect women workers and juveniles (under 15) from
poor working conditions, the first ‘Factory Law’ was formulated in 1911. Working hours were
limited to 12 hours a day for the first time. It also prohibited late-night work from 10 o’clock to 4
o’clock in the morning. However, factory owners bitterly opposed the idea, and implementation
was delayed by five years. In addition, exceptions were recognized for ‘special cases’, which made
the law virtually ineffective.
In 1946, a year after the end of World War II, a new constitution was adopted, and based on
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Asian Labour Law Review 2008
its principles, the Labour Standards Law and the Trade Union Law were passed. Thus, the root of
current labour legislation lies in the constitution. The bases are: the right to pursue happiness in
Article 13, equality under the law in Article 14, the right to exist in Article 25, minimum labour
standards in Article 27, and the right to organize in Article 28. The Labour Standards Law played
an important role in improving working conditions, and trade union membership even reached
55 per cent in the late 1950s because of the law.
See Table 2 below for ILO Fundamental Conventions and Japan’s ratification of them.
Table 2. ILO Fundamental Conventions (Eight Core Labour Standards) - Japan's
ratification. (Ratified ○ ; Not ratified X) (Year of Ratification)
(a) Freedom of Association and the Effective Recognition of the Right to Collective Bargaining Year
No.87 Freedom of Association and Protection of the Right to Organize
○
1965
No.98 Right to Organize and Collective Bargaining ○
1953
1932
(b) Elimination of All Forms of Forced or Compulsory Labour
No.29 Forced Labour
○
No.105 Elimination of All Forms of Forced or Compulsory Labour
X
(c) Effective Abolition of Child Labour
No.138 Minimum Age
○
2000
No.182 Worst Forms of Child Labour
○
2001
1967
(d) Elimination of Discrimination in Respect of Employment and Occupation
No.100 Equal Remuneration for Work of Equal Value ○
No.111 Discrimination in Employment and Occupation
X
Major Labour Legislation
The Labour Standards Law (1947)
Wages, working hours, days off, holidays and other working conditions were prescribed.
Working hours were set at eight hours per day, 40 hours per week.
The Trade Union Law (1949)
The legislation protects workers’ right to organize, bargain with employers and take collective
action. When workers join trade unions, or organize one, business enterprises are not allowed
to dismiss them, discriminate against them in terms of wages or bonus, or transfer them under
adverse conditions; these are unfair labour practices. When an unfair labour practice is found, the
case can be brought to the local labour relations commission, and an order can be sought.
The Equal Employment Opportunity Law (EEOL, adopted 1985, revised 1997 and 2006)
The law was adopted in 1985 as a corollary to the ratification of the International
Convention on the Elimination of All Forms of Discrimination against Women.
Initially, the law was mild, only persuading ‘business enterprises to make an effort not to
discriminate against women’ in all stages of employment from recruitment to retirement. The
1997 amendment pushed it further to ‘prohibit discrimination on the basis of gender’, and the
2006 amendment reinforced the regulations to prohibit adverse treatment for pregnancy or
Japan
31
childbirth or taking maternity leave. It also holds business owners responsible for taking measures
to prevent sexual harassment and to implement positive actions.
The most controversial point of the 2006 amendment was the introduction of the
prohibition of indirect discrimination. Indirect discrimination indicates those rules or practices,
which are gender-neutral on the surface, but have an adverse effect on members of one gender.
The prohibition of indirect discrimination followed recommendations from CEDAW, the
committee overseeing the implementation of the international convention, as well as from ILO,
and actions by women. However, precise rules were to be set by orders from the Ministry of
Health, Labour and Welfare. The prohibition was then restricted to the following three practices:
•
Specifying employees’ height/weight or physical capacity as requirements for
recruitment
•
Requiring relocation involving the change of residence when recruiting employees for
the management track
•
Requiring relocation when promoting employees
It is difficult for women with families to be relocated, and if they are required to do
so, it would be disadvantageous to them. Such requirements were thus specified as indirect
discrimination. However, women fiercely opposed this non-exhaustive list, since the limit on
three points was likely lead to new forms of indirect discrimination. As a result, a supplementary
resolution of the Lower House appended a note, stating that there may be other forms of indirect
discrimination, that such discrimination may be subject to judicial ruling, and that for these
reasons provisions would be added or revised.
The Part-Time Work Law (1993, revised 2007)
The revised Part-Time Work Law of 2007 prohibited discrimination against part-time
workers in relation to regular workers, but it was limited to those whose employment term was
open-ended. For the overwhelming majority of other part-time workers, appropriate working
conditions were to be provided. Part-time workers are defined as ‘workers whose weekly working
hours are shorter than regular workers at the same working establishment’. The Labour Standards
Law, the Minimum Wage Law, the Industrial Safety and Health Law, and the EEOL apply
equally to part-time workers but the Child Care and Family Care Leave Law, employment
insurance, health insurance, and employees’ pension apply under certain conditions based on
working hours and annual income.
The Temporary Work Law (1986, revised 1999 and 2003)
The legislation admitted indirect employment as an exception to the Employment Security
Law which prohibited ‘labourer-supply businesses’. Temporary work indicates that the worker
is dispatched from an agency (company) with which the employment contract is signed, to the
client (company) which has signed the contract of supply of temporary labour with the agency
and that the worker would follow the directions of the client. The 2003 amendment expanded
the applicable business domain to the manufacturing industry. The limited term of dispatch
has been removed for 26 specialized businesses, and it has been set at three years for general and
manufacturing industries. If the client company wishes to keep the worker beyond three years,
direct employment would be required.
The Child and Family Care Leave Law (The Child Care Leave Law of 1991, revised 1995 to The
Child Care and Family Care Leave Law, revised 1999 and 2004)
Child care leave can be obtained, in principle, by both male and female workers who care
for children under one year old (in some cases one year and a half years old). Before the law was
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revised in 2004, it was not applied to the workers on daily contracts or fixed term contracts.
Although the revision covered those on fixed term contracts, the condition remains severe;
continued employment has to have practically lasted three years or longer. During the leave, 50
per cent of the wage is paid from the employment insurance.
Family care leave can be obtained by both male and female workers who have family
members in need of nursing care. Family members are defined as spouse, parents, children and
parents-in-law. The leave covers up to 93 days per said family member, and 50 per cent of the
wage is paid from the employment insurance. As for workers on fixed term contracts, the leave
can be obtained under certain conditions, such as continued employment of one year or longer.
Public Consultation Concerning Labour Issues, and Solutions to Individual Labour Disputes
1. Prefectural Labour Bureau (located in each prefecture)
Deals with consultation, advice, supervision, mediation and admonition or arbitration on
labour issues in general.
2. Labour Standards Inspection Office
Carries out direction and supervision based on the Labour Standards Law and the Industrial
Safety and Health Law, processes applications for occupational accidents and deals with
licensing procedures.
3. Public Employment Security Office (commonly called ‘Hello Work’)
Deals with employment placement, counselling, mediation of admission to Polytechnic
schools and insurance.
4. Prefectural Labour Department-Equal Employment Opportunity Office
Deals with consultation, advice and arbitration on issues relating to the Equal Employment
Opportunity Law, Child and Family Care Leave Law and Part-time Work Law.
5. Tokyo Metropolitan Labour Consultation Centre
Provides information and deals with consultation/mediation on labour issues in general.
6. Industrial Trial System (2006—established in response to an increase of individual labour
disputes)
There had been no court specialized in resolving labour disputes, and it had become
extraordinarily time- and money-consuming to file suit in general courts. Under the new system,
when a worker files the case, three trials are held by the industrial trial committee consisting of
three parties: the trial judge, the judge from the worker’s side, and the judge from the employer’
s side. When there is a potential for resolution by negotiation, the committee arbitrates; if the
worker and the employer both agree to the solution proposed by the Industrial Trial Committee,
the case is settled, but otherwise, the case proceeds to the general court.
2. Implications of the Revisions to Labour Laws
In the mid-1980s, about the time when the Japanese National Railway was privatized, trade
unions were restructured and integrated, and there was a major change in the current of labour
movements. Since then, new labour laws have been adopted or revised, but the main message has
been deregulation. In retrospect, it is as though the original function of labour legislation has been
changed.
Japan
33
Box 2. The Judicial Struggle of Temporary Public Employees
Public employees are subject to National Public Service Law and Local Public
Service Law, which are distinct from laws applied to private employees. Working
conditions of public employees are determined not by labour-management negotiations
but by the laws and by-laws of the national and local governments.
Increasing non-standard employment is not limited to the private sector alone.
Among the public sector, too, the number has been on the rise not only due to
privatization and sub-contracting of national and local administration and public
organizations but also by the surge of temporary public service workers employed on
fixed term contracts. Under the pretext of administrative reform, the government has
reduced the number of public employees, while the shortage of people to carry out the
necessary administrative services has been compensated by non-standard workers such
as temporary and part-time employees. They are mostly employed in libraries, women’s
centres, hospitals, schools and welfare-related institutions such as daycare centers. The
number has been reported to amount to 600,000 persons throughout the country and
the majority of them are women. Being female, their salaries have been kept low with no
provisions of pay raise, bonus and retirement benefit. The annual income of a temporary
public employee is one third of an ordinary public employee while her working hours
stretches over the three-fourth of the latter. Most of the temporary public employees
are employed with contracts of less than one year term, not necessarily for temporary
work but rather for regular work through repeated renewal of their contract. It is not
unusual that they face sudden dismissals with the excuse of term expiry.
Despite many judicial fights so far made regarding dismissal and discrimination
of temporary and part-time public employees, it has been proven that it is extremely
difficult to win cases under the complex public service laws. However, in recent years,
two cases which were fought over unjust dismissal won epochal victories. Also a few
trade unions of regular full-time public workers have begun to work on this issue. These
are encouraging signs of hope for the future.
Deregulation of Labour Standards Law
Basically an employment contract should be without a fixed term, and a contract lasting one
year or longer was not admitted. This was beneficial for the worker’s employment stability. When
the worker wished to continue the contract, the employment would last until the retirement age
unless there were overwhelming circumstances for lay-off. In the case of irregular employment,
it was common to see consecutive renewal of contracts lasting shorter than one year each time,
but this made it difficult for the business enterprises to refuse renewal when the contract expired
after several times of renewal. In response to strong pressure from business enterprises wanting to
make employment terms more flexible, a new regulation was formulated in 2003, limiting labour
contracts to up to three years, so that the employers could smoothly terminate the contract when
the contract expired three years later. (Actually, the logic of this is often difficult to understand for
workers themselves.)
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Deregulation especially affected working hours. In 1987, weekly working hours were reduced
from 48 hours to 44 hours (and to 40 hours from 1999). In later years, several revisions advanced
deregulation, introducing an average working hour system, flexi system and discretionary work
system.
Japan’s long working hours are globally well-known. Alongside the trend of increase in the
number of irregular workers, overtime hours of regular workers have increased and long working
hours have become the norm. The rate of taking paid leave has decreased since the 1990s. In
addition, there is a large amount of overtime without extra pay. The long working hours trigger
death in some cases (‘karoshi’), and it is also the key factor behind consigning the burden of
housework and child-rearing to women.
The principle of the eight-hour working day has fallen apart, and a new ‘white-collar
exemption’ (a system which makes the white-collar worker responsible for managing his/her
working hours, so that paying for overtime is not needed) was proposed for introduction in 2007.
However, it met with fierce public criticism as a measure aimed at ushering in ‘zero overtime pay’,
and was not submitted to the Diet.
Equal Employment Opportunity Law (EEOL) and Employment Management
Categories
The 1997 revision specified the prohibition of discrimination. At the same time, under the
pretext that they contradicted gender equality rules, the clauses in the Labour Standards Law
limiting women’s overwork hours/holiday and late night work were removed. As a consequence,
it has become common for women workers to work long hours and late into the night.
On the other hand, the disparity of wages between men and women has not narrowed, The
promotion of women to managerial positions has been slow, way behind the global equality level.
The biggest obstacle is the issue of ‘employment management categories’. The EEOL prohibits
discriminatory treatment between men and women within the same category of employment
upon recruitment. In other words, if the category is different, even if the resulting treatment
seems different by gender, it cannot be identified as discrimination on the grounds of gender. For
this reason, many business enterprises have introduced ‘the career track-based personnel system’.
Before that, the employment-by-gender management (placement, promotion and wage structure)
was common. There were two different wage curves between men and women, of which men’s
were much higher. Under the career track-based personnel system, males were placed in a
‘management track’ and females in a ‘general track’, in effect discriminating against women
because the former ensures higher wage and promotion to male workers and the latter never gives
women such opportunities. This is a typical method of indirect discrimination. Many women
have filed suit claiming discriminatory treatment under this system, and although they have won
court decisions or settlements after years of struggle, there have been no cases won based on the
interpretation of the EEOL.
Similarly, in the case of irregular workers such as part-time workers, since women are the
majority and there are no comparative male workers within the same category of employment,
it cannot be identified as discrimination on the grounds of gender even though female parttime workers get lower wages. The EEOL fails to ensure affirmative action. Only a small number
of women have taken up the management track, and most women have been brushed aside,
widening the disparity with men.
Japan
35
Deregulation of Temporary Work Law
The ‘dispatch’ of workers by agencies tends to make working conditions worse and
employment security unstable, since the employer of the worker is different from the client
company to which the worker is dispatched. Therefore, the dispatch was initially limited to 26
job categories (in the ‘positive list’) which would require specialized knowledge, techniques,
and experience. After several rounds of deregulation, allowable types of jobs were liberalized in
principle, excluding port/transportation, construction, security, medical, and manufacturing
process in 1999 (the ‘negative list’). The 2003 revision admitted the dispatch of workers to the
manufacturing process, sharply increasing the number of temporary/dispatched workers.
The main characteristic of Japan’s temporary workers is that a majority of them are covered
by an unstable registration system. The dispatch of workers takes place under two systems: the
regular and the registration. Under the regular system, the worker is on a continuing contract
with the dispatcher company, whereas under the registration system, the worker is merely on the
register, to be employed when a position is available. About 80 per cent of temporary workers are
registered workers; by gender, 62.3 per cent of males are regular, and 75.8 per cent of women are
registered (2004).
An increasing number of young people work as ‘spot dispatch (one-day dispatch)’ workers,
registering with an agency by sending an e-mail from their mobile phones. They are hired by the
day, and end up in poor working conditions.
Revised Part-Time Work Law
In order to deal with the problem of increasing numbers of irregular workers, the PartTime Work Law was revised (effective from 2008) in order to improve their working conditions.
Discrimination against part-time workers, whose quality of work is similar to that of regular
employees, was prohibited, but there is a disadvantageously high bar for the law to be applicable
to women.
The discrimination is prohibited only against those part-time workers who fulfill all three of
these requirements: 1) the same duties (work and responsibilities) as a regular employee, 2) the
same personnel transfer (relocation) obligation as a regular employee, and 3) a non-fixed-term
contract. Only a small percentage of part-time workers are expected to qualify. Therefore workers,
trade unions and opposition parties strongly opposed the revised law protesting that it would not
eliminate discrimination but would entrench it. Nevertheless, it was passed by the Diet.
The revised Equal Employment Opportunity Law (EEOL) stated that requiring workers
to accept relocation when dividing them into the management and general tracks or evaluating
workers’ promotion prospects, was illegal as a form of indirect discrimination. Nevertheless, the
stipulation of the revised Part-Time Work Law includes the same relocation as a regular employee,
one of the requirements for part-time workers to be treated similarly as regular employees.
Women who cannot accept relocation or work overtime due to family responsibilities are
discriminated against. This would violate the intent of the ILO Convention Article 156 (on
family responsibilities), which the Japanese government has ratified in 1995.
With every revision of laws such as the Equal Employment Opportunity Law, Child and
Family Care Leave Law, Part-Time Work Law, and Temporary Work Law, the disparity among
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Asian Labour Law Review 2008
women workers has widened depending on employment status, and as a result, women’s status
has deteriorated.
See Table 3 for a summary of major labour legislations in Japan.
Table 3. Major Labour Laws in Japan
Constitution No.25 Right to Live, No.27 Right and Obligation to Work and Minimum
Standard of Labour, No.28 Right to Organize Right to work Individual labour Labour Market
relations Law
(Employment Security Law)
Employment Relation Law (Labour Contract Law)
Public Service
Law
Right to Collective Industrial
Organize
Labour Relations Relations Law
Employment
Security Law
Employment Insurance
Law
Employment Measure Law
Temporary Work Law
Human Resource Development Promotion Law
Law on Stabilization of Employment of Older persons
Law on Employment Promotion of Disabled Others
Labour Standards Law
Minimum Wages Law
Workers' Accident
Compensation Insurance Law
Industrial Safety and Health Law
Equal Employment
Opportunity Law
Part-Time Work Law Child Care and Family Care Leave Law
Temporary Work Law
Law on Promoting Resolution
of Individual Labour Disputes
Labour Contract Law
Others
National Public Service Law
Local Public Service Law
Others
Trade Union Law
Labour Relations Adjustment
Law
1946
1947
1974
1966
1985
1969
1971
1960
1947
1959
1947
1972
1985
1993
1991
1985
2001
2007
1947
1950
1949
1946
Japan
37
Equal Wage for Work of Equal Value
The argument used in court regarding gender discrimination in wages is founded in Article
4 (on equal wages for men and women) of the Labour Standards Law, since the EEOL excludes
provisions on wages. Japan ratified the ILO Convention No. 100 (on equal remuneration for
work of equal value) in 1967. But there are only a few cases where women workers win the case
in court based on Article 4 of the Labour Standards Law because Article 4 does not fully reflect
the principle of the Convention. So the principle of equal pay for work of equal value should be
clearly stipulated in the legislation, and a gender-neutral job evaluation system should be drawn
up as the means of executing the legislation. Only when this is done will wage discrimination
against irregular workers be corrected. The ILO has pointed this out to the Japanese government
from time to time.
3. Critical Analysis
Employment Strategies in Business Circles and Deregulation of Labour Laws
After the bubble economy burst, followed by the recession in the 1990s, a wave of corporate
bankruptcies raised the unemployment rate. Business enterprises dismissed part-time workers
and middle-aged regular employees in the name of restructuring, and regular employees had their
status changed to irregular employment as companies sought to reduce costs. In 1995, the Japan
Federation of Employers’ Association (then, Nikkeiren) announced ‘Japanese-style management
in the new era’ as an employment strategy for the age of globalization. It split up employment
statuses into three groups, in order to trim the total personnel costs, aiming to be internationally
competitive. The three groups are: a core workforce with employment security, a fluid workforce
with special skills and a flexible workforce of different occupations. Needless to say, most women
were categorized in the third group. The employers’ associations argued that since the traditional
‘Japanese management’ of lifetime employment seniority-based wages was making the labour
market stagnant, a change was needed to make jobs more flexible and to promote the employment
situation as a whole. The government supported the idea, and this strategy was rapidly adopted.
The already mentioned deregulation of the Labour Standards Law, the new Temporary
Work Law and successive deregulations were all crucial to implementing this strategy.
The deepening of economic globalization intensified the international competition of
business enterprises. Businesses shifted the pressure of reducing production costs to the workers,
and deregulation was further pursued in the name of self-responsibility under the neoliberal
ideology, leading to widening disparity among workers. In 2006, the Council on Economic and
Fiscal Policy, a consultative body of the Cabinet including intellectuals outside the Diet and the
government, convened to discuss labour policy and a member of the Council said that ‘a labour
big bang is necessary to review the related systems holistically and fundamentally’. After that, the
government’s policy review institutions and the business lobby Keidanren announced their visions
on the liberalization of the labour market, and on moving towards the ‘labour big bang’ (based on
the idea that workers’ protection is ultimately unnecessary).
Gender Division of Labour and Gender Bias
Business Enterprises Regard ‘Pregnancy, Child Bearing, Child Rearing’ as Cost
A big factor contributing to the ‘irregularization’ of women workers’ jobs is that business
enterprises consider employing women as long-term regular employees a high risk, because of the
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possibility of their getting married and pregnant. Since the EEOL came into effect, the system of
obliging women to quit upon marriage and of retiring them early became illegal. But the practice
and the atmosphere at the workplace remained unchanged and women are still obliged to quit
work when they get married or get pregnant.
Employers are obliged by law to provide their workers with maternity leave, child-care leave
and exemption from overtime to those with pre-school children. However, business enterprises
which regard these obligations as a cost are increasingly displacing women workers from regular
employment.
Moreover, Japanese society strongly favours gender-based division of labour, and family
responsibilities weigh heavily on women.
Wage System of Business Enterprises and Gender Bias in Company-based Unions
Japan has traditionally followed a seniority-based wage system, a system with a subsistence
wage that rises in accordance with the number of years in service. In this, the family allowance
and housing allowance are provided to the male head of a household. A different wage system is
becoming more prevalent now: wage is set based on the evaluation of not only the actual quality
and quantity of work at a given time, but also of expected future contribution. Moreover, in
recent years, business enterprises are increasingly shifting their payment systems to performancebased compensation, in order to restrict the wage growth that seniority-based payment entailed.
These wage systems are disadvantageous for women who need maternity protection and have
family responsibilities.
Some past policies of trade unions are also to blame. Company-based unions had been the
ones seeking head-of-household wage as subsistence wage, and opposed wages based on quality
or quantity of work. The slogan of the trade unions during the economic growth period had been
‘enough pay to eat without wives having to work’. Until the mid-1990s, male-oriented unions
consisting of regular full-time employees failed to address the wage demands of part-time workers.
Taxation and Pension Systems Based on Gender Division of Labour
In the same year when the EEOL was coming into effect in 1986, special tax exemptions
for spouses and a gender-biased pension system were newly established. The former applies to
a salary taker (husband) who has a wife annually earning less than 1.03 million yen (tax-free
limit), and entitles the salary taker to tax deduction (partially). The latter (gender-biased pension
system) applies to a wife annually earning 1.3 million yen or less, and her husband is entitled
to the social security system for employees. It is a system where the wife can get enrolled in the
health insurance, and she can receive a basic pension in the future as well, without paying pension
premiums herself.
A conservative attitude of seeing the household as being the base of the nation is still
prevalent. This, combined with the business enterprises’ policy of detesting additional costs has
resulted in contradictory policies; the Equal Employment Opportunity Law for working women
to promote women in the workforce on the one hand, and preferential policies for housewives to
keep women playing supplementary roles on the other. This has allowed business enterprises to
justify paying low wages to housewife-workers, who have been made to think they were working
within the limits of preferential provisions. The system seeks to ensure that a married woman
remains a housewife or works as a part-time worker with low wages.
Japan
39
Government Measures on Irregularization Issues and Their Problems
Gender-Biased Regularization Plan for ‘Freeters’
A plan for the regularization of ‘freeters’ was written into the 2008 budgetary request. This
is a proposal to regularize the employment of 350,000 senior ‘freeters’ (part-time workers or
arbeiters aged 25 to 34); it entails assistance to business enterprises and practical training.
The Ministry of Health, Labour and Welfare defines the ‘freeters’ as those aged 15 to
34, male graduates, and female graduates who are single. Excluding married women from the
definition of ‘freeters’ and from the employment measures reflects gender bias and the assumption
that married women are supported by their husbands.
According to this definition, there were 2.17 million ‘freeters’ in 2003, and although
the number has slightly decreased since then, senior ‘freeters’ have become a significant
phenomenon—i.e. those who had difficulties being hired as regular employees during the
recession period (as opposed to ‘freeters’ who are fresh graduates). Therefore, the regularization of
these senior ‘freeters’ is seen as a disparity correction policy. The part-time workers and arbeiters
in the corresponding age range number up to 430,000 males and 1.38 million females. Although
women are dominant, married women are excluded from the regularization measures.
On the other hand, a job assistance programme for single mothers started in 2003, but it
has had hardly any impact. This programme ostensibly aims to help self-reliance among singlemother households, but in reality it aims to cut down the child-rearing allowance provided to
single-mother households. The policy demands single mothers to work more but they are already
are working, by reducing the time spent sleeping or looking after their children, with consequent
effect on their health. However, this drastic measure has been suspended for some time, following
persistent protests by single mothers.
Dubious ‘Work-Life Balance’
The government consulted with Keidanren and Rengo drew up a ‘Work-Life Balance
(harmonization of work and life) charter’ in 2007 in order to eliminate overwork and stem the
decline in the nation’s birth rate. The action guidelines set numerical targets as follows: halve the
percentage of those working 60 hours per week or longer in the next 10 years (currently 10.8 per
cent), raise the rate of male workers obtaining child-care leave to 10 per cent in the next 10 years
(0.5 per cent), raise the rate of obtaining paid holidays to 60 per cent in the next 5 years (46.6 per
cent), and double the number of home-based tele-workers (10 per cent). However, it is doubtful
whether the measures are effective, as concrete budget and legal regulations are lacking.
‘Work-life balance’ stands on the premise that both men and women share the
responsibilities at work and home and that a living wage as well as reasonable working hours are
ensured. Even if shorter working hours or temporary/intermittent working styles are chosen,
‘work-life balance’ will not be realized in the absence of a living wage. Furthermore, a system is
lacking whereby when people temporarily quit work or switch to shorter working hours due to
child-care responsibilities, and where workers are evaluated on their experiences and capabilities,
receiving occupational training and help in improving their career prospects.
Summary: Current Moves Around Labour Legislation
The 2007 the Japanese Diet was reported to have been proceeding towards a deregulation
of labour legislation. However, there was a fierce opposition from labour organizations, backed
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Asian Labour Law Review 2008
by media and public opinion. Two issues had been awaiting submission for parliamentary
consideration: ‘white-collar exemption’ which would have sought to deny overtime pay for
some salaried employees, and ‘financial settlement upon dismissal’ which would have promoted
dismissals by making payouts.
1) Moreover, when discussion on a ‘revised Part-Time Work Law’ started in March 2007,
women workers’ NGOs and trade unions energetically lobbied Diet members, sat in on
meetings and Diet proceedings, clarifying the problems that would be created. This effort led
to a landslide victory for the Democratic Party in the Upper House election in July, reversing
the equations between the governing and opposition parties, and the prime minister
suddenly stepped down in October.
2) A discussion on the establishment of ‘the Labour Contract Law’ was held during that period.
It stipulates basic rules to prevent conflicts over employment. Due to the change of industrial
structure and the circumstances of management and employment, personnel management
has become individualized and diversified. The problems relating to working conditions
include that termination of employment has become individualized and the number of
terminations has increased. But there is no systematic rule to resolve such labour disputes
related to labour contracts.
The Labour Contract Law specifies the principle that the working conditions should be
decided by negotiation between worker and employer on equal basis. It stipulates that the
abuse of the rights of dismissal (by employers) is invalid and termination of the contract with
fixed term contract workers within the period of time is also prohibited unless the inevitable
circumstances exist.
However, workers have strongly opposed the new law especially about the stipulation of
‘shop/working regulations’, in which the concrete working conditions including work hours,
wages, retirement, etc. in each enterprise are described according to the rule of Labour
Standards Law. The Labour Contract Law says that the working conditions laid out in the
‘shop regulations’ would become the content of the ‘labour contract’, and when changing the
shop regulations, hearings of workers’ majority representatives would be held, followed by
the dissemination of the changes to the workers, and if the changes are rational, they would
be the contents of the contracts, again. It means that the contents of the labour contract
are easily changed by the employers if the conditions above are met. In small and mediumsized enterprises, workers are already suffering from the unilaterally imposed disadvantageous
changes in their working conditions, and this situation is now moving towards being legally
acceptable. Shop regulations are prepared by the employer, and submitted to the Labour
Standards Inspection Office, after hearings (without need for approval) by representatives of
the majority of workers (including trade unions).
For irregular workers, it is almost impossible to have their opinions taken into account in the
process of making changes to the shop regulations. Similarly, the minority trade unions in
the enterprises and small unions such as community unions and women’s unions to which
members of the unions individually joined from different enterprises, have no power to
become representatives of the workers at their workplaces. This would cause the existence of
these trade unions to be denied.
3) Another topic discussed in the Diet was the revision of the ‘Minimum Wage Law’. As
irregular employment expanded, increasing numbers of workers are earning just about the
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Japan
minimum wage. Therefore the minimum wage has become more important than ever. It
has become a social issue that the minimum wage is below the welfare standard (i.e. the
standard of income below which people can collect welfare payments). In 2007 the average
of minimum hourly wage was 687 yen. Workers demanded that the wage rise to 1,000 yen,
and the trade union Zenroren insisted on adopting uniform minimum wages across the
country, but both demands were rejected. The revised bill incorporated the need to ensure
consistency with the welfare standard regulated by the Livelihood Protection Law, but on
the other hand, there is a debate that a revision of the welfare standard is necessary as it is
too high. It seems that those who are working earn less money than those who are not and
who still get money from the government as social welfare regardless of the reasons; thus the
employers say that the welfare standard should be reduced.
4) The two bills were passed just before the Diet session closed. The Rengo trade union agreed
to the bill, but Zenroren, Zenrokyo and other unions and organizations organizing irregular
workers (women and youths) who are the most vulnerable, kept up their protest. One of the
core groups was the ‘Action Center for Working Women (ACW2)’, which was established
gathering women’s unions and women workers’ groups across the country in January 2007.
5) Alongside the Diet proceedings, activities demanding the revision of the Temporary Work
Law have been carried out. A non-profit organization (NPO) called NPO Dispatched
Labour Network submitted a demand for fundamental law revision, strengthening the joint
action with Rengo and Zenroren, and lobbied Diet members and the media. As a result,
the momentum is mounting even within the ruling party that partial revision is necessary,
such as to stop spot dispatch. The labour organizations are on an offensive, aiming at further
fundamental revisions and the revised bill is to be submitted to the (next) Diet session.
6) Irregularization, or deepening of unstable employment, is directly connected to
impoverishment. In order to solve this issue, ‘equal treatment’ needs to be ensured as well
as stabilization of employment by tightening regulations on national policies and labour
legislation. A mechanism must be created to disallow discrimination by different working
styles.
‘Equality Action 21’ has strongly demanded this through its nationwide network. In order to
change irregularization of women and impoverishment policies, organizing women workers
and their empowerment are crucial. Rengo and Zenroren have established the Irregular
Workers’ Center. As well as strengthening the activities of gender-sensitive trade unions, the
NGOs working on labour issues play a big role in studying policy proposals, and lobbying
for legislation, together with the women workers.
Endnotes
1.
2.
3.
Ministry of Public Management, Home Affairs, Posts and Telecommunications (2006) Labour Force Survey.
Ibid.
Annual Report on Temporary Work Business, 2005; Survey on the current situations of dispatched workers, 2004.
The former is regularly conducted but has no information by sex; and the latter includes breakdown by sex but
is not regularly conducted and 2004 figures are the latest.
42
4.
5.
Asian Labour Law Review 2008
Ministry of Health, Labour and Welfare, (2006) Basic Statistical Survey on Wage Structure, 2006.
These treatments were depicted in a book entitled Joko Aishi, a tragic history of factory girls,’ written in the
1930s by a male spinning factory worker. Hosoi, W. (1925) Joko Aishi, Tokyo: Kaizosha.
Korea
43
Korea
Aehwa Kim
Introduction: Neoliberal Structural Adjustment and Women E
xpanding globally since the 1980s, neoliberalism has been characterized by deregulation
of the economy, privatization of state companies and public enterprises, liberalization
of external trade, downsizing of the social welfare system and the imposition of a flexible
labour market. Neoliberal structural adjustment policies have exacerbated social crises of
impoverishment, massive unemployment, and extreme inequity in the distribution of income and
other resources. The living conditions of the public have grown worse as a result.
In Korea, the transition to a neoliberal accumulation model started to appear from the
late 1980s and became entrenched in 1990s. Most of all there were external pressures from
monopolistic capitals in developed countries pursuing globalization of capital movement and
financial capitalism in response to worsening profitability in the 1970s. As a result, the pressure
to open and liberalize domestic markets in developing countries increased. Various financial
institutions including the International Monetary Fund (IMF), the World Bank, and the
Organization for Economic Cooperation and Development (OECD) played important roles in
promoting neoliberal structural adjustment.
Internal conditions in Korea also moved in the same direction. Chaebols (big Korean
conglomerates) tried to avoid governmental intervention and the political burdens of state
financial support, believing they gained enough power of reproduction without the state’s direct
protection. Accordingly, they began to advocate market-oriented economic policies, relaxation
of state regulation and a private, commercial-based economy. Chaebols have tried to get rid
of existing regulations, or to stop the introduction even of regulations needed to relieve newly
emerging dilemmas of capitalism in the Korean economy, invoking the deregulation trend in
Western developed capitalist countries, which had emerged in a very different historical context.
The chaebols’ logic is that national competitive power should be strengthened to deal with
increasing international competition, and that chaebols are the best suited to achieve this. They
also claim that the state should remove any regulations that interfere with corporate activities, and
suppress wages and costs through labour and capital market flexibility.
The policy of deregulaion and liberalization of capital and finance continuously progressed
through the Chun Doo-hwan (1980 to 1988) and Noh Tae-woo (1998 to 1992) governments,
with relaxation of foreign investment regulations in the 1980s. At the beginning of 1990s, the
so-called ‘globalization’ policy (segyehwa) of the Kim Young-sam government further facilitated
the trend. The Kim government’s ‘new economy policy’ was indeed a neoliberal policy, pursuing
as it did privatization, liberalization and a profit-based evaluation system in the public sector,
deregulation of the private sector, liberalization of employment and lay-offs, labour market
flexibility, wage flexibility, aggressive acceptance of globalization, and so on. The neoliberal line
has been thoroughly regularized in Korea since the IMF’s intervention following the 1997 Asian
financial crisis.
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Asian Labour Law Review 2008
In Korean society, where household incomes are not secured by the government and the
social welfare system is severely deficient, individual families – and especially women – have been
charged with the responsibility of social reproduction, i.e. labour reproduction for society, which
takes place in the family. Women have been actively used as shock-absorbers in the process of
neoliberal structural adjustment. Women workers were the first to be laid-off during the IMF
foreign currency crisis in South Korea, providing the basis upon which neoliberal structural
adjustment in South Korea emerged. This demonstrates the dominant ideology that the livelihood
of a working family can be sustained by a male bread-winner’s so-called ‘family income’.
However, the logic of ‘family income’ proved to be false, and the laid-off women workers returned
to the labour market as low-wage, irregular and contract-based workers. The destabilization of the
labour market and the intensification of poverty necessitated a majority of women to participate
in the labour market to sustain the livelihood of their families.
In the 1980s, the trade union movement in South Korea was successful in demanding family
income and benefits on the basis of male workers’ organized forces and workplace negotiation
skills. Even then, issues of women workers were not treated as central topics of trade union
struggles. As a result, income inequality between the two genders remained. This perception of
women’s work as temporary and peripheral became the fundamental reason for the trade union
movement’s failure to stop capital from exploiting women workers’ labour. The labour movement
in the late 1980s failed to actively organize against the destabilization of labour that women
workers had to face. In other words, the South Korean labour movement committed a critical
mistake in not realizing that the destabilization of labour, as well as neoliberal globalization, was
materializing first and foremost with the sacrifice of women workers.
1. Contemporary Snapshot
The Irregularization of Korea’s Labour Force
The term ‘irregular worker’ that Koreans often use does not have a clear definition and leaves
room for misinterpretation. However, we can conceptualize irregular labour in contrast to ‘regular
labour’. Regular labour generally implies full-time, continuous employment, whereas irregular
labour is characterized by irregular and short work hours, non-customary work requirements, and
unstable legal and economic status. In Korea, the concept of irregular labour includes fixed-term
(contract) workers, part-time workers, dispatched workers and disguised self-employed workers.
Table 1 gives basic statistics about general and irregular workers in Korea.
Table 1. Characteristics of Contemporary Korean Workers
Factors
Nos./% involved
Data as of
Economically active population
(Labour force) Total employment rate
Female employment rate
Total unemployment rate Youth unemployment rate
(age 15-29)
Unionization rate
24 million
(15 million)
2007
60.4 %
52.5%
3.0%
7.1%
November 2007
2006
November 2007
November 2007
10.3%
2006 (end of )
45
Korea
Minimum wage/hour
Irregular workers’ wage as a proportion of regular
workers’
Workers’ average no. working hours
Irregular workers’ average working hours
KRW3,770 48.2%
January to December 2008
June 2007
41.3 hours
June 2007
46.9 hours
June 2007
Source: Korea National Statistical Office (www.kosis.kr)
Indeed, the number of irregular workers rapidly increased from the mid-1990s after the Kim
Youngsam government adopted ‘labour market flexibility’ as the prime labour policy. However,
it was after the IMF-directed structural adjustment in 1997 to 1998 (at the time of the Asian
currency crisis) that irregular labour became a serious social problem.
The crisis of the IMF relief loan brought waves of changes into Korean society. Its impact
reached every corner of society including economic, legal and cultural sectors. Above all, changes
in the labour market fundamentally transformed the nation’s social structure. Changes in the
labour market are directly connected to people’s livelihoods by affecting family incomes (i.e.
economic power). In a capitalist society, changes in the basic structure of money earning, in turn
mean changes in the earner’s social status.
The number of irregular jobs increased by 900,000 in five years from 7.72 million in 2002
to 8.61 million in 2007.1 While regular workers’ average wage increased by KRW570,000
(US$1=KRW1,000)2 – from KRW1.82 million to KRW2.39 million – irregular workers’ average
wage increased only by KRW240,000 (from KRW0.96 million to KRW1.2 million), resulting in
such a large wage gap that compared with what regular workers earned, irregular workers earned
half (i.e. the ratio of their earnings was 100:50).3 Worse still, the number of workers who earned
less than the statutory minimum wage reached 1.89 million; and of these, 1.79 million were
irregular workers.4 In other words, one out of five irregular workers earns less than the minimum
wage.
Figure 1. Number of Regular and Irregular Workers in Korea, 2001-2006
Source: National Statistics Office
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Asian Labour Law Review 2008
Exacerbating Social Polarization
One of the most negative features of social polarization in Korea is the increase in numbers
of the working poor. With an imperfect and unstable welfare system, job insecurity directly
results in income insecurity. It happens especially in the case of irregular workers, as their income
is about half that of regular workers. As a result, they gradually add to a new type of poor who
cannot escape poverty even though they keep working for a living. Today, discrimination against
irregular workers – i.e. fewer rights for irregular workers who do the same work as regular workers
– such as working conditions and job insecurity, are one of the main causes of polarization,
currently the most serious social issue in Korea.
While the traditional concept of poverty means the material deprivation caused by lack of
economic activities, working poor means the situation where many people barely escape living
in poor conditions despite having employment. It shows that it is increasingly difficult for the
second class (i.e. the new poor class earning only a little more than the minimum cost of living)
to escape poverty by simply getting a job. It is assumed that the working poor make up about
50 per cent of those in absolute poverty (those who earn less than the minimum cost of living
of KRW435,921 for a one-person household per month, and KRW1,205,535 for a four-person
household per month. They move in a cycle in and out of poverty, rather than always being in
poverty. Also based on income, they represent 13 to 14 per cent of the total working households.
In contrast, the wealth of the rich in this period increased rapidly. The phenomenon of the
rich becoming richer and the poor becoming poorer deepened. US-based brokerage firm Merrill
Lynch reported recently that the number of rich with financial assets greater than US$1 million
has increased more rapidly in Korea than in any other country in the world. The report indicated
that from 2004 to 2005, people with financial assets greater than US$1 million increased by 21.3
per cent in Korea, whereas the average rate of increase in the numbers of those people in Asian
countries overall was 7.3 per cent. 5
Social polarization threatens the health and safety of families. A study has shown that the
level of lead in the blood of children from low-income families is higher than in other children.
This results from the dietary habit of low-income household favouring cheap food over relatively
more expensive healthy food. Also suicide rates in Korea have constantly increased since 2000,
reaching the highest level among OECD member countries.
In response to polarization, the Korean government has suggested increasing economic
growth, arguing that the best social welfare is new job creation through growth. With the
exception of one year, 1998, right after the IMF crisis, Korean economic growth has increased.
And with the exception of two years (1998 and 2003), in every year more jobs were created. The
average annual rate of Korean economic growth since 2000 through 2007 has been 5.2 per cent,
making it only second to Ireland among the 30 members of the OECD. It is respectively double
and triple the 1.7 per cent growth of Japan and 2.6 per cent growth of the US.6 However, an
economic growth rate increase by itself cannot solve the problems of irregular labour. While the
working population has increased by 1.9 per cent every year since 2000 until 2007, most new jobs
have been low-income and irregular, and polarization of the labour market has been getting worse
and worse.7
Impoverishment of Women Meanwhile, it should be noted that women have become subjects of poverty in social
Korea
47
polarization. As the following chart shows, the proportion of women in medium- and high-wage
groups is significantly lower than men.
Figure 2. Wage Distribution by Gender
Source: See Datanews website: http://w21.datanews.co.kr
The following describe some features of female labour in Korea: 8 •
•
•
•
•
In 2006, the number of economically active women reached 10 million (54.7 per cent) but
was still lower than the OECD average rate of 60.8 per cent. Of these economically active
women, 6.444 million (67.7 per cent) were wage-earning women workers who were mainly
employed in unskilled labour and unskilled service-related jobs.
Of the 1.44 million workers at the minimum wage level, 65 per cent are women, and about
70 per cent of women workers are employed in irregular jobs. Irregular workers and workers
employed in businesses with five or fewer employees make up 77.3 per cent. These figures
indicate that it is women workers who are concentrated in poor working conditions.
The wage of 42 per cent of women wage earners and 58 per cent of irregular workers is less
than two-thirds of that of middle- to high-wage earners. In 2006, 14.4 per cent of the total
population (both men and women) of 15 years of age or higher were at the poverty level, and
60 per cent of the same population were working poor. Some 51 per cent of the working
poor population is identified as currently working: their type of work includes temporary,
day labouring or self-employed business.
In 2007, 19.9 per cent of households were headed by women; of these, 35.7 per cent worked
as temporary/day labourers, while 27 per cent were unemployed and suffered from absolute
poverty. The rate of poverty in households headed by women is 34.5 per cent, which is three
times greater than male-headed households, at 10.5 per cent. This gap has been widening
since the IMF intervention.
Wage discrepancies exist between different types of employment, and also between men
and women. Male, regular workers are the most highly paid. If we construct an index, with
male workers at 100, then irregular workers’ wages are much lower, at 54. Regular women
workers’ wages are at about 70 and irregular women workers at 42. Wage inequality is
higher between types of employment than gender, but irregular women workers are doubly
penalized. (If the wage for men is 100, the wage for women is 64; and if the wage for regular
women workers is 100, the wage for irregular women workers is 52).
48
•
•
•
•
Asian Labour Law Review 2008
Alternative plans are needed for the approximately 300,000 homecare providers, housecleaners and other types of caregivers working in disadvantaged areas, earning less than the
minimum wage and receiving no welfare.
Indirect discrimination against women continues in several different forms. One is repeated
career discontinuity and loss of seniority: when women’s careers are stopped or interrupted
with marriage or childbirth, previous work experience is not taken into account in new jobs
after returning to the workforce. Another is changing the form of employment, from before
and after career discontinuity, to part-time or other informal or irregular status. And another
is work segregation based on gender, which is widening the gender wage gap. The market
for women’s labour is continuing to produce an ‘M type’ work participation trend whereby
women in their late 20s and early 30s leave the workforce for marriage, birth and child
rearing. For example, in 2006, 67.3 per cent of women between the ages of 25 and 29 years
of age were employed, as were a similar percentage of men. However, this figure dropped to
50 per cent for women aged 30 to 34 years, and then increased to 60 per cent for those of 40
to 44 years. Some 46 per cent of women claimed child-rearing to be the biggest obstacle to
employment.
Women mostly work as unskilled labour and peripheral labour, and are largely hired
indirectly. Discrimination in wage increases and promotion through job status divisions
deepens and strengthens the inequity in the structure of the female labour market.
A media report suggests that one out of three of the large corporations secretly exercises a
male quota system. As such, women experience invisible forms of discrimination that hinder
employment, education, placement and promotion.
Low Birth Rate and Ageing Society 9
Korea’s total fertility rate, meaning the average number of times a woman gives birth in her
lifetime, reached it lowest in 2005 at 1.08, and then slowly increased to 1.13 in 2006, and was
expected to be 1.25 in 2007.
Significant changes are expected in future labour supply and demand with a rapidly ageing
society. The portion of the population aged 65 or above rapidly increased from 5.9 per cent in
1995 to 9.1 per cent in 2005, and will probably reach 24.1 per cent in 2030, creating considerable
difficulties and affecting the future labour supply. It is said that by 2012 a serious labour supply
deficiency will emerge.
As gradually more and more older people begin to engage in economic activities in a rapidly
ageing society, the quality of their working conditions becomes worse and worse. In other
words, the proportion of temporary and daily-contracted forms of employment is continuously
increasing. While the labour force participation rate of people aged 65 or above increased from
28.7 per cent in 2003 to 30.5 per cent in 2006, the percentage of older workers employed as
temporary or daily-contracted labour reached 25.8 per cent in 2006, from 18.3 per cent in 1999.
This means that one out of four older workers is an irregular worker in a temporary or dailycontracted form of employment.
The average wage of older workers is thus steadily decreasing. If the average monthly salary of
all wage workers were indexed at 100, then by comparison the average monthly salary of workers
aged 60 or above begins to decrease from 91.9 in 1999 to 78.2 in 2005. The change is especially
great in older male workers. In 1996, their average wage was equivalent to 101.6 points – even
higher than the average of all wage workers – but it decreased to 98.8 (lower than the average) in
1997 and to 83.5 in 2005.
Korea
49
On the other hand, the low birth rate and an ageing society have resulted in a weakening of
the way families function. Structural changes in families where women work outside the home
have slowly undermined the tradition where families took care of their own members. Most
significantly, household size has diminished while the make-up of families has varied. In 1990,
the average family had 3.7 members, but this fell to 3.1 in 2000. The proportion of single-parent
families increased to 15.5 per cent in 2000 from 9.6 per cent in 1990, while the proportion of
female heads of households increased from 15.7 per cent to 18.5 per cent during the same period.
Because of the effects of the low birth rate and an ageing society, it is time for Korean society
to seriously consider and prepare for the inevitable socialization of caring labour and accept a
foreign immigrant workforce.
2. Major Changes in Labour Legislation
On 11 September 2006, the Korean Tripartite Commission – made up of government,
labour and industry – reached an agreement on a labour-management relations advancement plan
(known as the ‘Roadmap’). Legislation for the Roadmap had been discussed since September
2003.
The labour-management relations roadmap is composed of three acts: the Trade Union
and Labour Relations Adjustment Act, the Act on the Promotion of Worker Participation and
Cooperation, and the Labour Standards Act. The roadmap covers various issues (34 in total)
which have enormous effects on labour in general, such as the ban on companies paying salaries
to full-time trade union officials, the introduction of the multiple union system in companies, the
abolition of the government’s right to intervene in labour disputes in essential public services, the
ability to hire substitute workers in public services, rules related to unfair dismissal and so on.
Trade Union and Labour Relations Adjustment Act
1.
2.
3.
4.
5. The three-year grace period of multiple unions approval in a company curtails workers’
right to organize. It means that where paper unions or company-dominated unions are
already registered, such as in Samsung, POSCO, Hyundai Heavy, etc., the establishment of
democratic unions is suspended.
The compulsory arbitration which has long blocked workers’ right to strike in ‘essential
public workplaces’ has been abolished. However if the government judges a strike as
undermining the public interest, essential public service operation must be maintained in any
case or by any trade union. Here, essential public service operation means core production
operation, so in fact, if this operation is continued, any strike would be almost completely
ineffective.
The use of substitute workers during strikes and expansion of the essential public workplace
actually block reinstatement of workers who participate in strikes, and impede workers’ right
to strike.
Regarding unfair dismissals, criminal penalty on employers who unfairly dismiss workers has
been abolished, and it has been made possible to demand financial compensation for unfair
dismissals. Thus removing the criminal penalty, which the managements had most feared,
furthers unfair dismissals to occur. In other words, it ensures that the problem of dismissed
workers can neatly be solved through the ‘monetary compensation system’.
When a dismissal is due to managerial reasons, the period of prior notice has been shortened
so that dismissals can be done even more freely.
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Asian Labour Law Review 2008
Thus it can be said that overall the Labour Roadmap (Labour Relations Adjustment Act) not
only limits the right to organize and the right to strike, but also guarantees the management more
right to dismiss workers.
Table 2. Main Contents of the Labour-Management Relations Roadmap
Content
Current situation
Changes
Multiple union system at a company
Salaries to full-time trade
union officials abolished
Compulsory arbitration
Scope of essential public services
Hiring substitute workers during strikes in essential public services
Enforcement from
1 January 2007.
Enforcement from 1 January
2007 (after enforcement, any
employer who pays a salary
to a full-time trade union
official will be punished for
unfair labour practice). In the event of strikes in
essential public services, the Labour Relations Commission conducts
compulsory arbitration (any
industrial action is prohibited
for 15 days after arbitration).
Hospital, electricity, water, gas
supply, railroad services, oil
refineries, Bank of Korea, etc. Only replacement of workers
in workshops is allowed
Suspension until
31 December 2009.
Suspension until
31 December 2009.
Remedy for unfair dismissal
Notice of working conditions and cause of dismissal
Required period of labour-management consultation in case of dismissal for managerial reasons.
A laid-off worker should be reinstated upon being given
remedy order by the Labour Relations Commission.
Of the various working
conditions, at least wages
should be indicated in writing.
No regulations on a written notice for cause of dismissal.
An employer should inform
the employee’s representative
60 days in advance and consult
in good faith.
An employer should try to re-hire laid-off workers.
Workers in essential public
services should carry out
certain essential managerial
work even during industrial
action.
If a laid-off worker wants,
he or she can receive
financial compensation
instead of reinstatement.
Working conditions
including wages, work hours,
days-off and vacations should
be indicated in writing.
Source: The Ministry of Labour, Roadmap for New Industrial Relations
Abolition of compulsory
arbitration system from
1 January 2008.
Addition of blood supply
services and aviation
services.
Hiring substitute workers
is allowed (the number of
substitute workers should be
less than 50 per cent of
workers on strike).
A cause of dismissal should
be issued in writing.
Period of advance notice to
the union decreased to 50
days; advance notice to
workers decreased to 30 days.
An employer should re-hire
laid-off workers first for the same job that they did before
dismissal for a period of
three years.
Korea
51
Irregular Labour Protection Act to Protect Fixed-term and Part-time Employees
The Roh Moohyun government started working on provisions for irregular labour issues in
the public sector and legislation on irregular labour rights after it gained power in February 2003.
Under the Roh government, the increase in irregular labour was even significant in the public
sector.
In July 2007, the Irregular Labour Protection Act was brought into force by the Ministry
of Labour. The main content of the Act is that if an employer hires fixed-term employees (the
main form of irregular labour) for more than two years, then these fixed-term employees should
automatically be granted non-fixed-term contracts. The employment period is thus limited to
two years with conversion into a non-fixed-term contract beyond two years. However, a loophole
in this is that dismissal is possible anytime in the first two years. Indeed, a number of fixed-term
employees were refused renewal of their contracts (in fact dismissed) before July 2007 when the
law was implemented, and an increasing number of corporations began outsourcing jobs.
In the case of E-land workers these exact fears were realized. E-land Corporation is one of
Korea’s largest retail companies. Before notice of the Irregular Labour Protection Act, E-land
had employed most of its cashier staff directly as fixed-term employees. But because the Act
would, upon implementation, require converting fixed-term staff into regular (permanent) staff,
the company terminated the contracts of its fixed-term staff, re-employing them as indirectly
employed staffi.e. they were hired through employment agencies. In May 2007, as many as 350
workers from E-land affiliate New Core and 400 from its other affiliate Homever had their jobs
terminated. The union of E-land workers conducted a high-profile struggle over 500 days and
eventually reached a settlement in favour of the workers.
Also, since July 2007, the conversion of irregular staff into regular employees has been
proceeding mainly in the financial sector. However, the transition has been criticized by labour
advocates and civil society for creating a new working class of ‘semi-regular labour’ instead of, as
intended, transforming irregular into regular labour. The legal status of these workers is as regular
labour, but their wages remain at the level of irregular labour.
Labour Standards Act
Act.
The following are the ramifications for workers of the 2003 revision of the Labour Standards
a) The 40 hour working week extended
As a result of the revision of the 2003 Labour Standard Act, the statutory working hours
per week and per day are now 40 hours and eight hours respectively. The date of enforcement
of this revision differs according to the scale of businesses or workplaces. In December 2007, in
businesses or workplaces with between 20 and 50 full-time workers, the pre-2003 provisions of
44 hours per week and 8 hours per day were still applied.
b) Monthly paid leave abolished
Under past law, a worker was granted one day’s monthly paid leave if his or her attendance
during the month had been 100 per cent. But this monthly paid leave was abolished in the 2003
amendment.
c) Menstruation leave was converted from paid to unpaid leave.
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Asian Labour Law Review 2008
d) Promoting the use of annual paid leave
Article 61 in the Labour Standards Act states that if a worker does not use annual paid leave,
the employer has no obligation to compensate the worker for the unused leave.
e) Leave in lieu of overtime pay
An employer may, instead of paying overtime compensation, grant leave in lieu to a worker
to compensate for overtime, night and holiday work according to a written agreement with
workers’ representatives.
Maternity Protection Act In November 2001, the new Maternity Protection Act took effect. It was revised from
maternity protection related laws including the Equal Employment Act, Labour Standards Act,
and Employment Insurance Act. The main contents are:
a) 90 days of paid maternity leave given, instead of 60 days.
b) Both men and women who are parents of children under 12 months can take paid childcare
leave. In July 2008, three days paid paternity leave was also granted. Parents of newborns
will also be able to take unpaid leave of up to one year, in turns, and during that period, each
may receive KRW500,000 (US$500) a month from their employment insurance.
c) Stronger punishments for sexual harassment were introduced, and regulations against
indirect discrimination were clarified.
Response to Immigrant Workers The migrant workers’ movement in Korea is essentially that of irregular labour, because the
working conditions of migrant workers imply irregularity. The presence of migrant workers began
to increase in Korea in the 1980s. In the 1990s, there was a large scale influx of migrant labour
to the ‘3D occupations’ (dirty, dangerous and demeaning). The legal system regarding migrant
labour, however, defined migrant workers as perpetually irregular in Korean society by limiting
them to short-term contractual work.
The development of the Korean legal system regarding migrant labour can largely be
divided into two periods: the industrial training period; and the employment permit period. As
the number of migrant workers increased, the Korean government in August 2004 introduced
the employment permit system. It is true that the employment permit system provides a more
advanced legal framework than the industrial training system. Since the employment permit
system was institutionalized, migrant workers have been able to obtain the status of labourers, and
therefore be legally eligible to demand their rights to minimum wage as well as the three primary
rights of labour: the right to organize, the right to bargain collectively and the right to take
collective action (i.e. to strike).
However, the employment permit system in reality does not differ greatly from the industrial
training system that it superseded, and has often been criticized as one of modern-day slavery. The
system limits a migrant worker’s stay to the short term (less than three years) and clearly denotes
the irregular nature of migrant labour by requiring a migrant worker’s contract to be renewed
on a yearly basis. His or her freedom to change workplaces is also restricted, impeding a person’
s right to work at the place of his or her choice. All these elements of the employment permit
system point to its potential to become an evil law. As such, migrant workers in Korea, regardless
of the system of industrial training or employment permit, are deprived of their rights to work
freely and to exercise the three primary rights of labour. This is why issues of migrant workers are
raised as part of the irregular workers’ movement.
Korea
53
3. Trends in Labour-Management Relations
While the number of company-level unions and overall union density has decreased,
industrial union density has increased. According to the Ministry of Labour, union density
decreased by almost half, from 18.6 per cent in 1989 to 10.3 per cent in 2005.10 Instead,
industrial-level negotiation has increased. About 90 per cent of all union workers belonged to
company unions ten years ago, but now the proportion has decreased to 60 per cent. However,
the number of industrial union workers has increased by the same amount. This is a reverse of the
global trend, where company unions rather than industrial unions have been increasing.
Polarization proceeds in labour relations. Since 2000, labour disputes in large enterprises and
public enterprises decreased, while labour disputes in small and medium enterprises, and among
quasi-independent contractors and irregular contractors increased.
Rapidly changing conditions of the working class have caused a number of changes in the
labour movement, such that the abolition of irregular labour became one of the main demands of
a general strike by the Korean Confederation of Trade Unions (KCTU). Newly emerging issues,
including establishing solidarity between irregular workers and regular workers, and concern
about the prospect of the irregular labour movement, have become dominant topics in the labour
movement.
While union density of the total Korean workforce is 12 per cent, that of irregular workers is
a mere 2.8 per cent.11 KCTU began with 417,000 members in 1995; by 2007, it had 800,000 members. Of these
members, 16 per cent in 2007 were female.12 The low organization rate among female workers is
related to the low rate of organization of irregular workers. Women make up a large proportion of
irregular workers, and most women workers are employed at small-scale workplaces or places that
are informal and not very visible.
In comparison with the situation in 2000, the response of capital to workers’ organizing has
been a lot more refined. Capitals often recognize the existence of a trade union, but restrict union
activities and regularize not the job itself but the formal status of the worker. The cunning of
capital has even resulted in the situation where a regularized worker, who has won his/her regular
status thanks to the hard struggle of irregular workers, shows no more interest in the irregular
labour movement. In addition, the core work process is again segmented, as irregular workers are
placed in the core work process, causing segmentation and the gap between regular workers and
irregular workers to deepen. This happens not only at the social level but even at the workplace,
once the traditional area where workers would find their common interests and unite.
The main points of the Irregular Labour Protection Act implemented in 2007 are that
irregular workers who have worked continuously at a workplace for more than two years should
become regular workers; and there should be an end to discrimination between regular and
irregular workers who are doing the same job at one workplace. However, as seen in the case of
E-land, the fear of workers being fired and their jobs outsourced has in fact been realized. Also,
in the area of ending discrimination, research shows that the wage discrepancy between regular
and irregular workers has actually deepened since the implementation of the Act. The monthly
wage gap between regular and irregular workers aged 20 to 30 years increased by KRW10,000
to KRW590,000 between 2006 and 2007.13 The Irregular Labour Protection Act has therefore
not been effective in its stated aim. In order to prevent any indiscriminate increase in irregular
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Asian Labour Law Review 2008
employment, the Act should be revised to include criteria establishing a ‘fair reason’ as a condition
for using fixed-term workers. Moreover, even among regular workers discrimination is committed
by way of creating different ranks, and to eliminate it the principle of equal pay for equal work
must be strictly enforced. Also, in order to remove the salary gap between wage workers, a
minimum wage level should be guaranteed that is at least half of the average wage of all workers.
Insurance for unemployed workers should also be expanded. These are the minimum demands.
The struggle for an Irregular Worker Protection Act that accommodates these minimum demands
is underway at many workplaces.
Resources
Organizations
Korean Women Workers’ Association This association focuses on organizing domestic workers and caregivers.
http://www.kwwnet.org/
Korean Women Workers’ Trade Union http://www.kwunion.or.kr
This organization, as well as the KCTU, focuses on organizing irregular women workers.
Korea Alliance of Progressive Movements http://blog.daum.net/jinbocorea
This alliance is a civil society alliance of organizations concerned about irregular workers.
Working Voice http://www.workingvoice.net/
This organization focuses on organizing informal and irregular workers.
Korean Labour and Society Institute http://www.klsi.org/
This is an independent labour research institute which also gathers data about irregular workers.
Korean Confederation of Trade Unions (KCTU) http://www.nodong.org/
Each industry and regional division of KCTU has its own campaigns on behalf of irregular workers.
Government Statistics
National Statistical Office Labour Department http://www.nso.go.kr/
http://www.molab.go.kr/
News and Analysis
Hangyoreh Newspaper www.hani.co.kr
Kyunghyang News www.newsmakers.khan.co.kr
Labour Documents
Irregular Labour (Korean Irregular Worker Centre monthly journal), 2006.
Eun Soo-mi (2007) 2006 Survey of Irregular Workers-Management Relations.
Korean Confederation of Trade Union documents
55
Korea
ENDNOTES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Available from: http://drawadream.tistory.com/48.
KRW=Korean won, the South Korean currency.
Ibid.
Ibid.
Merrill Lynch and CapGemini World Wealth Report, 10th Anniversary, 1997-2006,cited in Shin Kwangyoung (Professor in Joongang University), Hangyoreh Weekly Journal, December2005, Issue 641.
Kim Y. S. (2007) The Hankyoreh (www.hani.co.kr), December.
Ibid.
Korean Confederation of Trade Unions. (2008) KCTU Demands and Tasks in 2008.
The information in this section is mostly drawn from an article in Weekly Kyunghyang, 28 February2008.
http://newsmaker.khan.co.kr.
Government of Korea, Labour Department and National Statistical Office.
KCTU documents. KCTU documents. The Hangyoreh, 18 August 2008.
56
Asian Labour Law Review 2008
Macau
57
Macau
Labour Rights and the Political Economy of Growth:
Migrant Workers and Labour Informalization in Macau
Alex H. Choi
T
he last decade must be remembered as one of the most dramatic periods in Macau’s five
centuries of history. During this short decade, Macau’s sovereignty was reverted from
Portugal back to China in 1999. To alleviate the pain of re-absorption, socialist China promised
to keep capitalist Macau’s economic and political system remain for 50 years. Macau’s casinodominated economy was allowed to stay. It was also permitted to have an autonomous
government, which could rule with minimal interference from Beijing. A similar package has been
offered to neighbouring Hong Kong, whose colonial rule ended two years prior to that of Macau.
Hong Kong and Macau were given the status of Special Administrative Region within China’s
unitary state structure. This is known as the ‘one-country, two-systems’ formula. This formula is
touted by China to be the model for its future reunification of Taiwan.
Shortly after the political transition, the Macau government reviewed the system of the
casino monopoly, and decided to liberalize the system by increasing the number of licenses to
a total of three1 after the extant monopoly expired on 2001.2 This landmark event, in effect,
signified much more than the breaking down of the 90-year old gambling monopoly system.
Its dismantlement made room for the injection of foreign, especially US, capital, the emergence
of Las Vegas style resort casinos, and much needed competition, all intended to revitalize the
declining industry and revive Macau’s economy. At the same time, in 2003, China relaxed and
simplified the procedure of granting exit (travel) permits to its citizens visiting the two Special
Administrative Regions. As a result, tens of thousands of mainland tourists flooded into Macau,
enjoying the excitement of casino gambling, which is still prohibited and criminalized inside
China. Macau’s new prosperity thus become indissolubly bound up with China’s gambling
ban and its desire to use Macau (and Hong Kong) to demonstrate to Taiwan the beauty of the
‘one country, two systems’ formula. From this perspective, the foundation of Macau’s present
economic boom rests very much on unique political circumstances.
This pattern of development has produced fundamental changes to the economic structure
and has injected new dynamics in the authoritarian polity. Export-oriented industrialization
has effectively been declared obsolete; its existence had been sustained by a steady inflow of
migrant women workers from China. Trade protectionism against Chinese exports also forced
manufacturers to maintain their base in Macau so that they could claim a non-Chinese origin of
their products. With the decline of the manufacturing sector, Macau has become an ever more
mono-industry town. The present push for diversification to convention and cultural/heritage
tourism is a strategy to enhance the competitiveness of its gambling industry, rather than finding
an alternative recipe for growth. In all, the changes in the last several years have consolidated the
preponderance of the casino-based service sector in Macau’s economic structure.
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Asian Labour Law Review 2008
This transition, which took place in a highly compressed period of time, could also be
attributed to the government’s unmitigated pursuit of economic growth at all costs. This
strategy is derived from an ideology that treats economic development as inherently desirable. It
necessarily entails a politics of growth that attempts to marginalize and unravel any oppositional
voices that question its rationale.
One of the foundations of this politics of growth is corporatism. At pinnacle of this
corporatist structure is the business-led political elite, who rules with the blessing of Beijing. The
present chief executive, Edmund Ho, is a key player in the local business circle, and the son of
well-known Chinese leader, Ho Yin, in the colonial period.3 At the same time, he doubles as
the leader in the local pro-China groups which had played a unique political role in representing
and mediating with the Portuguese colonial government over Chinese interests since the ‘123
incident’ in 1966.4 The three most important pro-Chinese groups are the Macao Federation
of Trade Union (MFTU), the Macao Neighbourhood Association, and the Macao Chamber
of Commerce. The political structure created for Macau after its reversion to Chinese rule has
been clearly dominated by the local business elite.5 This ruling system functions smoothly if
the legitimacy of the government is high. However, if the government is seen as tilting too onesidedly to a particular social sector or not playing fairly as a custodian of public interests, these
social groups suffer too because they are not only considered to be part of the ruling system,
they are sometime called up on to defend unpopular government actions. Their acquiescence has
enabled the government to embark on a course of developmentalism without much concern for
its social impacts.
One of the key issues that has undermined the legitimacy of the government and its social
alliances is corruption. The arrest of Mr. Ao Man Long, the Secretary for Transport and Public
Works, on December 2006, for corrupt land deals and government contract kickbacks, merely
confirmed widespread rumours on impropriety at the very high up level of the government.
Government mishandling leading to rampant property speculation, inflation, and traffic
congestion added to the public discontents with the regime. Working class dissatisfaction
eventually flared up into a number of public demonstrations in 2006 and 2007. Thought none
of them were participated by more than a few thousands of people, they had highly symbolic
meanings in a society in which disruption of social harmony was considered to be a social sin.
In the following sections, I will give a brief outline on the recent structural changes on the
labour sector, the existing labour regulation regime, and the pattern of trade union movements
in Macau. Then I will argue that the importation of migrant workers is a key instrument for the
government to discipline labour and to promote informalization in the sense of reducing job
security and the cheapening of labour. It is then demonstrated that this informalization calls
forth different degrees of resistance. The success of the government in managing these forms of
resistance depends on its ability to deploy resources and to mobilize its social networks to co-opt
and to proscribe. In all, significant degrees of difference in informalization are demonstrated in
different sectors of the labour market in Macau.
Labour and the Economic Transformation
The economic growth of Macau in the last few years has been nothing short of spectacular.
Macau was in a deep recession registering a real GDP growth rate of -2.4 per cent and -4.6 per
cent respectively in 1997 and 1998. It was recovering very slowly at the turn of the century.
However, after China relaxed the restriction of its citizens visiting Macau (and Hong Kong) in a
scheme known as Free Individual Tourism launched in July 2003, Macau’s tourism-dependent
59
Macau
economy bounced back, pulling along with it the overall economic growth. The average annual
real GDP growth rate for the last five years (2002-2006) registered an amazing 15.32 per cent
(See Table 1). By 2006, it is reported that Macau’s GDP per capita ranked third in Asia, and has
overtaken that of Hong Kong.6
During this period of take-off, Macau has also undergone a profound transformation into a
service-oriented economy. The percentage of manufacturing employment as a percentage of total
employed population plummeted from 19.5 per cent to 11.1 per cent between 2000 and 2006.
During the same period, the combined share of the two key service-related sectors, namely Hotel
and Restaurant, and Cultural, Recreational and Services, increased from 21.8 per cent to 31.5
per cent. Other indicators pointed to the same trend. Visitor arrivals shot up from 9.2 million to
22 million, representing a jump of 239 per cent. Hotel rooms increased from 9,284 to 12,915.
A further 2,825 was added with the opening of the mega–resort The Venetian, raising the figure
to 15,740 in November 2007. The number of gaming tables soared even more dramatically from
339 in 2002 to 2,762 in 2006. It stood at 3,992 in the third quarter of 2007, representing a jump
of over ten times in six years.
Table 1. Basic Statistics of Macau, 2000 - 2006
2000
2001
2002
2003
2004
2005
2006
2.9
10.1
14.2
28.4
6.9
16.6
2) GDP per capita (current price, 14,171
US$)
14,253
15,567
17,805 22,634
24,369
28,853
3) Population (‘000)
431.5
436.3
440.5
446.7
462.6
484.3
513.4
4) Median Income (current price, MOP)
4,822
4,658
4,672
4,801
5,167
5,773
6,701
---
-3.4%
0.2%
2.76% 7.62%
11.73% 16.07%
1) Real GDP Growth Rate (%)
------ change 5.7
5) Inflation rate
-1.61% -1.99% -2.64%
-1.56% 0.98%
4.4%
5.15%
6) Unemployment rate
6.8%
3.8%
3.0%
6.3%
6.0%
4.9%
4.1%
7) Manufacturing employment* 19.5%
21.8%
20.5%
18.4% 16.4%
10.7%
11.1%
8) Hotel & Restaurant employment*
10.8%
11.1%
11.5%
10.9% 11.0%
10.5%
11.7%
9) Cultural, Recreational, 11.0%
Gambling and Other Services*
10.9%
11.4%
11.6% 16.6%
17.2%
19.8%
10) Visitors Arrivals (million)
9.2
10.3
11.5
11.9
16.7
18.7
22.0
11) Hotel rooms
9,284
9,081
8,869
9,280
---
---
12,915
12) Gaming Tables
---
---
339
424
1,092
1,388
2,762
*: (as a percentage of total employed population); ---: not available
Source: Statistic and Census Service, Statistical Indicators (http://www.dsec.gov.mo/e_index.html, accessed 16
January 2008).
The rapid economic growth and structural transformation had significant impacts on the
well-being of the working population. The unemployment rate was reduced from 6.8 per cent to
3.0 per cent between 2000 and 2006. During the same period, median monthly income increased
from MOP4,822 to MOP6,701. However, it is pointed out that the working class did not enjoy
a fair share of the economic growth. Real per capita GDP doubled between 2000 and 2006, but
the nominal median income rose merely by 39 per cent. Even this increase has to be tempered by
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Asian Labour Law Review 2008
high inflation rates, reaching 5.15 per cent in 2006. Income distribution worsened during this
period of intense growth. It is reported that Macau’s Gini coefficient increased from 0.43 in 1999,
to 0.45 in 2003, reaching a peak of 0.48 in 2006, and was higher than neighbouring countries.7
A total of 4.9 per cent of the employed population were earning less than MOP2,000 per month
in 2006, and another 18.1 per cent were earning between MOP2,001-4,000 per month. In other
words, a total of 23 per cent of the employed population were still stuck in very low income
categories.8
The low income level can be attributed to the low education attainment of the working
population. In 2006, 28 per cent of the employed population have only a primary or lower
education.9 However, the presence of a significant number of migrant workers must also be
regarded to be another important factor depressing income.
Table 2. Resident and Non-resident Employed Population
2000
2001
2002
2003
2004
2005
Employed population
195,288
204,984
204,892
205,385
219,143
237,451 265,054
Local employed population 168,067
179,059
181,432
180,415
191,407
198,040 200,381
Migrant workers
27,221
25,925
23,460
24,970
27,736
39,411
64,673
Male
8,049
7,405
6,811
8,307
9,805
18,499
37,855
Female
19,172
18,520
16,649
16,663
17,931
20,912
26,818
Unskilled*
---
---
---
21,257
22,621
31,561
56,734
Skilled**
---
---
---
3,713
5,115
7,745
7,908
0.16
0.14
0.13
0.14
0.14
0.20
0.32
Migrant : local ratio
2006
Source: Statistics and Census Service, Employment Survey, Table 7.1, various years; Statistics and Census Service,
Demographic Statistics, Table 2.2, various years; Statistics and Census Service, Yearbook of Statistics, Table 3.8,
various years.
* Based on approval from 12/GM/88 plus the number of domestic helpers.
** Based on approvals from 49/GM/88 minus the number of domestic helpers.
--- : not available
Between 2000 and 2006, the number of migrant workers increased from 27,221 to 64,673.
The ratio of migrant to local workers also increased from 0.16 to 0.32 (see Table 2). In other
words, there was one migrant worker for every three local people working in Macau. The sex ratio
of the migrant workers has gone through a major change. In 2000, 70 per cent of the migrant
workers were female. The percentage was reduced to 41 per cent in 2006. The change is probably
due to a change in the occupations of the migrant workers. In the past, most migrant workers
were employed in the garment industries, which tended to hire women in their workforce. The
present construction boom opened more employment opportunities for male construction
workers. Between 2003 and 2006, the number of migrant construction workers soared from 1,715
to 22,043, while manufacturing migrant workers only slightly increased from 13,761 to 14,516.10
The dramatic increase in migrant construction workers probably tipped the sex ratio amongst the
migrant workers in Macau.
In terms of the skill level, most of the migrant workers are admitted under the unskilled
category. Between 2003 and 2006, the percentages of skilled workers in the total migrant worker
population decreased from 14.9 per cent in 2003 to 12.2 per cent in 2006 (See Table 2). In all
major industries where migrant workers had a significant presence and where data are available,
migrant workers earned significantly lower levels of income than their local counterparts. For
Macau
61
instance, in the manufacturing industries, unskilled migrant workers on average earned 25 per
cent less than their local counterparts. The differences are 18 per cent, 3.5 per cent and 13.7
per cent respectively in the hotel and restaurants, security guard services, and the gambling
industries. 11 The glaring wage disparities are probably one of the most important reasons
accounting for the high demand for migrant workers.
Most of Macau’s migrant workers came from mainland China, to be followed by Hong
Kong and other Southeast Asian countries.12 Published statistics do not give a clear breakdown of
the industrial concentration by nationalities. However, it is believed that Chinese migrant workers
spread out in manufacturing, construction, hotels and restaurants, and the gambling industries.
Hong Kong migrant workers occupied the more skilled positions in the construction, and retail
services. Most of the security guards and domestic helpers came from the Philippines and other
Southeast Asian countries.
The Legal Regime Regulating the Labour Sector
Macau’s labour laws are outdated, rudimentary and incoherent. The system was designed in
the late 1980s, and the level of labour protection has stayed the same that period up to now. Gaps
in the labour system, such as on the regulation of labour import, have not been plugged. Promises
made in one level of the law are not recognized and followed up in other levels. The post-colonial
Macau government appears to be uninterested in either closing the loopholes or resolving the
inconsistencies until labour protests threaten social stability and the political credibility of its rule.
The legal framework regulating the Macau labour regime is composed of three levels. At the
top, the Macau Basic Law guarantees citizens the freedom to choose occupations and the rights to
organize unions and to participate in labour strikes (Articles 27 and 35). The Framework Law on
Employment Policy and Workers’ Rights (4/98/M) re-states in more detail the general principles
on labour rights and policies. The second level comprises of laws regulating in practical terms the
different aspects of the labour regime. The most important one is the Labour Relations Law (Decree
Law 24/89/M) which lays out the minimum standards of employment and labour contracts.14
The final layer of the labour system consists of various administrative orders regulating, for
instance, the importation of migrant workers (12/GM/88 for non-skilled migrant workers; 49/
GM88 for professionals), the prohibition of illegal work (17/2004) and the special arrangements
for manufacturing workers during periods of insufficient work (43/95/M).
These laws and orders provide a bare minimum level of labour protection, and are hardly
commensurable with Macau’s current ranking to be the country with the 3rd highest GDP
per capita region in Asia. The Labour Relations Law provides for a six-day work week (Labour
Relations Law 24/89/M, Article 10). Workers who have completed a year of service are allowed
six days of paid annual leave. Workers who have completed the three- month probation period
are entitled to ten days of statutory holidays, of which only six are paid (Article 19). Women are
entitled to 35 days of paid pregnancy leave after they have completed at least a year of service
(Article 37). The Legal working age starts at 16. But child labour is allowed as long as the children
are above 14 and have medical certificates proving the work will not do any physical harm to
the minors, and the work is not in the household.15 Disability and death compensations are
capped respectively at MOP625,000 and MOP500,000. Unemployed workers are entitled to
a maximum of 90 days of unemployment benefit, and are paid MOP70 per day.16 Permanent
citizens reaching the age of 65 who have worked for five years are entitled to a fixed sum of old
age pension of MOP1,450 per month.17 What these figures have shown is that Macau workers
are still required to work long weeks, and with very little annual and pregnancy leaves. They are
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Asian Labour Law Review 2008
still not entitled to any paid sick leave. If they suffer from injuries and deaths, the maximum
compensation they are entitled is about one third of neighbouring Hong Kong.18 Finally, the
payments of unemployment insurance and of pension are so nominal that nobody can really
survive on them at the current level of living costs.
Macau workers do not enjoy much job security. Any workers can be dismissed without
reason by paying the necessary compensation depending on years of service, with a maximum of
12 months of salary at a capped level of MOP14,000 per month. In other words, the maximum
amount of severance pay is MOP168,000.19 The law further allows employers to avoid paying
this severance pay by claiming the following reasons: ‘worker misbehaviour’, the poor quality
of service rendered by the worker and ‘significant alteration in the conditions of the agreed
labour relation’ (Article 44 of the Labour Relations Law). These reasons are written in such
vague language that it is not hard for the employers to find situations fitting these descriptions.
Theoretically, employers are not allowed to dismiss pregnant women workers, but this protection
ends if the employer is willing to pay compensation equals to 35 days of wages (i.e. the length of
pregnancy leave) plus the severance pay (Article 37).
Workers have the right to form unions, and being union officials cannot be invoked
by employers as an excuse for ‘dismissal with reason’.20 However, the law does not prohibit
arbitrary dismissal as long as severance is paid. Furthermore, the court has no power to order
a reinstatement. Three persons can form a union by going through a relatively straightforward
registration process. However, the power and status of the trade union, especially its right to
represent workers in collective bargaining and the right to call a labour strike, are not recognized
by law. Pro-labour Legislative Assembly members had tried to propose a private member’s bill on
trade union law in 2005 and 2007. But both attempts were defeated in the business-dominated
assembly.21 Under this situation, the rights to organize and to strike remain empty promises. In
Macau, there are no collective bargaining agreements, and the item ‘days lost in strike’ does not
exist in government statistics.22 Given the very poor job protection, and the abundant supply of
non-resident workers, taking strike action carries an inordinate amount of risk. It is not surprising
that disgruntled workers prefer public demonstrations to air their grievances rather than risking
jobs in strikes.23 It should be noted that the above minimal level of protection are not enjoyed by
all workers in Macau. The Labour Relations Law (Article 3) specifically excludes migrant workers
and domestic workers from its coverage. 24
Incompatibilities between different laws have made some of the workers’ rights
unenforceable. The government has not been forthcoming in trying to resolve the contradictions
and to clarify the confusions, thus putting many of those rights in limbo. For instance,
Article 5 of the Framework Law on Employment Policy and Workers’ Rights enshrines nondiscrimination based on age, sex, race, nationality and territory of origin in relation to labour
relations. Nevertheless, Article 3 of Labour Relations Law allows the exclusion of migrant workers
and domestic workers from its protection. Thus Article 3 of the Labour Relations Law allows
discrimination while Article 5 of the Framework Law outlaws it. Furthermore, many provisions
in the Framework Law have not been implemented almost 10 years after its first enactment. The
most glaring omission is related to Article 7c which calls for ’the establishment of a minimum
wage and its regular update‘. In reality, Macau workers as a whole have never enjoyed a minimum
wage, and the government has never put this issue very high on its agenda.
The apparent reason for these discrepancies in law is traced to the decolonization history.
The retreating Portugal colonial regime was said to be controlled by a group of socialist zealots
who were eager to introduce pro-labour policies which the colony could ill afford.25 Some of
Macau
63
the examples are the Framework Law on Employment Policy and Workers’ Rights (4/98/M)
and the Decree Law 52/95/M on gender equality in the workplace. For the sake of maintaining
political confidence in the transition process, all of these laws were allowed to stay in the book.
But they were sidelined by the succeeding Edmund Ho government which demonstrated no
commitment to implement any of these pro-labour policies. Indeed, throughout the first eight
years of the Edmund Ho regime, only one piece of labour legislation was introduced and passed
in the Legislative Assembly in 2003. A large part of this legislation is the prescription of a process
of adjudicating disputes and compensation related to industrial injury and disease.
The Organized Labour Sector
The shape of the government’s labour policy is influenced by its relations with the organized
labour sector. Macau has a very powerful labour centre, the Macao Federation of Trade Unions
(MFTU). Paradoxically, this powerful centre failed to bring significant pressure onto the
government. The recent changes, such as the revisions of labour laws, were brought on by a
few newly set-up maverick labour groups that were able to mobilize thousands of people onto
the street to demand government attention to their plights. The emergence of these new labour
groups is an indication of the discontent with the approach of the MFTU.
There are a total of 159 labour unions registered with the government.26 Beyond this figure,
there is very little information available, including their membership and activities. MFTU
claimed in 2000 to have a total membership of more than 60,000 people scattered over its 49
member unions.27 The number of member unions has increased to 65 at the end of 2007.28
MFTU is part of the so-called pro-Beijing social network in Macau, and its functions have been
deeply enmeshed with the Beijing regime’s policy over colonial Macau. The predominant position
of MFTU in Macau’s labour sector was consolidated after the 1966 ‘123 incident’ which led to
the wholesale expulsion of the pro-Taiwan labour unions from Macau.29 Since then the MFTU
has become the undisputed representative of the colony’s labour sector. With the departure of
Portugal in 1999, the succeeding political elite invited MFTU, amongst other groups in the proBeijing network, to become one of its ruling partners in the new regime.30
In all, because of the ideological commitment to cooperation and stability and its historical
connection to the pro-Beijing structure, the MFTU was pre-disposed to work inside the
government as a loyal supporter and, perhaps, as a loyal critic too. The Macau government has
also been willing to give the MFTU a privileged standing in all matters related to labour affairs in
order to get the legitimacy it needed.
Yet the failure of the MFTU to resolve the thorny issue of migrant workers has sparked a
series of demonstrations shortly after the setup of the new Macau SAR government in 2000 and
during a time of economic depression and high unemployment rate. These demonstrations were
organized spontaneously, and in the aftermath, several labour groups emerged. Not unexpectedly,
a fair degree of division and realignment occurred within these groups due to personality rivalries,
choice of strategy, and government cooptation. By the time of the 2006 May Day demonstration,
about three camps have been consolidated. They were the Macau Workers Union, led by the pair
Ho Heng Kuok and Lei Man Chao; the Macau Labourer and People’s Spirit Association, led by
Wong Pui Lam; and the Macao Free Trade Union for Casino and Construction Workers, led by
Ng Shek Yiu and Lee Kin Yun. None of these groups could claim a massive membership. But
they have been able to sustain a level of critique and a circle of activists who managed to catalyze
massive demonstrations when the tide of public opinions turned against the dominant elite.
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Asian Labour Law Review 2008
In addition to these labour groups, there are two other players in the labour sector. The
first one is the Macau Civil Servant’s Association (APFTM), which has been made prominent
by its outspoken leader Jose Pereira Countinho, who won a seat in the 2005 Legislative
Assembly election depending largely on votes from his civil service constituents. APFTM claims
a membership of about 9,000.31 The other important force in the labour scene belongs to the
oldest democracy group in Macau, the New Macau Association (NMA), led by its two prominent
Legislative Assembly members, Ng Kuok Cheong and Au Kam San. The NMA has a middle class
background, and most of its members are believed to be professionals, teachers and civil servants.
Ever since its establishment in 1992, it has been active in voicing the concerns of the working
class.
In conclusion, the Macau organized labour sector is dominated by the MFTU which has
been incorporated into the ruling network. Yet, recently, a few fringe labour groups have emerged
to challenge its domination. While these groups are still too weak and too disorganized to talk
of an erosion of MFTU’s control, they have injected a healthy dose of competition into the
organized labour sector.
Labour Informalization and Economic Growth
A large capital influx has created havoc in Macau’s labour market because of the relatively
small size of Macau’s local workforce. A limited labour supply can be translated into re-evaluated
wage levels that could erode into the profit margins of the labour intensive service industry.
The Macau government has played its traditional labour regulatory role through the import of
migrant workers. The liberal import of migrant workers in almost all sectors of the economy not
only depresses wages, but also creates a sense of insecurity that significantly undermines labour
rights. In this context, the discussion of informalization of the labour force becomes pertinent
for the Macau workers. However, if informalization assumes a prior status of formalization, this
becomes problematic because the vast majority of the Macau workers have never enjoyed formal
rights, as shown in the above sections, remotely comparable to their counterparts in the developed
countries.
The government has adopted a very liberal approach with regard to labour import. There
is no maximum import quota, no occupational restrictions and no minimum wage.32 One of
the outcomes of this approach is the putting of foreign workers into direct competition with
Macao’s own low skilled counterparts, which still represent a very significant proportion of the
city’s workforce. Apart from wage depression, the import serves to discipline the working class
as a whole by placing a constant threat that their jobs can be replaced by migrant workers, thus
curtailing their demands for improvement of wages and working conditions.
It should also be emphasized that the migrant workers are themselves victims in the system.
They are exploited and forced to work and live in harsh conditions, cramped dormitories and
suffer discriminatory social attitudes. Even the meagre labour standards granted under the Labour
Relations Law have been denied to them. They have to pay outrageous agency fees and monthly
labour management levies to recruitment agents. Under-payment or non-payment of wages by
employers is commonplace. Construction workers face a hazardous workplace, with very high
occupational death and injury rates. 33
For some local workers, poor pay and poor working conditions have pushed them into
the informal sector for subsistence. One of the informal sectors that has caught a lot of public
attention recently is the so-called couriers that carry goods across the border from Macau to
Macau
65
Zhuhai (the town on the other side of the Macau-China border). Taking advantage of the price
differentials between the two cities and the low costs of border crossing, people are paid as little as
MOP10 per trip to bring consumer products such as canned fruit and potato chips to the other
side of the border. In one good day, these couriers could cross the border up to several dozens of
times. This form of work has provided a means of livelihood for several thousands of people. For
the government, it serves as a safety valve because, if this alternative source of livelihood is not
available, unemployment could explode into an unmanageable political crisis. Social agitation
for the ending of the migrant worker program could also be more intense. The present labour
shortage and congestion at the border crossing have caused commentators to ask the government
to impose tighter administrative measures to force these people back into the formal job market.
No actions have been taken yet. One of the reasons probably is that many of these couriers are
unskilled, middle-age people, who cannot be easily reabsorbed into the formal job market.34
Civil servants and public sector employees are the workers most likely to have been affected
by informalization in its proper sense. In the past, the public sector has offered the most coveted
jobs because of its pay, job security, fringe benefits and social status. The labour relations with the
civil servants are governed by a set of special regulations giving them better working conditions
and protections than those offered by the Labour Relations Law. However, in the last several
years, the government has taken a number of new public management style reforms that have
significantly undermined the traditional privileges enjoyed by this sector. These reforms include
an increase in contract-based employment, lower salary and wages for new employees, annual
job performance assessment, pension reform and etc. The widespread use of contract-based
employment is a source of constant complaint from civil servants. According to one estimate, over
40 per cent of the 19,000-strong public sector employees are under temporary contracts.35 Since
contract workers are excluded from the civil service regulations, it creates not only the condition
of unequal pay for equal work, but also opens the doors to nepotism and corruption.
In Macau, the reform of the civil service has been driven primarily by political, rather than
budgetary considerations. The political elite saw it opportune to assault the widely-perceived
arrogant, elitist and inapt colonial bureaucracy in order to improve its popularity. Policy errors
are conveniently deflected to the bureaucracy. Administrative reforms have been eagerly embraced
because they can be used as a surrogate for democratic reform. While the Macau civil service is
certainly not immune from incompetence and corruption, the reform measures may not help it
to shore up its long-term capability and cohesiveness. Moreover, the recent economic boom has
opened up higher pay and professional job opportunities in the private sector. The prestige of the
civil service has been eroded and an exodus of civil servants to the greener pasture in the private
sector is expected. All these developments have intensified dissatisfaction within the rank and file,
and led to Coutinho, the leader of APFTM, participating in the 2007 May Day demonstration to
show their discontent.
Contrary to the trend of informalization, civil service Association’s the card dealing sector has
undergone a process of formalization. The expansion of the gambling economy drove the soaring
demand for card dealers. In the last several years, their wage, benefits, and job security have been
significantly improved. As of mid-2007, there were a total of 17,272 card dealers, earning on
average MOP14,370 per month, which is almost double the prevailing median wage.36 Symbolic
of the change has been the emergence of a pay system in which the amount of tip, which
represents more than 60 per cent of croupier’s take-home pay, is guaranteed at a fixed level by
the casino management. This change has also implied a change in the work process in which the
hustling for tips from players has been removed as a key part of their job, and thus significantly
reduces the tension between croupiers and players.37
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Asian Labour Law Review 2008
The arrival of foreign casino operators, it is claimed, has broken down labour paternalism
and has brought a more formal, impersonal style of labour-management relationship in the
casino sector. Before the liberalization of the gambling monopoly, in spite of the existence of
many casinos in Macao, all of them were owned by Stanley Ho, the monopoly holder. The terms
of employment were dictated to the card dealers who faced no other buyer of their service in
the market, a job change would amount to a change in career. Currently, with other operators
entering the market, job change has become possible, and the turnover rate has been high. The
competition for workers has driven up wages and other benefits.
The other, arguably more important, factor affecting the card dealer occupation is the
government’s unwritten policy of not allowing migrant workers to work in the card dealing
business.38 It is a shrewd move because, in an economy where migrant workers are ubiquitous, the
position of casino dealer acquires the image of a well-paid job reserved solely for Macao people.
The refrainment of the government from the opening of the card dealer sector to migrant workers
has demonstrated that labour import is not just about economic imperative but that political
considerations are also very much key part to its decision-making. The government needs to create
a social sector that benefits directly from the government’s economic policy.39 Understandably,
various interests are intensely lobbying the government to lift the ban. One form of discourse
maintains that the ban has distorted Macau’s human resource strategy, and harms its future
generation. The high pay of this low skill sector has led the younger generation to quit school and
to flock to casinos once they reach the minimum casino working age of 18 years old. It also instils
a sense of low value of pursuing an education because the card dealing occupation requires only
primary school education and offers a pay much higher than a fresh university graduate working
in non-card dealing jobs.
The other discourse targets the prospect of job promotion. While card dealing is reserved
for locals, casinos are permitted to fill both lower paid positions such as housekeeping, cleaning,
cooking and waitressing, and more senior positions, such as game supervisors and pit managers,
with migrant workers. In essence, a racial hierarchy is established within the occupational
structure of the casino. The bottom end is filled by workers from mainland China for cost
considerations, while the middle levels are recruited from Southeast Asia, where many of them
have operated casinos for a long time, and there are pools of workers who have casino supervisory
experiences. The very top management are usually seconded from US headquarters or recruited
from Hong Kong. In this system, Macau card dealers would have very limited promotional
prospect because, firstly, if they are promoted, that means fewer people would be able to do card
dealing. Secondly, local card dealers need to compete with migrant workers from Southeast Asia
who have far more experience, better English speaking skills, and demand a salary far smaller than
their local counterparts. If the government is not prepared to make policy initiatives to address
these problems, these discourses may gather enough momentum to break open the sector for
labour import.
Gender and Informalization
Gender issues are difficult topics to research in Macau. There is no activist women group
raising the voice on gender discrimination. There is a Women’s General Association of Macau
(WGAM) which is part of the pro-government, pro-China network and is a group dominated by
upper class ‘respectable’ women. It adopts a service-oriented approach intending to help women
to adapt to the society, rather than promoting structural transformation of the patriarchal system.
Its constitution has clearly stated that it is a patriotic association whose goals are to provide
services to the women and children and to protect the rights of the women.40 Its key activities
67
Macau
include the running of childcare facilities, family service centres, schools, and a shelter home for
battered women.
There are very little in-depth studies on gender inequalities in Macau. However, elementary
statistics does show considerable wage gaps between the sexes and the segregation of women
into unskilled and low wage occupations. Table 3 indicates that women in general earned only
between 60 per cent and 80 per cent of their male counterparts in industries where information is
available. The gaps in the manufacturing and construction industries are the widest, while that in
the gambling industry is somewhat narrower, but still represents a 15% difference.
Table 3. Monthly Earnings (MOP) of Selected Industries by Sex, 2006
Manufacturing*
Electricity, Gas & Water Supply**
Construction**^
Wholesale & Retail Trade**
Hotels and Restaurants*
Transportation, Storage and Communication**
Financial Intermediation*
Gambling Industries**
Male
6,193
20,333
526
9,533
7,899
18,354
Female
4,074
16,256
331
7,711
5,647
14,597
Female/Male (%)
65.78%
79.95%
62.93%
80.89%
71.49%
79.53%
18,669
15,220
11,899
13,062
63.74%
85.82%
Source: Statistics and Census Service, Manpower Needs and Wages Survey, various industries, and Indices and Daily
Wages of Construction Workers.
*: 3rd Quarter 2006 figure; **: 4th Quarter 2006 figure; ^: Daily wage
Table 4 indicates the number of male and female workers employed in different occupations,
and the median wage of each occupation. There are significantly less women occupying
professional and senior management positions, both of which are paid the highest. For instance,
in the category of Legislators, Senior Officials of Government and Associations, Directors and
managers of Companies, there are only 4,224 women compared with 12,798 men, representing
a female-male ratio of 33 per cent. There are relatively more women working in the category of
professionals which earned the highest remuneration. The ratio is 75 per cent, but is still far below
the overall ratio of 87 per cent in all occupations. The trend is reversed only in the categories of
clerk and unskilled workers. The former is traditionally considered a woman’s occupation. The
latter is the poorest paid amongst all occupations.
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Asian Labour Law Review 2008
Table 4. Employed population and Median Wage by Occupation and Gender, 2006
Occupations
Employed Population
Female Male F:M
Legislators, Senior Officials of Government
4,224
12,798 33.01%
and Associations, Directors and managers of Companies
Professionals
4,031
5,397
74.69%
Technicians and Associate Professionals
11,455 12,029 95.23%
Clerks
37,491 23,345 160.60%
Service and Sales Workers
26,583 28,186 94.31%
Skilled Agricultural and Fishery Workers
365
1,066
34.24%
Craftsmen and Similar Workers
1,990
25,865 7.69%
Plant and Machine Operators, Drivers and 11,211 14,111 79.45%
Assemblers
Unskilled Workers
26,150 18,757 139.41%
Total
123,500 141,554 87.25%
Median
Wage
(MOP)
14,982
17,802
11,024
9,516
5,576
4,991
7,197
4,045
3,813
6,701
Source: Statistics and Census Services, Annual Employment Survey-2006; Labour Affairs Bureau (http://www.dsal.gov.
mo/pdf/work/chinese/8_SalProf_a.pdf, accessed 22 January 2008).
Apart from wage discrimination and gender segregation, there are other difficulties facing
women in the labour sector. One of the issues is sexual harassment in the workplace. In 2006,
four civil servants sued their superiors for persecution and sexual harassment. The court accepted
that the superior’s behaviours did cause ‘uneasiness’ on the plaintiffs, but considered them
not serious enough to merit compensations according to the Civic Code. The case thus was
thrown out of court. Legislator Kwan Tsui Hang however, pointed out that Macau has no law
regulating sexual harassment in the workplace, and this put the working women in jeopardy of
sexual intimidation which is considered to be widespread in a conservative and male-dominated
society.41
The reservation of higher paid jobs of card dealing for local people and the general expansion
of the economy do increase woman’s job opportunities. Women’s labour participation rate has
increased from around 55.3 per cent in 2000 to 58.8 per cent in 2006. 42 While more women are
entering the job market, especially in the service sector, there are not enough supporting services
to help them to take care of the children and the family, which are still very much seen as women’
s responsibilities. Many of these jobs demand long hours and shift work; women are often left
alone juggling between family and work.
The WGAM’s response to the crisis is the stepping up of calls for the import of domestic
helpers to assist women in taking care of the family, rather than demanding for equal sharing
of domestic work between the sexes, or the demand for a higher level of socialization of
reproduction. It should be pointed out that domestic helpers from the Philippines, Indonesia
and Thailand have been working in Macau for a long time. The WGAM’s demand is specifically
Macau
69
focused on urging the government to open the import of domestic helpers from mainland
China.43 It rationalized the demand in terms of mainland Chinese helpers being able to speak
the local language and sharing the same culture, thus delivering better services to local families.
In reality, the key reason appears to be that mainland domestic helpers could be paid at a much
lower rate than their Southeast Asian counterparts. This demand encountered a number of
hurdles at the supra Macau level. For mainland domestic helpers to work in Macau, the Macau
government had to convince Beijing to change its policy of not exporting domestic helpers to the
two special administrative regions. In turn, China was concerned that a lifting of the ban would
force Hong Kong to reverse its long-held position of not importing mainland Chinese maids, and
the subsequent complications with Hong Kong politics.
Apart from domestic helpers, Macau has also acquired the reputation of a pleasure periphery
where erotic labour can be bought from women (and men) from many ethnic backgrounds.44
Most of the sex workers are from mainland China, to be followed by those from other Asian and
Eastern European countries, with a conspicuous absence of locals working in this sector. The
Macau government takes a relaxed attitude to the industry because it is keenly aware that the
presence of a thriving sex market helps bring players and tourists to the casinos. Macau legislation
does not criminalize the act of prostitution per se. However, the procurement, soliciting and
living on the proceeds of prostitution are criminal offences. Furthermore, the Law on Organized
Crime specifically prohibits tourists from engaging in prostitution. In practice, however, the
police take a very tolerant attitude to sex workers except perhaps those working in local residential
neighbourhoods.
Consciously or nor, government policy segregates the sex workers into two groups. The
first group of sex workers work in an institutionalized setting (e.g. nightclubs, saunas, massage
parlours, etc.), and their employers usually apply for them to be properly documented to avoid
being charged of employing illegal workers. Their clients are mainly tourists who are able to pay
a higher price for their service. To maintain legal status, sex workers are required to undergo
medical check, specifically AIDS test, once every four months. Their status will be terminated if
the AIDS test returns a positive result. The other group of sex workers come to Macau on tourist
or transit visa or through smuggling channels. Their stay in Macau is precarious, and they are
always concerned about police, triad, or client harassment. Thought many of them claim to come
voluntarily looking for opportunities to make money, a number of them are trafficked and forced
to work in the trade. News story of police smashing rings of forced prostitution regularly appear
in local newspapers. Obviously, there must be many more not smashed nor reported.
Sex work is a controversial feminist topic, and the debate is divided into two diametrically
opposing camps: prostitution as exploitation versus sex work as liberation.45 The key issue,
however, is that the phenomena of trafficking and under-aged prostitution are still quite
widespread in Macau. This is not an acceptable situation in the position one adopts. Since
2006, the US has put Macau in the observed list of countries of not doing enough to combat
trafficking.46 In response the government has announced in September 2007 the setting up of
a committee under the coordination of the Secretary of Security to study and investigate the
situation. This is clearly a form of delay tactics, and more pressure, especially inside the Macau
society, has to be exerted on the Macau government, and probably on the central government
too, if any prospect of improvement is to be forthcoming. 47
The Politics of Informalization
While gender issues have not garnered enough social attention at present in Macau, the
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Asian Labour Law Review 2008
migrant worker issue has generated, arguably, one of the primary impetuses to reform the capitaldominated authoritarian political structure. As demonstrated in the above sections, the basic
form of labour informalization in this small enclave operates along the line of the import and
globalization of labour.
There has been relatively little public display of political dissent. However, the opposition to
the government’s migrant worker policy was the key rallying point for the two consecutive May
Day demonstrations in 2006 and 2007. The latter one caught world attention when a member
of the Macao Police fired five warning shoots at the sky in an essentially peaceful demonstration.
A few short months later, demonstrators on motorcycles took to Macao streets again on the eve
of China’s National Day (30 September 2007) to oppose the authoritarian and intransparent
approach in implementing the new Traffic Law. The most noticeable event in this demonstration
appears to be the appearance of a group of school teachers and social workers holding banners
and placards demanding government actions to fix the problems in Macao’s education and social
welfare systems.
A pattern could be gleaned from these social actions. Initially, the 2006 demonstration
focused mainly on labour issues and were participated in largely by the lower working class.
By now, the issues have been broadened to encompass issues that touch on the integrity of the
government and its capacity to provide coherent and efficient government functions. Participation
in these demonstrations is no longer confined to the working class hurt by the migrant worker
policy, but includes common people, and a segment of the middle class. These actions have
apparently broken the myth that the Macao people are politically apathetic. They demanded that
their voices be heard in the governance process.
These mobilizations have generated disruptive pressure on the pattern of rule in Macau.
Firstly, the concessions46 made by the government to the organizers before the demonstrations
could be interpreted as a slight to the pro-government social groups. For instance, Ms. Kwan
Tsui Hang, the most outspoken Legislative Assembly member from the MFTU, had demanded
for a number of years to review the investment immigration scheme, but to no avail. However,
the government included in the concession package an immediate suspension of the scheme just
before the May 2007 demonstration.48 It not only calls into question the effectiveness of social
organizations working inside the government system, but also gives rise to a perception that the
government would only listen if people are on the street. Secondly, these pro-government social
groups are expected to help stabilize the government’s social base, in particular to deter and
to dissolve social challenges to the regime. The demonstrations raise the spectre that they may
not be able to contain social oppositions, and indirectly threatens the monopoly position the
government had given them since the 1999 transition. In the wake of the 2006 and 2007 May
Day demonstrations, these pro-government social groups have faced unfriendly comments of their
losing touch with the people,49 and calls were made for them to rejuvenate the link with their
constituencies.50 The MFTU would surely find this an unfair criticism, and largely an attempt to
scapegoat them for all the policy errors the government had committed.
Recognizing the government has made concessions to the opposition, one needs to put these
concessions into perspective. As Au Kam San presciently commented, none of them directly
threatened the elite’s core interests, namely the control of land sales, and the import of migrant
workers.51 Migrant labour has saved Macau employers millions of dollar every month.52 There is
simply too much resistance from vested interests to allow it to be changed. Even if changes have
been promised, there simply is not the political determination to implement them. For instance,
the government promised in the annual policy speech of the Chief Executive at the end of 2005,
Macau
71
to impose a foreign workers levy in 2006. This levy was envisaged as a means to raise the cost, and
thus reduce the incentives, of employing foreign workers. The money collected would be put into
a fund used for the retraining of local workers. Despite all the fanfare associated with this policy
initiative, the government has not produced a credible plan that could prevent the burden of this
levy from being transferred to the migrant workers through reduced salaries. Worse still, there has
been a lot of procrastination and foot dragging, and the foreign worker levy is still only a promise
on paper three years later. 53
After the 2006 May Day demonstration, the government has also promised to increase the
transparency of the migrant worker system by submitting to the Legislative Assembly a Law
governing the import of migrant workers.54 In August 2006, the government announced a draft
bill and a government regulation relating to the import of migrant workers. The draft bill put
down the general principle, while the regulation lay out detailed regulation. Critics pointed
out that this arrangement is a way to circumvent legislative oversight because only the former
would require Legislative Assembly discussion and endorsement.55 The draft law and regulation
on migrant workers are said to be an attempt to improve the existing system by codification of a
number of existing practices. Following their predecessor decree laws (12/GM/88, 49/GM/88),
they endorse priority of employment opportunities being given to local people, make provisions
for charging a foreign workers levy, and impose fines and penalties if the stipulations are violated.
However, they have not been able to satisfy the concerns of the labour groups. There were very
few new initiatives; many stipulations in the draft represent merely the writing into law in vague
terms various verbal commitments already made by government officials. Concrete protection
measures demanded by labour groups such as an overall import quota, occupational restrictions,
minimum wages, and various measures to prevent employers from firing local workers over
preference for migrant workers, have not been incorporated into the law/regulation.
The government undertook some consultations of the two draft legislations. These
consultations, however, took place mainly in closed circles. There was also fear that they would
follow earlier versions to be shelved when public pressure died down. However, just before the
2007 May Day demonstration, the government again promised to submit them to the Legislative
Assembly for consideration before June 2007. Eventually, the new Labour Relations Law was sent
to the Legislative Assembly in late 2007, and the government claimed that the Migrant Worker
Law would follow once the Labour Relations Law finished the process of legislation.
Conclusion
The conflicts endemic in the migrant worker system symbolizes an important aspect of
Macao’s politics. The authoritarian regime cocoons itself in a dense network of incorporated social
groups glued together by a web of interests and power. Oppositions are neutralized by making
selective concessions. Some times, oppositions are stridently made by groups that merely aim
to win a chance of being invited to join the incorporation. Under this pattern of politics, social
groups could become an obstacle to transparency and accountability. The newly sprung up labour
groups are facing this challenge too. If these groups cannot maintain their effective autonomy
and cannot sustain a social critique on the political elite, they could turn Macao’s undemocratic
politics even to be more irrational and monolithic. The most urgent task at this moment appears
to be the democratization of organizations and the associated incorporated networks.
This democratization process could have major impact on the politics of informalization.
Informalization takes place unevenly plaguing labour sectors with weak bargaining power. The
card dealers in Macau’s casino have demonstrated that job security and decent wages can be
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Asian Labour Law Review 2008
attained if they can coalesce into a powerful political force. The task ahead for the labour sector in
Macau is to expand this power across the board to prevent the casino workers from being isolated
and confined as a labour elite. The existing pattern of politically-mediated and top-down labour
unionism has so far proven unable to achieve this mission. A more autonomous and grass-root
oriented labour unionism has to be explored.
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Endnotes
1.
2.
3.
4.
5.
6.
7.
8.
9.
Shortly after, a further three so-called ‘sub-licences’ were added. The six casino operators are: Stanley Ho’s SJM,
Galaxy, Venetian, Wynn, Melco PBL, MGM Grand Paradise.
The ending of the monopoly related to a number of reasons, including the economic recession sweeping the
region in the wake of the Asian Financial Crisis, the poor services provided by the monopoly holder, and the
political transition taking place at that moment. A good account of the transition is yet to be written. However,
Pina-Cabral (2002) and Eadington and Siu (2007) offer good glances of that period.
Cremer (1991), p. 201.
Edmund Ho is the son of the well-known Chinese leader Ho Yin. For the 123 incident (‘123’ stands for 3
December) was sparked over the construction of a school by pro-China groups in Taipa. For more on the 123
incident and the subsequent rise of the pro-China social groups in Macau politics, see Dicks (1984), Lo (1995),
Lóu Shèng Huá (2004: 111), Fernandes (2007). The colonial government forcefully stopped the construction
claiming that it was illegal because the appropriate licence had not been obtained. Eventually, the incident
spread to become a major anti-colonial movement. The colonial government was defeated and conceded to
have made the mistake of suppressing the people. One of the conditions agreed by the colonial regime was to
expel the pro-Taiwan forces from Macau. Since then, the pro-China social groups have indisputably become
the dominant force in Macau politics.
Putten (2004), Sousa (2002), p. 166, Yee (2005), p. 241.
Jornal Do Cidadao, 24 August 2007.
Jiāng Xùn, ‘Tòu shì zhōng guó: ào mén guāng xiān debèi hòu’ (http://news.bbc.co.uk/go/pr/fr/-/chinese/
trad/hi/newsid_7160000/newsid_7165400/7165442.stm, accessed 22 January 2008) The same story reports
that neighbouring countries have a lower Gini co-efficient: mainland China (0.447), South Korea (0.316),
Singapore (0.425).
Statistics and Census Services, Employment Survey, 2000-2006.
Labour Affairs Bureau figure, http://www.dsal.gov.mo/pdf/work/chinese/2_EmpEdu_a.pdf (accessed 22
January 2008).
74
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
Asian Labour Law Review 2008
See information from Labour Service Bureau website (http://www.dsal.gov.mo/pdf/work/chinese/
10_ImpWkCAM.pdf, accessed 22 January 2008)
The average monthly wages for the local workers in the Manufacturing, Hotels and Restaurants, Security Guard
Services and Gambling Industries are respectively MOP4,023, MOP5,169, MOP4,353, MOP6,178. The
same figures for the migrant workers are: MOP3,190, MOP4,378, MOP4,206, MOP5,434. See Statistics and
Census Service, Manpower Needs and Wages Survey, various industries.
In 2006, the percentages of migrant workers from China, Hong Kong, the Philippines, Malaysia and Thailand
are respectively 57.76%, 18.9%, 11.33%, 1.19% and 1.06%. See Labour Affairs Bureau website (http://www.
dsal.gov.mo/pdf/work/chinese/10_ImpWkNation.pdf, accessed 22 January 2008).
See Labour Services Bureau statistics (http://www.dsal.gov.mo/pdf/work/chinese/10_ImpWkNation_M.pdf,
accessed 22 January 2007).
The other labour laws are: 1) Decree Law 52/95/M on gender equality in the workplace outlaws various
discriminatory practices. 2) Decree Law 40/95/M provides compensations on industrial accidents and
occupational diseases; 3) Decree Law 9/2003 regulates the process the court system handling labour disputes
and the adjudication of compensations on industrial accidents and occupational diseases; 4) Decree Law 58/93/
M provides various social security measures including unemployment insurance, disability allowance, and
retirement pension.
See Article 38-42, Labour Relations Law. The prohibition of housework for children under 16 is probably an
attempt to outlaw the traditional practice of keeping mui tsai (girl servants) at home.
To be qualified for this benefit, workers must be ’involuntary unemployed‘ and have worked 9 months in the
previous 12 months. Once the 90 days of benefit have been exhausted, the unemployed worker has to wait for
one year before he or she is qualified again. See Social Welfare Institute website (http://www.fss.gov.mo/chn/
fssmainset.htm, accessed 25 January 2007).
Social Security Fund website (http://www.fss.gov.mo/chn/fssmainset.htm, accessed 25 January 2007).
The maximum compensation for Hong Kong workers is HK$1.75 million (Jornal Do Cidadao, 31 December
2005).
See Article 47 of the Labour Relations Law (24/89/M). The level of compensation varies with length of service.
Workers completed one year of service are entitled to seven days of wages. Workers completed 10 years or more
of service are entitled to 20 days of wage for each year of service.
Article 45a of the Labour Relations Law stipulates that participating in a union does not constitute sufficient
reason for dismissal.
Macao Daily, 14 November 2007; Jornal Va Kio, 30 December 2007.
The author carried out a search on the keyword ‘labour strike’ over the year 2007 in the database Wisenews,
which contains most of the Macau newspapers. The search produced nothing.
The lack of protection of the rights to organize is a key complaint from the US and the International Trade
Union Confederation. See the US Department of State's Country Reports on Human Rights Practices – 2006:
Macau (http://hongkong.usconsulate.gov/usmo_hr_2007030601.html, accessed 9 January 2008), and ITUC's
International Recognized Core Labour Standards in Macao, S.A.R. – Report for the WTO General Counil Review of
Trade Policies of Macao (http://www.ihlo.org/HKM/030507.html, accessed 9 January 2008), and 2007 Annual
Survey of Violations of Trade Union Rights – Macau SAR (China) (http://survey07.ituc-csi.org/getcountry.php?I
DCountry=MAC&IDLang=EN, accessed 9 January 2008).
The Article also excludes civil servants. See below for further discussions.
The authoritarian Salazar regime was overthrown by a revolution in 1973. The post-revolution Portuguese state
promoted decolonization. It was under the control of left-wing governments until the early 1990s. See Maxell
(1995)
See the information published in the Government Printing Bureau (http://cn.io.gov.mo/Priv/categories/9.aspx,
accessed 27 January 2008).
See the 2000 Annual Report of the MFTU, available at the MFTU website (http://www.faom.org.mo/files/
faom27.pdf, accessed 27 January 2008).
See the 2007 Annual Report of the MFTU, available at the MFTU website (http://www.faom.org.mo/files/
faom31.pdf, accessed 27 January 2008).
See Endnote 3.
MFTU was given representation in almost all of government consultative committees. For a complete list, see
MFTU website (http://www.faom.org.mo/?mod=page&pid=1154658745, accessed 27 January 2008).
Macau
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
75
See ATFPM website (http://www.atfpm.org.mo/eng/about/main.asp, accessed 27 January 2008).
There are a number of studies on the migrant labour issues in Macau. See Chén Shŏuxìn 1999, 2003, Xŭ
Qiūyún 2003, Zhào Lǚping 1998, Cài Xìngqiáng 2004, 2005, Choi 2005.
Jornal Va Kio, 13 June 2007.
Breitung 2004: 22, Macao Daily, 1 January 2008.
Jornal Do Cidadao, 15 July 2007.
The total number of croupiers and their average wage level are found in Statistics and Census Service,
Manpower Needs and Wages Survey – Gambling Industries, 2nd Quarter 2007. Median wage level during the
same period was MOP7,708. (http://www.dsec.gov.mo/index.asp?src=/chinese/indicator/c_ie_indicator.html,
accessed 31 January 2008).
There has been a long-running battle between croupiers and Stanley Ho on overtime compensation. This boiled
down to a contest over whether or not the definition of wages should include tips. Macau’s Court of Final
Appeal handed down a decision in late 2007 ruling tips could not be considered wages, not withstanding two
lower courts having ruled otherwise. The croupiers and their supporting Legislative Assembly members are
pressing for a revision of the Labour Relations Law to define tips as wage. See Macao Daily 11 October 2007,
Cheng Pao, 11 October 2007.
The Secretary of Economy and Finance, Tam Pak Yuen, reiterated this policy in the debate of his policy
statement in the Legislative Assembly. See Jornal Do Cidadao (23 November 2007).
The other sector of similar situation is bus drivers. After the bus driver union threatened drastic labour action,
the government decided to turn down the application by a public transit company to import migrant bus
drivers in early 2007 (Macao Daily 29 January 2007).
See its constitution, published in its website (http://www.macauwomen.org.mo/rules/index.htm, accessed 29
January 2009).
Cheng Pao, 11 July 2006; Jornal Do Cidadao, 8 January 2007.
Labour Affairs Bureau figure, see http://www.dsal.gov.mo/pdf/work/chinese/5_PartiSex_a.pdf (accessed 31
January 2008).
Macao Daily, 20 December 2007.
This section is taken from Choi (2007).
Kong (2006).
See the US report on trafficking in Macau: http://gvnet.com/humantrafficking/Macau-2.htm (accessed 9
January 2008). See also Macao Daily (6 November 2007).
On January 2008, the police prosecuted a Vietnamese woman, for the first time in Macau history, on charges
of human trafficking. See Cheng Pao (18 January 2008).
This scheme fuelled property prices, and increased the difficulties for low-medium families of home-ownership.
See http://www.updmo.org/index.php?mod=page&pid=1169109195 (accessed 20 May 2007).
Of course, this kind of challenge is fiercely denied. Personal communication with Kwan Tsui Hang, 5 May
2007.
Macao Daily, 22 August 2007.
Personal communication, Au Kam San, 8 October 2007.
A crude estimation could be made in this way: assuming that each migrant worker could save the employer
MOP700 per month, the total amount saved at the 2006 level of migrant worker import is MOP45 million per
month, and MOP540 million per year. This has not yet included the surplus value these workers could have
produced.
Jornal Va Kio, 23 April 2007.
The importation of migrant workers is governed by two separate decree laws, 12/GM/88 and 49/GM/88,
respectively for unskilled and skilled workers. But these two laws, established 20 years ago, are said to be
inadequate and outdated to meet the present need of the society.
See the opinion of the New Macau Society on the drafts, http://newmacau.org/mainbody.php?inner=es/
laborlaw (accessed 20 May 2007).
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Asian Labour Law Review 2008
Mongolia
77
Mongolia
Informal Labour in Mongolia
B. Batkhishig
A
fter the people’s revolution in 1921, the Mongolian government began a process of
developing totally new labour relations in the history of Mongolia in order to respect and
protect the rights of the working class and eliminate feudalism which was the dominant system in
Mongolia for centuries. The working class did not recognize itself as a class in Mongolia prior to
the people’s socialist revolution of 1921 and therefore there were no legal grounds for adopting
specific laws and regulations dealing with the labour relations at that time.1 Since 1921 the
Mongolian government has adopted various laws regulating labour relations in the country. Such
laws were adopted and enacted in 1925, 1930, 1933, 1934, 1941, 1973 and 1991. The current
Labour Law of Mongolia was adopted in 1999 and since then the law has been significantly
improved. The labour laws of 1991 and 1999 are considered to be the laws of the transitional
period.
Since the 1990s the term ‘informal economy’ or ‘informal labour’ has entered the labour
relations of Mongolia and the number of people involved in the informal labour relations has
been rapidly increasing, creating serious difficulties in the overall labour relations in Mongolia.
The above-mentioned labour law does not regulate the informal labour relations. Therefore the
Mongolian government has been taking serious measures in successful dealing with the informal
economy in order to create a favorable legal environment for protecting the rights of the people
involved in the informal sector of economy and, more importantly, to reverse it to formal labour
relations.
1. Contemporary Snapshot
Mongolia made a peaceful revolutionary transition from a totalitarian system based on central
planning and state-owned economy towards democracy and free market economy. The
incapability of the private sector of the economy to fully bear the new challenges of economic
and social burdens in the beginning of the transition period was the main factor bringing into
existence the informal labour relations in Mongolia. And since that time, the so-called informal
sector of economy or informal labour has played a significant role in increasing profits and
creating new jobs in Mongolia. In other words, the informal labour has largely contributed
to reduction of unemployment and increased economic growth.2 Besides the government
organizations and private corporations, individuals also become owner-employers in the informal
sector of economy.
Although the wage system of the informal labour sector greatly differs from its formal
counterpart and has no solid guarantees, the people involved in this sector usually work towards
meeting their basic needs. Moreover the informal sector has begun to attract foreign workforce
establishing business partnerships, which indicates that the informal sector has been more
globalized and has significantly contributed to its growth.
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Asian Labour Law Review 2008
When compared to the countries of the Asian and Pacific Region, the Mongolian economy
and its Gross Domestic Product (GDP) statistics reveal a relatively high level of growth. In 2001
GDP of Mongolia was 3.0 per cent, in 2006 it equaled with 8.6 per cent.3 Also, according to the
‘Employment Data 2006’ of the National Statistical Office, the unemployment rate was reduced
from 3.5 per cent in 2003 to 3.2 per cent in 2006. This seems to demonstrate that Mongolia
has been relatively successful in reducing official unemployment and poverty; however, the rates
of poverty and unemployment have actually not gone down since 2003. According to standard
international methodology, unemployed persons are those segments of the population of the
working age who are currently not working in a paid or self-employed position, are actively
looking for a job and are willing to work. In contrast, according to the Mongolian government,
the unemployment rate is measured by unemployed people registered in the Central Employment
Office. By this definition, thousands of non-registered unemployed people are not considered
unemployed, so if they were included, the numbers of unemployed would be far higher.
On the other hand, the labour market of Mongolia is becoming more and more two-sided,
which means that one part of the population is able to enjoy decent work conditions with high
wages, while the rest have no choice but to work in hazardous and unprotected environments to
make ends meet. 4 This is a very dangerous situation.
Labour Force and Employment
Since the adoption of the Labour Law of Mongolia in 1991, more than 30 articles of this law
have been amended in order to regulate the mutual labour relations between an employer and
an employee on the basis of the labour agreement or contract. According to the Labour Law,
citizens aged from 16 to 60 years of age are considered to be the economically active population.
A National Statistical Office (NSO) study done in 2006 reveals the labour force statistics as
following:
Table 1. Employment Data
For the General Population
(Unit: thousands)
Indicators 2003
2004
2005
2006
Population of working age
1,488.9
1,531.1
1,577.0
1,619.6
Economically active population 956.8
986.1
1,001.2
1,004.8
Of which:
Employed
926.5
950.5
968.3
1,009.9
Registered unemployed
33.3
35.6
32.9
32.9
Labour force participation rate, %
64.5
64.4
63.5
64.6
Employment to population rate %
62.2
62.1
61.4
62.4
Unemployment rate, %
3.5
3.6
3.3
3.2
79
Mongolia
(Unit: thousands)
For the Female Portion of the General Population
Indicators 2003
2004
2005
2006
Population of working age 765.4
790.3
815.3
835.2
Economically active population
475.8
503.0
507.3
536.8
Of which:
Employed
457.7
483.4
489.0
518.1
Registered unemployed
18.1
19.6
18.3
18.8
Labour force participation rate , %
62.2
63.6
62.2
64.3
Employment to population rate, %
59.8
61.2
60.0
62.0
Unemployment rate, %
3.8
3.9
3.6
3.5
Source: National Statistical Office, 2006
Note: Population working by contracts in foreign countries and Ministry of Foreign Affairs missions were excluded.
According to 2006 statistics, more than half of the workforce (53%) were involved in the
informal sector of the economy, the vast majority of which (92%) worked in agricultural sector
in rural areas. In recent years there has been a tendency toward reduction in the overall share of
the agricultural sector of Mongolia, which in turn leads to shrinking of the informal labour as a
whole. At the same time, informality is rising among salaried workers. (See Figure 1.) According
to the Selective Study of the Labour Force in 2004, 126,000 people worked on two jobs, which is
14.6 per cent of the total economically active population, 44.8 per cent of whom were women.5
The main reason for being employed in two or more jobs for this category of people is a very low
level of wages in Mongolia, inadequate to meet even the basic needs. Although the minimum
wage rate is renewed by the government twice a year, the employee’s right to receive an adequate
wage has not yet been respected.
Figure 1. Overall informality is decreasing but
informality among salaried workers is on the rise
(Informality rates, %)
70
60
50
40
30
20
10
0
60 53
12
19
In total In wage
In total
In wage
employment
employment
employment
employment
2002
2006
Source: Government of Mongolia, Living Standards Measurement Survey (2002), cited in The World Bank (2007)
Mongolia: Building The Skills For The New Economy, June (Report 40118).
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Asian Labour Law Review 2008
Informal Labour in Mongolia
One of the peculiarities of the informal labour is that the worker has an opportunity to determine
by himself/herself the wages, working hours, resting hours, etc. The informal sector workforce of
Mongolia can be categorized into the following groups: owner-employers of micro-enterprises,
which employ a few paid workers, with or without apprentices; own-account workers, who own
and operate one-person businesses, who work alone or with the help of unpaid workers, generally
family members and apprentices; and dependent workers, paid or unpaid, including wage workers
in micro-enterprises, unpaid family workers, apprentices, contract labour, home-workers and
paid domestic workers, such as livestock breeding, illegal hand mining on a small scale, sex work,
baby-sitter work and other household works. The most noteworthy groups in the informal labour
are livestock breeding, sex work and mining. Since 1999 the number of herders has decreased and
in 2006 there were 364,400 of them, but the number of rich livestock breeders increased.6 This
phenomenon may be explained by reducing the overall share of the agriculture, severe weather
conditions, desertification, and pasture deficiency, and leads to increase of the number of livestock
per household. Therefore a huge number of rural people migrated to the urban areas, filling the
army of the informal sector of the economy.
In 2000-2001 Mongolian herders suffered huge losses of livestock due to severe unusual
weather conditions, triggering the bankrupt herders to make their living by working in the illegal
mining sector, which is available in almost every region of Mongolia. According to the survey
undertaken by the Mongolian Business Development Agency and Eco Minex, about 100,000
people are involved in illegal gold mining, 40 per cent of whom work all year round without
adequate working conditions, safety and insurance. 7
Besides the people directly involved in sex work, there are many other categories of citizens
indirectly involved in this field of illegal business, such as night club dancers, massagers in saunas,
etc. But serious studies on the issue of determining physical and emotional conditions, social
protection and the number of people involved in sex work have not been undertaken by the
government nor by foreign states. Women's share of informal sector employment has remained
high. However, women most probably number much more than reflected in available statistics.
They comprise most of the unpaid family helpers and home-based workers, and thus fall easily
through gaps in enumeration. Productive but unpaid work is often compounded with household
work. In many cases, women themselves do not view themselves as workers. The typical hazardous
working conditions of informal work seriously affect women’s health; moreover there is a huge
threat to their reproduction abilities.
But interestingly, some women involved in informal labour have various advantages over
those women working in formal sector, which includes proper satisfaction of their physiological
needs, the possibility of managing their vacation without any risk of losing their jobs, and having
more time to spend with their children after birth.
Both informal and formal sectors of the Mongolian economy violate the register of jobs
prohibited for women to perform by the Labour Law of Mongolia, such as restriction on night
and overtime work and assigned trips for women having children, reduction of hours of work
of pregnant women and mothers, their transfer to other work, limitation on loads handled by
women, etc.
The widespread strategy of subcontracting production and services to family enterprises and
home-based labour has contributed to the further integration of women's home-based labour into
Mongolia
81
the formal production system under informal, flexible employment arrangements. Self-employed
workers, most of whom are own-account and unpaid family workers are considered the major
component of the rural and urban informal sector.
As shown in a study on informal work, the divorce rate among families working in the
informal sector is much higher, almost twice as much as their formal sector counterparts.8 In
some respects, this phenomenon can be explained by the peculiar features of the informal labour,
including unjust share of the resources.
As in the formal sector, in contrast to their male counterparts, women workers tend to be
concentrated in a narrower range of activities or occupations (common stereotyped activities are
food processing, garment sewing, domestic services), in tasks that require less or no skills and pay
less, and in the lower-end of the markets. Moreover, in addition to constraints faced by workers
and producers in the informal sector with regards to assets, markets, services and regulatory
frameworks, women face additional gender-specific barriers (e.g. restrictions on entering into
contracts, insecure land and property rights, and household and childcare responsibilities).
Working all year round in hazardous, unfriendly conditions affects not only women’s health,
but their temperament. For instance, 47 per cent of women working in trade business such as
sellers on the black market place or shop assistants admitted that they became too nervous, 25 per
cent of them became able to quarrel and swear and, moreover, 15 per cent of the women became
able to fight and brawl, which led to losing some profits and resources. Furthermore, 30 per
cent of women who work in the black market as informal workers are constantly suffering from
cough and cold, 23 per cent have chronic kidney problems and eight per cent of them suffer from
various other diseases due to poor working conditions. 9
Box 1. The female seller S. on Narantuul international marketplace, 45 years
of age
‘I have been working here for the last five years, all year round regardless of the weather
conditions. In the hot summer time I usually suffer from headaches and high blood
pressure; but in the cold winter times I suffer from chronic sore throat and other serious
diseases. Also I don’t have my lunch on time. Since my employment here, my character
has become nervous and unstable. I even often quarrel with my husband and children,
pouring on them my negative energy.’
Source: ‘Last Vision Center’ and ‘Young Women Leader Club’ (2004) Study of Labour
Conditions of the Women Working In the ‘Narantuul’ International Marketplace.
In recent years Mongolian citizens have had the opportunity to live and work in foreign
countries. During the period from 1990 until 2003, 5 per cent of the Mongolian population,
or 120,000 people, have migrated to foreign lands to make their living. Most of them migrated
to the US, Japan, Germany, Thailand, Czech Republic and especially South Korea. From 1994,
Mongolians began to work in the Republic of Korea. At present over 29,000 people are working
there, 60 per cent of who work on a legal basis, while others work illegally. The Mongolian
citizens working in foreign countries face very many challenges such as poor working and safety
conditions, inadequate health care and other kinds of discriminations.
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Asian Labour Law Review 2008
Box 2. Mongolian Labour Unions protect the rights of the employees of the
formal sector of economy
Labour Unions have the legal environment to protect only the rights of the employees
in the formal sector of economy. The Mongolian Labour Union (MLU) consolidates
35 different small labour unions divided according to specific fields of occupation,
which include 22 regional labour unions. MLU consists of 2,037 local units and its
membership approaches nearly 209,000 supporters which make up more than 20 per
cent of the economically active population over the age of 15.
However MLU has failed to adequately protect the rights and interests of the working
class. Although Mongolian workers have organized a few strikes on a legal basis in order
to protect their own interests, as a rule, they do not reach the desired results. But in
September 2007, miners of the Shivee-Ovoo coal mine finally succeeded in reaching the
desired results of the strike, which was the biggest strike ever organized in Mongolia.
Their clams were to improve working conditions and increase their wages.
Employees of informal labour have begun to establish different NGOs
Recently the representatives of the informal sector of economy have begun organizing
different NGOs aimed to protect the rights and interests of this sector, such as taxi
drivers, microbus drivers, etc. Trade unions serve only formal employees whom have
official labour contracts, not informal workers; for this reason this step taken by
informal workers clearly demonstrates that, in fact, informal workers have no authorized
way to do this in current difficult situation.
2. Labour Law and the Informal Sector of Economy
As the development of the informal labour shows, it is obvious that it fills the niches and gaps left
by the formal sector of economy and is more flexible and adaptable to market changes as well as
the formal labour cannot offer enough jobs to the population. As we can see, the world economy
is getting more and more flexible and informal labour-oriented, due to various reasons.
Mongolia still has not adopted any laws and regulations dealing with the informal labour.
The Labour Law defines that a contract of employment should represent mutually accepted
agreement whereby on the one hand a worker undertakes to strictly observe the internal labour
regulations and to perform a work in definite trade, specialty and position; on the other hand
an administration undertakes to pay labour wages and ensure working conditions in accordance
with the legislation of Mongolia and the Collective Agreement as well as the accord reached with
the worker himself. But in the informal labour there is no understanding such as ‘internal labour
regulations’.
We would like to emphasize again that the conditions of work in the informal sector of
economy have violated the rights and interests of its employees, especially the female ones. Besides
the legal protections for working women which were mentioned in the previous section, also
under the law, pregnant women, mothers having children of 1-8 years of age, and single mothers
with children under 16 shall not perform night or overtime work or make assigned trips only on
Mongolia
83
their own consent; mothers must be granted baby care leave; dismissal of pregnant women and
nursing mothers are prohibited; overtime work payments should be given; and all women should
be covered by any legal insurance programmes, such as social and health insurance programmes
leading to obtaining the pension after retirement; etc.11 Yet these laws are frequently violated
when the female worker is not working in the formal sector.
Moreover, there is no legal term or understanding of a ‘job position’ in the informal labour.
This leads to violations by the employers of their obligation to guard workers against industrial
accidents and occupational diseases, to ensure safe and healthy conditions of work, etc. In other
words, the employees of the informal sector of economy do not enjoy any rights provided by
the labour law of Mongolia, which is the direct negative consequence of the primitive legal
environment on this issue.
The so-called temporary or provisional labour contract is one of the main aspects defining the
flexibility of businesses, but it fails to be applied in a correct way, thus turning formal ‘wage
employment’ into informal labour, seriously affecting the employees.
The temporary or provisional labour contract is regulated by the civil code, not by the labour
law. In order to avoid high social insurance payments, the employers commonly practice signing
temporary labour contracts. Therefore, such employees are not able to enjoy all benefits provided
by the labour law such as payment of the social insurance, and as a result also cannot obtain
adequate pensions in the future. According to some sources, an enormous migration from the
rural area has played a major role in the increase of the informal labour in Mongolia.
Especially, in 2000-2001, drought and ‘zud’ (harsh winter) influenced the employment pattern
of many herdsmen, who occupied almost 50 per cent of the total labour force of Mongolia.12
Currently, 60.8 per cent of the population of Mongolia lives in a city or other settlement and
almost 62.9 per cent of this settled population live in Ulaanbaatar.13
According to the Labour Law, there is a practice of dismissing an employee after six months of
probation period. These persons, as well as the employees with temporary or provisional labour
contracts, have been greatly contributing to ‘informalization of labour’ and are not able to enjoy
all the benefits provided by the Labour Law. This tendency of informalization of labour is widely
practiced in the foreign-invested garment industry. There have not been undertaken any proper
surveys on this issue yet. It is definitely one of the most important matters to be resolved.
As we have mentioned, temporary or provisional labour contracts must be one of the main
aspects of the labour system, but it needs tough regulations and control, such as respecting the
rights of the employees to enjoy the social protection mechanisms.
Beginning this year the social insurance taxes paid by the employers have been reduced.
Obviously, this reduction of the social insurance taxes for the benefit of the employer will
significantly reduce the level of informal labour in Mongolia. Previously, the rate of the social
insurance taxes paid by employers was very high. The employers would want to avoid the high
taxes and had no interest in creating new job places or increasing salaries. This situation had the
effect of increasing the level of informalization.
In the following section we will be discussing the mechanisms to reduce informalization of labour
in Mongolia.
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Asian Labour Law Review 2008
3. Measures to Be Undertaken to Reduce Informalization of Labour
Mongolia has faced many challenges since the transition from central planning economy towards
market economy, such as resolving completely new problems in social and economical relations
in order to establish legal environment to protect the human rights of the population. One
of the vulnerable issues is the informalization of labour. Although this issue has not any legal
grounds yet, the Mongolian government has defined its policy on regulating the informal sector
of economy. This ‘Policy of the Government of Mongolia on the Informal Economy’, which
was declared in 2006, outlines: ‘Although, informal labour is not prohibited, it includes all
unregistered and undeclared non-agricultural economic entities, uncovered by social insurance’.
As we can see, agricultural economic entities, which are the main source of informal labour in
Mongolia, are excluded. It leads to neglecting the rights of the employees of this sector. The
proper changes need to be made.
The main objective of the government’s policy is to formalize the informal labour by establishing
adequate legal, economic and social environments to regulate and protect the rights and interests
of the employees of the informal labour from various risks, to create favorable conditions for
economic growth.
There are no organizations or unions protecting the rights of the informal labourers in Mongolia.
Just recently, some groups of informal labour representatives such as taxi drivers, street
photographers, bus drivers, etc. have consolidated into non-governmental organizations. The state
should undertake appropriate steps to support their actions. According to the Law on the Rights
of Mongolian Trade Unions, the trade unions and its federations shall be established according
to either a type of profession or industry, and conduct its activities in accordance with the law.
Though, the existing law admits establishment of many kinds of trade unions, eventually, only
the rights of the formal employees are protected by these trade unions. Currently, Mongolia has
totally 35 trade unions. As of September 2008, CMTU has 209.2 thousand (60 per cent female)
members, 13 affiliated industrial and professional federations and 22 provincial unions. Affiliated
unions are: the energy, geology and mining workers’ union, public employees’ union, railway
workers’ union, construction workers’ union, agricultural and food workers’ union, transport,
communication and petroleum workers’ union, industrial workers’ union, health employees’
union, private sector workers’ union, road construction workers’ union, trade and service workers’
union and education and scientific employees’ union. In total, 1,955 trade union committees
belong to these provincial and branch trade unions. Also, the Labour Law of Mongolia provides
the rights of the formal workers, who work in the official organizations. It is needed to emphasize
that the rights of the informal workers have been neglected and lack legal protection.
The following measures should be undertaken to successfully resolve the issue of informal labour:
Measures to be undertaken on the state level to resolve informal labour:
1.
2.
3.
4.
5.
6.
7.
To reduce any hardships and obstacles exerted on the informal labourers;
To establish mechanisms of guaranteed social protection of the workers;
To create equal conditions in providing different kinds of services for the workers;
To promote formalization of labour by creating favorable economic and other conditions;
To make an easy access for obtaining credits on favorable terms;
To protect property and assets of the informal labourers from risks;
To promote informal labour by favorable tax policy for their contribution in creating new
jobs;
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Mongolia
8. To undertake measures to officially include informal sector of economy in the national
statistical registration and perform studies and surveys on the gender situation in the
informal labour and improve analysis methodology of the sector;
9. To create opportunities for cooperating with the related state and other economic entities
and organizations. To promote and support informal labour groups in organizing unions for
protecting their rights and interests.
10. To introduce a management programme to improve working conditions of the workers of
the informal sector with the support of the International Labour Organization;
11. To promote and explain to informal labour employees the significance and advantages of
being covered by the social and health insurance programmes.
12. To join international conventions and agreements on dealing with informal labour.
Measures to be undertaken regarding legal regulation:
The necessary condition for successful implementation of the above-mentioned objectives is
establishing an adequate legal environment concerning informal labour in Mongolia.
1. To create legal regulations to protect the rights and interests of the informal labour
employees and, in case of violations, establish mechanisms of proper restoring their rights;
2. To establish favorable conditions for the workers of the informal labour to be covered by
social and health insurance programmes, by creating adequate legal environment;
3. To establish favorable conditions for the workers of the informal labour to be involved in
social welfare and pensions programmes, by creating an adequate legal environment;
4. To amend the related labour laws and regulations in order to establish a tripartite
agreements, national committees and councils to reach a consensus on the issue of social
protection of informal economy representatives;
5. To harmonize national laws and regulations with international standards.
6. To harmonize national laws and regulations regarding a procedure of dealing with industrial
accidents of informal workers, because this procedure has not been clarified.
Finally, it is not enough just to create an adequate legal environment for regulating the informal
economy. At the same time it is obvious that a proper mechanism of control is vitally needed,
because any implementation process in Mongolia lacks adequate control measures.
ENDNOTES
1.
2.
3.
4.
5.
6.
Baasan, L. (2000) Labour Law, Ulaanbaatar.
Shi. Batbayar, Ministry of Labour and Social Welfare (2002), Opening Speech at the national conference on
Informal Economy and Development of Small and Medium-sized Businesses.
Government of Mongolia. National Statistical Office (2007) Study Comparing the Basic Economic and Social
Indicators of Mongolia With International Standards.
UNDP and Government of Mongolia, (2007) Report on Human Development in Mongolia.
Government of Mongolia. National Statistical Office (2003) Selective Study on the Labour Force in Mongolia.
Human Development Sector Unit, East Asia and Pacific Region, The World Bank (2007) Mongolia: Building
The Skills For The New Economy, June (Report 40118).
86
7.
8.
9.
10.
11.
12.
13.
14.
Asian Labour Law Review 2008
Government of Mongolia. National Statistical Office, (2006) Informal Gold Mining in Mongolia, Baseline
Survey Covering Bornuur and Zaamar, Tuv Aimag.
Government of Mongolia. National Statistical Office (2005) Report on the Study on Mongolian Informal Sector
of Economy, Open Society Forum.
‘Last Vision Center’ and ‘Young Women Leader Club’ (2004) Study of Labour Conditions of the Women
Working In the ‘Narantuul’ International Marketplace.
Government of Mongolia. Ministry of Labour and Social Welfare. (2007) Study on Human Rights of the
Mongolian Citizens Working in South Korea, Union of the Small and Medium-sized Business Employees
Working Abroad.
Government of Mongolia. Labour and Welfare Service Agency (2006) Summary of ‘Research on Informal
Workers’.
Government of Mongolia. National Statistical Office (2006) Informal Gold Mining in Mongolia, Baseline Survey
Covering Bornuur and Zaamar, Tuv Aimag.
Government of Mongolia. National Statistical Office (2006) Compilation of Mongolian Statistics.
Confederation of Mongolian Trade Unions website, www.cmtu.mn
References
Morris, Elizabeth (2001) The Informal Sector in Mongolia, International Labour Office.
Human Rights Report of Mongolia (2004, 2006).
Government of Mongolia. Ministry of Labour and Social Welfare (2006) State Policy on Informal Sector.
Taiwan
87
Taiwan
Liu, Wan-Ling
1. Introduction
T
he economic structure of Taiwan (mainly small- and-medium-sized enterprises) and the
labour administration (factory-based union scheme) of the Kuomintang (the Nationalist
Party) have shaped the capacity of the labour movement in Taiwan. Small-scaled and divided
labour used to rely on governmental intervention to confront the exploitation of employers. With
the globalization of the world economy, the state has tried to reduce its role in the mediation
between workers and employer. The government policy has tended to support a more flexible
labour market. The labour movement allied with the opposition political party in the past to
struggle for workers’ rights, but since the opposition party became the ruling party, the liberal
policy has not changed at all. The Taiwan labour movement needs to face new ways of organizing,
including how to ally with migrants and temporary workers.
2. The Labour Law System In Taiwan
Collective Labour Laws
The collective labour laws include Labor Union Law (announced October 1929 and
modified May 1975), Collective Agreement Law (announced October 1930) and the Settlement
of Labor Disputes Law (announced June 1928 and modified June 1988).1 These three laws were
all originally legislated during the 1920s when the Kuomintang was in power in mainland China.
When as a result of civil war the Kuomintang was defeated by the Communist Party in 1949, it
moved its government to Taiwan and kept these three collective labour laws.
The Labor Union Law regulates the registration and structure of trade unions. The law
recognizes two kinds of unions: the industrial union and the craft union. If there are more than
30 workers in the same workplace, they can form an industrial union. Fewer than 30 workers
and the self-employed can join craft unions. In reality, the craft unions are all controlled by the
owners of small businesses. The only function of the craft union for workers is to create a platform
for joining the Labor Insurance—nothing else. Only the industrial unions can exercise collective
labour rights.
Most industrial unions are factory-based, except in state-owned enterprises. And most private
enterprises in Taiwan are small- or medium-sized, so that the scale of the union is usually small.
Before Martial Law was removed in 1987, all the unions had to join the official confederation, the
Chinese Federation of Labor (CFL). Since the mid-1990s, it has been very difficult to establish an
independent union. Until now, the law has dictated that unions in Taiwan are closed-shop union,
i.e. only a single union can be registered in a single workplace.
The Settlement of Labor Disputes Law regulates the mediation of the government in the
settlement of labour disputes. When Martial Law was in effect, the workers’ right to strike was
frozen. At the height of the labour movement during the late 1980s and the early 1990s, strikes
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were frequent but quickly decreased. In recent years, there have been almost none. Since most
unions are small and have little strength, workers usually rely on government intervention and not
collective bargaining power to resolve disputes.
The Collective Agreement Law regulates the Collective Bargaining Agreement (CBA)
between the union and the employer. Again, because a large number of unions lack bargaining
power, a CBA in Taiwan is rare; only a few have succeeded in being concluded. Even the CBAs
that do exist are just repeats of what are already in the labour standards. We can say that most
unionists take little advantage of the CBA; they also rely instead on government intervention,
rather than collective bargaining power, to raise working conditions and workers’ welfare. Only
in recent years have several bank unions tried hard to negotiate a CBA with the employers to
demand job security, confronting the privatization or proposed merger of banks.
Of these three laws, the Labor Union Law and the Settlement of Labor Dispute Law are
the two most familiar to trade unionists. The resolution of a labour dispute can be considered to
have the same binding effect as a CBA, once it has been agreed between the employees and the
employer.
Individual Labour Laws
The Labor Standard Act is the basis of labour laws that regulate individual labour rights.
It was introduced in July 1984 and last modified in December 2002. The chapters of the Labor
Standard Act include labour contracts, working hours, wages, protection of child and female
labour, retirement, compensation for occupational accidents, apprenticeships, work rules, among
others. In the mid-1980s, the independent labour movement in Taiwan was still in its infancy. It
had insufficient strength to push the Taiwan government to legislate this law. The instigation of
this law was the result of pressure from the US government to increase the cost of manpower to
avoid ‘unfair competition’ in the global market from cheap Taiwanese labour.
But once the Labor Standard Act was legislated, it became a tool for trade unionists to
demand workers’ rights. In the late 1980s and the early 1990s, workers asked for back wages,
over-time pay and better annual bonuses. From the mid-1990s to the early 2000s, workers’
campaigns focused on how to get compensations when their bosses moved their factories away
from Taiwan and invested their money abroad. Demanding enforcement of the Labor Standard
Act has been the major role of the Taiwan independent labour movement until the present time.
Another important law for individual labour rights is the Labor Insurance Act (announced
July 1958 and newly modified in January 2003). It has two types of coverage: 1) ordinary injury
insurance, which provides seven kinds of benefits: maternity; injury and sickness; medical care;
disability; unemployment; old-age; and death; and 2) occupational injury insurance, which
provides four kinds of benefits: injury and sickness; medical-care; disability; and death.
3. The Labour Situation in General
Size of the Labour Force in Taiwan
According to statistics from the Council of Labor Affairs (CLA, the labour department),
the population of Taiwan at the end of 2007 totaled 22,821,000, of which 18,392,000 were
civilians aged 15 years and over. The labour force was 10,713,000 of the total population. Of this,
10,294,000 were employed and 419,000 unemployed. According to these statistics, officially,
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Taiwan
96 per cent of the labour force is employed. The percentage of women employees in the labour
market is 43 per cent.
Unemployment
According to the same statistics, the unemployment rate of males is 4.05 per cent and of
females is 3.72 per cent.
We should keep in mind that the official unemployment rate is much lower than the real
situation. At the end of 2007, the total number of jobless affected by closure and bankruptcy
was 130,000, and the long-term jobless, out of work for more than one year, reached its highest
peak at 60,000. Even more numerous are the many jobless people who use their bank savings
to carry on some small business and those who have given up trying to find a job and live on
relatives’ support: they are all excluded from the jobless statistics in perpetuity. This hidden jobless
population – accounted for as ‘unwilling to work’ and ‘free at home’ persons – who according to
official statistics belong to the ‘non-labour force’ category, numbered 960,000 persons at the end
of 2007. In just the one year from 2006 to 2007, the hidden jobless increased by a significant
140,000 persons, indicating that the official unemployment rate is much lower than the real
situation.
Table 1. Unemployment Rate in General by Year
Year
2003
2004
2005
2006
2007
Unemployment rate (%)
4.99
4.44
4.13
3.91
3.91
Source: Directorate-General of Budget, Accounting and Statistics, Executive Yuan
From the table below, we can see that for female employees, a higher education means a
higher unemployment rate. It should be kept in mind that for official statistics, women who
become housewives after marriage are excluded from the definition of the labour force. The
phenomenon of a higher unemployment rate in higher-educated women reflects the existence of
gender discrimination in the society. The higher positions with better pay would be considered to
be a male province; female employees are directed to do the so-called unskilled and service jobs.
Table 2. Unemployment Rate by Educational Attainment and Sex (Unit: %)
Education
Sex
Male
Female
Below junior high school
4.74
2.92
Senior (vocational) school
4.51
4.01
College, university and graduate school
2.98
4.35
Source: Directorate-General of Budget, Accounting and Statistics, Executive Yuan
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Average Wage and Minimum Wage
Table 3. Average Wage and Minimum Wage, 1985-2007
Per cent Minimum Average Percentage
Average Percentage
change from
wage
monthly of change
monthly of change
previous
(NT$) earnings of
from last manufacturing from last
year about industry period (%)
(NT$)
period
general and service
(%)
index
(NT$)
consumers
Avg. 1985
-0.16
6,150
13,991
4.24
12,697
4.30
Avg. 1995
3.67
14,880
35,421
5.14
32,555
5.69
Avg. 2002
-0,20
15,840
41,667
-0.89
38,565
-0.05
Avg. 2003
-0.28
15,840
42,287
1.49
39,583
2.64
Avg. 2004
1.62
15,840
43,021
1.74
40,611
2.60
Avg. 2005
2.31
15,840
43,615
1.38
41,751
2.81
Avg. 2006
0.59
15,840
44,107
1.13
42,293
1.30
Avg. 2007
1.80
17,280
45,112
2.28
43,026
1.73
Source: Council of Labor Affairs
Note: NT$32 = approx. US$1
According to my own experience, factory workers commonly earn about NT$30,000 a
month in the automobile parts or electronics industry. In the textile industry, the wage would
be below NT$25,000 for men and below NT$20,000 for women. The official ‘average wage’
above is arrived at from all the employees in the industry, meaning that the income of managers is
included in it.
Some workers in the service sector earn even less than NT$18,000 a month. And if a
worker’s salary is calculated by hours worked, or deductions are made for reasons such as paying
for uniform, the monthly income can be less than the minimum wage. In the village areas, it is
common to find textile workers (who are mostly female) earning less than the minimum wage,
but they are reluctant to complain about this for fear of losing their jobs.
From 1996 to 2006, the minimum wage was fixed at NT$15,840 in order to keep the
labour supply cheap enough for global competition. It severely affected the income of part-timers,
migrant workers and traditional industry employees because their salary was just on the border of
the minimum wage by law.
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Taiwan
Working Hours
(Unit: hours/month)
Table 4. Working Hours
Average Working Hours Of
Industry And Service Sector
Average Regular Working Hours Of
Industry And Service Sector
Avg. 1985
203.8
194.2
Avg. 1995
194.2
184.5
Avg. 2002
181.4
172.4
Avg. 2003
181.2
172.0
Avg. 2004
183.5
173.5
Avg. 2005
182.0
172.4
Avg. 2006
180.8
171.7
Avg. 2007
180.3
171.2
Source: Directorate-General of Budget, Accounting and Statistics, Executive Yuan
The regular working pattern is eight hours a day and 84 hours in every two weeks. With prior
consent of either the labour union or a majority of the workers in the company, the employer
may transfer regular working hours between weekends and weekdays, known as flexible working
hours, to avoid paying for overtime. The total working time each day, however, must be less than
12 hours, whether it is accounted as overtime or flexible working hours.
Many companies ask employees to give up their overtime payment in the name of
‘responsibility to the work system’. This is very common in the IT industry and also for whitecollar staff. In the advertising industry, the average number of working hours in a day can reach
15 hours, but no one asks for overtime pay! So, we are confident that the data above does not
show the true situation.
The law regulates that there should be at least one day of leave for every seven days; thus the
working week should be no more than six days. The Labor Standard Act does not cover domestic
helpers, so those migrant women, the majority of whom are from Indonesia and the Philippines,
in practice suffer slave-like working conditions, which means ‘24 hours a day and seven days a
week of working’.
Migrant Workers
At the end of 2007, the total number of migrant worker was 357,937. About 51 per cent
of them work for manufacturing industries and 45 per cent for social, personal and related
community services, including providing medical and household support.
Wu Jing-Ru, Secretary General of TIWA (Taiwan International Workers Association), has
pointed out five major problems in Taiwan's migrant labour policy, including the limit imposed
on the length of work, the broker system, the inapplicability of the Labor Standards Law for
domestic helpers, deprivation of rights to form labour unions and to inability to choose their
employers. Wu claims this discriminatory policy has justified the exploitation of migrant workers,
and the NGOs must unite and ask for changes in the policy.
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Asian Labour Law Review 2008
Table 5. Foreign Workers in Taiwan by Industry and Nationality, End of 2007
(Unit: no. of persons)
Total
Agriculture (crewman)
Total Indonesia Malaysia Philippines Thailand Vietnam Mongolia
357,937 115,490
11
84,423
86,948
69,043
22
3,786
2,526
-
736
13
511
-
Manufacturing 183,329
11,286
11
60,744
77,936
33,337
15
59
-
574
7,180
781
-
162,228 101,619
-
24,369
1,819
34,414
7
Construction
Social, personal and
related
community
service
8,594
Source: Council of Labor Affairs
In 2005, migrant workers for Kaohsiung’s Metropolitan Rapid Transit (MRT, the
underground railway) system rioted in the face of employment that amounted to slavery. The case
exposed the inadequacy of the migrant labour policies, but it resulted only in political quarrelling
and hardly any change to policies.
Brokers, of course, become the beneficiaries. Before 2001, the commission for introducing
migrant workers depended solely on demand and supply. When brokers realized just how
desperate Southeast Asians were to go to richer countries to make a living, they began to demand
a sky-high commission. In most cases, the migrant worker is allowed to stay in Taiwan for no
more than three years. They spend their first two years working to pay off the commission.
Because workers in debt have no freedom to choose their employers, they either put up with
unfair treatment, or become ‘runaway workers’ who are often blamed for rising criminal activities.
On November 2001, after pressure from labour NGOs, the CLA finally announced a
regulation prohibiting the brokers from getting ‘commission’. Instead, they can only ask for
a ‘service charge’, which is no more than NT$1,800 per month for the first year, NT$1,700
per month for the second year and NT$1,500 for the third. However, Taiwanese brokers have
teamed up with brokers in the workers’ home countries, cheating the migrant labour into signing
enormous loan contracts so the brokers on both sides can share the commission clandestinely.
The migrant workers’ groups are demanding a ‘Household Service Act’ to regulate the basic
working standard for migrant domestic helpers. The establishment of a direct hiring system to
avoid exploitation from agencies is also being demanded of the CLA.
Number of Unions, Number of Members, Details of Major Union Centres
As mentioned earlier, there are two kinds of union in Taiwan: the industrial union and
the craft union. More than 30 workers from the same workplace can form an industrial union.
Where there are less than 30 employees in a workplace or where the worker is self-employed, the
worker can join a craft union. As most private enterprises in Taiwan are small- and medium-sized,
employing less than 30 workers, most unionized labour in Taiwan, as the table below shows, are
craft union members.
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Taiwan
According to the statistics, at the end of 2007, the number of female members in industrial
unions was 161,944. This means that only 28.3 per cent of the industrial union members are
female. The number of female members in craft unions was 1,281,506, which represents 52 per
cent of the total.
The organization rate of the industrial unions looks reasonable, although it is decreasing.
However, the statistics only include workplaces with more than 30 employees. If we calculate
the total organization rate by members of industrial unions with the total employed workforce,
leaving craft unions out, then the organization rate in Taiwan in 2006 was only 5.73 per cent.
Table 6. Unions and Members and Organization Rate
Industrial Unions
No. of Unions
No. Craft Unions
No.
Organ-
No. of ization
of of
Members rate (%)
Unions
Members
Organ-
ization
No.
No. of
Organ-
of Institutional Individual
ization
rate (%) Unions No. of
Total
Members
members rate (%)
1995
1,204
598,475
25.35
2,413
2,537,396
58.05
3,704
4,475 3,135,875
46.58
2002
1,104
561,140
20.28
2,848
2,299,158
49.19
4,093
4,735 2,860,298
38.44
2003
1,103
558,195
19.42
2,902
2,343,777
49.83
4,158
4,769 2,901,972
38.30
2004
1,109
593,907
19.61
3,024
2,370,704
49.02
4,290
4,844 2,964,611
37.69
2005
1,027
618,006
19.64
3,119
2,368,798
47.98
4,310
4,862 2,986,804
36.95
2006
989
579,291
18.11
3,277
2,399,682
47.15
4,476
4,871 2,978,973
35.94
Source: Council of Labor Affairs
Although 69 general federations are included in the statistics, ‘general federation’ just
means a nation-wide federation. In terms of national labour centres, there are now four or five in
Taiwan. In fact, only the CFL and the Taiwan Confederation of Trade Unions (TCTU) are really
operational.
Before 2000, there was only one national labour centre—the CFL. It was established by the
Kuomintang during their mainland era and came to Taiwan with the Kuomintang. The CFL is in
two parts—a nation-wide industrial union (in state-owned enterprises) and the regional branches.
In the regional branches, there are both industrial unions and craft unions. Because there are
always more members in craft unions than in industrial unions, the regional branches are always
controlled by the craft unions. Yet the leaders of craft unions do not show concern about labour
rights. This is a major issue which angers trade unionists from industrial unions.
After the rise of the independent union movement of the late 1980s, some industrial
unionists began to split from the CFL. The first regional federation of independent industrial
unions was established in 1994. Only industrial unions can join; the craft unions are not allowed to.
In 1997, the preparation committee of a new national labour centre was set up. The preparation
committee was transformed into the TCTU in 2000 as the Democratic Progressive Party (DPP)
came to power.
The TCTU also comprises a nation-wide industrial union (in National-Owned Enterprises)
and regional branches. It is thought to be the essence of the Taiwan independent union
movement. It really played this role during the preparation period. After the DPP came to power,
it gave up its social movement strategy, betraying the grass-roots activists, and did the same with
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Asian Labour Law Review 2008
labour issues. But the TCTU still supports the DPP’s labour policies and seldom participates in
rank-and-file struggles any more. From 2005 until now, the TCTU has already twice changed its
president because both previous presidents accepted DPP nominations: one went to be a legislator
(later the Chair of the CLA) and another became head of the Kaohsiung City labour bureau.
The seat of the TCTU president is more like a ladder to becoming a politician than a leader of a
labour movement. It doesn’t help the labour situation that the previous presidents have turned
to politics. As will be discussed later, they support the DPP government in enforcing a labour
flexibility policy.
The TCTU is no longer active. It functions more like an NGO but not a national labour
centre. Most regional federations of industrial unions have already dropped out the TCTU. Many
trade unionists think that the TCTU isn’t capable of representing Taiwan’s independent union
movement any more.
Another confederation that still functions is the National Federation of Independent Trade
Unions (NAFITU). However, NAFITU is not recognized by the government because it has never
registered. NAFITU was set up very early in 1988. It was the first nation-wide confederation of
independent unions in Taiwan. Although NAFITU still exists, it is now run only on a small scale.
Table 7. Number of Unions in Taiwan, 2004-2006
No. of Unions
End of 2004
End of 2005
End of 2006
4,290
4,310
4,476
General federation of unions
53
58
69
Federation of industrial unions
23
25
36
Federation of craft unions
81
81
105
Industrial unions
1,109
1,027
989
Craft unions
3,024
3,119
3,277
Total
Source: Council of Labor Affairs
Number of Strikes
According to the Settlement of Labor Disputes Law, the term ‘labour disputes’ refers to
either rights disputes or adjustment disputes. Rights disputes concern the collective agreements or
labour contracts between workers and employers. Adjustment disputes arise between workers and
employers when they cannot agree whether to continue or to change the working conditions.
The law goes on to say that rights disputes can be settled by conciliation procedures provided
in this law; adjustment disputes can be settled by conciliation or arbitration procedures provided
in this law. During the period that labour disputes are in the process of conciliation or arbitration,
an employer may not close shop, suspend work, terminate labour contracts, or carry out other
activities unfavourable to the workers on account of such disputes. At the same time, workers may
not resort to strike, sabotage, or carry out other activities on account of such disputes which may
interfere with the normal work procedure.
If the labour dispute cannot be settled by the procedure provided, then the union can go
on to strike. The union has first to hold a general assembly and conduct a strike ballot in the
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Taiwan
assembly. If more than half of all the members are in favour of striking, then the union has
the legitimacy to strike. According to the Settlement of Labor Disputes Law, only adjustment
disputes can lead to strike action.
At the beginning of the high point of the labour movement in the late 1980s, strikes were
still illegal under the martial law regime of the time, but wildcat strikes were frequent. Now
although the unions are allowed to strike by law, strikes are rare. As mentioned earlier, the unions
in Taiwan are usually small-scale, especially in the private sector, so they do not have the capacity
to strike. Union leaders always try other strategies to find a resolution.
One way is to hold a general assembly continuously for days but without launching a strike
ballot. In practice, it has same effect as a strike, but in legal terms the union has not gone on
strike. This means the procedure is still in mediation, the union preferring not to totally break
with the employer.
In recent years, only bank unions and unions in state-owned enterprises have had enough
capacity to launch strikes. Since 2005, more than ten bank unions have held general assemblies
and strike ballots. They all had the legitimacy to launch a strike, but only one strike took place.
One reason for this was that the employer compromised after the union obtained legitimacy.
Another reason was that the union wished to retain a weapon with which to confront the
employer: a strike is the last resort. Thus, if negotiations are ongoing, then strike action is not
necessary so soon.
For picket lines, the law has no clear regulation. If workers set up a picket line, then the
employer can file a law suit to demand compensation. During the labour movement’s peak
and some closure disputes, workers successfully picketed to stop goods being shipped out from
factories. The success of pickets depends on the workers’ capacity and the political atmosphere.
GDP, Debt and the Poverty Line
After years of capital outflow and a tax deduction policy for investment, the Taiwan
government faces a serious financial deficit and also a large number of debts. The formerly
opposition and presently (since May 2008) ruling party Kuomintang announced that by the end
of 2007, the national debt had reached a peak of NT$4.85 trillion, 40 per cent of the GDP.
Table 8. Per Capita GDP of Taiwan, Mainland China and Hong Kong
Year
2006
2005
2004
2003
Taiwan
16,030
15,668
14,663
13,587
Mainland China
1,988
1,735
1,484
1,131
(unit: US$)
Hong Kong
26,611
25,191
23,751
23,021
Source: Department of Investment Service
The debt not only would be left to the next generation, but also would be accompanied by
expansion of the gap between rich and poor. The existing poverty line is criticized for being too
stringent to match the real situation. Joblessness, credit card debt and the increase in prices as
reflected in the CPI (consumer price index) have in reality resulted in more and more people
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falling under the poverty line yet unable to get any support from the government. The problem
arises because the social welfare authority in Taiwan classifies the poverty line as 60 per cent
of the lowest living standard for a household, and also stipulates that a person living below the
poverty line must have no car, must have no house or estate, and other conditions. So, according
to official records, the population below the poverty line in Taiwan is estimated in 2007 at only
0.95 per cent of the total population, which would make it the lowest in the world (according to
the The World Factbook of the CIA; see www.cia.gov). In 2007, the declared poverty line was
NT$14,881 in Taipei City, NT$10,708 in Kaohsiung City and NT$9,509 for other counties in
Taiwan.
4. Some Important Changes in Labour Laws from 2003 to 2007
1. Gender Equality in Employment Act (announced January 2002)
This Act sets out to protect equality between the sexes in the right to work, to thoroughly
implement the constitutional mandate of eliminating sex discrimination and to promote the spirit
of substantial equality between the sexes. The Act includes some very good measures to improve
gender equality in employment, such as the menstruation leave one day per month, fraternity
leave, maternity leave, parental leave, and so on. Unfortunately, the lack of enforcement makes
this Act little more than a few good words on paper.
2. Employment Insurance Law (announced May 2002 and modified January 2007)
An employed Taiwanese citizen between 15 and 60 years of age should join the employment
insurance programme as an insured person through his employer or the establishment to which
he/she belongs. There are four kinds of employment insurance benefits: 1) unemployment benefit,
which is 60 per cent of the pre-unemployment salary, for six months; 2) early re-employment
awards; 3) vocational training living allowance; and 4) a subsidy for National Health Insurance
premium support for unemployed insured persons and their dependants who are enrolled with
the insured person.
3. Labor Pension Act (enforced July 2005)
The old retirement regulation was legislated in the Labor Standard Law. The Labor Pension
Act provides a new regulation to replace the old retirement system. Under the old regulation,
employees could apply to retire after working for the same boss for 25 years if they were over
55 years of age, and the boss had to pay the retirement benefit in a lump sum. Unfortunately,
most small- and medium-sized companies in Taiwan don’t survive for more than 12 years, so in
practice most workers cannot get their retirement benefit. Under the new regulation, the boss has
to pay an extra six per cent of the employee’s salary each month to the worker’s personnel account
and the worker keeps this account until the age of 60, at which point he/she would get a pension
paid each month until death. By law, the government guarantees the benefit of the pension fund
to at least two per cent.
The benefit of the new retirement regulation is that retired workers can get monthly
payments in their old age. The major problem with it, however, is its very low incomereplacement rate; it is far from able to cover the minimum cost of living after retirement. Needless
to say, inflation is very likely to be more than two per cent.
Taiwan
97
4. The Increase in Minimum Wage
After a ten-year pause in the adjustment of the minimum wage (last adjusted in 1997), it was
announced in July 2007 that the minimum wage would increase from NT$15,840 to NT$17,280
(about US$540) per month and NT$95 (about US$3) for hourly work. Unfortunately, domestic
helpers from Southeast Asia are not covered because they are not included under the protection of
Labor Standard Law.
Some Attempts by Government to Informalize the Labour Market
5. To Amend the Three Collective Labour Laws
The ruling party until May 2008, the Democratic Progressive Party, tried many times to
amend three important labour laws: the Collective Agreement Law, the Labor Union Law and
The Settlement of Labor Dispute Law. (After May 2008, the Kuomintang has come back into
power as the ruling party.)
It would have a big impact on the existing labour law system if the amendments were passed
in parliament. The major direction of the amendments is to diminish the role of the government
in the settlement of labour disputes and change the union structure from closed-shop to openshop. The trade union leaders are not happy to see the change, worrying that it will worsen the
trade unions’ already unfavourable situation. Because the Democratic Progressive Party did not
have a majority in parliament and the Kuomintang did not support this issue, the amendments
have so far failed.
6. To Legalize Dispatch Employment and a More Flexible Labour Market
The government under the Democratic Progressive Party has attempted to make a new law
to regulate dispatch employment, which prevails both in the service and manufacturing industries,
but has had no success yet with either.
The reason the government wishes to legalize dispatch employment in Taiwan is that
there are many agencies doing this business. Companies from the commercial sector to the
manufacturing industry have accepted dispatch employment in their operations, but until now
no law exists to regulate dispatch employment. Both the dispatch agencies and the employers
have lobbied the government to legalize dispatch employment so as to expand the dispatch labour
market.
Trade union leaders cannot agree with such a law because it would legalize flexible hiring by
agencies. Currently in Taiwan, many factories hire migrant workers (as much as one-third of the
total workforce), which makes it difficult for local workers to find a decent job and also impossible
for them to ask for a salary increase. Should the dispatch law be passed and enforced, workplaces
would have three diverse labour resources: migrant workers, local regular employees and local
dispatch employees. Trade union members might then only represent one-third of the workforce
in the company, as migrant workers are excluded in practice from trade union organizations and
dispatch workers are not considered to be employed by the same boss.
In fact, since the 1990s, many government offices have hired temporary staff by different
means such as outsourcing, short-term contracts, dispatch and so on. The government itself has
thus adopted to a flexible hiring behaviour as a way to cut expenses. According to official records
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Asian Labour Law Review 2008
from Council of Labor Affairs, in 2006 the number of people employed as dispatch labour was
about 130,000. However, the dispatch companies point out that in reality the figure is closer
to 400,000. How trade union organization of dispatch labour should be developed is a very
important issue for the Taiwanese labour movement.
5. Conclusion
From 2000 to 2007, the ruling DPP party, which had allied with the social movement in the
past, quickly changed its position to the capitalists’ side. Unemployment and the cost-of-living
increase have made the poverty problem more noticeable than ever. Although the government has
tried to introduce revisions, like the new pension system and Employment Insurance, this very
limited systematic support is not enough to enable the jobless and the aged to live well. Outflow
of Taiwanese capital also hurts the government’s finances. Workers cannot leave Taiwan as the
capitalists can, and they have to pay the price for all. The labour organization rate is dropping
and threatens the limited negotiating power that Taiwan workers have when facing this so-called
period of global competition.
Taiwan
99
Appendix 1: Main National Labour Confederations and Labour Groups
Taiwan Confederation of Trade Unions (TCTU)
5F, No. 177, Sec 3, Roosevelt Rd, Taipei City 10647, Taiwan
Tel: +886-2-23630980 Fax: +886-2-33652950
Homepage: http://www.tctu.org.tw/
Email: [email protected]
Chinese Federation of Labor (CFL)
4F, No. 177, Sec 3, Roosevelt Rd, Taipei City 10647, Taiwan
Tel: +886-2-23660111 Fax: +886-2-23696111
Homepage: http://cfl.trumpet.com.tw/
National Federation of Independent Trade Unions (NAFITU)
Tel and Fax: +886-2-29238895
Homepage: http://blog.yam.com/nafitu1988
Email: [email protected]
Labor Rights Association (LRA)
6F, No. 25, Lane 344, Nanjing W. Rd, Taipei City 10345, Taiwan
Tel: +886-2-25596233 Fax: +886-2-25594984
Homepage: http://www.laborrights.net/_NewSys/
Email: [email protected]
Raging Citizens Act Now! (RCAN)
5F, No. 17, Lanzhou St, Taipei City 10358, Taiwan
Tel: +886-2-25576872 Fax: +886-2-25574367
Homepage: http://www.nobnog.org.tw/
Note: RCAN was previously known as CALL (Committee for the Action of Labor Legislation) or
ICLE (Information Center for Labor Education)
Taiwan Labor Front (TLF)
Add: R518, 5F-14, No. 110, Sec 1, Hankou St, Taipei City 10044, Taiwan
Tel: +886-2-23110259 Fax: +886-2-23115901
Homepage: http://labor.ngo.org.tw/
Email: [email protected]
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Asian Labour Law Review 2008
Appendix 2: Chronology of Significant Labour Events, 2003-2007
(see Appendix 3 for List of Acronyms)
Time
Event
3 June 2003
The Nurse Protection Alliance established
6 June 2003
Former state-owned enterprises must have a labour representative in the directorate 17 June 2003 TCTU was criticized for
betraying the labour movement
March to Zin-Lon Motor Parts
July 2003
Company labour dispute case
24 June 2003 Kaoshiung Business Bank
labour union held a sit-in to demand work security
1 July 2003
COSWAS protested in front of the Ministry of
the Interior 5 August 2003 CYUTTLC protested against privatization when its board meeting was held
8 August 2003 Ching-hsiu Electronics in Taoyuan, and Zian-wei Electronics Co. in Kaohsiung went bankrupt
11 September TRLU held a strike ballot 2003
for an anti-privatization campaign
Content
A school nurse association called for
improvement of the OSH situation of nurses
when the public was concerned about the
prevention and treatment of SARS.
The Legislative Yuan passed a regulation saying
that more than one director should represent
the labour union when more than 20 per cent
of the company’s capital is owned by the state.
Three labour movement activists held a press
conference to make public that the so-called
independent trade union movement,
Taiwan Confederation of Trade Unions,
had been controlled by the ruling party,
the Democratic Progressive Party.
The boss of the company escaped owing
hundreds of workers three months’ wages.
Workers collectively complained to the
government for compensation.
More than 800 members held a sit-in in front
of the headquarters of the Kaohsiung Business
Bank to protest and ask for a CBA with
the employer.
To ask for legalization of the sex industry.
This state-owned enterprise planned to
implement a privatization schedule
without permission from labour and the
government.
Both companies owed hundreds of workers
salaries and compensation. Employees formed
a victims’ group to press for compensation.
Taiwan Railway Labor Union successfully held
a member’s meeting for a strike ballot.
Although facing the threat of punishment,
nearly 8,000 members gathered in Taipei to
join in and pass the decision to ‘strike during
Chinese New Year’. This campaign got strong
support from other labour activists in Taiwan,
and support letters from UNI (the global
union), Hong Kong Confederation of Trade
Unions and the Japan Railway Labor Union.
Taiwan
23 September CTWU held a rally to
2003
protest against privatization 28 September NTA held a demonstration
2003
to ask for a better education environment
15 October to Taichung Passenger
8 November Transport Labor Union
2003
struck for 22 days and won 4 November Fun-da Electrical Trade
2003
Union protested against lay-off
16 November Zuan-lon Passenger
to 11 December Transport Labor Union
2003
went on strike
27 November Alliance of state-owned
2003
enterprises’ trade unions held a sit-in in both Taipei and Kaohsiung 9 December
TransAsia Sisters
2003
Association, Taiwan (TASAT) was formed
28 December Migrant Workers’ Grand
2003
Rally held for uprising workers’ right
7 February COSWAS held a rally
2004
for decriminalization of sex-workers 7 March 2004 School Nurse Association held a rally in Kaohsiung 101
More than 6,000 members of Chunghwa
Telecom Worker’s Union joined in this
demonstration and shouted in front of
Legislative Yuan against privatization.
More than 10,000 joined in this rally which
was held by National Teachers’ Association.
On this ‘Teachers’ Day’, teachers gave voice
to the education issue including asking for
a small class policy, education reform and so on.
Labour groups supported the NTA and also
joined in the rally.
The demands of the union: 1) stop deducting
salary; 2) stop hiring more short-term contract
drivers; transfer the existing short-term contracts
into long-term contracts; and 3) change the
CEO who is on very unfriendly terms with the
trade union.
Fun-da TU from the Kaohsiung processing
zone protested against the company’s group
lay-off policy. The company laid-off 49
employees at the same time.
The demands of the union: return workers’
salaries of more than NT$13 million.
To protest against the privatization policy and
ask the government to stop selling state-owned
enterprises to the private sector.
This is an association of migrant brides who
come from overseas. TASAT is active in
campaigning for their human rights and also
supports migrant workers who rally on the street.
At least 600 migrant workers, mainly from
the Philippines, Indonesia, Thailand and
Vietnam, held a rally. It was the first time
migrant workers showed their multi-cultural
image and demonstrated to the public the
migrant workers’ contribution to a progressive
Taiwan.
About 400 persons joined in this rally,
including representative activists from Thailand,
Korea, Hong-Kong and Switzerland.
To protest against the outsourcing policy of
public senior-high schools. The outsourcing
policy of school nurses hurt both students’
medical rights and also nurses’ job security.
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Asian Labour Law Review 2008
28 March
With the support of Hsin-Chu County Federation of Trade Unions,
2004
the women workers’ chorus issued its first CD.
14 April 2004 TAVOI protested against the stringent standard of the karoshi
(death by overwork) definition.
22 April 2004 RCA victims sued the company RCA, the company GE, the Taoyuan county
government and the Council of Labor Affairs for occupational disease
compensation.
1 to 30 June Yi-Hsin Passenger The company owed employees salaries of more
2004
Transport Labor Union than NT$6 million, and could not keep their
went on strike
cars in good repair. The company’s financial
crisis had hurt its employees’ job security and
passengers’ safety.
18 July 2004 Draft of Household Service This draft was promoted by migrant workers’
Act, workers’ version was support groups including TIWA, Hope
announced
Workers’ Center, and so on. The draft was sent
into Legislative Yuan on 20 May 2005.
14 September Yia-wen Electronics Labor This company faced bankruptcy and delayed
to 4 November Union went on strike
paying salaries and asked employees to work on
2004
their day off with no pay. The final 600
employees fought for compensation.
20 November First Bank Trade Union held a rally to demand job security when the
2004
government asked it to merge with a large international commercial bank.
28 December Pastfame company labour
Migrant workers and local workers went to the
2004
dispute case
Council of Labor Affair to protest about owed
salaries.
6 January
After years of protest by labour groups, the Council of Labor Affair amended
2005
its regulation on the karoshi definition.
19 April 2005 Youth Labor 95 called on the government to increase the minimum hourly
wage to stop the trend of impoverished youth.
1 May 2005
A May Day rally was held with the cooperation of the TCTU, labour groups
and the teachers’ association. More than 2,000 teachers joined in the rally
demanding their labour rights. More than 300 migrant workers were also
organized to join in.
1 July 2005
Labor Pension Act came into force.
21 August Some 1,782 Thai workers set fire to their company’s office in Kaohsiung.
2005
It was found that the Thai workers’ rights and dignity had been violated.
For example, communication with their family members at home was limited,
their dormitory was overcrowded (one could say worse than a prison) and
their pay was reduced or they weren’t paid at all. Furthermore, they could
not speak out about the problems or they would face dismissal.
13 March Thousands of Thai migrant workers in the Formosa Industrial Zone went on
2006
strike over poor working conditions.
16-19 June
Huan-Ya trade union The Huan-Ya hotel faced a financial crisis and
2006
urged a strike for lay-off sold its hotel to Holiday Inn. But the former
compensation
boss was unwilling to pay workers compensation.
Taiwan
103
18 December International
The church groups urged a solidarity night for
2006
Migrants’ Day
migrant workers on 17 December (Sunday).
1 May 2007
CTWU held a rally to demand the government, as the biggest share-holder,
change its CEO.
1 July 2007
The minimum wage rose from NT$15,840 to NT$17,280 per month.
The hourly rate minimum wage became NT$95.
9 December Migrant Workers’ Rally
The major demand of migrant workers in
2007
the rally was: ‘I want a day off.’
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Asian Labour Law Review 2008
Appendix 3: List of Acronyms and Organization Websites
COSWAS:
CTWU:
CYUTTLC:
First Bank Trade
Union: HCTUTW:
NTA:
SNA:
TASAT:
TAVOI:
TCTU:
TIWA:
TRLU:
Youth Labor 95:
Collective of Sex Workers and Supporters, http://coswas.org/,
[email protected]/
Chunghwa Telecom Worker’s Union, http://www.ctwu.org.tw/
Confederation of Trade Unions of Taiwan Tobacco & Liquor Company http://www.tctu.org.tw/front/bin/ptlist.phtml?Category=179157
http://www.fcbiu.org.tw/
Hsin-Chu County Federation of Trade Unions,
http://www.wretch.cc/blog/hctutw
National Teacher’s Association, http://www.nta.org.tw/ [email protected]
School Nurse Association of ROC, http://www.schoolnurses.org.tw/
TransAsia Sisters Association, Taiwan, http://www.tasat.org.tw/
Taiwan Association For Victims of Occupational Injuries,
http://tavoi.myweb.hinet.net/
Taiwan Confederation of Trade Unions, http://www.tctu.org.tw/
Taiwan International Workers Association, http://www.tiwa.org.tw/
Taiwan Railway Labor Union, http://www.trlu.org.tw/ [email protected]/
http://blog.roodo.com/youthlabor95/
ENDNOTES
1.
In this paper, for accuracy the spelling of 'labor' is kept in the names or titles of labour-related laws and
organizations, as they are spelled in Taiwan.
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Cambodia
Southeast Asia
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Asian Labour Law Review 2008
Cambodia
107
Cambodia
Street Vendors, Factories and Family Workers:
Informalizing Labour in Cambodia
Dennis Arnold
I
n recent years Cambodia’s foothold in the global economy and the most prominent aspect of
its labour movement has been the textile and garment industry. Cambodia’s position in this
global industry has been promoted as an ‘ethical producer’ as a result of a monitoring programme
run by the International Labour Organization (ILO) initiated by a bilateral trade agreement with
the US. While this chapter addresses some of the challenges for the informalizing women workers
in the textile and garment industry, its main focus is the estimated 85 per cent of Cambodia’s
labour force who are officially employed in the informal economy.
Cambodia is an agrarian-based society and economy; estimates of the population living in
rural areas range from 80 to 90 per cent. Many small- to medium-scale landholders are sending
their children, predominantly young women, to the cities to supplement the family income
and/or ensure its survival. Additionally, millions of rural Cambodians have been pushed off the
land into urban and other rural areas for work. This is largely due to debt, lack of title to the
land and the interrelated consolidation of land in the hands of an increasingly polarized society.
Hundreds of thousands of rural and urban poor have also migrated abroad for work, primarily
to neighbouring Thailand for jobs in agriculture, fisheries and seafood processing among other
industries. In Thailand they often work without registration or legal rights.
This chapter is divided into three main sections: a contemporary snapshot of socio-economic
issues relating to the informal economy in Cambodia; a summary of labour law as it pertains to
the informal economy; and an analysis of activists’ initiatives that address the informalization of
labour. The chapter focuses on two major groups of informalizing women workers in Cambodia:
first, those technically engaged in the informal economy, including street vendors, unpaid family
labour and others; and second, women employed in ‘formal’ or registered workplaces such as
factories and restaurants where they either work on a short-term casual or flexible basis and/or
lack a clearly defined employment relationship. The first group is quite clearly working in the
informal economy in terms of the law since they do not have an employer-employee relationship
or are specifically exempted from the labour law. The second group are part of the informalization
process. Technically, they are protected by the Labour Law but implementation is critically
lacking.
1. Contemporary Snapshot
Socio-economic Overview
In 1991, negotiations between factions fighting a civil war in Cambodia since 1979 led
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Asian Labour Law Review 2008
to the Comprehensive Political Settlement for Cambodia. This called for the creation of the
United Nations Transitional Authority in Cambodia (UNTAC)1 a peacekeeping and transitional
operation unprecedented in scale for the UN. This was part of a process ending decades of
civil war, foreign military intervention and internal/regional strife. Bilateral aid and loans from
governments including Japan, the US, China, Russia and Australia, in addition to funding and
consultation from the World Bank, International Monetary Fund (IMF) and Asia Development
Bank (ADB), have since increased dramatically. The structural adjustment programmes
implemented from the early 1990s in conjunction with these governments and organizations
espouse an agenda of poverty reduction and economic progress. These policies are tied a priori
to a model that regards economic growth led by foreign direct investment, industrial exports,
privatization, liberalization and higher agricultural productivity, as the keys to development.
In recent years, Cambodia has experienced significant economic growth. In 2007 GDP
expanded by 9.6 per cent, which is below the average of about 11 per cent in the three previous
years. GDP growth is projected to decline to 7.5 per cent in 2008 and to 7.0 per cent in 2009.2
Growth is concentrated in garments, construction and tourism. Exports reached US$2.9 billion
in 2005, including garments, shoes, cigarettes, natural rubber, rice, pepper, wood and fish, with
garments accounting for roughly 80 per cent of the total. Lower levels of growth in 2007 are due
to decreases in garment exports and a decreased expansion in agriculture, forestry and fisheries.3
Following the lifting of safeguard quotas on textiles and garments in 2008 imposed by the US
on China, in addition to rapidly expanding garment exports from recent WTO member-state
Vietnam, exports from Cambodia are expected to continue the decline in coming years.
On the demand side, consumption and private investment contributed to GDP growth.
Inflation accelerated to an average of 5.9 per cent in 2007 mainly as a result of increases in food
prices (see Table 1).4 Inflation has become a major area of concern. Rice prices rose owing to
domestic supply shortages, and prices of other food items also rose. Rising demand and limited
supply caused imported food items, primarily from Thailand, to continue to increase. According
to the Asia Development Bank’s Asian Development Outlook 2008, ‘The price of meat (pork
and chicken) also increased, in part following a ban on meat imports from Vietnam to prevent
the spread of animal diseases. Higher global fuel prices added to inflationary pressures, as did the
weakening of the US dollar, which is widely used in Cambodia (its depreciation against the Thai
baht contributed to imported inflation).’
Government estimates put the overall budget deficit in 2007 at 3.2 per cent. According to a
debt-sustainability analysis conducted by the World Bank and IMF in mid-2007, external public
debt is ‘sustainable’ and the risk of debt distress is moderate. At the end of 2007, external public
debt was estimated at $2.4 billion (30 per cent of GDP). Of this amount 54 per cent was owed to
multilateral institutions and around 35 per cent to the Russian Federation and the US.
Table 1: Inflation in Cambodia, 2002-2008 (per cent per year)
2002
2003
2004
2005
3.3
1.2
3.9
5.8
2006
2007
2008*
4.7
5.9
5.5
*Forecasted for 2008
Source: Author’s compilation of Asia Development Bank, Asian Development Outlook, 2007 and 2008
Cambodia
109
Labour Force and Employment Data
In 2003, the informal economy accounted for 62 per cent of gross domestic product (GDP)
and 85 per cent of the total workforce in Cambodia, according to estimates by the Economic
Institute of Cambodia (EIC) (see Table 2). In 2003 the remaining 15 per cent of the workforce
was employed by formal sectors, especially in the garment industry (230,000 [increasing to
350,000 in 2008]), tourism sector (70,000) and public administration (350,000). Although the
contribution of the informal economy to the GDP has slowly declined in recent years (see Table 2),
the contribution to the economy is still considerable, and its proportion of the labour force has
remained constant.
The Cambodian informal economy is made up of a huge proportion of own-account workers
and unpaid family workers. These two groups represent respectively 40 per cent and 44 per
cent of the total workforce, or a total of 84 per cent, according to the Cambodian Labour Force
Survey of 2001.5 Of this, 70 per cent is found in agriculture. Over half of them are women. The
total proportion of employment in agriculture, forestry and fisheries is going down while persons
employed in this sector are going up (see Table 2).
Table 2: Employment by Sector of Activity, Even Years, 2002-2006
(in thousands)
(as per cent of total)
2002
2004
2006
2002
2004 2006
Total employment
6,571
7,496 8,053 100
100
100
Agriculture, forestry and fisheries 4,426
4,520 4,619 67.4
60.3
57.4
Industry
741
947
1,169 11.3
12.6
14.5
Services
1,404
2,028 2,265 21.4
27.1
28.1
Agriculture, forestry and fisheries 4,426
4,520 4,619 67.4
60.3
57.4
Agriculture 4,080
4,103 4,183 62.1
54.7
51.9
Forestry
56
57
60
0.8
0.8
0.7
Fisheries
291
360
376
4.4
4.8
4.7
Industry
741
947
1,169 11.3
12.6
14.5
Mining and quarrying
15
17
20
0.2
0.2
0.3
Manufacturing
601
720
870
9.1
9.6
10.8
Utilities
6
16
19
0.1
0.2
0.2
Construction
120
195
260
1.8
2.6
3.2
Services
1,404
2,028 2,265 21.4
27.1
28.1
Trade
756
1,042 1,140 11.5
13.9
14.2
Hotels and restaurants
24
30
61
0.4
0.4
0.8
Transport and communications 178
196
217
2.7
2.6
2.7
Financial intermediation
9
16
32
0.1
0.2
0.4
Real estate, renting
16
15
184
0.2
0.2
2.3
Public administration and defence 159
180
18
2.4
2.4
0.2
Education
94
106
120
1.4
1.4
1.5
Health and social work
28
37
49
0.4
0.5
0.6
Other social services
59
78
108
0.9
1.0
1.3
Other 81
327
336
1.2
4.4
4.2
Source: International Monetary Fund Country Report No. 07/291, August 2007, citing National Institute of
Statistics
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Asian Labour Law Review 2008
Wages
Articles 104,105,107,108, 109 and 111 of the Labour Law specifically deal with minimum
wage. The minimum wage ‘must ensure every worker of a decent standard of living compatible
with human dignity’. There is not a general minimum wage in Cambodia; only the garment
industry is covered. On 23 October 2006, the Ministry of Labour and Vocational Training issued
a Prakas (decree) increasing the minimum wage of textile and garment worker to $45 a month for
probationary workers and $50 a month for Undetermined Duration Contract (UDC) workers
(i.e. ‘regular workers’) (from $40 and $45 respectively). According to the ILO the average wage
of garment workers is roughly $70 per month. However, according to interviews conducted by
Womyn’s Agenda for Change from 2004 to 2006, in reality many workers do not even receive
the minimum.
The pay rate for night shift work has decreased. In March 2007, Prime Minister Hun Sen
successfully lobbied the National Assembly to amend the Labour Law to cut the wage for night
work from 200 per cent of the day wage to 130 per cent. He argued that the reduction was
necessary to make Cambodia a more attractive place for foreign investors to set up large factories.
On 20 July 2007, the amendment of Articles 139 and 144 of the Labour Law went into effect.
Informal Women Workers: Problems and Gender Issues
Roughly 85 per cent of Cambodia’s labour force is not covered by the Labour Law.
Implementation of the Labour Law for those workers technically covered is lacking. Informaleconomy workers are not recognized, not regulated and are not entitled to legal protection. In the
informal economy women workers are subject to a wider range of potential problems or abuses
because they have no legal rights, no protection under occupational safety and health regulations
(OSH) and no access to social security protection. They are often subject to extortion, bribery,
repression and harassment – sometimes sexual – by authorities. 6
HIV/AIDS disproportionately threatens women in the informal economy. Cambodia has
the highest HIV infection rate in Asia. Despite numerous programmes that promote the use of
condoms, many men refuse to use them. Cambodia’s sex industry is unregulated, despite the
efforts of certain women’s organizations and NGOs, increasing exposure to HIV/AIDS and
increasing the risk of violence. 7
According to the National Institute of Statistics, 35 per cent of the Cambodian population is
made up of migrants. In general males are more prone to rural-rural migration (and international
migration), while women are migrating primarily to urban areas. The urban labour market is
highly gender-specific, with textile and garment, service sector (small scale hotels, bars, markets,
street vendors, massage parlours and restaurants) and sex work all favouring women. In certain
sectors such as garments, young, unmarried women are favoured. This is largely due to stereotypes
and gendered roles that influence the kind of jobs men and women do in Cambodia. These
practices largely determine the choice of work among men and women. For example, nearly
every moto-taxi driver (motodop) is a man, while market stall vending is dominated by women.
Women represent a large proportion of the informal economy, yet due to a lack of research by
sector comprehensive figures are not yet available.
Following the three decades of conflict in Cambodia lasting through the early 1990s,
Ledgerwood 8 contends that Cambodians have experienced a loss of their social order to
such an extent that images or stories of proper behaviour of women are being re-articulated
Cambodia
111
as an idealization in reaction to that loss of social order.9 This pressures women to maintain
‘traditional’ roles in the household, but economic hardships and social change are transforming
this idealization of women’s responsibilities. Culturally Cambodia is organized hierarchically,
with notions of power and status conditioning social relations. In this social order women
are considered to be of lower status relative to men, though the status of an individual is also
determined by their age, wealth and other characteristics.10 The roles of men and women in family
life differ along gender lines: young women are more likely to quit school early and are expected
to provide supplemental income to their families in the provinces. The primary focus of women in
the informal economy is often basic reproduction of their lives and their families. Women living
on their own in the cities are helping to support their families, yet they are regularly stigmatized
for living away from home. This is largely because women’s idealized role in society is as the
household manager.
Land and Informal Economy Workers
Fifty per cent of Cambodia’s population is under 20 years of age, so high numbers of
workers enter the labour market every year. The formal economy does not have the absorptive
capacity to deal with this young and increasingly urbanized population. This is leading to calls for
intensification of engagement with the regional and global economy, including attracting foreign
direct investment (FDI), which provides a significant proportion of jobs in the formal economy.11
However, this process is creating surplus labour in rural areas.
As more rural Cambodians are pushed off the land due to debt, lack of land titles, increasing
prevalence of agro-industry, real-estate development and numerous other reasons, the needs of
marginalised populations in both rural and urban areas will only become more pressing. The issue
of access and rights to land are critical. Land and labour (much less labour law) are too seldom
considered together. This is unfortunate as the case in Cambodia demonstrates; in the course of
the flows of women through various sectors of the informal economy, a vast majority of them
begin because of disruptions in rural-agricultural livelihoods.
The passage of the Land Law (formally entitled the ‘Immovable Property Law’) by
Cambodia's National Assembly on 20 July 2001 is a major step toward commodified land reform.
The law aims to overhaul the way land is managed and distributed, and to protect property rights.
According to Mr. Urooj Malik, the Asian Development Bank’s (ADB) Resident Representative in
Cambodia, ‘This marks the achievement of a major milestone in the sustainable development and
management of Cambodia's natural resources, given the gravity of governance issues in relation
to landlessness, as well as the need to establish private property rights and facilitate private sector
development in the country’. 12
Some key features of the law, are the recognition of rights to land of persons who have had
peaceful, uncontested possession of the land for a certain period before the date of proclamation
of the law, and the recognition of communal rights to immovable property for pagoda's and
indigenous communities. In general, the law clarifies the immovable property regime which was
unclear and contradictory under the existing 1992 Land Law. 13
According to Yeng Virak, executive director of Community Legal Education Centre, ‘The
2001 Land Law is progressive. It recognises the right of people who have lived on a piece of land
for over five years to be entitled to the land’s title. There has been a systematic effort to register
land over the past six years.’ But, Yeng Virak goes on to say that the poor who have been targeted
for evictions are among the millions who have not received the ‘paper work’ to lay claim to the
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land they are living on. Consequently, they have become victims of the manner in which the
Cambodian government is interpreting the two types of state land in the country – for public use
that needs protection, such as forests,14 and for private use, which can be sold for development.15
Since 2001, the scale of land grabs by the wealthy and connected has risen steadily and has
become one of the major concerns in Cambodia. Few of the millions evicted have received
compensation. In summary, this is a key factor in creating an informalized and proletarianized
population.
2. Summary of Labour Laws and Implementation
According to the Economic Institute of Cambodia and the ILO, the term ‘informal
economy’ in Cambodia refers to very small-scale units producing and distributing goods and
services. These units are composed of independent, self-employed producers, family labour, hired
workers or apprentices.
Cambodia has defined activities in its informal economy as those without a firm, identifiable
postal address; those that have self-employed workers and utilize part-time or full-time workers;
those that have a lot of labour-intensive operations and quick turnover; those that use energy
input from human or animal sources; those about which data is unavailable through census
surveys; those that are not legally recognized; those that take place in non-structured premises;
and those that do not come under any regulations, licence, or insurance, and do not pay any tax.16
Jobs in the informal economy are ‘informal’ in the sense that they are mostly: 17
• unregistered and unrecorded in official statistics and thus not recognized, supported or
regulated by the government;
• have little or no access to organized markets, credit institutions, formal education and
training institutions, or to many public services and amenities;
• are compelled to operate outside the legal framework and beyond the pale of social
protection, labour legislation and protective measures, even if they are registered and
respect certain aspects of the law.
• The informal economy also includes employment to the extent that workers are
undeclared (by both informal and formal enterprises) and do not enjoy social benefits
mandated under the law.
These units: 18
• operate with very little capital or none at all;
• utilize a low level of technology and skills;
• operate at a low level of productivity;
• generally provide very low and irregular income, and highly unstable employment for
those who work in them.
In Phnom Penh, work in the informal economy includes vendors, shoe-shiners, motodops,
cyclos and tuk-tuk drivers, sex workers, mechanics, garbage collectors, small-scale gasoline sellers,
road-side/sidewalk vendors, construction workers and all domestic workers. In rural areas they
include farmers and workers in non-farm activities such as fishing, fish processing, mining,
spinning and weaving, food processing, handicraft-making and vending. In short, these are
activities that are not legally recognized largely due to the lack of a clearly defined employeremployee relationship (see below), where work takes place in non-structured premises, where
work is conducted without any regulations, licence, or insurance, and where taxes are not paid.
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113
Many people in the formal economy, including tens of thousands of civil servants are also
engaged in the informal economy to supplement their insufficient income. For example many
work as motodops in their time off. Other workers employed in the formal economy such as smallscale textile and garment factories/workshops and service sector jobs in restaurants and massage
parlours are outside of legal protection for reasons including lack of registration of the workplace,
employers who do not declare their employees to the Ministry of Labour and Vocational
Training, and a myriad of other technicalities. The following sections outline some of these issues.
Labour Laws and Administration
Cambodia’s labour law is comprehensive for formal economy workers, relatively progressive,
and has been described for both formal and informal economy workers in numerous publications. 19
Rather than provide another review of Cambodia’s Labour Law, this section highlights a few key
points most relevant for workers in the informal economy, and for informalizing labour in the
formal economy.
International Standards
Cambodia joined the ILO in 1969 and has ratified 13 ILO Conventions, including all
eight of the Core Conventions (see Table 4). It has also ratified numerous UN Human Rights
Conventions and Treaties including the Universal Declaration of Human Rights. This is due in
part to the prominent role played by the UN and ILO in Cambodia’s democratic transition from
the early 1990s to the present, and the ILO’s Better Factories Cambodia Programme, respectively.
As stipulated in its Article 31, the Constitution recognizes human rights as stated in the UN
Charter, the Universal Declaration of Human Rights, and the covenants and conventions related
to human rights, and women’s and children’s rights.
Table 4: ILO Convention Ratification
Convention
Ratification date
C4 Night Work (Women) Convention, 1919
24:02:1969
C6 Night Work of Young Persons (Industry) Convention, 1919 24:02:1969
C13 White Lead (Painting) Convention, 1921
24:02:1969
C29 Forced Labour Convention, 1930
24:02:1969
C87 Freedom of Association and Protection of the Right to Organize
Convention, 1948
23:08:1999
C98 Right to Organize and Collective Bargaining Convention, 1949
23:08:1999
C100 Equal Remuneration Convention, 1951 23:08:1999
C105 Abolition of Forced Labour Convention, 1957 23:08:1999
C111 Discrimination (Employment and Occupation) Convention, 1958
23:08:1999
C122 Employment Policy Convention, 1964 28:09:1971
C138 Minimum Age Convention, 1973 23:08:1999
C150 Labour Administration Convention, 1978
23:08:1999
C182 Worst Forms of Child Labour Convention, 1999 14:03:2006
Source: ILOLEX, Database of International Labour Standards
Note: Core Conventions are highlighted in bold
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The Constitution
After the adoption of the Paris Peace Agreement on 23 October 1991, and the formation
of a democratic government in 1993, the government of Cambodia has made significant effort
in terms of labour-related laws, legislation and building institutions mandated to implement the
laws. The 1993 Constitution recognizes fundamental principles relevant to international labour
law and a market economy. A series of employment conventions and covenants has been ratified,
and a large number of laws and regulations promulgated. 20
Cambodia’s Constitution recognizes:
• the equality of Khmer citizens [author’s italics] before the law regardless of race, colour,
sex, language, religious belief, political tendency, birth origin, social status, wealth or
other status (Article 31);
• the right to choose any employment, the right to enjoy equal pay for equal work,
equality of work inside and outside the home, the right to obtain social security and
other social benefits as determined by law and the right to form and to be a member of
trade unions (Article 36);
• the right to strike and non-violent demonstration (Article 37);
• the right to establish association and political parties (Article 42);
• the abolition of all forms of discrimination against women and the prohibition of the
exploitation of women in employment (Article 45);
• the guarantee of women’s job security during pregnancy and their right to maternity
leave (Article 46);
• the protection of children from acts that are injurious to their educational opportunities,
health and welfare (Article 48);
• the obligation of the state to provide free primary and secondary education to all citizens
in public schools (Articles 66 and 68); and
• the establishment of a social security system for workers and employees (Article 751).
The Labour Law
In 1997, the Cambodian National Assembly adopted a Labour Law to cover all kinds of
work where there is an employer-employee relationship. It is based upon the 1992 Labour Law,
but contains a number of additional provisions and exemptions. Apart from the Labour Law,
other legislation also directly or indirectly affects labour relations. The main relevant texts are: Law
on the Export of Cambodian Labour to Foreign Countries; Law on Social Security Regime for Those
Set under the Provisions of the Labour Law (15 August 2002); Law on Commercial Registrations and
the Commercial Register (26 June, 1995), some provisions of which are amended by Law of 18
November 1999; Law on the Press Regime (18 July 1995); Law on Demonstration (27 December
1991); and, more generally, Decree-Law No. 38 on Contract and Other Liabilities. 21
In theory Cambodia’s Labour Law covers all employees, regardless of nationality, gender,
creed, political opinion etc. (see Article 12 of the Labour Law). It broadly includes:
the labour contract, collective labour agreements, general working conditions (including
wages, hours of work, holidays and leave, and provisions for children and women),
health and safety (occupational health and safety, the rights of the labour inspectorate,
and accident compensation), trade union freedom, settlement of labour disputes,
provisions on strikes and lockouts, the labour advisory committee and labour courts. 22
The most important aspect of Cambodia’s Labour Law regarding the informal economy is
employment contracts. Specifically, Articles 2 and 3 define terms of employment contracts as an
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agreement in which one person (the employee) agrees to work for wages for another person or
company (the employer). These contracts can be written or oral. The articles state:
Article 2
All natural persons or legal entities, public or private, can be considered to be employers who
constitute an enterprise, within the meaning of this law, provided that they employ one or
more workers, even discontinuously.
Every enterprise may consist of several establishments, each employing a group of people
working together in a defined place such as in factory, workshop, work site, etc., under the
supervision and direction of the employer.
A given establishment shall be always under the auspices of an enterprise. The establishment
may employ just one person. If this establishment is unique and independent, it is both
considered as an enterprise and an establishment.
Article 3
‘Workers’, within the meaning of this law, means every person of all sexes and nationalities,
who has signed an employment contract in return for remuneration, under the direction
and management of another person, whether that person is a natural person or legal entity,
public or private. To clearly determine the characteristics of a worker, one shall not take into
account either the jurisdictional status of the employer or that of the worker, as well as the
amount of remuneration.
In summary, the Cambodian Labour Law only provides for the protection of workers and
employers having employer-employee relationships. This means that many occupations are
excluded from the Cambodian labour legislation, such as self-employed workers (absence of
employer-employee relationships), unpaid family workers (absence of remuneration) and some
home workers or outsourced workers (without clear employer-employee relationships). According
to Article 1 of the Labour Law, the following are explicitly excluded:
a) Judges of the Judiciary.
b) Persons appointed to a permanent post in the public service.
c) Personnel of the Police, the Army, the Military Police, who are governed by a separate
statute.
d) Personnel serving in air and maritime transportation, who are governed by a special
legislation. These workers are entitled to apply the provisions on freedom of union under
this law.
e) Domestics or household servants, unless otherwise expressly specified under this law.
These domestics or household servants are entitled to apply the provisions on freedom of
union under this law. 23
Despite restrictions of the Cambodian labour legislation’s application to the employeremployee relationship, Sieng and Nuth (2006) contend it is quite progressive. ‘First, it applies
to enterprises employing just one or more workers, even on a discontinuous basis. In other
words, notwithstanding the scale of enterprise or establishment, workers in the enterprise or
establishment are subject to the labour protection enshrined in the legislation. This is meant
to extend the labour protection to a wider array of enterprises and people including sweatshop
production. It recognizes that the Cambodian private sector is comprised of a large number of
micro, small and medium enterprises (MSMEs).’
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Informalizing Labour in the Garment Industry
The first factories producing textiles and garments for export opened in Cambodia around
1994, with foreign investors from Hong Kong, Taiwan, Malaysia and Singapore. The industry
is still dominated by foreign investors. Cambodians currently account for only 5 per cent of
ownership, while management is also generally imported from mainland China or the investors’
home country, meaning Cambodians are employed in the lowest wage, de-skilled aspects of the
production process. 24 These initial investors were attracted to Cambodia for several reasons.
Primarily, Cambodia’s lack of quota restrictions to the US market from the mid-1990s until
1999, combined with quota-constraints other producing nations in the region experienced, led
to significant expansion of the industry. Since Cambodia was not a party to the quota system
under the World Trade Organization’s (WTO) Multi-fibre Arrangement it was free to sell into
the US and EU markets, but those countries were free to limit or cut off market access at will.
Contributing to the industry’s boom was the granting of Most-Favoured Nation status by the US,
and the framework for cooperation with the EU under the Generalised System of Preferences,
both in 1997. Of course, investors were also attracted to the abundance of cheap, unregulated
labour and low-cost land. Employment has increased dramatically from about 100,000 workers in
the industry in 2000 to roughly 350,000 in 2008 (see Figure 1).
Figure 1: Workforce Evolution: 2000-2006
Source: Better Factories Cambodia, 2006.
Under Cambodian Labour Law there are two main categories of employment contract.
Workers may be employed on Undetermined Duration Contracts (UDCs) or Fixed Duration
Contracts (FDCs). 25 As their names suggest, a UDC is valid for an unlimited time, while a FDC
is valid for a specific period of time. The Coalition of Cambodia Apparel Workers Democratic
Union (CCAWDU) stated in an interview that from 2001 (when the federation was formed)
until 2005, a majority of workers in registered textile and garment factories were employed as
regular workers (UDC) with associated benefits such as sick leave and maternity leave, regular
wages, holidays and the like. Since 2005, with the end of the quota regime under the WTO there
have been numerous changes in the factories: the piece-wage rate has gone down, and the use
of flexible labour (in the form of FDCs, mentioned above) has increased. Also, outsourcing of
production to home-based workers or smaller, unregistered ‘sweatshop’ facilities has increased.
These trends indicate that workers’ time in the factory is pushed both in length (hours of work)
and intensity (amount of work accomplished).
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A prominent means to increase productivity for often stagnant or decreasing wages is use
of the piece-rate system. Currently there is no minimum wage for piece-rate work. Article 108
stipulates that an average piece-rate worker must be able to earn the minimum monthly wage by
working the same hours as a worker on a contract of service. 26 Implementation of this stipulation
has been a constant point of conflict over the past several years. The increased use and intensity
of this system in Cambodia coincides with numerous shifts of the textile and garment industry
at the global level. Steep competition puts factories under greater strain to produce more goods
at low prices. Numerous workers interviewed by Womyn’s Agenda for Change (WAC) said that
the piece rate declined over the course of 2006. At a Mean Chey area factory the rate is now just
$0.02 per dozen pieces (in the quality control section), so that take-home pay for regular workers
is well below the legal minimum wage of $45. The same factory in Mean Chey summarily fired
70 workers who demanded that the piece rate be restored to its previous higher rate. The workers
were compensated by the factory, which determined that the profits from the lower piece wage
were greater than the cost of compensating 70 workers. Piece-rate wage systems give low-wage
workers an incentive to maximize time at their work station, at the expense of rest time or even
their bathroom breaks, which negatively impacts their health. 27
While the rate of piece wages is a major point of contention in Cambodia, the use of flexible
labour is another. Employers are increasingly using informal/flexible labour employed on a dayto-day or short-term period as part of efforts to maintain or increase profits and avoid demands
of organized workers. Ms Anne Ziebarth, legal advisor for the ILO’s Better Factories Cambodia
stated, ‘An increasing number of garment factories have started to use FDCs for all workers,
which is troubling because it may indicate that they misunderstand the appropriate use of the
different types of contracts, or that they are using FDCs to undermine workers’ employment
security’. 28 According to CCAWDU, the use of flexible labour began in larger knitting factories
which employ from 3,000 to 10,000 workers, primarily in Kandal Province where unionization
rates are highest. Over the past year CCAWDU has found that use of flexible labour has spread to
both smaller knitting factories and garment assembly factories of all sizes. Flexible labour can be
employed on a day-to-day basis, where pay is daily, or on short-term two-month contracts, which
can legally be extended for up to a year. If these workers are hired as regular employees their
time as temporary workers is not factored into their seniority and benefits. These workers work
side by side with regular employees, with different coloured name-tags or uniforms as a form of
separation in lines and work units.
Many factories, such as one in Tuol Sangke, exploit loopholes and keep workers on shortterm contracts well beyond the one year limit. Others will not allow male workers to become
regular, out of fear that they will become union leaders, as men are perceived to be more likely to
be union activists. Some only allow workers to become regular if they fulfil certain requirements,
such as not asking for leave during their first three months of work, or being unmarried.
The ILO confirms that employers prefer flexible labour (FDCs) to regular workers (UDCs)
‘...because they believe that it is easier to terminate workers’. 29 Employers are under no obligation
to renew a flexible worker’s contract after it has expired, but they are prohibited from firing
flexible workers for illegitimate reasons, including anti-union discrimination. Cambodia’s Labour
Law is clear that all workers have the right to join and form a union, regardless of the type of
contract. Employers are expected to have a valid business reason or justification based on the
worker’s aptitude in deciding whether to terminate a flexible worker’s contract. Without a valid
reason an employer is liable to pay damages to the worker in addition to legally mandated 5 per
cent lay-off compensation.
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The piece rate and use of flexible labour have been major factors in the sharp increase
in plant level strikes in Cambodia since 2006. In 2006 the ILO stated, ‘We are seeing more
disputes arising over the type of contract used to employ permanent workers, with workers in
some factories complaining that they lack security of employment because they are working
under repeating short-term FDCs.’ 30 Other issues leading to industrial disputes include unjustly
dismissed union activists, sexual harassment and demands over benefits. Regularly strikes and
agitation from plant level activists have resulted in regular workers being sacked and replaced with
flexible labour.
Table 5: Number of lost days caused by strikes affecting Garment Manufacturers Association
of Cambodia (GMAC) members
January 2003-May 2006
Year
2003
2004
2005
2006 (Jan-May)
Total
130,284
107,112
52,419
181,556
Source: GMAC Labour Support Office 2006
Table 6: Number of disputes (strikes and conciliations) affecting GMAC members
Jan 2002-May 2006
Year Strikes
2002
80
2003
55
2004
84
2005
66
2006
37
Conciliations
78
38
54
30
Source: GMAC Labour Support Office 2006
Thus far CCAWDU is organizing flexible labour in garment factories to become members
of plant level unions. They support demands to become regular workers with benefits accorded
to this status such as maternity leave, sick leave, bonuses, etc., while demanding that their time as
flexible workers be included in their employment package.
3. Workers’ Responses, Initiatives and Struggles
Since the transition to democracy began in Cambodia in 1991 there has been a dramatic
increase in both the number and extent of activities of trade unions and NGOs contending for
space in civil society. 31 Since the founding of the Free Trade Union of Workers of the Kingdom
of Cambodia (FTUWKC) in 1997 there has been a major spike in the number of trade union
federations and plant level unions in garments, particularly in the years since ILO monitoring
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began in 2001. In mid-2006 there were 892 trade unions in 270 garment factories, according
to the Garment Manufacturers Association of Cambodia. Nearly 60 per cent of the workers in
the industry are members of trade unions. But, only about 1 per cent of the total labour force is
unionized, and outside the garment and tourism/hospitality sectors, the trade union movement
remains quite weak. 32
It is a competitive environment, particularly in the garment industry, in terms of
organizational politics, objectives and access for unions to resources. 33 These organizations range
from pro-ruling party, pro-opposition, independent/radical positions, to corrupt pro-capital
unions. At times this is apparent in terms of the staff at the federation level of trade unions. Some
unions such as the Coalition of Cambodia Apparel Workers Democratic Union (CCAWDU) are
led by current and former rank and file workers. On the other end of the spectrum, the Cambodia
Labour Union Federation’s former leader was an investor in garment factories and had acted as
advisor to Prime Minister Hun Sen. 34
New Forms of Organizing
Currently in Cambodia there is not a clearly identifiable informal workers movement.
Registered trade unions most relevant to the informal economy are the Cambodian Union
Federation of Building and Wood Workers and the Cambodian Construction Trade Union
Federation. Informal economy workers’ associations are registered under a more complex set
of rules with the Ministry of Interior. An example of this kind of association is the Cambodian
Association for Informal Development. In 2006, another association of informal workers was
formed, the Independent Democratic Informal Economy Association (IDEA).
IDEA joined CCAWDU, a progressive/independent trade union federation with over 30,000
members, the Cambodian Food and Service Workers Federation (CFSWF) and the Cambodia
Independent Civil Servant Association (CICA) to form the Cambodia Labour Confederation
(CLC). 35 The vast majority of CLC members are from textile and garment factories and the food
and service sector. CLC has not yet developed a centralized strategy in terms of their organizing
in the informal economy or informalizing labour. The activities of several members overlap.
For instance, CCAWDU (primarily a garment union) is organizing workers in gas stations and
women in service sectors 36 – both IDEA and CFSWF are focusing on the same or similar sectors.
Thus, as a confederation they maintain a degree of flexibility in terms of the member activities and
have not established neatly defined ‘territories’ for each of the members. This can be viewed as a
potential strength as it allows organizers to utilize their particular strengths and share strategies.
By not narrowly focusing on one sector it allows organizers to access a broader range of workers
across sectors, which more accurately reflects workers’ mobility in the urban labour market. 37
CLC members focus on organizing the following sectors or forms of informal and
informalizing labour:
• flexible labour in textile and garment factories (85 to 90 per cent women)
• casual labour in service industries such as food and beverage services (nearly 50/50 men
and women)
• beer promotion women (100 per cent women)
• motodop drivers (nearly 100 per cent men)
• street vendors (nearly 100 per cent women)
CCAWDU, IDEA and other CLC members do not organize a significant proportion of
these workers with the immediate intent to negotiate a collective bargaining agreement or pursue
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other tripartite functions. Many trade unionists may think it is pointless to organize if there is
no employer with whom the workers can negotiate. This is, obviously, impossible for a number
of informal-economy or informalized workers. The underlying objectives for CLC members are
primarily social and to an extent political and correspond to the immediate concerns of their
members. Social organizing and legal advocacy is an underlying aspect of their organizing strategy.
Rather than consider a narrow economic functionality to trade unions these organizations are, to
an extent, pushing beyond the conceptualization of trade unions prevalent throughout much of
the post-war period.
Case study
Since the formation of CLC, CCAWDU and IDEA have successfully organized two unions
for women working to promote particular brands of beer in bars and restaurants. This is a very
difficult sector to organize in Cambodia. In Cambodia and internationally, both industry and civil
society representatives refer to these workers as ‘promotion girls’ or ‘beer girls’ but this language
is belittling, so we use the term ‘beer promotion women’. Beer promotion women are ubiquitous
in Cambodia’s bars, beer gardens, restaurants and nightclubs. CARE (2005) estimates that there
are 4,000 beer promotion women nationwide, though this is surely a conservative estimate for
Phnom Penh alone. Normally each establishment will have women promoting at least three
different brands of beer on a commission basis, in addition to ‘regular’ staff. Based on the size of
the establishment there may be numerous women promoting the same brand. The women usually
wear provocative dresses with the name of the beer they are promoting emblazoned on them.
This is, of course, an example of the commodification of women by beer corporations including
Heineken, Carlsberg, Tiger, Anchor, Ankor and others.
Male customers regularly choose the woman rather than the beer brand, as customers are
approached by several women selling different brands upon taking a seat. The woman (or beer
brand) chosen is expected to closely service the customers throughout the night, ensuring glasses
are never empty, and ice is regularly added to the glass, etc. In many cases the women are expected
to sit with and and/or drink beer with the customer and provide ‘entertainment’. Workers on
commission are more likely to drink beer with customers both due to pressure from the customers
and the interrelated need to sell more beer. According to a study by CARE (2005) cases of
harassment and abuse are rife within beer promotion. In their survey of 640 beer promotion
women, 83 per cent reported having experienced derogatory behaviour (verbal/non-verbal), 80
per cent unwanted sexual touching, 54 per cent physical abuse, 60 per cent have been threatened
or forced (verbal, physical and at gun point) and 38 per cent have had to perform a coerced sexual
act in the workplace. 38 These issues are considered ‘on the job hazards’ for these workers. The
survey found that one quarter of beer promoters are paid a monthly salary (plus bonuses), and
73 per cent work on a commission-only basis. Many of these women do ‘after-hours’ sex work
voluntarily, while others are forced or coerced into it.
Most beer promotion women in Phnom Penh are rural-urban migrants who are working to
support extended families. For the ‘successful’ ones, beer promotion can offer a higher income
than working in a garment factory. But in exchange they must deal with an ever-present threat to
their personal safety. Beer promotion women are normally employed by distributors for the beer
brands. This makes it difficult to organize as women working for any one distributor are scattered
throughout the city. Women can shift location regularly, meaning workplace-specific organizing
strategies are not always effective. According to CCAWDU, many beer promotion women are
only concerned with day-to-day survival and are not interested in talking about longer-term
efforts to improve their work environment through collective action. Many do not expect to be
employed in these jobs for long, so they do not see the point of organizing. The CARE (2005)
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survey found that 67.5 per cent of respondents had been working in beer promotion for less than
one year. Only 15 per cent had worked on the job for more than two years.
Bearing these challenges in mind it is quite a success to have organized unions for beer
promotion women. It is, however, too early to write of an outcome since it is quite recent and the
unions are in initial phases of their activities. What is lacking from this case study is research and
insight into the lives of the women who have chosen to organize, and the personal-social context
that has led to this association and their perceptions of empowerment.
Conclusions
Cambodia’s Labour Law is comprehensive and relatively progressive but coverage and
implementation is critically lacking. A salient example is Cambodia’s high-profile garment
industry. Competition in the global garment industry is intensifying and the ILO is in the process
of handing over the Better Factories Programme to local stakeholders. The government has not
rigorously implemented the law at any stage, leading to concerns that flexible labour may take on
the competitive advantage over ‘ethical production’ in the coming years.
For those in the informal economy the situation is even more critical. Eighty-five per cent of
the labour force is not covered by the Labour Law. One potential way to overcome the problems
facing informal economy workers is to extend the labour law to include all workers. However, as
the ILO has noted, extending the labour law is complex and contradictory. A point of concern is
that enforcing contracts and registration of business establishments may drive workers into more
uncertain situations. The business registration process has been simplified since 2004, but the
registration fee is as high as $250 to $300.39 For street vendors and other small-scale enterprises
in the informal economy where incomes are very low, this fee is well beyond reach. Furthermore,
the benefits associated with registration do not outweigh the costs, given the low level of social
security and other benefits such as retirement, health care and the like. Despite the fact that a
social security law exists in Cambodia, a system to implement it has not yet been put into place.
Given these circumstances, the revenue for social security and other benefits should not come
from small-scale employers. Rather, it should be a government provision.
This article has suggested that individualized negotiation with government and employers is
not feasible in Cambodia. Furthermore, the formal economy accounts for a very low proportion
of Cambodia’s labour market, meaning collective bargaining in tripartite models is difficult
if not irrelevant in this context. Accordingly, new and creative forms of social organizing and
empowerment are necessary to address the social and economic difficulties facing a vast majority
of Cambodians. The resolution of this may include macro-economic policy reform that would
generate a budgetary provision for workers in small-scale industries and sectors. Pressure to
implement this kind of reform is not likely to come from the World Bank, IMF, ADB or garment
corporations prominent in Cambodia’s socio-economic transition to date. Rather, grass-roots
social-worker activism and progressive/radical organizational activists are essential in opening the
debate, dialogue and action on these issues.
One of the primary advantages for organizing informal and informalizing labour in
Cambodia is that it has a quite young and vibrant labour movement with many committed
activists. Numerous activists working with trade unions and NGOs are thinking of new ways
to address the many challenges confronting the labour movement. Through this we find much
needed conceptualizations and practices that are transforming ‘passive victims’ of history and the
global economy into agents of change in Cambodia.
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Endnotes
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17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
On 3 January 1992, the US lifted its embargo against Cambodia, thus normalizing economic relations with the
country. The United States also ended blanket opposition to lending to Cambodia by international financial
institutions (Department of State 2006).
Asia Development Bank (ADB) (2008) Asian Development Outlook.
Ibid.
Ibid.
Economic Institute of Cambodia (EIC) (2006a) Decent Work in the Informal Economy in Cambodia: A
Literature Review, Informal Economy, Poverty and Employment: Cambodia Series, No. 2. Bangkok:
International Labour Office.
Economic Institute of Cambodia (EIC) (2006b) Handbook on Decent Work in the Informal Economy in
Cambodia. Informal Economy, Poverty and Employment, Cambodia Series, No. 1. Bangkok: International
Labour Office.
It is worth noting that the US Government and any US funding through such agencies as USAID do not
support any organization or programme that promotes the regulation or legalization of sex work.
Ledgerwood, J. (1990) Changing Khmer Conceptions of Gender: Women, Stories and the Moral Order, Ph.D.
Dissertation, Anthropology Department, Cornell University.
Gorman, S., D. Pon and K. Sok (1999) Gender and Development in Cambodia: An Overview, Working Paper
10, Phnom Penh: Cambodia Development Resource Institute, June.
Gorman et al. 1999.
To this end, the Cambodian government has approved 15 special economic zones in border and rural areas
since 2005.
Asia Development Bank (ADB), ADB Congratulates Cambodia on Passage of Land Law, http://www.adb.org/
Documents/News/CARM/2001/carm200101.asp [Accessed 15-4-08]
Asia Development Bank (ADB) (2001)
See Global Witness (2007) Cambodia’s Family Trees: Illegal Logging and the Stripping of Public Assets, June.
Macan-Markar, M. (2008) Rights-Cambodia: Land Grabbing-A Serious Concern, Bangkok: IPS, Jan 28.
EIC 2006a
EIC 2006b
Ibid.
See Falkus, M. and S. Frost (2003) ‘Labour Law and Workers’ Rights in Cambodia’ Asia Pacific Labour Law
Review: Workers’ Rights for the New Century, Hong Kong: Asia Monitor Resource Centre, pp. 91-104.
Sieng, D. and M. Nuth (2006) ‘Extending Labour Protection to the Informal Economy in Cambodia’, in
Tajgman, Ed., Extending Labour Law to All Workers: Promoting Decent Work in the Informal Economy in
Cambodia, Thailand and Mongolia. Bangkok: International Labour Office.
Sieng and Nuth 2006
Falkus and Frost 2003
See Brown, E (2007) Out of Sight, Out of Mind? Child Domestic Workers and Patterns of Trafficking in
Cambodia, International Organization for Migration, January.
Yamagata, T. (2006) ‘The Garment Industry in Cambodia: Its Role in Poverty Reduction Through ExportOriented Development’, Institute of Developing Economies, Discussion Paper No. 62.
Better Factories Cambodia (2006) Better Factories Concerned about Labour Contracts, Quarterly Newsletter, No.
6 October.
Falkus and Frost 2003
Womyn’s Agenda for Change (WAC) (2005) ‘Current Situation of Labour Flexibilization in Cambodia,’
available at www.womynsagenda.org.
Better Factories Cambodia 2006
Ibid.
Ibid.
Cambodia
31.
32.
33.
34.
35.
36.
37.
38.
39.
123
On a general level this is an issue far too complex to address in this chapter; numerous articles and books have
been written on the subject. See Hughes, C. (2003) The Political Economy of Cambodia’s Transition, 1991-2001.
London: RoutledgeCourzon; Hughes, C. (2007) ‘Transnational Networks, International Organizations and
Political Participation in Cambodia: Human Rights, Labour Rights and Common Rights,’ Democratization,
Vol. 14 No. 5, pp. 834-852; Landau, I. (2008) ‘Law and Civil Society in Cambodia and Vietnam: A Gramscian
Perspective’ Journal of Contemporary Asia, Vol. 38, No. 2. May. pp. 244-258; and Arnold, D. and H.S.
Toh (forthcoming, 2009) ‘Success Story or Barely Surviving? Cambodia in the Global Textile and Garment
Industry’, Journal of Contemporary Asia.
International Trade Union Confederation, 2007 Annual Survey of Violations of Trade Union Rights.
As a brief summary, there are 20 trade union federations in the garment industry, two federations in
construction, two federations in food, beverage and services, one workers’ association for sex workers, a civil
servants’ union, three informal workers’ associations in addition to numerous non-government organizations
(NGOs) focusing on the informal economy in wide-ranging capacities, up to ten NGOs working on labourrelated issues (in a wide range of programmes and capacities), several trade unions and NGOs working in
plantations, and scores of NGOs working in rural areas with farmers and peasants.
Falkus and Frost 2003
The CLC is not able to formally register since two of its members, IDEA and CICA, are not yet ‘legal’;
regulations require at least three registered federations to form a confederation.
This is, partially, a survival strategy for CCAWDU given the uncertain future of the garment industry in
Cambodia.
One drawback of organizing in these sectors is that several CLC members have secured funding from external
donors such as international NGOs and trade unions, since they do not have surplus budgets from work in
other sectors to support work with informal/izing workers. This entails project reporting, writing proposals and
other tasks that are time consuming and distract the union activists from their core work of interacting with
their members. Thus, they run the risk of becoming like an NGO in certain functions and capacities.
CARE (2005) A Report on the Situation of Beer Promotion Women in the Workplace, Cambodia.
EIC 2006a
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125
Indonesia
Indonesia
Informal Women Workers: The Case Of Indonesia
Hesti R. Wijaya
1. Contemporary Snapshot
Description of Indonesian Informal Economy
T
he most complete picture on the informal employee situation is portrayed in a survey
conducted by BPSN or Badan Pusat Statistik Nasional (Central Bureau of Statistics). Based
on BPSN data of 2006, the Indonesian population stood at 224 million, comprising of 106.28
million in the productive workforce (95.18 million are employed and the remaining 11.1 million
are unemployed). Around 60.77 million work as labourers, which mean that around 63.85% of
the workforce works in informal economic enterprises.(See Table 1)
Table 1. Formal and Informal Workers
Year
Number of Formal Workers
Number of Informal
Workers
Productive
Workforce
2004
34.5 million
59.2 million
93.7 million
2005
34.5 million
60.6 million
94.9 million
2006
34.4 million
60.7 million
95.1 million
Source: BPSN, 2006
The above data reflects that the number of people working in the informal economy is
increasing yearly. In contrast, the formal economy is in a downturn so that it can be said that job
creation in the formal economy is unable to absorb the growth in the labour market. The informal
economy is more likely to operate in enterprises that do not rely on advanced educational
backgrounds and require no special skills. As reflected in Sakernas (National Labour Force Survey)
data of 2006, 46% of the workforce which was engaged in informal activities were elementary
school graduates, followed by employees who had not graduated from elementary school.
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Table 2: Number of Workers in Informal Activity Based on Educational Achievement in
2006
Educational Background
Total
(millions)
Percentage
Elementary School (not finished)
14.337
23.66
Elementary School (graduated)
28.026
46.12
Lower Secondary School
12.031
19.80
Upper Secondary School
5.939
9.78
Diploma/Academy
0.166
0.27
University
0.23
0.37
Total
60.769
100
Source: BPSN, 2006 (February)
The statistical figures above do not reflect whether the informal workers referred to are
mainly comprised of workers outside the agriculture sector. However, given the workforce
structure based on the sector (see Table 3) we might find that most of the workforce is employed
in informal economy of trade.
Table 3. Informal Workforce Distribution Based on Sector
No.
Sector
Number of Workforce
(millions)
1. Agriculture
39.22
2.
Processing Industry
2.84
3.
Service provider
10.09
4.
Consultancy
1.93
5.
Others
6.68
Source: BPSN, 2006
In addition to informal economic activities related to the agriculture sector and economic
patterns based on culture and local tradition, recently there has been a rapidly developing
informal economy that is linked to the modern economy. Although the word informal might
indicate small-scale business, the economic contribution of these informal activities is significant.
In 2004, the Central Bureau of Statistics estimated the number of Business Entities categorized as
non-legal entities (Usaha Mikro, Kecil dan Menengah or Small, Micro and Medium Enterprises)
at 17 million business units, employing a total of 30 million informally, with total production
valued at IDR 537 billion. 1
The Process of Informalization
One area of interest related to the informal economy is the informalization of working
relations that were previously formal. This informalization relates to economic development in
developed countries such as the US and Europe which has promoted new work divisions under
production which has become global. The production system, by developing supply-chains, no
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longer focuses on centralized production activities but spreads production to a number of regions
or countries based on comparative competency. Hence, economic units become more flexible to
deal with competition. Meanwhile, production parts are outsourced to the third parties. Such
transfer of production is often carried out by a number of illegal business units employing, for
instance, immigrant workers; this type of production unit is what is known as a sweatshop. This
phenomenon explains the employment informalization process. In this context, usually workers
do not receive protection of employment status or health care. The New World (i.e. developed
world)’s work practices have had an impact on Indonesia. Beginning in 1970s, a number of
factories were established in different industrial estates, prepared by the government to attract
foreign direct investment. The investors, mostly foreigners, tried to win bids offered by major
European and American companies such as Adidas, Nike, and Reebok by taking advantage of the
comparative advantage of low-cost manpower in Indonesia. Some argued that those companies
shifted their operations due to strict provisions in the constitution and regulations of both Europe
and the US.2
To top it off, the world’s worsening economic situation that caused poverty in developed
countries in the late 1990s compelled the global community to become more selective in
exercising their spending power, and focus more on economizing rather than buying luxury items.
The Wal-Mart retail business which has been rebuked for its anti-union policy was able to expand
significantly because the consumers in the country of origin no longer care about anti-sweatshop
campaigns.3
In those days, factories employed workers in a manner that frequently contravened laws
and regulations. This included employment of young children, or discrimination against female
workers, e.g. by giving less compensation compared to their male counterparts. Only after
international human rights and local labour organizations focused on this issue did these factories
improve themselves and reduced illegal practices. However, the companies also transformed their
production units into smaller units often undertaken by smaller home industries. The workers of
such industries usually work based on contract and receive remuneration based on the size of the
order they complete.
Problems and Issues of Informal Workers: Focus on Women
In Indonesia, the informal workers are located in both in the urban and rural areas. By and large,
the work is recognized from its ease of entry, lack of any formal procedure whatsoever, operation
on a very small scale, maybe done on own account or with the help of others sometime without
pay, use of locally based resources, where the technology required is simple and easy to adapt
to, and no education required for the job, which more than often not was creatively thought of
by the workers themselves. For example these are street traders, laundry service, food producers,
handicraft makers, pedicab drivers, only to mention several, as the activities, indeed, cover various
products of goods and services.
Characteristically the problems and issues faced by these informal workers are:
1. Poverty
Most of the informal workers are living in poverty. The majority of them are women, who,
due to poverty, always apply survival strategies in their daily life to secure their living.
2. Lack of capital
They have only a low level of capital. In most cases their working motivation are only as
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simple as having enough income earning to meet the daily food consumption, with no
intention to pile wealth.
3. Limited skills
4. Limited access to regular markets and technology.
5. Poor working conditions
Lack of capital and small income, they work in indecent places.
6. Low and unstable income
7. Invisibility
Unlike those in the formal employment, the informal workers do not appear in statistics, are
unregistered as working enterprises, or are wage workers employed by a middle-person.
8. Unprotected workers
Since Indonesia’s independence in 1945, for around six decades labour regulations have not
yet been designed for them. It is not surprising therefore, that the informal workers have
become workers with neither protection nor any form of standard social security.
9. No labour union
Working in solitude, such as working in isolation within their own home with no common
establishment, organizing in a labour union is almost impossible. This leads to the fact that
almost all of the informal workers are unorganized workers. Consequently, they have no
representation capacity.
10. Long working hours
The women might work for long working hours, particularly when the informal work is
intermingled with domestic chores under women’s responsibility. Other common reason is
related to the workers capital availability. As capital is limited, they rely on their labour to
earn. Moreover, as earnings are low, they are willing to spend hours to work to earn enough
for living.
The evidence is enough to conclude that being an informal worker is an unfortunate thing.
Despite their plights, because they do not work within enterprises that adhere to legal and
regulatory frameworks, it is a logical consequence that they have little or no legal and social
protection. This is still true despite the latest development, the passing of the latest labour law,
namely Law No. 13/2003 about manpower, in which all wage labourers are supposed to be
covered, while the own account workers shall be covered by social security for all policy areas in
accordance with Law No. 40/2004, as described in the next section.
Informal Women Workers
Very much related to the gender role of women, the majority of Indonesian women work in
the informal economy. Largely, there are two categories of informal women workers: own account
workers, and wage workers.
a. Own Account Women Workers
In this category the following type of workers are included:
1. Heads of family business
2. Self-employed
3. Unpaid family workers
4. Street vendors
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Relatively speaking, self-employed women conduct regular work; they have daily orders,
and can decide on their own compensation and work standards, working hours and rest periods,
holidays and leaves. They get paid upon selling their products, following the entire production
process, and bear all of the risks. Sometimes these are not all applied, and what happens then is
more complicated. An example is the case of palm-sugar production by the own account women
workers in Lumajang, East Java.4 (Wijaya, 2008). These workers are necessarily women because
the production process involved boiling and simmering the palm nectar to be molded later; any
production activities related to cooking is women’s work.
Three parties are involved. First, are the sugar wholesale traders, who grant loans to the
self-employed women according to their demand of money and their ability to return the loan,
collect palm sugar from the workers at the price set by this wholesalers (usually lower than the
market price), and sell it to the buyers. Though they claimed that there is no interest for the
loans, they gain huge profits from loaning as they collect palm sugar from the workers at a much
lower price than they sell to the market. Second, are palm tree owners who rent palm trees to
the palm sugar workers. Third, are the self-employed women workers who work to earn a living
and to repay debts. The workers do not have adequate capital to start their own business. They
have very low credit ratings, making it impossible to obtain loans from banks. They also prefer
borrowing money which is ‘interest-free’, not understanding the high implicit interest rate in
such borrowing. As they cannot save enough capital to set up their own business, they have no
choice but to continue borrowing from the same person to get enough capital for production and
sustenance. The working conditions are poor. The family workers, often unpaid, usually have to
climb up palm trees without safety devices, and the workplace for boiling nectar and moulding
the palm sugar has poor ventilation and poor lighting. Risks for the women such as falling from
the palm trees or third degree burns from splashing boiling nectar are common, yet the women
lack health insurance against such risks.
b. The Wage Workers
Various wage workers are included in this category. They maybe classified as follows:
1. Employees of informal enterprises
2. Casual workers without a fixed employer
3. Home-workers (industrial outworkers, or workers in the putting-out system, the system
of producing for external companies)
4. Domestic workers
5. Temporary or part-time workers
6. Unregistered workers
7. Undeclared workers
Lacking statistical figures, it is believed that home-based workers are the majority of women
informal workers in Indonesia. Like elsewhere in the rest of the world, this is related to the gender
roles of women as the home-maker, which necessitate that women work in their own home even
though it is an economic activities to earn income. Other reasons are that because it is flexible
work, they can do income-earning activities without neglecting their roles as mother and wife in
the home as necessary. The women home-based workers alternately do domestic chores and work
for income-earning activities. They work by orders to perform special tasks and get paid by piece
or by volume. It has been observed that in most cases the domestic role is prioritized over the
putting-out system work, resulting in a double burden to the women workers, lack of rest and
working overtime to meet the deadline.
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Not only is the work flexible, while recruitment is simple—through word of mouth
only—home-based work is less tense than working in a factory since the work is unsupervised.
Nevertheless, quality control is carried out by the employers (or immediate employers/the middle
person), and the risk of below-standard production must be borne by the workers in the form of
deducted payment in the case of products beyond repair, or by undoing and redoing the rejected
product, which usually takes longer time than initially. The employer–employee relationship is
loose, without any standard practice of that officially recognized by the Department of Labour
and Transmigration. This predicament leaves the home-based workers, like other informal
workers in the rest of the world, without any access to social protection.
Home workers show specific characteristics remarkably different from workers in a
manufacturing establishment which belongs to the factory owner. In Indonesia, there are three
types of home-based workers:
1. Home workers in the putting-out system (POS) who work in their home. This work is
obtained from the employers or, in most cases, immediate employers or intermediaries
who give them orders and raw materials; thus the workers do not have any rights to the
type of products and they do not have rights to market the product;
2. Home workers who act as middle persons, employ other home workers and employ
themselves in similar type of work, and
3. Home workers who are self-employed and work independently in producing goods
according to their own designs, having full rights to their production and marketing
their products themselves.
An example of typical home-based work in Indonesia is shoe production in Asrikaton
Village, Malang Regency, East Java 1 (Students for Equality and Equity Project of Hong Kong
University, 2007, unpublished report). Sanny shoe factory, which receives orders from overseas
(Malaysia, Germany, Singapore and Hong Kong) and domestic buyers, allocates part of the
production process to the factory, and outsources the rest to home-based workers through
‘middlemen’ or intermediaries, as factory partners. The shoe factory is a transnational company,
with investors from Germany, Malaysia and Indonesia. The factory claims that all of the
production processes are finished within the factory, and that it outsources some of its production
process to partner factories only when the factory lacks the capacity to meet the demand. This
claim, however, is contradicted by what the intermediaries and the women home workers have
said, i.e. that the factory conceals the fact that they employ home workers. The intermediaries in
most cases are long-term employees. For example, the head of the Assembly Department has not
only the responsibility to train the assemblers in the factory and supervise the production process
in his department, but since eight years ago when economic crises hit the Indonesian economy at
its worst and a large number of workers were retrenched, he has been assigned the additional role
of finding women home workers to assemble shoes when the factory has difficulty fulfilling orders
in time. He profits from the difference between the piece rate he receives from the factory and
that offered to the home workers. He also checks the quality of the finished products and returns
those which are sub-standard, but he neither trains these workers nor supervises the production
process. The home workers receive orders for sewing shoes from the intermediaries. Sewing is
perceived as women’s job, and only women are perceived capable to do so, regardless of the fact
that it is, indeed, tough work. Therefore only women are recruited as the home workers, receive
orders from the intermediaries, and are paid based on a piece rate ranging from IDR (Indonesia
rupiah) 1,900 to IDR 2,500 (equivalent to US$2.1 – US$ 2.6) according to the complexity of
different models. On average each workers can finish 10 – 12 pairs a day. This is similar to the
capacity of their counterparts working in the factory. But their working hours fluctuate a lot due
to the irregularity of the orders, and their income, too, fluctuates accordingly. Furthermore they
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do not receive benefits. These women workers are the ex-workers of the shoe factory laid off years
ago and have been working as home-based workers ever since, receiving raw materials in the form
of shoe parts, including shoe-soles, needles, and thread. Yet no occupational safety measures are
practiced from the order provider against punctured fingers, wound and cuts, shoulder aches and
sore eyes.
All three types of home-based workers have the following characteristics in common (typical
of informal workers, as previously mentioned): 1) long working hours, 2) low returns, below
the regional minimum wage, 3) work often involving family labourers, 4) no social security, 5)
no occupational health and safety devices, 6) no written contract, and 7) use of their home as
their base of production. Neither return nor compensation is paid to the POS workers for their
contribution on fixed cost (e.g. room, premises), variable costs (e.g. electricity, oil, paints, water,
petrol) and equipment (such as cooking utensils, knife, scissors, molds, etc.) and machineries (e.g.
sewing machines). The POS system involves their production in mass production, unlike the selfemployed women, where the production process moves from one home-based worker to another
before the final product is fully shaped.
There are additional similarities between home workers in the POS and home workers who
are middle persons at the same time. Their work is irregular, orders are from one to seven days,
and wages are paid through piece rate decided upon by the immediate employer or intermediary,
and upon delivery of products which are considered satisfactory by the latter. Despite long
working hours, they have no overtime payment. Their contributions to the production process
which consist of not only labour, but other input factors mentioned above are only compensated
for (if at all) by the flat all-inclusive piece-rated return. Workers lack any bargaining power to
overcome this problem. There are no provisions regarding length of working hours, overtime
bonus, weekly rest period, maternity leave, menstruation leave, or annual leave. More often than
not at the time of economic crises, or simply during market failure of their product (e.g. time of
Gulf War, rejection of garment products from entry to Germany and the USA, during financial
crises in the second half of the 1990s) it is the home workers who suffered losses. They bear the
brunt of these market changes because they do not get paid if products remain unsold.
State of the Labour Movement with Particular Attention to Women
The experience of self-employed workers—namely of street traders, home-workers in the
putting-out system, overseas contract workers as domestic helpers, forester community, farmers
and fishers—in workers organizing and advocating for social protection are different from one
another, because each group has unique characteristics.
Home-workers are the only self-employed workers that are officially organized under proper
registration following Law no. 22/2001 on workers’ organization, although it should follow a
bottoms-up approach from the bottom level of the Technical Labour Agency at the municipality
level and regency (an intermediate administrative unit) level, to provincial level, before going to
the national level. At present, the level of organization is primitive. East Java is the only Province
out of 33 provinces in Indonesia in which the Association of Women Home workers (Himpunan
Wanita Pekerja Rumahan Indonesia) is officially registered as a labour union (in the regency
of Malang, municipality of Blitar, regency of Mojokerto and the regency of Situbondo. These
are only four out of 38 Municipalities regencies in East Java Province. The workers should be
empowered before capable of registering themselves, due to their unique characteristic wage
workers. They should know by heart the aims of organization such as:
- collective bargaining capacity
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-
-
-
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collective advocacy
recognition as workers
obtaining rights as workers including social security rights
alliance-building for strengthening workers’ capacity
Standing before the officials of the local labour technical agencies is a tough challenge for the
home workers, who may regard themselves as being just housewives.
-
As for the other type of informal workers, the organization, if any, may not be officially
registered while their aim for organizing focuses on productivity only. It is different
from one organization to another. With the self-employed street trader in Jember, East
Java, for example, the goal set is provision of local regulations for street traders which
protect them and offer them job security and freedom from exploitation. On the other
hand, the fisherfolk, forestry community and the farmers organization aim at: a model
of protection, social empowerment, and protection of natural resources.
The only informal workers who are insured with the state worker insurance company
Asuransi Jasindo Consortium are the overseas contract workers—basically, those who go abroad
to work as domestic helpers. However, regardless of their full payment of the insurance premium,
they remain unprotected at the receiving countries; they became undocumented workers precisely
because their documents get confiscated by the labour agencies. At all stages, whether during predeparture, at the work place or even on the way to return back home, claiming insurance for a
work-related accident is almost impossible.
For workers who have not got any experience in organizing themselves, organizing is often
perceived as a waste of time, particularly for those for whom, very much due to low income and
poverty, time is a factor sorely needed for survival. Organizing this unorganized sector requires a
process and facilitation. The role of NGOs in capacity-building and organizing is crucial, while
character-building ought to be undertaken too. It can be as simple as it looks such as in the case
of street traders, yet it can be as complicated as overseas domestic helpers at their workplace which
involve various components and many players. The unique characteristics of each must be taken
into account in the effort to organize an informal workers’ union. Protection against risks may be
an effective entry point for informal workers’ movement.
Specific segments of informal work have specific type of risks related to occupational
health at the workplace, variously ranging from physical ills (e.g. respiratory problems, eyesight
problems, stomach disorders, muscle tension, skin diseases, cuts and wounds, over-fatigue),
to emotional tension, to economic risks. Sometimes sexual violence is suffered by the women
informal workers, as experienced by women workers in the tobacco drying area in East Java. Even
death occurs among informal women workers, both among those who work as domestic workers
abroad as well as those who work in-country such as street traders. Among the fisherfolk, the
informal workers face uncertainty about their future when they get old and they are too weak to
work, no longer capable of selling their labour with frail aging bodies. ‘Pension’ is not in their
vocabulary.
In the recent laws of social security for all, those above-mentioned risks may be covered
by health insurance, social security insurance, and a pension scheme for the old age. All these
depend, however, on the capacity to pay premium, which is a question mark for the low-earning
informal workers.
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Another problem is related to the type of the insurance scheme availability. During the 2nd
Informal Sector Workers Conference in 2005, it was revealed that there are other types of risk
which is usually uncovered by any insurance scheme, such as:
a. Economic related risks for the women home-workers in the putting-out system such as
unpaid wages and lack of benefits and holiday
b. Death, capital loss, overfishing, instability of fish prices, seasonality and uncertainty of catch
and competition with the capital intensive modern fishing companies risks for the fisherfolk
c. Risks of total capital loss, and uncertainty of workplace availability for the street vendors
d. Risk of death, loss of land, loss of product and income loss, risks of instability for the farmers
e. For overseas migrants workers and domestic workers: risks of unpaid wages, deportation, loss
of jobs as formal workers, confiscation of documents (e.g. passport, working permit, ID card
and/or working contract), transformation from legal to illegal status, confiscation of money
and personal belongings, treatment as modern form of slaves, sexual and physical abuse, and
death.
All those risks are good entry points to initiate informal workers’ movement and struggle to
obtain social protection, or, social security, wherever applicable as their rights of workers. This has
been applied to home workers in Indonesia, as part of the home workers movement in Southeast
Asia. Since it is only at the initial stage, we need to wait to observe its progress and success.
Indonesian Labour Law: Does It Apply To Informal Workers?
For a long time the Indonesian labour law has not included any clear concept between the
formal workers and that of the informal one. The former is well-regulated, while the latter is
neglected. Policies related to the protection of informal workers have been absent, even though
the 1945 Basic Constitution, Chapter 28 reads that:
‘Every citizen has the rights to obtain social security that make it possible for a
person to develop properly as a respectable human being.’
while Chapter 24, Article 2 states that:
‘The state shall develop a social security system for all of the citizens and empower the poor segment
of the society in accordance with proper degree of humanity.’
This is a logical consequence of the fact that informal sectors are invisible. Their numbers
are not covered by statistics or by any labour union – let alone organization, and representation.
For more than 15 years, official efforts to protect home-based workers have been conducted in
Indonesia to analyze the existing labour laws, since home workers are invisible as workers under
the law even though they actually have working relations with their employers and receive pay in
return. Those workers should therefore be recognized by law and obtain their rights as workers.
This Country has not ratified the 1996 ILO Convention on Home Workers. This
Convention defines a home worker as someone who works for remuneration in his or her home
or in other premises of his or her own choice, other than the workplace of the employer, resulting
in a product or service as specified by the employer, irrespective of who provides the equipment,
materials or other input used. Are home workers protected under the Indonesian Labour Law
No. 13/2003? The following section explores this issue by describing the characteristics of home
workers in Indonesia, analyzing their predicament under the current labour law, and making
certain conclusions at the end.
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When Labour Law No. 13/2003 was passed, a new hope begun to take form for the formal
workers. By the definition of workers in this law, all wage workers should be covered by this law.
This leads to the implication that the wage workers in the informal economy are also protected.
The main problem is that terminology of informal workers is not mentioned explicitly in this
Labour Law. Research into this law has indicated that they are not protected by written working
contracts due to a lack of formal and direct ‘working relations’ with the employer (Wijaya &
Sembodo, 2005).
However, to the informal workers the law is not readily implementable for various reasons.
For example in the case of home-based workers. Essentially, these segments of informal workers
may be classified into the following categories (as described earlier in the chapter):
Home-workers in the putting-out system
Sub-contractor who are sub-contracting the job order to the other home-workers
Self-employed workers
Does Law No. 13/2003 Protect Workers in Informal Employment?
The case of home-based wage workers
Working relations between home-based workers and their immediate employers has specific
features distinct from employer-employee relations in the industrial sector or formally registered
companies. They have the following characteristics:
1. The working contract between the employee (i.e. home workers) and their immediate
employer is only a verbal agreement. This verbal agreement covers an extremely short time
only (one day to one week), yet because there is a constant repetition of the job, the work
goes on continuously. The job contract components include, for example:
a. a job order
b. a wage/salary upon completion of work performed
c. workers working for ‘employers’ within a subordinate relationship
2. The employers do not supervise home workers who are employed. Yet quality control is
imposed upon the submitted product based on their standards of the expected results.
3. The home workers do not have any bargaining power to mutually determine the terms of
a contract with the immediate employer. It is the same when they work as intermediaries
between end workers and employers.
These characteristics cannot easily be fitted into the new Indonesian labour law. The main
question is whether their current patterns of working relations are covered by existing law, thereby
ensuring that their rights to be protected as workers are met, or whether such patterns fall outside
the existing labour law.
Working Relations
In the case of the putting-out system, for example, although home-workers are not explicitly
mentioned in the latest Indonesian labour law, the definition of workers alone implies that this
law covers those workers. Consequently they must have the right to obtain social protection.
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In this law (Law No. 13/2003), it appears from a glance that home workers are covered by
it. Chapter 3, Article 3 reads: ‘A worker or a labourer is a person who works and receives a wage or
a return in other forms.’ Chapter 1, Article 4 also provides that ‘A work provider is an individual
or entrepreneur, corporate body or other type of institution that employs a worker and pays by wage or
other form of return.’ These definitions are consistent with the home workers’ intention to work
for pay.
According to the definition of what an entrepreneur is and what an enterprise is, found in
Chapter 1, Number 5, and Chapter 6, Number 6 of Law No. 13/2003, not only the employers,
but also the middle persons or subcontractors employing women home workers, should be
covered—whether registered or non-registered, as long as they employ other people in the
production process.
It implies that entrepreneurs/employers who employ home workers are included in the
above-mentioned definition, because it applies to both types of employers. The problem is
that entrepreneurs are usually not transparent about the fact that they employ home workers.
Entrepreneurs can hide their status as employers since the production process is not done in the
factory establishment, but in the houses of home workers.
The Work Contract
In the meantime, the work contract supposedly is covered by the law which states: ‘A
working contract is an agreement between the workers/labourer with the employer or work provider
that covers work conditions, rights and responsibilities of all parties.’ (Chapter 1, No. 14 of Law No.
13/2003). This definition is broader than the coverage of labour laws in the past. In particular, it
explicitly states that a working contract is not only applied to labourers/workers with employer,
but also to the middle person. The main difference between the two lies in enterprise ownership.
Entrepreneurs may own the enterprises, while the work providers are not necessarily enterprise
owners.
Unfortunately, it seems this chapter is nullified by the law which reads: ‘A working relation
is relation between entrepreneurs and the workers/labourers, based on working contract that spells out
items of work, age and order’. (Chapter 1, No. 15, Law 13/2003)
Legal experts such as Soepomo (1985) and Djumialdji (2002) however believe that a
working agreement exists when a worker/labourer has agreed to work for employers who provide
jobs and pay upon job performance. It is not necessary for there to be a written contract since
Chapter 51, Article 1, of Law 13/2003 reads: ‘A work agreement may be a written agreement or a
verbal agreement’.
Thus the elements of work agreements are: 1) job implementation, meaning that the worker
agrees to perform a designated job, and 2) a subordinate relationship, meaning that workers work
under the leadership or instruction of others.
Repeated Nature of Work Confirms Work Relations
Another feature that characterizes home-based work relations is that the work is very much
short-term, and replicable continuously. Particular reference to this is in chapter 1601 c, Article
2 KUHP (Book of Rule of Civil Law a) which states: ‘When a work-contract-agreement is followed
with other agreement in which there is a time gap in between, or if during the time of drafting the
work contract agreement both parties clearly meant to materialize further a number of agreements, such
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that all work contract agreements together are considered as one work agreement….this agreement is
considered to remain intact as a work contract agreement.’
It is clear that such relation may be categorized as work relation, because it involves a
leadership element or authority for employers to instruct workers such as home workers.
On the other hand, the self-employed workers, as own-account workers, are not covered
since no working relations involved.
The Issues of Wage Payment and Social Security
Law No. 13/2003 mentions the following definition of wage or pay. ‘A wage is the worker’
s/labourer’s rights in the form of return from employers or work provider to the workers/labourers which
is determined and paid according to a work agreement, joint agreement, or rules of laws, including
bonus for workers/labourers and their families upon a job and/or tendered service.’ This definition
identifies the work provider as the party who is capable of paying the workers/labourers, thereby
implying inclusion of the case of home workers. The ones who are actually the workers/labourers
in the putting-out system (POS) are covered and should be protected under Indonesian labour
laws.
In addition, as a result of advocacy by Homenet Indonesia and other groups, the Ministry
of Manpower covered home-based workers by issuing the following regulation on piece rate: ‘For
the labourers on the contract system of piece-rated payment, for over and above a month, the minimum
monthly wage should be equivalent to the minimum wage rate at the said company’ (Minister of
Labour Regulation No. Per. 01/MEN/1999) Chapter 15, Article 1.
Although the term ‘home workers’ is not specifically mentioned, this article means a lot to
them. Consequently, other rights as workers should be applied to the home labourers including
social security. This has been seriously undertaken with the promulgation of implementing
regulation No. Kep. 150/Men/1999, a Decision Letter of the Manpower Minister regarding
operation of the social security programme for daily paid workers, contract labourers and fixed
time agreements.
Homenet Indonesia will work based on these rules, as these are not nullified by Workers Law
No. 13/2003. As for the self-employed workers, they are supposed to be covered by social security
using Law 3/1992, regarding workers’ social security, wherein Chapter 3, Article 2 says: ‘Every
worker has the right to obtain worker social rights.’ The mechanism for implementation is organized
by and under the responsibility of PT Jamsostek (Worker’s Social Security Company).
As a conclusion, although technically, home workers are not specifically mentioned by the
labour laws, Homenet Indonesia claims that these laws can be interpreted to cover the workers
or labourers in the putting-out system. However, a lot still has to be done in order to make social
protection in general, and social security in particular, a reality for the home workers.
Important also is the question of: ‘Who is the employer?’ because in most cases, the
employers are invisible to the home workers and can easily deny any responsibility to their
employment.
In 2008, nearly five years since Labour Law No. 13/2003 was promulgated, nothing has
happened that positively changed home workers’ access to social security. It is important to note
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that since the law did not explicitly state the definition of home workers, the general perception
among government officials and the entrepreneurs remains that they yet uncovered by the law,
and thus, are not eligible to obtain social protection benefits. Up to the present time, despite
the widespread popularity of informal work, informal workers are not officially recognized.
At the empirical level, for instance, both the employers and the officials of the Department of
Employment and Transmigration have not had any knowledge of the home workers’ issues.
This indicates therefore, that to make the law work for the workers in their obtaining protection,
awareness-raising should be carried out to all parties, i.e. not solely to the home-workers, but also
to the officials of the Department of Labour and Transmigration and the employers.
Social Security to Cover Informal Workers
After a long period of advocacy, Law No. 40/2004, otherwise known as ‘Sistem Jaminan
Sosial Nasional’ (National Social Security System, hereafter NSSS) has finally been promulgated.
Through this Law, the government shall cover the social security of all Indonesian citizens.
Previously social security had been available only for workers in the formal economy. Optimism
is high with the promulgation of NSSS that all workers in the informal economy, own account
workers in particular, will be covered and protected.
To the surprise of many, Law No. 40 /2004 regarding NSSS seems to respect the informal
workers’ right to decent living. Chapter 1 defines Social Security as: ‘… one form of social protection
to secure that all of the people obtain a decent level of the basic needs of life’. From what has been
almost a standard norm to provide informal workers only a minimum level of basic needs, it has
been raised to a more truly decent one. Meanwhile, the words ‘all people’ implies embracing those
in the informal employment including own account workers and home workers too, validating
the latter’s inclusion as recipients under the law. The standard of a social security system as it
applies to Indonesia is further stated in Chapter 3: ‘National Social Security System aimed at full
provision of decent basic needs of living to its members and/or their family members’. By Law, the
NSSS will extend minimum protection using the criteria of decent basic living (‘Kehidupan
Hidup Layak’). Essential needs, or decent basic needs or living, is defined as meeting minimum
basic needs in order to have a decent life—this ultimately is the realization of social welfare to all
Indonesian people.
The
people:
a.
b.
c.
d.
e.
•
•
NSSS explicitly states that five security programmes shall be extended to all Indonesian
Health security
Occupational accident security
Old age security
Pension security
Death security
The home-based workers, particularly the self-employed women, are therefore not excluded
from availing of the said privileges provided by law.
Chapter 14 states that the government is committed to the poorest and most financially
incapable persons, who as recipients of the government-supported welfare plan must be
registered with the Social Security Implementing Board. Under the said scheme, a home
worker may participate as a self-employed worker by paying the nominal rate determined by
the government, or may join the system through a neighborhood group. Home workers in
the putting-out system may avail of the scheme through joint payment, with those receiving
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low wages being encouraged to participate in the insurance programme. They should be
given access to claim their rights to social security and that of their families.
Social security under this law is obtained depending on the capacity of a person to pay: she
or he may choose to avail of all the privileges offered or may choose just one or two of the
following—health, workplace accident, pension, old-age security, and death.
In view of the above, the Board of Social Security was legally established, with four agencies
to undertake the task of implementation and facilitation of social security extension to
workers: Workers Social Security Company (PT Jamsostek), Government – Civil Servant
Insurance and Saving Fund Company (PT Dana Tabungan dan Asuransi Pegawai Negeri,
or TASPEN), Social Insurance of the Army of the Republic of Indonesia Company (PT
Asabri), and Indonesian Health Insurance Company (PT ASKES).
Similarly, a lot still has to be done as the law is not readily implementable as the bureaucracy
requires directives or other implementing instructions. In the meantime the Government has
taken ILO’s recommendations as follows:
a. organizing the workers by type of employment
b. training the workers on workers’ rights and responsibilities
c. assisting informal employment workers to become formal ones
Viewing the law positively, it is worth noting that:
1) The government has been aware that the informal employment workers should not
be discriminated against by formal workers. A step-by-step approach ought to be
undertaken hand in hand with non-government organizations. The latter, considered to
be more advanced in experience, should offer their inputs to the government.
2) Every person may become a NSSS member by paying the premium.
3) The government is willing to work collaboratively with NGOs and other forms of
community organizations particularly with respect to the availability of data on workers
in informal employment that may realistically be used for NSSS purposes across
government departments (such as the Department of Labour and Transmigration,
Department of Fishery and Oceanography, Department of Health, Department of
Women Empowerment, etc.)
4) The government should play a role in the supervision of NSSS implementation
particularly with respect to employers who break this law.
5) Socialization of NSSS is needed for the society in general, and the workers in the
informal economy in particular.
that:
Effort toward official recognition of home workers remains to be pursued. It is recommended
a. An official written statement be given, that the home workers be included in the
definition of workers by Indonesian labour laws
b. The home based workers be organized to conduct a formal registration of an informal
workers’ union within the Department of Labour and Transmigration
c. Enable informal workers’ associations, through advocacy, to be eligible for membership
in the Labour Conflict Solution Board at the provincial/district Wage Boards. This
should lead the associations to pursuing a real function and existence.
d. Enact or implement local regulation that clearly states rules between the employer and
the employee leading to a written working contract that includes at least the basic rights
and responsibilities of the two parties.
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e. Advocacy and struggle for the realization of workers’ social protection, particularly
their participation in the workers’ social security company, PT Jamsostek, equally for
informal workers as for those who work in the formal employment.
Law No. 40/2004 remains inadequate in the sense that are many more risks beyond the
coverage of the five social security programmes it mentions. This implies that other type of
social security programme that meet the need of the informal employment workers should be
developed.
Other challenges also remain, in order for the law to become implementable for informal
workers in all sectors concerned, particularly women:
•
•
•
•
To date, there are still some 21 compulsory implementing regulations under this law that
must be passed. Otherwise its full implementation will prove futile.
Additionally, Chapter 52 on Transitional Directives states that all regulatory directives of the
Social Security Implementing Board should be adjusted within five years’ time. Therefore,
there is a need for concerted effort and relentless pursuance of public policy advocacy to push
the Government to pass all of the implementing regulations. This is to ensure that within five
years social security will be accessed by informal workers including the home-based workers,
and the rest of Indonesian citizens. Moreover, learning from the past experience of futility
and disappointment, there is a real need to keep track of how the good intention of the law is
carried out, through advocacy, monitoring and consultation. This includes the government’
s use of its financial capacity, because of its position and power to either deny or provide
provision of full insurance packages.
The apparent absence of enforcement power in the law may turn the National Social Security
System inutile or inefficient. For example, there is no sanction for uncooperative employers
who disagree to make contributory payments for workers’ insurance, nor obligation for those
in power to dutifully obey and fulfill their responsibility under the law.
Finally, the organizing efforts among informal sector and home-based workers must be
pursued at all levels. In the meantime, for the own account workers, the advocacy should be
directed at the drafting and pushing the directives of a social security programme for workers
outside the working relations designated in Law No. 3/1992, Chapter 4, Article 2. To fill the
gap, indigenous social protection schemes should be promoted.
Tripartite Meeting to Improve Protection for Informal Workers
In addition to the responses to the laws of 2003 and 2004 by workers and NGOs already
mentioned, another response was to call for a public discussion through a conference to allow
a democratic process involving the ‘tripartite’ structure of the government officials, the SPSI
(Konfederasi Serikat Pekerja Selerut Indonesia, the state-backed All Indonesian Workers Union),
and APINDO (Asosiasi Pengusaha Indonesia, the Indonesian Business Association), in addition
to the NGO network and the workers in the various sectors.
Following the first meeting of its kind solely dedicated to workers in the informal sector in 2002,
as preparation of the first ILO International Conference employment in Geneva, in 2005 the
second National Conference on Informal Workers was organized in Jakarta. The aims of this
conference were:
• to discuss and shares the result of the law studies, both that of Law no 13/2003 and Law
no. 40/2004.
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to discuss whether ratification of the ILO convention no.177/1996 is still relevant
to discuss the follow up with respect to the plight of workers in the informal
employment
The government’s officials from related departments, SPSI (the state-backed labour union)
and APINDO (the employers’ association) were invited. Interestingly, the appropriateness for the
informal wage workers and the own account workers of the Social Security under Law 40/2004
was questioned by those parties. In the meantime, the grassroots and the NGOs, after critically
examining the type of risks faced by the workers, found that there is a need for adequate measures
of social security. Many expressed that formal systems in the above-mentioned laws were still far
from appropriate as far as the type of risks and problems are concerned.
As a result, it has been agreed that the workers in the informal employment should organized
themselves as a workers’ union to obtain their rights. An All-Indonesian Informal Workers
Association has been suggested to be established among the grassroots of the informal workers
in which its members shall be composed of groups of informal workers. For example classified
as informal wage workers home-based workers, organized within HWPRI (Himpunan Wanita
Pekerja Rumahan Indonesia – The Indonesian Association of Women Home Workers), and
SBMI (Serikat Buruh Migran Indonesia – The Indonesian Union of Migrant Workers) for the
cause of migrant workers, while the own account workers expected to be established are the
Fisherfolk Union, Farmers Union and Union of Traditional Traders.
A quick survey to selected informal workers was undertaken to find out whether the labour
law was known to them. It was very interesting to find out that they did not yet know that
the Labour Law had been passed. Similarly, upon a quick polling of the local governments,
a year after the promulgation of the law, most of them were still at the state of awaiting the
implementation instruction from the national level government.
The strategies for the wage workers in the informal employment that have been agreed
among the organized informal workers were as follows:
-
-
-
-
-
to form a solid group
to register the workers group as a labour union
to submit the file of labour conflict cases to the Labour Agency Technical Department
and Court where relevant
to be listed as members of the Labour Conflict Solution Board at the provincial/district
Wage Boards
to demand a registration as the beneficiaries of the labour social security
In parallel, advocacy work must be done to the governments officials at all levels managing the
social security systems. NGOs and activists’ participation to facilitate the response to work is
important.
Health Insurance for the Poor
Consistent with the definition of informal workers as those with no formal working
relations, or who are self-employed, the workers shoulder all of the risks themselves, to obtain
security against accidents at work, old age and health care, for which the worker must pay on their
own. To obtain these benefits, using the minimum regional wage 2006 standard in East Java for
example, to cover the entire family of four, the monthly premium is nearly 10% of the monthly
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141
wage. This is considered relatively high. For the poorer informal workers in East Java whose total
monthly earning is around one half of the minimum regional wage, the premium is found to be
unaffordably expensive. As though a blessing from God, however, a sudden policy of health care
for 50 million of the poor was announced.
Thus, the opportunity for the informal workers believed to be covered by Law No. 40/2004
regarding National Social Security System for all became available through the Health Insurance
for the Poor scheme. Solely limited to health care, in 2005, Kepmenkes (Decision of the State
Minister of Health) No. 56/2005 was passed as an implementation directive of Health Care
Security Programme for the poor.
In the following year, this directive was revised with the passing of Kepmenkes No.
332/2006 regarding Guidelines for implementing Health Care Security Programme for the
poor. Namely, under the programme Health Insurance for the Poor (Asuransi Kesehatan Untuk
Masyarakat Miskin - Askeskin) s many as 60 million poor people are covered. This is a 20 per cent
higher number of poor members of society than targeted under the previous directive (Kepmenkes
No. 56/2005), but the mechanism and rules is tighter than before.
Within two years of the passing of the Askeskin programme, the following empirical
evidence of on the ground has been observed:
-
-
-
-
Below-standard medical service for the poor
Programme information is almost non-existent; it is very difficult to access information
on access to Askeskin
The procedure is bureaucratically long, full of red tape and confusingly complicated
Illegal requests of payment from the personnel of the health provider
For poor informal workers, it is certainly a promising health care programme worth the
struggle. However, NGOs’ support to advocate and improve this programme is still greatly
needed, directed both at the health providers and the informal workers.
State of the Labour Movement: Union Organizing and Organizing of Women
The fact that the informal workers mostly work in isolation yet also spread widely all over
the archipelago makes organizing at the national scale difficult. At present the Indonesian union
of workers are those organized under SPSI (mentioned above), for the labourers in formal
employment. This union has not been recognized yet by the ITUC (International Trade Union
Confederation) as a member. For about a decade, including around eight years facilitated by the
ILO-DANIDA project (for the home-based workers including self-employed women workers),
efforts to organize informal workers as a segment of SPSI has not yet been successful.
Only after the fall of Suharto’s regime did new alternative workers’ unions sprout in this
country. In the spirit of democracy and freedom of expression, following the transformation era in
1998, the labour movement tried through various actions on the ground to fight for their rights
as workers such as: minimum regional wage adaptation issues, discrimination of labour including
gender issues, retrenchments without proper payment, to mention several. Demonstration and
strikes have become a way of life of workers They not only showed their feelings and stated
their demands to the employers about normative rights, but also to the executives, e.g. to the
labour technical agencies at the local as well as national level. When the issue was about law, for
example during the drafting process of Law 13/2003, they marched to the People’s Representative
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Assembly structures. Yet their spirit has not yet reached the informal workers. Rallies and strikes
are not part of their activities. Campaign among their peers for extension of membership alone up
to the present time has not been a movement. Empowerment and awareness-raising is required to
make organizing as a labour union get on the move.
It seems that workers in the informal employment still have a long way to go, since without
suitable implementing regulations the law is futile. Meanwhile, by 2006, a bright hope has come
for own account workers further to the above-mentioned laws in 2003 and 2004, with the passing
of Permenakertrans no. 24/2006 (Regulation of the State Minister of Labour and Transmigration
no. 24/2006) which seems to be an exceptional government programme to access the social
protection programme. This regulation deals with guidelines for implementing the labour social
security for workers employed outside the standard working relations. This is perceived, at the
same time, as an implementing regulation of Law no. 3/1992 regarding social protection for
workers, which states the social protection for workers outside working relationship shall be
regulated further. Yet, problems remain. It is not always easy to persuade information workers
to agree to join the social security scheme offered. Those who understand and have perceived
themselves as workers, do want to be classified as workers instead of the poor.
A new initiative is being applied to fisherfolk who consist of both own account and wage
workers, to learn the need to organize as well as to get the protection of the social security board
based on their own experience of the risks they have suffered from, including death toll, shipwreck
on the stormy seas, and the lack of catches that directly affect their income and wellbeing.
Considering Indonesia is an archipelagic country, the fishing community is large and widely
spread all over the country. Organizing them is challenging. The type of insurance scheme offered
within the social security programme has also not yet covered any total loss of ship and death at
workplace on the sea.
Registration of the informal workers group to the Technical Department at the national
level has not possible yet, as registration in the local Technical Agency of Labour almost
absent. Registration is a must if the group of home workers would like to be recognized by the
government. It seems that among various segment of workers in the informal employment, only
several home-based workers in East Java have been registered (Malang Regency, Blitar, Mojokerto
and Situbondo—four regencies out of 38 regencies/municipalities of East Java Province).
An initiative to register has been in place from the early 1990s facilitated by YPP (Yayasan
Pengembangan Pedesaan – The Rural Development Foundation), by organizing the unorganized
informal workers, started from a group of home workers.
Officially registration has been possible only in this millenium, based on Law No. 21/2002.
In 2005, Homenet Indonesia facilitated the establishment of a women home workers grassroots
organization of women mentioned earlier - namely Himpunan Wanita Pekerja Rumahan
Indonesia. That organization is supposed to be a branch of SPEKINDO (Serikat Pekerja Ekonomi
Informal – The Indonesian Informal Economy Workers Union). The other type of informal
workers (farmers, fisherfolk, informal workers in The trading sector, and domestic workers) are
not yet easily organized nationally. The ission to struggle toward realization of workers rights
including social security is not yet in the agenda of any existing national organization of informal
workers. This is true for example, in the case of farmers. So far they are under the organization of
Agriculture Technical Department. Usually they are organized by group of farmers, in which their
vision, mission, and activities focus on productivity and income. This is also the case of farmers
organization facilitated by NGOs. Another type of national farmers’ organization exists under
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Indonesia
the wings of political parties, to ensure constituencies’ commitment to place their voting during
general election.
For the women farmers, instead of workers’ rights and social protection, the organizing
agenda is related to the government development programme strongly related to current gender
ideology. Struggles should start with gender awareness-raising not only to the women farmers
alone, but also the families, the related technical departments and the concerned NGOs partners.
It is certainly challenging since it is work against the mainstream, against culture and against
patriarchal ideology that currently remains strong within Indonesian society.
ENDNOTES
1.
2.
3.
4.
Central Bureau of Statistics (2006) ‘Beberapa Indikator Penting Sosial-Ekonomi Indonesia’, Directorate of
Statistical Dissemination, Jakarta, July, p. 16.
Suziani, J. (1999) Kasus Nike di Indonesia, Meneropong Kondisi Kerja Buruh Perusahaan Sepatu Olahraga,
Yakoma-PGI, Jakarta, p. 20.
Wal-Mart is a major retailer company that expands at the highest speed in the world. In 1998 its sales hit $100
million, and in 2004 it grew almost three times as much, i.e. $276 million. Wal-Mart is also one of the private
company that has the largest employees. In 2004 it employed 1.5 million people at 3,361 outlets in the US,
1,363 retail shops, and 1,672 Super Centers. Behind these achievements, Wal-Mart has destroyed employment
opportunity and economy in US because most of its items are manufactured abroad. See: Quinn. B. (2005)
How Wal Mart is Destroying America (and the World). And What You Can Do About It, California, United
States: Ten Speed Press.
Wijaya, Hesti R. (2008).‘Sektor Informal - Katup Pengaman dan Sang Penyelamat yang Terabaikan’. Jurnal
Perburuhan No. 8, p. 24 - 29.
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Laos
145
Laos
The Lao People’s Democratic Republic
A special correspondent
‘My brother told me that to serve the Party well you must have a mind empty of
thoughts and ideas, and be able to totally surrender.’
Friend of the author
‘Laos is being transformed from being a land locked country to a land linked
country.’
Chareune Inthavy, Minister of Industry and Handicrafts, 2003
Introduction
T
he 2003 edition of the Asian Labour Law Review contains an excellently researched
summation of the situation and mechanisms of labour administration in the Lao People’s
Democratic Republic (Lao PDR). Any changes that have occurred in the ensuing four years
are those of emphasis and are not substantive, despite marked changes in the economy and an
escalation in the number of hazardous industries.
‘ Lao ’ (used by this author as Lao people themselves use it) continues to be a nation
dominated by agricultural workers who lack technical capacity or comprehensive education.
Despite a growth rate of around seven per cent, industry only accounts for 23 per cent of the
economy and employs four per cent of the workforce. The major exports are: wood, electricity,
hand-woven textiles, garments, resources from mining and plantations, and handcrafts. Over 60
per cent of consumer products are imported. 1
In terms of influences on labour participation four issues stand out as being particular to
Lao:
• The at times coerced relocation of thousands of rural villagers to make way for land use
projects (dams, extractive industries, and plantations). The consequent loss of arable land,
which results in trafficking, urban drift, and employment in hazardous industries. 2
• The growth in the export market for the traditional crafts and in particular of silk weaving,
leading to craft ‘factories’. This is linked to the burgeoning interest in green or organic
products.
• An escalation in labour migration, in particular to Thailand where the National Statistics
Center counted around 200,000 souls, 55 per cent of whom are women, seek work largely as
unskilled workers. 3
• The phasing out of textile and clothing quotas in 2002.
The situation for labour is limited not only by the lack of effective trade union rights, but
by the government’s suspicion of civil society, in particular locally formed non-governmental
organizations (NGOs). They have allowed the establishment of various associations,4 such as the
Community Development and Environment Association,5 which considers the needs of rural
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informal workers, and the Lao Disabled Peoples’ Organization, which assists injured workers;
but they maintain control by subsuming the organizations under the Prime Minister’s Office.
While international NGOs do exist, they have to observe Lao sensitivities. There are optimistic
indications that a new law will be introduced in 2009 making it easier for local civil society groups
to be established and function.
This opening up comes in the wake of ASEAN’s Vientiane Action Plan of 2004 and the 2007
UNDP conference in Vientiane, to which 100 senior government officials were invited. South
and Southeast Asian speakers representing government and NGOs highlighted the invaluable
role of NGOs in assisting the government implement their programmes. This conference, plus
membership in the Association of Southeast Asian Nations (ASEAN) since 1997, seems to have
yielded slow-growing fruit.
International Picture
The International Labour Organization (ILO) has a small but active office, whose work largely
focuses on social security and has sponsored some occupational safety and health (OSH) activities.
At the time of writing, only two international NGOs (the Australian trade union-backed
Australian People for Health, Education and Development Abroad, APHEDA, and Oxfam) have
labour-focused programmes (separate from migration and trafficking, which are heavily supported
by international research and operational budgets).
Until the time of writing, no core labour standards have been ratified. Laos has ratified
the ILO Conventions C138 (Minimum Age) and C182 (Worst Forms of Child Labour) and
since 2000 has been pondering the possibility of ratifying Core Conventions such as C87
(Freedom of Association and Protection of the Right To Organize), C98 (Right to Organize and
Collective Bargaining), C100 (Equal Remuneration), C111 (Discrimination in Employment and
Occupation) and even C105 (Abolition of Forced Labour). In response to a surge in trafficking in
women and children, and commensurate critical international attention, Lao became signatory to
ILO Convention C129 on Forced Labour and the UN Convention on the Rights of the Child.
It is also signatory to the Convention on the Elimination of All Forms of Discrimination Against
Women (CEDAW).
In 2006, Laos hosted a regional meeting of ASEAN marked by the Vientiane Action Plan
and agreed to participate through ASEAN in the Global Hazard Substances regulatory and
control system, becoming a signatory to the International Chemical Classifications systems for
industrial, agricultural transport and consumer chemicals in addition to the ASEAN-wide hazard
communications system. Laos was in line to provide Secretariat services to ASEAN Occupational
Safety and Health Network, or ASEAN-OSHNet, after Indonesia, but declined, presumably in
the absence of sufficient technical expertise. Consequently Malaysia took on the responsibility.6
The Deputy Director General of Skills Development and Employment in the Ministry of
Labour and Social Welfare (MLSW) participated in the March 2008 International Association of
Labour Inspection (IALI) Conference in Adelaide. In his speech, Mr. Singthilath recognized the
urgent need to develop OSH interventions at both enterprise and national levels. The IALI is in a
good position to extend mentoring and training for this purpose.
Laos suffers an acute shortage of skilled technical and professionally trained personnel;
the laws are internally inconsistent and not supported by contemporary regulations. The global
disenchantment with labour as a focal point of development means that newly emerging
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economies such as Laos cannot get assistance to develop competent and effective national and
provincial labour administrations.
Occupational Safety and Health
Informal sources indicate safety and health problems emanating from the proliferation of
hazardous industries such as sawmilling, lead-acid and nickel-cadmium battery making, hazardous
heavy and base metal mining, chemical and plastics manufacture and asbestos tile making - but
reports of illness and fatalities are largely anecdotal. Official data seem to be non-existent or
incomplete.
The National Institute for Labour Protection (NILP) in Vietnam has provided training and
educational support and with the Thai-based Occupational Safety, Health and Environment
Institute (OSHEI) conducted extensive training in OSH in 2005-6.
In her presentation to a Tokyo meeting in 2006, Ms. Viengxaylack Souksavath of the
MLSW affirmed that incident reporting is non-existent.7 Her comments were consistent with
information by Jukka Takkala of the ILO in his 1999 summary on global occupational health and
reporting safety reporting, in which he names Burma, Nepal, North Korea and Laos as countries
that do not submit accident data or accurate representational data. Laos’ occupation accident rate
is consequently extrapolated from that of Malaysia. 8
So while the situation is noted and has remained unchanged for several years, it begs
the question of what to do next. The need to establish the nature and extent of major sectors
producing death, injury and illness is vital so as to plan services and interventions, and should be
a priority for any donor assistance, should they surmise that labour welfare is worth improving.
It can be estimated that some percentage Laos’ high number of traffic fatalities and injuries
are occupationally related. 9
The law does not address occupational health, and as far as this writer can ascertain, no
dedicated occupational health services are available outside large international private companies.
Despite being signatory to the ASEAN conventions, there is no specialist body in Laos that
has ostensible or overarching reporting and investigation responsibilities. Ms. Souksavath admits
that the 121 national inspectors are mainly concerned with management and other matters than
with inspections, despite having access to all workplaces under the 1994 Labour Act. 10
They are however much more successful with training having trained all 18 provincial
MOLSW staff using the ILO model training for ‘Higher Productivity’ and a ‘Better Place to
Work’. Ms. Souksavath reports that they are having some success with enterprise-level training
using the ILO’s WISE methodologies.
Laos does not have any occupational hygiene laboratories, testing facilities, nor independent
loci for advanced skills training. Some private companies, particularly those which are overseasmanaged, such as mines and chemical companies, have their own in-house expertise and send
trainees overseas. In light of the huge amount of very dangerous chemicals transported by road
for use in gold mining (cyanide, concentrated sulphuric acid and hydrogen peroxide, as well as
flocculation chemicals, etc.) emergency response teams and regulation would seem to be vital.
None exist.
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Donor attention seems drawn by the nascent garment industry, which since the phase out
of textile and clothing quotas, is diminishing in importance. This ongoing focus draws attention
away from the very real hazards in the other sectors. Large-scale infrastructure, extractive and
processing industries, particularly aluminium, carry the very real risk of cancer and silicosis, as
well as traffic and traumatic death and injury. The potential risk of radio-nucleides being released
during aluminium extraction and processing threatened both workers and communities, given
the current low levels of technical enforcement. Laos’ basic medical services, which are rightly
focused on public health, makes it unlikely that medical monitoring needed for the management
and mitigation of pneumoconiosis and other occupational diseases will be put into operation.
Mr. Singthilath, in his speech mentioned earlier, has acknowledged that Lao had experienced
both industrial disasters and recently the proliferation of bone, lung and skin cancers—which he
attributed to agricultural exposures.
Private investment in hydropower, in particular, presents cause for concern as it is unlikely
that deaths and injuries will be reported. Only a minority of the projects thus far have enjoyed
the oversight of the large donor institutions whose purview has at least managed to preserve a
modicum of control.
The major exception to the dismal safety and health picture is that of air safety. Laos
has been diligent in adhering to air safety regulations and training. A recent meeting on this
subject was held in Laos in December 2007. The meeting was sponsored by the Cooperative
Development of Operational Safety and Airworthiness Program (COSCAP), SE Asia chapter and
was attended by ASEAN representatives as well as French and US Federal Aviation, European
Air Safety Association; Boeing, Airbus and other airlines companies also sent representatives.11 It
accepted that places like Lao have difficulty in staying up to date and according with international
standards of safety.
Women and Work: The Focus for Asian Labour Law Review
This Asian Labour Law Review is focused on women and the informal sector and the transition
from formal labour to precarious, unregulated informal employment. But the author, mindful of
the pattern of employment in Laos, considers gender to be a less important predictor of equity/
inequity than the rural-urban divide and ethnicity.
Urban-based lowland Lao women enjoy a remarkable degree of self-determination and
equality, which is shared to a great degree by rural lowland Lao. However, ethnic minority women
do not share this independence or enjoy the same educational opportunities. They shoulder the
majority of agricultural and family responsibilities.
Being until now a predominantly pre-industrial agrarian society, Laos is undergoing a process
of ‘formalization’ as land is lost to development. Women in particular are becoming wage slaves
in industrial employment. Stories told by rural Lao underscore the importance of dignified selfsufficiency,12 which is being undermined by destructive industries.
In this context the environment, encapsulating forest and riverine systems, is a form of social
protection for most rural Lao. In times of hardship and transition they have relied on the forest
and rivers for food and as sources of income and medicines. Environmental destruction that is
happening apace threatens to mire a huge number in absolute poverty. Other than seeking work
in the formal sector, some choose to migrate or enter the expanding sex industry.13
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Women who enjoyed high status in Lao for their agricultural and handcraft skills are being
adversely affected by development.14 It can be argued that industrialization, which encourages
atomization of community structures, withdrawal from traditional roles in which women made a
significant contribution, into a socio-economic and employment system based on consumerism,
is one of the major factors in women’s reduced status. On the other hand, having a disposable
income, freedom from village constraints and early marriage also empowers women.
Informalization is driven by low wages and poor conditions in the formal sector - such as
women seeking sex work as an alternative to factory employment. Young women seek work in
occupations such as housekeeping, particularly in foreigners’ houses. as they earn up to four
times more than in a formal industrial setting and have access to safe water and some degree of
comfort.15
Economic Indicators of Equity
To underline that growing inequity in Lao, between 1992 and 1998 the Gini coefficient rose
from the comparatively equitable level of 0.286 to an inequitable 0.357. Recent studies have
indicated that the trend is deepening, rising to 0.370 in 2001 according to both UNDP and
World Bank. 16 More importantly Viphonxay et al. (undated) found that the Gini coefficient rose
to an alarmingly inequitable 0.426 in Vientiane and 0.394 nationally, as compared with a rural
rate of 0.331. 17
It is estimated that up to ninety per cent of employed women work in agriculture. In 2005,
manufacturing produced 32.5 per cent of national GDP and industry an additional 21 per cent.
Industry grew by 16 per cent in 2005.18 But the garment industry lost ground, dropping from a
growth rate of 22 per cent in 2004 to only 10 per cent in 2007.19 Many garment companies have
closed, citing poorly trained workers, the tendency to return to the village at harvest and planting
times, and the cost of transport as reasons for lack of competitiveness.
A Brief History and Factors Affecting Contemporary Lao
Laos survived years of colonization, foreign occupation, civil war and political instability. In 1975,
the Communist Pathet Lao with assistance from Vietnam consolidated their control, arrested
the majority of the royal family, who subsequently perished, and established the Lao People’s
Democratic Republic in December of that year. Since then Lao has been a totalitarian one-party
state.
The country, a nominally Marxist-Leninist state, is ruled by the Lao People’s Revolutionary
Party (LPRP). The head of state is the president, elected by parliament for a five year term.
The prime minister is head of government and appointed by the president with parliamentary
approval. The nine-member politburo of the LPRP, drawn from its central committees, is the key
decision making body. A National Assembly meets twice a year and is responsible for scrutinizing,
but not opposing, proposed legislation. The assembly is elected by the people from a list of
candidates approved by the party. In short, there is little that is democratic about the Lao People’s
Democratic Republic.
Instead, they rely on what is called ‘Democratic Centralism’, by which decisions are
made by consensus at the upper echelons and then this decision is passed down to operational
levels of society. At a recent meeting on agriculture the Minister was horrified at the idea that
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farmers should be involved in decision-making. ‘What do they know?’ he asked some dispirited
consultants.
Stuart-Fox hypothesizes that Theravada Buddhism has a lot to do with political stasis in Laos
and surrounding nations. The belief being that those in power must have gained lots of merit in
previous lives, and now have the wealth to keep doing so, so have the ‘right’ to stay in power.
In the mid-1980s, after years of Marxist central economic planning and dependence on state
ownership, the economy nearly collapsed and inflation soared; the National Assembly adopted a
constitution which formalized the establishment of a market-oriented economy, called the New
Economic Mechanism (NEM).
In theory NEM guaranteed all Lao citizens the ability to own property, if they have resources
that is, and protection for foreign and direct investment. Wealthy Lao, of which an increasing
number exist, now have greater freedom to travel and choice of employment. Tourism and
overseas investment, particularly from neighbouring countries, is encouraging the growth of a
fledging private sector.
Despite all this, the population – more than any other in Asia – continues living a subsistence
life, 31 per cent of them living below the poverty line, hunting, foraging and growing food. A
significant number of villages have no road access or health service.
The continuing government control of the media limits the extent of critique or reportage
on controversial topics, such as labour and ongoing environmental destruction. Concerned
individuals will rarely speak out as they risk individual and collective family punishment. But,
below the surface, there is tension between the political and power elite who control the patronage
and the Lao patriots who care about the direction the country is taking. 20
The government projects itself as benevolent, and aligns itself closely to both China and
Vietnam. These countries share Laos’ hard-line stances on labour, despite pretensions to a
proletariat revolutionary past. There is evidence that broad-scale corruption allows contractors and
employers to get away with both environmental and social destruction - including workers health
and safety and rights. This is apparent particularly in the logging and hydropower industries.
Reports by individual Lao indicate high injury rates in illegal21 and legal logging and construction.
Most of the information is conveyed by word of mouth or posted on the Lao language bulletin
associated with LaoFAB.
Both Vietnam and China are making increasingly 'imperialist' demands on Lao. Many
Chinese and Vietnamese workers have entered Lao working on road and building construction
and plantation tasks. What effect that has on labour rights has yet to be seen.
Working Where?
Eighty per cent of Lao workers are still classified as self-employed in rural activities such as
farming, weaving and petty trade22 and many have multiple jobs, that is they do all of these
activities.
Women hold dual responsibilities for farm (including aquaculture and small livestock
management), household and financial management, in addition to petty trading. Women will,
for instance, weave, fish and then sell the fish and/or textiles at a market or in a small roadside
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stall. An un-attributed study found that Lao women were more successful at small and medium
enterprises than were men. Despite this, women are 30 per cent more likely to be illiterate and
innumerate than men, particularly among ethnic minorities. But women have a substantial and
enlarging role in rice cultivation, despite mechanization that favours men.
Women hold primary responsibility for marketing of agricultural produce, including
butchering and selling meat. Despite this, and reminiscent of Waring’s findings,23 women’s
contribution to agriculture and as family labour is not counted as work in the national accounts
of Lao. 24
Despite few gender differences being present in the broader society, it is when women enter
the capitalist economy of formal work that they experience disparities. In the formal sector,
despite laws to the contrary, they sometimes receive a lower wage than men, due it is said to their
lower level of education. Onphanhdala found that on the whole minimally educated women tend
to attract lower wages than their male counterparts.25 The exception is the weaving industry,
reviewed below, in which women’s wages exceed those of men.
Overall the trend in Laos and in particular for women, is towards formalization. However,
that trend as we shall see does not necessarily optimize income.
Textile and Garment Quota
In the previous decade the garment industry played a significant role in Lao’s economy, being
the major foreign exchange earner and non agricultural employer. Started in 1990, it steadily
expanded in extent until by 1998 garments accounted for 30-40 per cent of merchandise exports.
Now it has been superseded by the electricity and mining industries. The garment industry
was however susceptible to shocks. First the Asian economic crisis, then the phasing out of quotas
granted by the Generalized System of Preferences (GSP).
The Garment Factory Survey of 2006 conducted by the National Statistics Center for
the study cited in this section 26 covered 44 companies, almost half of which were foreignowned. Thirty per cent were Lao-owned, the rest being joint ventures. However foreign-owned
companies employed more workers and generated disproportionately more income.
At the time of the study the garment sector employed 28,000 workers, 80 per cent of whom
were women with the majority of from the northern provinces.
The major markets were European Union, Asia, Canada and the US.
Competitiveness is determined by labour costs, productivity and lead times. While Laos
at US$0.125 per hour, has the lowest labour costs of Asia’s Least Developed Countries (LDCs)
the authors concede that low wages cannot be translated into competitive advantage without
productivity factors. Productivity in Laos is low when compared to say China. A Lao worker
will produce 1,350 pieces in comparison to 7,500 in China. The writers agree with the circular
argument that low wages act as a disincentive for hard work and to attract skilled workers.
Coupled with poor education and skill levels, and the inability or unwillingness of companies to
provide vocational or technical training, the picture is one of stasis.
Turnover rates are between 40-60 per cent per year. ‘Temporary’ turnover results from a high
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proportion of seasonal workers and the absence of work contracts. What is typified as ‘permanent’
staff turnover is attributed to low wages, tedious and repetitive work, and the perception that the
garment industry is a waystop to something better.
Lead times are determined largely by inefficiencies in transport modalities (too many
transfers at borders) , high costs (the cost of transporting goods to ports in Vietnam and Thailand
are higher than the international transport due to massive informal levies) and distance from
markets, and lack of supporting industries.
The report identifies working environment and compliance issues as also counting against
Laos having a successful garment industry. They cite consumer concern about health and safety
and worker’s rights and admit that, as the Association of Lao Garment Industries stated in 2006,
the major problems facing the garment industry in Laos include compliance to international
standards on safety and health working conditions and quality control. While a few producers
have complied, the majority have not. In a similar vein most do not have ISO 9001 or SA8000
accreditation.
Despite this, owners recognize that international campaigns against child labour and absence
of labour rights can adversely affect business.
Consequently, a relatively high proportion of Lao FDI and JV respondents to the survey
indicated that they wanted to improve and upgrade factory facilities and conditions. Most
customers tend to visit factories before placing orders, so owners are increasingly recognizing the
importance of compliance with international standards. But more transfer of technology and skills
is required from international experts, as few resources exist so far in Laos itself.
While the majority of companies FDI and JV report, for various reasons, only slight adverse
effect from the GSP phase, they are more worried at the removal of safeguards that have protected
garment industries from China’s onslaught. The gloves come off in December 2008. 27
Trade Unions and the Lao Women’s Union
The sole Lao trade union, the Lao Federation of Trade Unions (LFTU) is an extension of the
government and is powerful enough to draft its own legislation. Ms. Pathoumthong told the
2001 International Training Center (Turin) course in OSH and the environment that the ‘LFTU
is one of the political organizations of Lao PDR.’ The International Confederation of Free Trade
Unions (ICFTU) now the ITUC, International Trade Union Confederation drew attention to
the Lao Constitution, which states that the purpose of the LFTU is ‘to unite and mobilize all
people for taking part in the tasks of national defence and construction.’
Article 3 of the 1994 Labour law stipulates that ‘workers and employers shall have the right
to organize and belong to any mass and social organization that has been formed lawfully.’ No
other lawful associations or unions exist; ergo, there is no freedom of association.
At the time of writing, a draft new Lao Labour Act is being circulated, but it is available only
in Lao. Summary notes from translation appear below, as does an outline of the new Trade Union
Act, which was recently approved by the National Assembly and launched in late December
2007.
The senior trade union officials interviewed after the APHEDA/ILO-sponsored OSH
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training revealed they had little if any experience of industrial work. Most of the 77,000 rank and
file members come from the government technical services, civil servants and the ranks of the
army and police, who, are as will be noted below are, exempt from the Labour Act and whose role
it is to defend the nation (see box below). The LFTU is represented at provincial level as well as
having a central coordinating body - a model that replicates all government bureaucracies.
While all workplaces are supposed to have an LFTU Unit, workers are not involved in
electing their representatives.
As Phil Robertson Jr. wrote in the 2003 Asian Labour Law Review:
There are not many other countries in Asia where one finds a trade union body with a
constitutionally mandated role … and top union officers with the equivalent of Ministerial
rank in the government. Why then does what appears to be a great deal of power and policy
dialogue by the LFTU result in such poor and sporadic labour enforcement? What is the role
of the LPDR Ministry of Labour and Social Welfare (MLSW) and is that where the problem
lies? Does the LFTU adequately represent workers in trouble, seeking redress for violations of
their rights under the labour code, or is it a tool for state power to keep workers quiescent?
An Oxfam report on the situation of workers in the nascent garment industry indicated that
the LFTU and the MLSW are still confused about their roles and responsibilities with regard to
labour protection. Souksavath of the MLSW (mentioned above) reported that while the LFTU
has inspectors, employers give them no credence.
As part of their national campaign the LFTU go on air each evening between 7.30 and 8
pm to encourage membership and advise about workers’ rights. I did not meet anyone who had
listened to and who could comment on the usefulness of the programs.
The excerpt below is indicative of nexus between the LFTU and the government and in
particular references to national defence.
Party leader congratulates trade union
Vice President Mr. Bounnhang Vorachit on Friday joined the 52nd founding
anniversary celebrations of the Lao Federation of Trade Unions (LFTU) with hundred
of officials from various government bodies. He conveyed his ‘strong sense of love’ and
warm greetings from the Party …
In the revolutionary tasks of national defence and construction, the Party has always
considered mass organizations as strategic tools, including the LFTU, the Lao People's
Revolutionary Youth Union and the Lao Women's Union.
He pointed out that one of the main duties of the union was imbuing workers with
a sense of loyalty to the Party and the nation, and strengthening their unity and
patriotism, as well as encouraging a strong sense of proletarian internationalism.
The Lao proletariat have sacrificed their lives and used their energy in contributing to
the tremendous victories of the Party, army and people as a whole during the long fight
to liberate the nation, as well as during the process of national defence and development,
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Mr. Bounnhang said. The task of the union in the new era is to campaign to educate
the proletariat to be good citizens and to protect the rights and benefits of their fellow
citizens.
Since its establishment, the union has improved in line with the Party's ideology, and its
activities have been in line with the Party's guidelines.
‘On behalf of the Party Politburo, may I wholeheartedly congratulate the union's and
proletariat's achievements throughout the past 52 years,’ Mr. Bounnhang said.
.. the President of the union, Mr. Vongphet Xaykeuyachongtoua, reviewed (LFTU)
activities when foreign imperialists invaded Laos, particularly in the 19th century when
Lao workers suffered severely, working 14-15 hours at a time for the foreign occupiers.
Mr. Vongphet outlined the growth process of the union in each area and its
contribution to national defence and development. The approval of the Union Law
by the National Assembly in December last year has facilitated the union's role in
representing workers' rights and benefits in playing their part in national defence and
development.
To mark and congratulate the achievements of the union, Mr. Bounnhang presented it
with a first class Issara Order.
By Souksakhone Vaenkeo
Source: Vientiane Times, 4 February 2008
In late 2007, the Vientiane Times reported that at the third Plenary Meeting of the Executive
Committee of the LFTU, the number and seriousness of workers’ complaints were noted to be
increasing in Laos.31 Last year, 315 complaints were lodged with the LFTU. Of those, 123 had
been resolved at the time of writing. Most complaints were in relation to unpaid or underpaid
wages. As a result, the union had been instrumental in arranging for employers to pay some 775
million kip (US$81.58) in outstanding wages.
The Times also noted the LFTU is facilitating getting low-cost loans in order to allow
workers to take up small business or agricultural activities. It could be said that the LFTU might
better expend its efforts enabling workers to get higher wages so as to obviate the needs for loans.
The Times went on to say that the Savannakhet provincial office of the LFTU had collected
about US$900 to assist families of those who had died or been injured at work. Xayaboury, which
has a large number of sawmills and logging operations, has also collected around US$600. How
that money was collected, how it was allocated and if it was a substitute for or in addition to
workers’ compensation was not stated, although they did say that the LFTU was ensuring that all
companies establish funds at the union branches ‘to assist workers who fall ill or are injured.’
It is thought by Lao observers that the LFTU is gradually clarifying their role within the
structural and political constraints. It is not clear however if that represents any fair arbitrage.
Regulatory breaches are, according to reports, more common in Lao owned companies.32
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New Labour Act
The tenor of the new act, passed in February 2008, is very heavily weighted towards law and
order and is little changed from the former Act. ‘Control and discipline’, ‘force’ and ‘obey’ are
frequently occurring words. Its focus on a centrist style of control that pre-dates Robens.33 Though
there is reference to safety committees, the new act allows workers little self-determination, unlike
the Robens Act, which clearly specifies rights as well as responsibilities.
The new Labour Act also reiterates the need ‘to be in accordance with Law in the Lao PDR’
and further ‘workers and employers have to strictly follow the rules.’
The Article 49 on safety stipulates a six-day, 48-hour working week, except for those working
with sources of radiation (including UV) and infectious diseases, chemicals and bomb disposal,
underground workers, and those labouring in overly hot or cold conditions or with vibration.
These workers are restricted to six-hour work days, which it is wrongly assumed should reduce the
risk.
While the law makes no mention of an increase in minimum wages, it does insist that
employers have no right to underpay workers. It maintains the government’s central role in
wage-fixing and does not allow any right of appeal or for worker leverage on determining wage
increases.
The new Act maintains the principles of exclusion from risk, not overall risk management. In
a move reminiscent of 1950s’ safety law, pregnant women are excluded from heavy lifting, long
periods of standing and other risky work as defined in the article about working hours. There is
no acknowledgement of reproductive hazards for males or that the objective should be to achieve
safety and health for all, not merely the pregnant.
Women are however awarded 90 days’ maternity leave, 42 of which have to be taken after
delivery. A worker is then is allowed one hour per day to feed the child on return to work, as well
as the right to take paid time off to enable her children to be vaccinated.
The minimum age at which children can enter the workforce is 14 years, but at that age they
should not work a full day and are precluded from mining, manufacture of explosive or chemical
products, working with corpses, noisy environments, locations where alcohol and gambling are
present, or other dangerous work as above. This prescriptive litany is a theme running through
the Act. It does not entertain any notion of risk assessment or prevention.. Training or workers
participation is not a feature of the new Act.
Pasar Lao is known as an imprecise language, particularly as it relates to legal, technical or
scientific ideas and allows room for misinterpretation. 34
Comments given by Lao NGO workers on the draft labour law indicate that there are few
differences from the previous Act. The minimum wage for so-called unskilled workers (excluding
overtime and bonuses) has not been increased and still stands at 290,000 kip per month, less
than US$30. This makes Lao workers some of the poorest paid in Asia. Even so, many employers,
a number of whom are Lao, prefer to still misunderstand the Act and pay below that rate. The
Vientiane Times on 24 August 2007 reported wages as low as US$8 per month in some factories.35
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When this wage was originally mandated, inflation was running at 13 per cent. While
inflation has been reduced and remains steady at just over 6 per cent, this signifies the need for
a significant cost of living adjustment over the past 13 years. 36 However, this minimum wage
extends to all workers, including civil servants and other members of the State apparatus.
On the whole, wage structures in the private sector outpace those in all branches of the civil
service and wage hierarchies are relatively flat.37 Police, public servants, and the military and other
‘mass organizations’ (one presumes the LFTU and LWU are included) are specifically excluded
from the Act.
Trade Union Act of 2007/8
Late in December 2007, Mr. Khamla Lolonsey, the vice-president of the LFTU, presented
the new Trade Union Act to the National Assembly for approval.
In his speech Mr. Lolonsey, reported by the Vientiane Times, said that the new Act would
give the LFTU greater rights to form labour units in workplaces employing in excess of ten
workers. He said that such a move was needed to assist employers and employees to negotiate
in situations of conflict. He reflected that the majority of Lao workplaces had not formed trade
union units. Workers had, he said, called the National Assembly instead, complaining of unfair
practices and requesting more rigorous inspections. Most complaints concerned non-payment of
overtime and wages. He encouraged MLSW officials to also talk with workers, instead of merely
consulting with managers. The new trade union law, he said, would give the union the right to
inspect factories.
In summary, the new Act brings no substantive labour reforms. It will allow the LFTU to
register workers in a wide range of workplaces, including the hotel and restaurant industry where
exploitation is reported to be rife. It also allows the LFTU to inspect workplaces where there have
been complaints from the workers, and to mediate and refer to what they call ‘higher authorities.’
That the LFTU prefers to mediate rather than initiate a judicial process reveals more about the
LFTU’s principle role, which is to enforce Party adherence and obedience.
Lao Women’s Union
The Lao Women’s Union provides an enabling environment for the promotion of gender
equality in the Lao PDR. The LWU, the Lao Constitution, and the National Commission for
the Advancement of Lao Women provide the pillars of gender representation and institutional
advocacy. While regarded as a mass organization the LWU bears the hallmarks of a public service
office, with a Byzantine number of varied subdivisions and departments.
Article 35 of the 1991 Lao Constitution ensures women’s economic and contractual equity.
The law enables women to own land, have family and economic rights, make contracts and
take out loans in their own right. Lao women’s equal rights to employment and to receive an
equal salary as well as social insurance are enshrined in other regulations. Lao women also have
the legislated right to participate in the National Assembly as well as in policy and law making.
Articles 17 and 34 of the Constitution guarantee maternal rights, while Article 25 guarantees
access to education, research and training.
Laos
157
The Lao Women's Union provides the operational apparatus for women’s representation,
having an organizational structure that extends from central to village level. The LWU enables
women from ethnic minorities to have a voice in the social and environmental impact assessments
of large projects. The Union has ensured that women retain land titles despite moves to encroach
on that right and recently launched a magazine (SaoLao) in addition to regular radio broadcasts to
reach urbanized women at all levels. It broadcasts news of importance to women, including issues
of workplace rights, sexual harassment and health.
Specific Issues
Weaving 38
He: Oh my dear heart
How ardent is my wish to have you weave on the landing on my stairs
How I wish to have you weave at the foot of the loom
having you weave an ikat sinh, and feed silk worms in my house
She: Oh my dear young man
Going with you I dare not
Because I don’t know how to weave ikat fabrics for you to sell
I cannot weave horse blankets for you to sit on
As you ride on your trade expeditions. 39
Development tends to sideline traditional culture-bound activities such as weaving,
relegating it to the rubric of quaint handicrafts. Increasingly, however, Lao weaving is becoming
part of the global market as demands for artistic textile-weaving widens and demand for organic
products increases. It is not known how many women weave, but as one woman told me, at least
150 households within a kilometre radius of her land on the outskirts of Vientiane produced silk
for sale.
Weaving is a part of Lao living culture. The silk tubular skirt known as a sinh is still widely
worn, as are the shoulder scarves known as pha bia worn by women and men for rituals. In
addition, silk appeals to the burgeoning tourist market.
The weavers discussed in this part of the chapter are those whose goods are produced for four
large Vientiane-based textile companies who design and market the products overseas. The owners
and managers are, by and large, all women. Previously the production and trade of textiles were
staples of household income providing for both household needs and a small surplus. The end of
the Soviet era and the arrival of the NEM, along with lifting of trade barriers with the USA, for
instance, have allowed the expansion and development of this enterprise. One cooperative that
the author is familiar with, but not included in the study, employs women and men from 200
villages.
It is estimated that each piece of hand-woven silk can provide nominal employment for up to
17 people.40 Most of the produce is exported, netting fair returns to villagers that have few other
cash-making options for village improvements.
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Asian Labour Law Review 2008
Weaving presents the intersection between informal outsourced piecework and formal
‘institution’-based formality. Weaving allows flexibility of labour that fits well with both women’s
traditional cultural norms and family responsibilities. It allows them to make money within their
own social milieu. It is common to see a cluster of women assembled around a household weaver,
assisting and chatting as she makes for a specific buyer or company. Women weave at home
for individual sale or barter, or as part of home-based supply chains producing for marketing
companies or in weaving ‘factories’, which have dormitories with kitchens and bathrooms. This
latter arrangement particularly suits young women migrating from the ‘weaving provinces’.
Feminist analysis of global commodity chains often refers to ‘women victimization’ and
‘marginalization’. However, the other side of this is the empowerment of women who enjoy
economic independence and discretion by being employed. Indeed, among the ethnic groups in
Lao, a competent woman gains respect if she is able to bring in money.
An increasing number of Lao weaving companies are seeing the marketing and ethical
importance of achieving fair trade and organic product status. While Fair Trade, like Corporate
Social Responsibility, is somewhat hard to define, the author believes that in Lao the certification
is not regarded as a cynical marketing tool but a genuine ethics-driven desire.
In these respects, Laos seems to fall out of the stereotypical patterns drawn by labour analysts.
While some supply chains41 are buyer - or producer-driven, Laos does not seem to fall into either
of these. Doolittle et al. (in progress) observe that the exploitive power of corporations seems
absent. Indeed buyers tend to seek out the Lao companies, while the Lao producers use a variety
of methods (exhibits, tourism, art collections, diplomatic contacts) to bring the goods to the eyes
of international markets. The scale is self-limiting, being restricted by the availability of fibres and
skilled weavers, and production standards.
While men also weave, it is largely a women’s occupation. The ability to weave underpins
women’s status as finance providers and managers, which persists into modern day Laos.
Consequently, workers interviewed by Doolittle and her colleagues report a high degree of pride
and contentment with the working environment. On a 20 point scale (20 being the optimal) the
mean was 16.
The trend seems to be away from off-site/home-based piecework, and Doolittle et al.
postulate that this could be a sign of the proletarianization process – women moving from villages
to become employees. 42
A large majority (86 per cent) of the workers were women, with an average age of 28 years.
The slight majority that were married lived with spouses and most came from northern provinces,
this is at variance with factory work that prefer to employ young unmarried women.
Most of the women were already competent weavers after tutelage from female relatives, but
agreed they had learned and increased their skills as a result of working for the companies. The
average period of employment was more than four years, but some had been working for more
than 20 years as weavers and earned an average of about 634,000 kip (about US$62) per month
(compared to the minimum factory wage of 290,000 kip) for a seven to eight hour day, five-day
week (again in comparison with longer hours and a greater number of days for factory workers).
Men who predominate in the dye shops and the few male weavers reportedly earn around 17 per
cent less than women.
Laos
159
If significant orders come in, workers may be asked to work overtime, at which point
they are either paid by the length, piece or hour. Companies provide health care and loans
for the employees. This is in contrast to factory work which often ignores health and financial
responsibilities.
Health and Safety
Women report back-ache, neck and arm pain from prolonged poor working postures and
headaches. Those using chemical dyes report skin rashes and respiratory problems from dust,
chemical residues and sizing.
A program conducted in Thailand indicates that helping women achieve a participative
caretaking approach to health and safety is effective, as it develops both leadership and changes
cultures of dependency.43 Culture-induced fatalism led the weavers to blame non-work factors for
pain and illness.
This model could well be adopted by Lao women and the entrepreneurs who employ
weavers, as cultural factors are parallel.
In summary, the Lao weaving industry provides an island half way between the informal
and formal sectors, which allows women some flexibility, humane conditions and relatively good
wages. Enterprise owners know about the labour laws, but the conditions and pay are more
determined by personal ethics and care for the craft than by legal stipulations. The introduction
of fair trade to Laos should enable women weavers to maintain their superiority over industrial
workers, as fair trade is more typically applied to the handcraft industry.
Migration and Trafficking
Laos and Thailand share similar cultures and languages but greatly dissimilar economic
circumstances, making it attractive to Lao wanting a better life for themselves and their families.
The majority of migrants are women from rural areas aged between 17 and 25 years. Lao women
work as domestic help, factory labour, hotel maids, in agriculture and restaurants. That is the ‘3 D’
jobs: dirty, difficult and dangerous.
But the wages and opportunity to learn new skills far outweigh those for similar jobs in Laos.
Thai managers preferentially seek out Lao workers, who are thought to be more diligent and
honest than others (National Statistics Center 2007).
The economic contribution is significant, amounting to around USD100 million per year or
five per cent of GDP. Women return having higher expectations of health care and educational
services and are more responsive to information, many become leaders in their communities
and role models for others. They are likely to marry later, have less children and invest more in
education.
Illegal migration comes at a cost. Those who leave without passports are fined when they
return and their families can be forced to pay money even before the worker returns if local
officials hear of their migration. These fines are often disguised shake downs the amount often
exceeding the formal fine.
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Asian Labour Law Review 2008
Those studying migration have recommended that fines be paid into village funds or the
worker left unfined, as the contribution directly made to human development exceeds that
of foreign direct Investment. Interestingly, remittances have proved to be more effective than
overseas aid or investment-driven projects in reducing poverty, as the money tends to go straight
to the village avoiding the filtration system of government kleptocracy.
But as civil service salaries remain below subsistence and the temptation to wield power
comes without sanction, there is little reason to think this might change quickly. 44
Chamberlain et al. found that development policies that favour relocation and resettlement
tend to provoke migration and trafficking.45 Despite that, Laos is embarking on many such
programs, the majority supported by private investment, often without adequate environmental,
social or labour safeguards.
Laos also is an intermediate stop for many others migrants seeking better-paid work,
particularly those from Yunnan. This may tend to skew wages and conditions in Laos itself.
Mechanisms
While there are an increasing number of labour brokers setting up shop in the major centres,
many workers still move informally and in some cases illegally as brokers tend to be too expensive
(VOA broadcast transcript 23/03/06).46 Data about migration is imprecise as the borders are so
porous and unsupervised. The author sees Lao fishermen traveling back and forth to Thailand in
pirogues each day. Many have family in Isarn, the adjacent area in Thailand, in previous times
part of Laos.
A taxi driver remarked,’ Laos is the factory for Asia. We make the workers that feed the
factories in Thailand.’
His girlfriend, a factory worker, was only 16 years of age, as were most of the young women
in her dormitory. Like many women from rural areas, she had only rudimentary education.
From the northern provinces she now worked making jeans. The company was overseas-owned,
but she did not know the name of the label or the company. She was happy to earn 5000 kip
per day (US$0.60) to learn enough skills to enable her to travel to Thailand to seek higher paid
factory work. She stands from 8 am to 5 pm ironing jeans. She appeared happy to be working
earning money and having a meagre disposable income. Her ideal was to buy a motor bike, fancy
clothes, and with enough work experience migrate. She typified both the internal migrant and the
prospective out-migrant.
While poverty is a major driver for the mostly poorly educated rural folk who go, the
better educated and urban workers influenced by mass media migrate in search of adventure
or experience. Young women migrate to avoid farm work, while young men move to avoid
education.
Regional festivals and trade fairs, when border controls are more lax, provide ideal
opportunities for workers to cross into Thailand, in particular. Few data are available concerning
migration to Vietnam or Cambodia. Friends and family provide advice and workers use longestablished networks and routes. 47
Chanthavysouk (UNDP) points out that Lao women benefit more than men from
Laos
161
migration, as while the culture values women who earn money, the women also tend to return
with enhanced self-esteem and confidence and their remittances are more likely to be spent on
medical treatment, nutrition and household improvement. 48 They remit more than men and are
more reliable senders. However, the price is high - HIV infection (rates in returning women are
the highest in Laos) and among men, addiction to alcohol and drugs.
Migrants are sometimes conflated with or become trafficked workers.49 Chamberlain in his
study of Lao trafficked and migrant labour for UNICEF concluded:
‘From the findings of the study it is possible to build a profile of those most at risk
of trafficking and target interventions accordingly. The overwhelming majority of
trafficking victims surveyed (60 per cent) are girls aged between 12-18 years of age and
most victims (35 per cent) end up in forced prostitution. Other forms of employment
were domestic labour (32 per cent), factory work (17 per cent), and fishing boats (4
per cent). Those that worked in agricultural labour tended not to be trafficked and
exploited, whilst those working in domestic household situations experienced some of
the most extreme cases of abuse and mistreatment.
The majority of cross-border trafficking was found to occur into Thailand although
some cases were reported of trafficking into Myanmar and China for the purposes of
buying and selling brides.
Crossing the border is relatively easy; many victims actually crossed with legal papers,
and informal crossings are not uncommon. Most victims come from rural areas,
although few of the victims came from extremely remote areas or from situations of
severe poverty. The connection between ethnic background and the child trafficking
issue needs further study, since the majority of non-Lao trafficking victims come from
villages that have been resettled or relocated.’ 50
The Lao government’s high profile policies on abolition of opium and promoting
hydropower are known be actively contributing to the trafficking of women, girls and, to a lesser
extent, boys.
In 2005, the then Thai Minister for Labour gave permission to bodies to employ 10,000 Lao
migrant workers, particularly in the construction industry. Thai workers are increasingly reluctant
to take on the poorly paid, arduous work typified by construction. Industry groups had lobbied
the government to allow more Lao to enter Thailand legally. The minister gave permission only,
he said, as a temporary measure, though it is hard to see how this could be effectively rescinded.
He was concerned that while many Thai companies had been pushed to officially employ the 1.7
million foreign workers now in the country, only 700,000 had been lawfully registered.51
A significant problem for the authorities is the large number of homeless and parentless
children who enter formal or informal work though migration.52 An ILO study indicated that
some had been gone for as long as three years without any contact with relatives in Laos.53
More than one in five of all Lao migrants from the provinces are under the age of 18, with
girls accounting for more than two-thirds (67 per cent), making this group the most vulnerable to
human traffickers. The survey, based on sampling of some 36,398 people in 5,966 Lao households
in the three provinces, reports nearly seven per cent have mobile family members and confirmed
that the pace of migration is rapidly accelerating.
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Asian Labour Law Review 2008
Que Bono?
The Bangkok Post (July 2006) reported that migration had bred a sub-business, that of
unregistered money-transfer run by Thai brokers for Lao migrant labour.54 The clients are
migrant labour, both legal and illegal. Some brokers can earn as much as 50,000 to 60,000 baht
(US$1,600 to 2,100) per month for the service, the source said.
At the beginning, the brokers charged 10 to 20 per cent commission for the service. Now it
has fallen to just three to five per cent due to higher competition among brokers.
It appears migrant workers prefer the unregistered service, largely because of the lower
charges. If a client's family is badly in need of money, Thai brokers give them an advance
with monthly interest being charged. However, illegal workers can be defrauded by the more
unscrupulous.
Future Trends
There is no evidence that the Lao Government intends to lessen its stranglehold on power.
Some observers have commented that the government is getting more nervous and controlling, a
feeling confirmed by many long-term international workers and local Lao. In the case of labour,
without significant impetus at the donor level, little will change and the new labour law will
cement that non-change in place for possibly another ten years.
Lao had been closed country for many years and is now really only beginning to become part
of the regional and international community. Its powerful ties to Vietnam and China, as well
as old patronage from Russia, tend to hinder progress in the direction of rights-based activities
and while a large number of students are encouraged to study in those countries, progress will be
slower. However many more are opting to travel and seek education opportunities in Australia,
the US Europe and Canada. The problem being that Lao education standards are generally
low. So with few exceptions only the children of the elite can achieve a standard sufficient to
comply with scholarship requirements. Of those who go to study few opt for technical subjects
like occupational hygiene and occupational medicine, safety engineering or other labour related
disciplines. Consciousness of the importance of those issues is still low.
Membership of ASEAN, the International Labour Inspectors Association, and industry
groups such as the Association of Lao Garment Industries, will all prove to add bricks to a
growing structure of change, gradual as it will have to be to succeed.
Some small scale activities including a survey of health and safety issues amongst informal
and home workers is also occurring at the time of writing. The education program that follows
will have some content on labour law, although the informal sector per se is not addressed in
the regulations. The concern is that some very hazardous industries, in particular mining and
processing of metals, are being rapidly introduced sponsored by nations who have low compliance
levels. There is generalized concern that Lao people are being sacrificed for profits.
Already wood processing, with its attendant risk of cancer, is widespread. Rubber plantations
are replacing protected forests driven by a rapidly escalating demand for tires in China. If Laos
decides to value-add and not simply export the latex, another potential source of occupational
cancers will flourish. In the absence of any reporting system, freedom of the press and a system for
163
Laos
monitoring occupational health (as opposed to safety) there is a great risk that Lao workers will
suffer the consequences of rapid development.
A creative industries policy that not only regulates handcrafts, but values this sector as part of
Lao’s development strategy could employ more people in less destructive ways. However, without
donor policy support and direction this is unlikely to happen. In fact, overwhelming pressures
from neighbouring private investors is actively reducing the land available for growing both silk
and food.
Any significant change depends on the outcome of the tension between progressive reformist
patriots and the patronage driven power elite who have cemented themselves into a personally
prosperous future.
ENDNOTES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Inthavy. C. (2003) Untitled Powerpoint presentation given at the meeting ‘Integrated Frameworks and WTO
Accession: Challenges and Opportunities for Poverty Reduction’, Phnom Penh, Cambodia, 1-3 May.
LaoFAB is a Laos-based subscriber bulletin board.
Press release, 22 May 2007.
The Lao government does not speak of NGOs. Advocacy and human rights are not terms that the government
encourages. Associations are the only legal expression of civil society. Some elements of the Lao government
consider people’s participation and consultation an anathema to the democratic centralism model of
governance. This is likely to change with membership in ASEAN.
For more about CDEA, see http://www.homenetseasia.org/laos/2006attainingsocialsecurity.htm.
‘National Institute of Occupational Safety and Health (NIOSH), Malaysia (2007), Powerpoint presentation.
http://www.oit.org/public/english/protection/safework/cis/about/mtg2007/p_mys_niosh.pdf [accessed 29
September 2008].
Souksavath, V. (2006) JISHA/ASEAN-OSHNET ‘Safety and Health Education for OSH Practitioners’
Powerpoint presentation, 25 September-12 October 2006. See www.jniosh.go.jp/icpro/jicosh-old/japanese/
training/special_speeches/2006/oct10/pdf/msViengxaylacksouksavath.pdf.
Takala, J. (1999) Global estimates of fatal occupational accidents. ILO. Special Supplement. Geneva, 6-15, 1998.
See www.ilo.int/public/english/protection/safework/accidis/globesti.pdf.
Road traffic in the Lao PDR is increasing at an alarmingly rapid rate. Over a 12-month period, from 2005 to
2006, the number of vehicles rose by 32% (motorcycles +34%, pickups +38%, trucks +12%). Motorcycles
account for the vast majority (80%) of the 568,290 registered vehicles in the country, reflecting rising living
standards and a three-fold decline in prices since 2000 - the introduction of cheaper Chinese models has made
motorcycles much more affordable. Increasing numbers of vehicles on the road has led to a rapid rise in the
number of road traffic accidents. In 2006, 492 people died (a 19% increase compared to 2005) and 7,825 were
injured in 4,620 road traffic accidents recorded by the police. However many accidents go unrecorded and the
true number of casualties is undoubtedly much higher: a survey conducted by Handicap International Belgium
(HIB) in April 2006 at one of Vientiane's four large hospitals recorded 542 road traffic accident victims
seeking emergency treatment in a one month period. Of these victims, 84% were riding a motorcycle and 53%
were between 15 and 25 years old. Source Handicap International. http://www.directoryofngos.org/project.
cfm?id=144.
‘National Institute of Occupational Safety and Health (NIOSH) Malaysia (2007).
‘Laos Hosts Aviation Safety Meeting’ Vientiane Times, 13 December 2007.
The author edited a series of stories written by farmers displaced by the first hydro power dam built in Lao.
Doussantousse S. et al. (2005) Lao Women Attracted by Sex Work in Malaysia. International Conference. Transborder Issues in the Greater Mekong Sub-Region. Ubon Ratchathani, Thailand. 30 June-2 July 2005.
164
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
35.
36.
37.
38.
39.
40.
Asian Labour Law Review 2008
See http://www.socialwatch.org.
Personal communication: The author talked with her own housekeeper’s sisters, all of whom are housekeepers.
One had recently made the transition from low-wage factor worker to housekeeper and was very satisfied. The
other had been sent to English and cooking classes so had improved her employability.
See UNDP site http://www.undplao.org/mdgs/ and World Bank site: http://web.worldbank.org/WBSITE/
EXTERNAL/TOPICS/EXTPOVERTY/EXTPA/0,2004.
From http://www.unsiap.or.jp/completed_prog/workshop/poverty_indonesia04_/projectwork/lao.ppt.
World Bank. See http://go.worldbank.org/GQAO6SK0J0.
Ibid.
Latif, A.I and Lee, P.O. (2007) Regional Outlook: South East Asia 2007-2008. Institute of Southeast Asian
Studies.
Further information is in the study: Sisouphanthong, B., Boupha, S., Souksavath, P., Sone, P. (2007)
Addressing the Impact of Phasing out of Textiles and Clothing Quotas in Lao PDR: Human Development Assessment
in Post Agreement on Textile and Clothing, National Statistical Centre, Committee for Planning and Investment,
Vientiane, Lao PDR, August; supported by the UNDP Asia Pacific Regional Office in Colombo. Illegal
logging and related cross-border trade is possible because of the collusion between importers, customs officers,
the military and local party officials. ‘Much of the border trade is conducted informally and illegally, largely
in response to customs officials’ demands for illicit payments.’ Quantities of goods are systematically underreported, with the savings in tariffs shared between the importer and local party officials. Attempts to give more
responsibility to the provinces for managing their revenues only aggravated the problem. See p. 96. Many
farmers have been driven into poverty as a result of land expropriations that have been expedited through
corruption. The report is in four volumes, each of which have a full-length and an abbreviated version; see:
www.nsc.gov.la.
Onphandala, P and T. Suruga (2006) Education and Earnings in Lao PDR: Regional and Gender Differences.
Graduate School of International Cooperation. Kobe University Technical Papers No 4. July.
Waring, Marilyn. (1998) Counting for Nothing: What Men Value and What Women are Worth, Bridget Williams
Books.
http://www.fao.org/sd/WPdirect/WPreo0109.htm.
Onphandala and Suruga (2006).
Sisouphanthong, B. et al. (2007).
Ibid.
Report on Occupational Safety Health and Environment. See http://training.itcilo.it/actrav/2001/A3-2387/
works/works/Report/lao_pat.doc.
ICFTU (2006) http://www.icftu.org/displaydocument.asp?Index
Oxfam (2007) Report of Scoping Study for Labour Rights in Vientiane Capital and Savannakhet.
Vientiane Times, 12 October 2007.
Oxfam (2007), op. cit.; Robertson (2002).
Lord Robens, the UK legislator, broke the mould of centralist labour law administration by legislating for
workers’ participation. What became known as the Robens Act became a hallmark legislative reform enabling
of trade union representation and as widely copied in other industrialized countries.
An example would be ‘relocation’. In Lao this translates into ‘make a new house’, which on the surface sound
innocuous if not positively desirable, hiding the social and economic upheaval implicit in relocation.
Vientiane Times, 24 August 2007.
World Bank, op cit.
Onphanhdala and Suruga (2006).
For this section I am indebted to Carol Ireson-Doolittle and her colleagues from Willamette who volunteered
their unpublished research papers. The work is ongoing so some of the data sets are as yet incomplete.
Doolittle-Ireson, C. and Moreno-Black, G. Traditional Craft or International Business? Vientiane Textile
Companies and their Workers (unpublished draft paper) Department of Sociology. Willamette University,
Salem, 2007.
From Lao classical literature, cited by Bounyavong, Deuangdeuane
Personal communication with Rassanikone Nanong, Head of Lao Handcrafts Association, 2008.
Laos
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
165
The supply chains term used by the researchers applies to an intricate domestic network of people who
contribute to the finished piece: Weaving, dyeing, growing silk, Many are related to the merchandisers, other
are from the same province, and are known through extended family linkages.
Doolittle-Ireson et al. (op. cit.)
Nilvarangkul K., Wongprom J, Tumnong C., Supornpun A, Surit P, and Srithongchai N. (2006) ‘Strengthening
the Self Care of Women Working in the Informal Sector: Local Fabric Weaving in Khon Kaen (Phase 1)’
Journal of Industrial Health. No 44, pp. 101-107.
From The National Human Development Report, Lao PDR, 2006. International Trade and Investment National
Statistics Centre Lao PDR.
Chamberlain, J., Phomnombath, P., Vangmua,V., Oudone, P., Vixayath, T., and Chittanavanh, K. (2004)
Broken Promises Shattered Dreams, A Profile of Child Trafficking in Lao PDR, Vientiane. Report prepared
for UNICEF and the Ministry of Labour and Social Welfare, Government of the Lao Peoples Democratic
Republic.
www.voanews.com/lao/archive/2006-04/2006-04-04-voa2.cfm and www.voanews.com/lao/archive/200602/2006-02-27-voa1.cfm.
Luangsombath, M. ‘Dreams draw Lao workers to Thailand’ at http://www.newsmekong.org/dreams_draw_lao
_workers_to_thailand.
Chanthavysouk K. (2006) Labour Export: A Contribution to Lao Development. Technical paper for the Third
National Human Development Report. UNDP.
Tan, D. and Bertran, D. (2007) How Illegal Migration Turns into Trafficking for Sex and Labour Exploitation?
Raising Voices of Girls and Women from Lao PDR. From Workshop on Female Labour Migration in Globalising
Asia. Asia Research Institute and Asian Metacenter for Population and Sustainable Development Analysis,
National University of Singapore.
Chamberlain et al. (2004)
http://etna.mcot.net/query.php?nid=41359.
Huijsmans R. (2008) ‘Children Working Beyond Their Localities: Lao children working in Thailand’
Childhood, Vol. 15, No. 3, pp. 331-353.
ILO. Communication and Public Information (2004) ‘Strangers in a Foreign Land—Migration’s Hidden Risk:
Increased child trafficking’ World of Work Magazine, No. 50, March. http://www.ilo.org/wow/Articles/lang-en/WCMS_081346/index.htm.
Bangkok Post, 30 July 2006. At http://www.bangkokpost.com/News/30Jul2006_news11.php.
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167
Malaysia
Malaysia
Irene Xavier
1. Contemporary Snapshot
T
he informal economy in Malaysia is diverse and has been in existence for a long time. In
recent years, it has been expanding. Thus, there are now a larger number of workers whose
jobs and rights are unprotected. Home-based work is not recognized as work by Malaysia’s labour
laws. The subcontracting of work by factories in various forms has not been addressed in terms
of protection for the rights of workers. Many factories have outsourced employment in certain
production lines to subcontractors, who supply labour to the production lines in accordance with
the fluctuating demands of the factory. The workers are thus not employees of the factory though
they work on its premises. They are regarded as employees of the agencies that arrange work for
them. As their work is on a casual basis they have little or no access to legal protection.
Many services are also outsourced to subcontractors. These include call centres that service
banks, telecommunication companies and airline ticketing offices.
At the core of informal work is subcontract work for factories that is done at home or
in small sweatshops. These include garment production, electronics, food products and even
automobile parts.
Malaysia also employs a large number of migrant workers, many of whom work in the
informal economy. It is estimated that there are 2.2 million foreign migrant workers in Malaysia,
accounting for 21% of the labour force. Migrant workers should also be treated as informal
workers as the majority of them are on short-term contracts. Furthermore migrant workers have
limited access to legal remedy to ensure that employers comply with these contracts.
Table 1. Labour Force and Employment Data
Updated on 31 December 2007
Employment
2006
2007
1st Quarter
2007
2nd Quarter
2007
3rd Quarter
Total Labour Force ('000)
10,628.9
10,826.7
10,970.6
10,967.9
Employed ('000)
10,275.4
10,461.3
10,601.2
10,627.2
Unemployed ('000)
353.6
365.4
369.4
340.6
Unemployment Rate
(% of Labour Force) 3.3
3.4
3.4
3.1
Source: http://www.statistics.gov.my/images/graf/gtQ32007.jpg
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As there is a dearth of information on the informal economy in Malaysia, this paper focuses
mainly on home-based workers. The information obtained is also limited to a few research papers
on specific and limited topics. One was focused on the home-based workers and utilization of
information and communication technologies (ICT) 1. The second was a regional report on
homeworkers and ICTs in Malaysia.2 The third was an unpublished research paper by an NGO
in Malaysia3 and the fourth is a study on Chinese women in industrial home-based work in
Malaysia.4 This paper will also briefly touch on the issues of migrant workers in the country whose
numbers are increasing and many of whom are part of the informal economy.
Growth of Informal Economy
Since the introduction of the New Economic Policy in 1970 there was a strong push by
the government to expand the formal economy through foreign investment in industrialization.
Initially it was import-substitution industrialization and in the recent past the move has been
towards an export-oriented industrialization. Women entered the formal labour force especially
in industrialization for export. However with the recent restructuring in response to globalization,
the informal economy has re-emerged as an important component of this global production
chain. Capital has adopted subcontracting and outsourcing as an option to keep costs low and
remain competitive globally.
The informal economy exists in various forms as some limited studies have shown. Both
the public and private sectors use informal labour. Many government departments too employ
contract labour. Privatization has resulted in the extensive use of contract labour in cleaning
services, ports, telecommunications and public health. The government has privatized some
services that were formerly in the public sector. These include port services, garbage collection
and disposal, some of the light railway services and some sections of the public hospitals such as
catering and cleaning. Several attempts have been made to privatize the public hospitals but they
have stalled mainly because of public opposition.
Meanwhile, it is estimated that there are about 20,000 government employees on contracts
in the civil service.5 This gives an indication of the extent of informalization in government
service.
It appears that a large formal workforce is viewed as being ‘unsustainable’ by employers.
They prefer to expand the scope of informal work, which appears to them to be more efficient,
and more sustainable. However from the workers’ point of view this type of work poses many
problems and challenges.
Problems and Issues Facing Informal Workers and Women
There has been a relatively low rate of participation of women in the formal labour force in
the last decade: Women’s participation has remained at around 44 per cent. Some effort has been
taken to increase women’s participation in the formal sector but little has been done for women
in the informal sector.
Problems of home-based work
Homeworkers are involved in making and providing a wide range of products and services.
These include traditional handicrafts and food processing cottage industries, labour-intensive
work subcontracted from factories as well as knowledge-based services.
Malaysia
169
Home-based workers are usually counted as own account workers.6 There is no system of
registering them and thus they do not show up in statistics. They are also not regarded as workers
according to the Employment Act of 1955. As a result they are not eligible for any of the terms
in the Act such as weekly rest day, annual leave, sick leave, maternity benefits, Employment
Provident Fund or state social security contribution by the employer.
Home-based women workers often face harassment by local officials for using residential
premises for production without proper licences.
All these factors together serve to keep the home-based workers invisible and their
economic contribution is not regarded as work by the government, factories or employers. Their
contribution to the economy is not recorded and reflected in national accounting and budgeting.
Another reason for the invisibility of home-based work is that productive work is carried out
alongside domestic care work. Their domestic tasks are deemed to take precedence and thus they
are regarded as ‘housewives’ rather than workers even by themselves.
A survey by the Malaysia-based network, eHomemakers, in 2006, yielded the following
findings:7
The majority of the homeworkers previously worked in labour intensive factories but took up
home-based work after childbirth when confronted with a gender insensitive environment
unsupportive of mothers with small or disabled children and aged parents. This confirms
the earlier research finding by Loh-Ludher (2002) that home-based work offers women an
opportunity to be gainfully employed when they are either unable to participate in, or have
to withdraw from, the formal labour force after childbirth.
The home-based workers face another problem—that of negotiating contracts with the
subcontractors or factories. The main difficulty is that they have to negotiate contracts
individually. They are therefore in a weak bargaining position. There are no standards or legal
measures on which they can base their contracts. If they are cheated they have hardly any
access to legal redress.
Home-based workers also have great difficulty in organizing themselves. They perceive their
work as being illegal or semi-legal. Consequently they are reluctant to draw any attention
to themselves. Much of their relationship with the sub-contractors is based on personal ties.
In an unpublished study by Persatuan Sahabat Wanita in 2005 it was found that the homebased workers had work given to them by village heads, relatives or people known to them.8
These personal connections make it difficult for them to organize themselves to better their
conditions. They are usually reluctant to share information about their work contracts. As a
result factories exploit home-based workers by paying them extremely poor rates.
Moreover, there are health and safety risks for home-based workers and their families. There
is little or no consideration for making their work safe. There are no lighting or ergonomic
considerations. Production material is also stored haphazardly.
State of the Labour Movement
The Malaysian trade union movement is subject to laws that allow the Registrar of Trade
Unions to control it. Registration must go through a civil servant who disallows a trade union
when there is strong employer lobby against it. This is the case with the National Union of
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Asian Labour Law Review 2008
Electronics Workers that has failed to get approval for registration. The laws also do not permit
more than one national union in an industry. The classification of the industry is the sole
prerogative of the Registrar of Trade Unions. The laws also make it practically impossible to hold
a legal strike. Industrial action is limited to legal action that can only be taken after negotiations
under the auspices of the Labour Department or the Industrial Relations Department have
failed. Permission is granted to proceed to legal action either by mutual consent of workers and
employers or the Industrial Relations Department chooses to refer the matter to court.
The effect of such legislation and the policies the Registrar has pursued since independence
in 1957 have served to produce a generally compliant trade union sector that has rarely challenged
the government on its labour policies. The trade union movement has not been able to stop the
amending of labour laws to take away existing benefits of workers, such as overtime rates. The
union movement has not been able to stop or even effectively regulate privatization. It has done
little to improve the conditions of work for migrant workers who constitute a large percentage
of the Malaysian workforce. Membership in trade unions has never exceeded ten per cent of the
work force. Out of a labour force of about 11 million today, only about 7 per cent are unionized.
Table 2 (below) shows a decline in trade union membership since 2002.
Tables 3 and 4 (below) show that although the total number of unions both by sector and
industry have increased since 2002 the total membership figures have fallen.
This reflects the decreasing trend in the formal workforce overall—something which is
not yet reflected in official government statistics, which do not disaggregate levels of informal
employment (yet). The lower level of formally employed workers within a sector can be accounted
for by increased use of contract and part-time workers and home-based workers; at the same time
there is lower overall employment in the last several years within certain sectors like construction
and agriculture/fisheries.9 The lower union membership also reflects the increased employment
of foreign workers, who upon employment must sign contracts which forbid them to join unions.
In 2001, foreign workers composed 9% of the workforce; in 2004, this rose to 12%; and as of
January 2008, they composed 21% of the workforce.10 Foreign workers are strongly represented
especially in manufacturing, petroleum, construction and household help positions.
Table 2: Membership of Trade Unions in Malaysia
Year
Trade Unions
Membership
2002
581
807,260
2003
609
789,163
2004
611
783,108
2005
621
761,160
2006
631
801,585
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Malaysia
Table 3: Number of Trade Unions by Sector in Malaysia, Year 2002 - 2006
Sector
2002
2003
2004
2005
2006
Private
373
380
380
390
396
Government
128
127
130
127
130
Statutory Body and Authority
80
88
87
91
92
Employers 11 14
14
14
13
13
TOTAL
595
609
611
621
631
Table 4: Number of Trade Unions by Industry in Malaysia, Year 2002 - 2006
Sector
2002
2003
2004
2005
2006
Agriculture, forestry and fishery
48
55
54
54
55
Mining and quarrying
2
2
1
1
1
Production
149
145
144
146
150
Electricity, gas and water
28
39
39
39
39
Construction
11
11
11
11
11
Commerce
12
18
18
18
19
Transportation and telecommunication
53
58
61
61
61
Services
278
281
283
291
295
TOTAL
581
609
611
621
631
Trade unions have seen an increase in women members as Table 4 shows. This partly reflects the
expansion in Malaysia of the sectors that employ large numbers of women, such as service and
manufacturing, since 2002.
Table 5: Number of Trade Union Membership by Gender in Malaysia, Year 2001 - 2006
Year
2001
2002
2003
2004
2005
2006
Number of Trade Unions
592
595
609
611
621
631
Total
Membership
785,441
807,802
789,163
783,108
761,160
801,585
Male
Female
472,401
504,305
479.607
474,470
464,308
484,016
313,040
303,497
309,556
308,638
296,852
317,569
Source: Tables 2 to 5 from http://jheks.mohr.gov.my/BI/english/indexBI.html
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The trade union movement has also been slow to respond to protect the rights of workers in the
informal sector. Labour laws were written for the formal sector. As the informal economy has
expanded in recent years it has escaped the notice of the union movement. In unionized factories
some contract workers receive benefits equal to those of the permanent workers. However over
a long period of time these benefits get eroded as employers increase the number of contract
workers, those hired from agencies or homeworkers and reduce the ranks of permanent workers.
Informal Women Workers
Profile of informal women workers
According to Lee Loh-Ludher, in her article entitled ‘Women in the Informal Sector in
Malaysia’,12 the typical urban or rural woman in Malaysia’s informal sector has a primary level
education and belongs to an average household of five members. The woman entered the sector
after she married and began bearing children; now she contributes substantially to her household
income. Approximately one third of such women have incurred debt to provide capital for their
businesses. Most urban women have worked previously in the formal sector.13
The Malaysian home-based worker’s profile conforms to the needs of capital in the global
restructuring process. Home-based workers are former factory workers, the majority of them in
their 40s. Thus they are familiar with a factory and production discipline environment and are
largely reliable in terms of quality output. Also they are not a sought-out category in the labour
market given their age. Furthermore, these workers possess limited education and come from poor
households that require additional remuneration to improve their quality of life and standard of
living. Thus the ‘human capital assets’ of home-based workers pushes them towards a vulnerable
job environment, but one that favors capital.14
Box 1. A Case Study 15
Mrs. L is a 45-year old home-based worker with only Standard Six education
and has been making shoes for more than 30 years in Ampang, Kuala Lumpur.
Through these years, she has worked for four sub-contractors. She started sewing
shoes at the age 14 and she remembered getting paid 2 ringgit (3.8 ringgit = US$1)
She was paid a little over 2 ringgit during peak periods in the 1990s but now she
earns 1.5 ringgit per pair.
Mrs. L makes about 12 to 13 pairs of shoes a day by working for more than
nine hours. Sometimes, when the order is large and urgent, she works longer hours
including weekends and public holidays. Besides, she has to attend to her duties as a
housewife.
She chose this job because it gives her the flexibility to attend to household
chores and care for her children and work at the same time. She herself pays all the
expenses of doing the work, including purchase of a second-hand sewing machine,
monthly electricity charges, thread, machine oil and scissors. After all these job-related
costs, which are not compensated for in the piece rate, her net monthly income is just
500 ringgit.
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173
Mrs. L says the piece rate has not been increased for over 20 years. She thinks
her employer and the shoe company are making huge profits when she compares the
piece rate paid to the homeworkers and the price of shoes in the market. Some shoes
are tagged at 80 ringgit per pair in the market. She would have demanded higher
piece rates and social protection plans but is afraid she might lose her job if she
questioned her employer. However, she would welcome government intervention to
get her a better deal.
She complains of headaches and skin irritation caused by the thinner and glue.
Some of her friends use masks when applying the glue due to its strong smell. Though
she thinks the use of glue is safe, she remembers that a home-based worker got badly
injured when the glue caught fire and burnt her skin, obliging her to spend more
than10,000 ringgit on burn treatments.
There is no employment contract but she gets paid once a month. There is a
pay slip but with no detailed information about the company or the employer. The
employer keeps a record of the number of pieces completed in a small pocket book
and computes her salary monthly. She earns around 600 ringgit per month without
any benefits such as contributions to the Employees Provident Fund and Social
Security. Unlike workers in the formal economy, she is not entitled to paid leave,
public holidays and sick leave nor does she have medical insurance coverage.
2. Summary of Labour Laws and Their Application to Informal Work
Malaysia has a set of labour laws that apply to workers in general. The main ones are as follows.
Employment Act 1955 (Amended 1981, 1998)
The Employment Act is the main legislation which applies to employees in Peninsular Malaysia
and the Federal Territory of Labuan earning a salary not exceeding 1,500 ringgit per month.
Those whose salary ranges between 1,500 ringgit and 5,000 ringgit can consult the Labour Court,
if they are seeking justice, or making inquiries.
The Act specifies the minimum standards for workers covered by it. These include hours of
work, overtime rates, employment contracts, leave, maternity benefits, retrenchment, dismissals,
deductions from wages, rest days and complaint and compensation procedures. This law is
enforced by the Labor Department which is empowered to take up cases of non-compliance.
The procedure is fairly simple and it has been perhaps the most useful complaint mechanism for
workers. However the department is severely under-resourced and workers need to be organized
to get the department to attend to issues of non-compliance.
The Labour Ordinance, Sabah and Sarawak
The Labour Ordinance is considered the Employment Act of Sabah and Sarawak and is largely
similar to the Employment Act which applies to Peninsular Malaysia and the Federal Territory
of Labuan, with some differences. Until 2005 this Ordinance provided lower benefits to workers
in these two States. However since then amendments have been made to standardize them. The
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main difference is that the ordinance covers workers earning up to 2,500 ringgit and their public
holiday entitlement is more than in Peninsula Malaysia.
Industrial Relations Act 1967
This law regulates the relationship between employers and workers and their trade unions in the
event of disputes and industrial relations. The regulations include voluntary negotiations between
employer and the trade unions; conciliation procedure with the help of the Industrial Relations
Department and arbitration of cases in the Industrial Court.
Employees Provident Fund Act 1991
The act makes it compulsory for employers who do not offer pension schemes to make
compulsory contribution to the Employees Provident Fund account. The common applicable rate
of contribution is as follows:
•
•
Employers - at least 12% of the employee’s monthly salary
Employee - at least 11% of the monthly salary
Employees’ Social Security Act 1969
This Act covers workers who earn less than 2,000 ringgit. The Act makes it compulsory both for
the employer and the employee to contribute every month to social security. Once registered
under the scheme the worker remains part of it even if the earnings rise above 2,000 ringgit.
The Act streamlines two social security schemes for workers, the Employment Injury Insurance
Scheme and the Invalidity Pension Scheme, which provide medical coverage and financial
protection in case of disability or death arising from workplace injury. However this Act protects
the employer who cannot be sued for compensation by the worker. The fund has become a major
source of financing for the government as it is often difficult for workers to receive adequate
compensation for injuries and amounts paid out are a small fraction of what is received in
contributions.
The Occupational Safety and Health Act 1994
This Act covers the whole of Malaysia for specified industries: Manufacturing; Mining and
Quarrying; Construction; Agriculture; Forestry and Fishing; Utilities; Transport, Storage and
Communication; Wholesale and Retail Trades; Hotels and Restaurants; Finance, Insurance, Real
Estate and Business Services; and Public Services and Statutory Authorities.
The Act applies to both the private and public sectors. Only merchant shipping and the armed
forces are exempted. Under this Act, the National Council for Health and Safety investigates
complaints and makes policies to improve occupational health and safety. However, the Act
works only when the mandatory Health and Safety Committee in each workplace implements
the law in the workplace. It does not provide for a mechanism for complaints to be taken to
a department for enforcement. As a result, the Act has done little to address health and safety
concerns in the workplace. Most committees are nominated by the employer and even when there
is a trade union, the workers’ representatives lack knowledge about health and safety to effectively
raise standards in the workplace.
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Labour Laws and the Informal Sector
The labour laws do not provide for any kind of protection for informal workers. The only people
who are covered by the law are documented migrant workers and contract workers who have
proper papers and details about their employer. Though the laws provide for migrant workers
there are other conditions which make it difficult for them to seek redress. The main obstacle is
the immigration laws which an employer can use to send back a worker who is taking legal action
against him. Most contract workers do not have proper documentation. This prevents them from
taking action against errant employers.
Meanwhile, home-based workers have contact with only the subcontractor. In addition workers
in the informal economy are not registered with any government agency. While the statistics
department has promised to come up with a plan to gather data about the informal sector, it has
yet to be done. This is the first obstacle in the struggle for labour rights for informal workers.
Information about who they are, where they work, what kind of work they do, what are their
working conditions and who employs them is badly lacking.
3. Responses, Initiatives and Struggles
There are few initiatives and struggles to protect the informal workers in the country. The most
prominent struggle is the effort by the Malaysian Trade Union Congress (MTUC) to formulate
laws to protect migrant labour and to ensure that their working conditions are not inferior to
those governing Malaysian workers. Negotiations are still taking place on this issue.
Persatuan Sahabat Wanita Selangor, a women’s support group, has done a brief study on
women in this sector to trace the nature of work, the numbers of homeworkers and their working
conditions in selected areas in Peninsula Malaysia. It is hoped that this mapping project will
contribute to organizing women in this sector. The MTUC is also engaged in an effort to organize
domestic workers into a trade union. This will require not only organizing the domestic workers
but also dealing with the legal obstacles that may exist in forming a trade union of this type.
The challenge for the informal workers is to become more visible so that they are recognized
as an important part of the labour force but lacking legal protection. The visibility needs to be
built by giving these workers greater exposure in the mass media which can highlight their plight
and vulnerability. Women’s groups too can be mobilized to work in this vulnerable sector. For
example, one non-governmental organization, Pertubuhan Pertolongan Wanita or Women’s Aid
Organisation (WAO) brought media attention to women migrant workers who were seeking
protection at a shelter. The Immigration Department sought to forcibly evict these women from
the shelter and to imprison them without regard for the violence these women had suffered. They
were able to get some measure of protection because of the intervention of WAO, which has
also highlighted the situation of migrant women workers who were sexually abused while under
protective custody of the police. Without the intervention of women’s organizations the abuse
that migrant women workers face will not come to light.
Such measures by workers and other organizations are still at an initial stage. It is hoped that
with greater and more accurate information about the informal sector in the country organizing
efforts will increase and result in the provision of much needed protection for workers in this
vulnerable sector.
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ENDNOTES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Loh-Ludher, L. (2007) Homeworkers Online: Utilization of ICT for home-based work in Malaysia, The Electronic
Journal of Information Systems in Developing Countries, Vol. 32. See www.ejisdc.org/ojs2/index.php/ejisdc/
article/viewFile/466/234.
Chong Sheau Ching, Homeworkers and ICTs in South-east Asia, Corpcom Services Sdn. Bhd., (E-Homemakers)
Malaysia, www.idrc.ca/panasia/ev-67367-201-1-DO_TOPIC.html
Lee, S. H. (2005) unpublished research for Persatuan Sahabat Wanita Selangor
Loh-Ludher, L. ‘Chinese Women in Industrial Home-based Subcontracting in the Garment Industry’ in Kuala
Lumpur, Malaysia: Neither valued nor costed (based on field work done in 1992-1996).
The Star, 28 October 2008.
Own account workers are sometimes also referred to as dependent workers. They receive work from an
intermediary, subcontractor or employer according to specifications. They are usually paid on a piece-rate basis.
See http://www.aseanfoundation.org/documents/homeworkers/Malaysia%20-I-%20Fin%20Report.pdf
Lee, S. (2005).
See Malaysia Economic Report 2007/2008 at http://www.treasury.gov.my/index.php?ch=22&pg=165&ac=2053
&tpl_id=93&lang=eng.
‘Malaysia to cut foreign workers’, http://www.cnn.com/asia, 20 January 2008.
In Malaysia, employers’ associations are a form of trade union and are registered and recognized as such. The
rules for forming and joining a trade union are the same whether for employees and of employers.
See http://info.bahai.org/article-1-7-6-12.html.
Berma, Madeline and Faridah Shahadan (1991) Meeting Women’s Needs in Development and Family Welfare
in the Informal Sector: A Proposal for Action. Unpublished paper.
Kalis Gopal and Charles Santiago (2005), ‘Informalization and Individualization of Formal Work – The case of
Home Based Workers in Malaysia’, unpublished paper for the ILO Subregional Office for East Asia.
Ibid.
177
Philippines
Philippines
Philippine Laws and Policies from the Perspective
of Women Workers in the Informal Economy
Rosalinda Pineda Ofreneo, Phoebe O. Cabanilla, & Josephine C. Parilla
1. A Contemporary Snapshot
U
nemployment and underemployment figures totaling more than 30 per cent of the labour
force in the Philippines reflect the current employment crisis. With little advance since
1
2000 the situation can be traced to a weak agro-industrial base, aggravated by liberalization
policies that allowed cheap imports, resulting in the disenfranchisement of local producers and
large numbers of workers.2
Participation of women in the labour force has been declining since 2002; the latest
figures put women at at 49.8 per cent compared with 79.8 per cent for men. In terms of overall
employment, only 46.1 per cent of women had jobs compared to 74 per cent of men in 2005.3
This indicates that education has not raised women’s status to better levels4 despite their seeming
advantage in terms of simple literacy, and their enrolment and completion at elementary,
secondary and tertiary levels, where they perform better than men. Women’s economic activity
has been circumscribed by traditions that classify women as housewives who do not ‘work’, and
hand over to women the demands of child care and domestic chores during their childbearing
years.
Formal employment opportunities for Filipino women in export-oriented industries have
increased but they are mainly consigned to the electronics sector, which in the last decade has
been responsible for as much as two-thirds to three-quarters of total Philippine exports. These
women comprise 80 per cent of the 545,000 employed workers concentrated in economic
zones, where poor working conditions and violations of labour rights are commonplace. Where
cheaper and compliant labour is desired, women are readily available. Lately, employment in the
call centres is also registering a phenomenal growth with an estimate in 2005 of 162,250 jobs.
Centres that are sprouting nationwide are mostly funded by big foreign players, perhaps drawn by
the huge wage differential (where a Philippine customer service representative for example earns
US$1,689 per year while someone based in the US will get US$25,000).5 Moreover, attrition
rates reach as high as 50 per cent due to job-related stress and sleeplessness.
A process of de-unionization has accompanied changing employment patterns (flexibilization,
which is most visible as contractualization, as well as informalization and migration) in a
globalizing economy. Workers are affected by labour cost-cutting measures adopted by microbusinesses just to be able to keep up with increasing competition under globalization. The core of
permanent workers is reduced to accommodate temporary and casual employees. The increasing
use of cheap labour, such as apprentices and migrants’ is continuing. Somehow this is tantamount
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to deunionization or controlling unions. Moreover, subcontracting production and services
outside formal workplaces (outsourcing) is accompanied by an increased number of shifts per day,
overtime and use of piece rates. All of these actions have an overwhelming impact on workers,
women and men, in both formal and informal employment.
A mere nine to ten per cent of the employed are currently covered by unions, and only
one-third of union members and one-fourth of union leaders are women. Worse, according to
trade union leaders, only 230,000 of unionized workers are covered by collective bargaining
agreements.6
Currently, there are ten registered trade union centres (groups of registered federations, or
national unions).
These centres represent various segments of the broad spectrum of the Philippine labour
movement, which has had a long history of ideological and organizational division.7 Some of
these centres have ventured into organizing women informal workers but have not managed to
sustain these mostly fund-driven initiatives.
From Informal Sector to Informal Economy
The ranks of unprotected informal workers in the Philippines as well as in the whole of
Asia 8 are growing fast, even while those of regular formal workers are being depleted by the
onslaughts of trade liberalization and the increasing flexibilization and contractualization of
labour. Formal workers may become self-employed when they lose their jobs. Or they may
continue working in the same industry as contractual, casual, agency-hired, or subcontracted
homeworkers under precarious and insecure conditions. In this sense, they provide cheap and
unprotected labour vulnerable to exploitation at the bottom of the production ladder while firms
save on costs by maintaining just a few regular, organizable workers.
Formal and informal employment are often linked together by the subcontracting chain.
And towards the bottom of the chain the distinctions between the two can often-times get hazy.
This chain is negatively affected by the intricacies of international trade, where larger firms tend
to exploit micro-enterprises by ordering at low prices or subcontracting certain stages of the
production process to save on labour costs or to weaken the leverage of regular and/or unionized
workers (see Figure 1).
Figure 1. The Subcontracting Chain
.
Philippines
179
Note: In the garment industry, a foreign principal based abroad (a large enterprise) could order from a Manilabased exporter (a medium enterprise), which in turn could subcontract to a province-based factory (a small
enterprise). This factory could order from outlying barangays, where agents could tap the productive capacity
of microenterprises and/or home-based workers (HBWs). As the chain goes downward, so do the wages and
benefits of the workers, who range from formal at the top to informal below.
High unemployment and underemployment due to the decline or stagnation of local
industries faced with ruinous competition drive displaced workers abroad in an often uncertain
diaspora. Many of these migrants, especially the undocumented ones, wind up in unprotected,
informal, 3D (dirty, dangerous, and demanding) jobs in construction, service and other
industries. Feminization of migration has been a phenomenon since the early nineties, and lately,
women comprise almost three-fourths of newly deployed migrants. The dollar remittances of
these vulnerable migrants help keep the Philippine economy afloat and resilient.
The majority of employed women are in informal employment, whether agricultural or nonagricultural. The informal economy is highly gendered, serving as a catch basin of women who
have been among the first to be displaced from formal work, especially in the garment industry,
as globalization progressed. Furthermore, women have also been the mainstay of the informal
economy even before the onslaught of globalization, since informal work (e.g. home-based
work) is compatible with their reproductive work (child care, domestic chores), and since their
status as secondary or supplemental earners often deprives them of opportunities to find formal
employment.
In the whole of ASEAN, informal work comprised 156 million or 63.7 per cent of total
employment in 2006, according to the ILO.9 In the Philippines, figures based on the 2005
labour-force survey show that informal workers now comprise 76.34 per cent or 24.6 million of
the country’s total employed, an increase of several percentage points from previous estimates.10
This rise in informal employment is accompanied by an alarming decrease in the ranks of formal
workers.
The National Statistical and Coordination Board (NSCB) issued the following operational
definition of the informal sector in 2002 after consultations with stakeholders:
Units engaged in the production of goods and services with the primary objective of
generating employment and incomes to the persons concerned. It consists of household
unincorporated enterprises that are market and non-market producers of goods as well as
market producers of services.
These enterprises are operated by own-account workers, which may employ unpaid family
workers as well as occasional, seasonally hired workers.
These enterprises may also be owned and operated by employers which may employ less than
10 employees on a continuous basis. (NSCB Resolution No 15, series of 2002)
The informal sector thus officially recognized and defined includes the following subsectors,
among others: the micro-entrepreneurs, home-based workers (including subcontracted, ownaccount workers and self-employed), vendors, small transport operators (of tricycles, pedicabs
and bancas), petty retailers, barter traders, small-scale miners and quarry workers, non-corporate
construction workers, entertainers, beauticians, laundry persons, hairdressers, small and landless
farmers, artisanal fisherfolk, on-call domestic helpers, volunteer workers, barkers, unorganized
cargo handlers, etc.
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In recent years, there has been a shift in terminology from ‘informal sector’ to ‘informal
economy’, the latter defined by the ILO as ‘all economic activities by workers and economic units
that are – in law or in practice – not covered or insufficiently covered by formal arrangements’.11
The shift is underpinned by the realization that what used to be considered a transitory, marginal
‘informal sector’ did not disappear with industrial development but has become a permanent,
expanding provider of jobs, goods and services for lower income groups not only in developing
but also in industrialized economies. It is responsible for a significant portion of the Gross
Domestic Product (GDP) and as the Philippine case suggests, accounts for a broad range of
occupations from old resilient casual jobs in construction and subcontracted work done at home
for the garment and handicraft industries, to new emerging forms such as temporary or part-time
work and computer-based ‘tele-homework’ such as medical transcription. It also includes a wide
variety of economic activity, from survival and livelihood projects to thriving micro-enterprises
and stable businesses.
The informal economy covers ‘all work in informal enterprises as well as informal jobs (jobs
that pay no benefits or provide no social protection), thus including the self-employed in informal
enterprises (for example home-based workers or street vendors) and paid workers in informal
jobs (for example casual workers without fixed employers, most domestic workers, even factory
workers in unregulated and unprotected work)’.12 A worker therefore is no longer defined as
someone in a formal setting having a regular job and with a clear employer, which is how the
shrinking male minority of working people in the world see themselves. A worker is ‘anyone who
lives by selling his or her capacity to work, either for wages or for other forms of income’.13 And
as a worker, he or she deserves the full compendium of labour rights and entitlements irrespective
of formality or informality.
Impact of Informalization on Women Workers
Women’s role as a significant income-source for the family defines the real extent of women’s
work and their contribution to the economy. It is in this context that women are responding
with efforts to create their own jobs or to make do with low-quality jobs. This is because women’s
earnings are critical to ensuring family survival, especially during times of economic crises when
their participation in the labour market noticeably increases.
Data gathered in 2002 show that the majority, or 6.2 million or 53 per cent, of employed
women belonged to the informal economy.14 Women predominate among the unpaid family
workers in agriculture, in the wholesale/retail trade, and social and personal services in the
community. Many own-account or self-employed workers operating sari-sari or small variety
stores and other micro-enterprises are women. Also included are the working children estimated
at four million in 2001, of whom 1.5 million or 37.5 per cent are girls.15 Women and girls in the
informal economy combine domestic tasks with income-generating work to sustain their families.
Problems of women workers in the informal economy are already common knowledge.
They include: 1) lack of social protection due to the absence of clear employer-employee relations
(no medical, maternity, and other benefits; no retirement pension); 2) irregular and unstable
employment dependent on fluctuations in labour demand; 3) exposure to occupational and
environmental health hazards, since their working and living conditions can hardly be monitored;
4) vulnerability to super-exploitation and abuse, such as below-minimum wages, non-payment
of work done, etc.; 5) low awareness of their rights as workers and as women; 6) poor access to
credit, markets, technology and other support services; 7 ) low levels of organization; 8) lack of
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voice and representation in policy-making bodies; 9) lack of access to justice; and 10) vulnerability
to gender-based violence such as domestic abuse and sexual harassment.
Aside from the cross-sector problems, specific subsectors of informal workers have other
pressing issues. For example, many vendors are insecure in their workplaces, fearful of being
driven away by authorities. Legislation meant to promote and protect the interests of construction
workers has not really been implemented. Small miners are marginalized and disadvantaged by
the Mining Act. Small transport operators (particularly of tricycles, habal-habal 16 and railroad
trolleys) are vulnerable due to lack of safety regulations for both drivers and passengers. Vendors
whose goods are arbitrarily confiscated by the authorities or drivers who are unjustly penalized for
alleged traffic violations just resort to bribery because there are no mechanisms to hear and address
their complaints and grievances. Volunteer workers in government service lack compensation,
incentives and protection. Small farmers and fisherfolk are affected by environmental degradation
as well as increasing conversion of farm land and decreasing fishing grounds. Informal workers in
the entertainment industry are vulnerable to sexual exploitation and harassment.
Specific Issues of Women in Micro-Enterprises
In the Philippine context women micro-entrepreneurs experience gender-specific constraints,
which according to the ILO largely originate from their socio-cultural context. These include lack
of self-confidence, conflicting role demands and time limitations; lack of family support; limited
mobility; fewer opportunities for vocational training and skills development; lack of information;
and inadequate or fewer legal entitlements compared with men. 17
Due to flexible time and involvement, production work in micro-enterprises is often done
at home. But combining reproductive and productive work simultaneously has advantages and
disadvantages for women, as can be gleaned in an ILO document:
As the economic activity is most often undertaken in addition to household chores and,
in rural areas, to agriculture, women are not able to dedicate continuous attention to it.
There is a lack of clear-cut division between household and business, both in terms of
allocation and financial flows (re-investment is often subject to prior fulfillment of the
family’s basic needs). The total work load is heavy.
The owner-operator performs all the functions herself. The marketing and managerial
functions are embryonic. 18
Other constraints have to do with lack of access to productive resources. Foremost is the lack
of affordable and accessible capital that makes them vulnerable to usurers. They are also unable to
purchase in bulk, so their supply of raw materials and other production needs are always limited.
Oftentimes, they lack management skills as well as access to or control of technology in terms of
production, design, equipment, etc. And when they cannot market their own produce, they lose
control over their revenues.
Due to unbridled trade liberalization, women micro-entrepreneurs suffer from competition
with foreign products and limited access to profitable markets. They often end up as victims of
non-payment of goods delivered or non-acceptance of goods due to real or trumped up qualitycontrol issues. When they are victimized in this way, they have no real access to justice as they do
not know which authorities to approach or what legal mechanisms to use in order to redress their
grievances.
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Different forms of micro-enterprises abound. There are micro-enterprises found at the
bottom of the subcontracting ladder supplying larger firms with raw materials or finished
products at very low cost, employing unprotected labour comprised of women homeworkers,
child labour, indigenous craftspersons and others similarly situated. A special category of a nonprofit-oriented micro-enterprise is the social enterprise, which may take the form of a group or
cooperative enterprise, community-based and anchored on solidarity, mutual assistance and social
service. Then there are also the ‘free-standing’ ones that are not dependent on other entities for
capital or for markets.
Workers of various categories are found in micro-enterprises. And because they have
particular needs, ensuring their rights through specific interventions must be a priority concern.
Organized wage workers in formal or registered micro-enterprises are the most advantaged
because of the employer’s ability to provide for their basic legal entitlements like minimum
wage, social security, and safe and healthy working conditions. Unorganized wage workers in
informal micro-enterprises are the most disadvantaged since they do not receive the minimum
wage, have no social protection and are subject to occupational hazards. One of the largest groups
of unorganized wage workers, if statistics are to be the basis,19 is composed of unpaid family
workers in family-based micro-enterprises. Perceptions differ as to whether they are advantaged
or disadvantaged. They can be considered disadvantaged, especially in the case of women and
girls due to lack of female labour valuation and persistence of child labour. On the other hand,
they can be considered better positioned vis-à-vis non-related workers due to the positive effect
of family relations on the meaning and experience of work. Finally, the self-employed or ownaccount workers, or micro-entrepreneurs who are also workers themselves comprise another large
category of workers.
2. Analysis of Specific Laws and Their Implementation
The following discussion points out the gaps and biases in certain provisions of specific
laws, and in one way or the other proposes recommendations towards revision and/or workable
implementation.
Legislation of General Application
The 1987 Constitution of the Republic of the Philippines, as the fundamental law of the
land, gives emphasis to the importance of labour as a primary social and economic force, which
must therefore be protected and promoted. Section 3 of Article XIII on Social Justice and Human
Rights states that: ‘The state shall afford full protection to labour, local and overseas, organized
and unorganized, and promote full employment and equality of employment opportunities
for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with
law. They shall be entitled to security of tenure, humane conditions of work, and a living wage.
They shall also participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law….’
Section 1 of the same article provides for ‘measures that protect and enhance the right of
all the people to human dignity, reduce social, economic and political inequalities and remove
cultural inequities’. Section 2 calls for the ‘promotion of social justice through creation of
economic opportunities’.
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Additionally, Article II, Section 9, provides for ‘policies that provide adequate social services,
promote full employment, a rising standard of living and an improved quality of life for all’.
Section 10 of the same article emphasizes ‘social justice in national development’, and Section
8 highlights the need to ‘protect the rights of workers and promote their welfare’. Article III,
Section 1 of the Bill of Rights, enshrines ‘due process and equal protection of laws’.
The abovementioned constitutional provision makes no distinction between formal and
informal workers, spreading the mantle of protection, social justice and human rights to all.
Labour Code: Presidential Decree 442
The basic policy of the Labour Code is that: ‘The state shall afford protection to labour, promote
full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the
relations between workers and employees. The state shall assure the rights of workers to self-organization,
collective bargaining, security of tenure, and just and humane conditions of work.’
As observed by legal and labour experts, ‘One of the critical features of the Code is its
emphasis on workers with employer-employee relationship, the elements of which are not usually
present in the informal sector.’20 Even among formal workers, provisions of the Labour Code are
weakly enforced in an atmosphere of stiff competition under globalization and the resultant ‘race
to the bottom’ in terms of labour standards to save on production costs. Violations are rampant,
especially among women workers in the economic zones. Recurrent worker complaints against
below-minimum wage, non-regularization, labour-only contracting, forced overtime with or
without pay, unreasonable pegging of quotas, working hours beyond eight hours a day and six
days a week, non-remittance of Social Security Service (SSS) and PhilHealth contributions, denial
of incentive leave, maternity leave and other privileges, non-compliance with occupational health
and safety standards, etc. should be immediately addressed. Many of these clearly violate specific
provisions of the Labour Code and should therefore be easy to penalize.21
The rise of flexible employment not only in the economic zones but in most other workplaces
has led to the effective negation of the right to organize and to bargain collectively. The number
of establishments employing non-regular workers increased from 65.5 per cent to 86.4 per cent in
just a three-year period (1998-2000), highlighting the seriousness of the phenomenon. 22
Unionization is often limited only to regular workers, which now comprise a minority of
employees on the shop floor, the majority being contractual, casual, or agency-hired workers.
Seasonality and insecurity of employment, with contracts lasting at the most five months to
avoid regularization of workers and therefore higher labour costs, have made it almost impossible
for organizers to consolidate workers they are able to contact and educate into a cohesive force
with representation and bargaining power. Difficulties and delays in registering unions, calling
for certification elections, as well as harassment of union leaders by management, all comprise
barriers to the transition from organizing to collective bargaining. Management can also refuse
to negotiate, forcing workers to strike, but when they do the footloose nature of industry under
globalization makes it very easy for firms to just transfer to other places where cheaper and more
compliant labour can be found.
Informal workers in the Philippines in general are beyond the reach and scope of government
legislation because there are no formal contracts, only verbal agreements. As a result, the terms
and conditions of their employment become exploitative and further aggravated by the absence of
an employer-employee relationship. This situation hampers their access to social protection.
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Social Security Act of 1997 (Republic Act 8282)
Section 2 of this Act provides that ‘it is the policy of the State to establish, develop, promote
and perfect a sound and viable tax-exempt social security system suitable to the needs of the people
throughout the Philippines which shall promote social justice and provide meaningful protection to
members and their beneficiaries against the hazards of disability, sickness, maternity, old age, death,
and other contingencies resulting in loss of income or financial burden. Towards this end, the State
shall endeavor to extend social security protection to workers and their beneficiaries.’
The branches of social security that exist and are being implemented in the Philippines
consist of 1) medical care; 2) cash sickness benefits; 3) maternity benefits; 4) old-age benefits; 5)
invalidity benefits; 6) survivors benefits; and 7) employment injury benefits.
Social security in the Philippines follows the principle of contributory social insurance. Those
who cannot pay the cost of social security are not qualified beneficiaries or are automatically
excluded from formal social security coverage. Women workers who have no access to such
benefits are doubly burdened because they cannot avail themselves of maternity and medical
benefits.
SSS figures for mid-2005 show that employees (mostly formal sector) covered numbered
20.63 million, while the self-employed members (the category to which most informal workers
belonged) comprised a mere 5.28 million. 23
Social security should be provided to all workers in case of death, illness, disability, maternity
and old age. Most informal workers, however, do not enjoy such social security, perhaps because
they have no clear participation in both policy-making and implementation on this issue. The
SSS Law should be amended to allow for informal sector representation in the SSS Commission,
accreditation of informal workers’ organizations as collecting agents, improvement of benefit
package and easier contribution terms for low-income earners. In order to facilitate informal
worker membership, cooperatives and people’s organizations should be accredited as collecting
agents of premiums; other collection mechanisms (through cellphones, couriers, etc.) should also
be developed. Efficiency, transparency and effectiveness in service delivery need to be ensured.
Initiatives such as the Automatic Debit Account (ADA) scheme whereby informal workers
can open savings accounts at minimal cost in specific banks and have their SSS contributions
automatically deducted and remitted to SSS should be assessed, improved and replicated.
National Health Insurance Act of 1995 (Republic Act 7875)
This Act instituted the Philippine Health Insurance Corporation (PHIC) to actively
implement a programme that aims to provide universal health insurance for all. The Programme,
called PhilHealth, provides free hospitalization benefits to members and their families.
Although PhilHealth is aiming for universal coverage, its membership is still mainly formal
sector. In mid-2006, PhilHealth had a membership base of 12.5 million, and 54.5 million
beneficiaries representing 64 per cent of the population. The majority of the members come from
the formal employed sector (56 per cent). Overseas Filipino workers account for 4.9 per cent; the
sponsored sector (or those paid for by local politicians and other benefactors) 24 per cent; and
the non-paying (indigent) sector comprises 0.6 per cent. The individually paying sector, to which
informal workers generally belong, comprises a mere 14 per cent. 24
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When informal workers and their family members fall ill and need to be hospitalized, they
need health insurance to cover their needs otherwise they either fall into debt or are unable
to seek necessary medical attention. Thus, they should eventually be covered by PhilHealth
through universal, state-subsidized schemes such as the highly successful one in Thailand. In the
meanwhile, the Kalusugang Sigurado at Abot-Kaya sa PhilHealth Insurance (KaSAPI) initiative
(launched in 2005) and other PhilHealth programmes for indigents and the working poor should
be expanded and improved in order to develop effective partnerships with organized groups and
better serve their target populations.
Community-based health insurance and indigenous schemes such as the damayan should
also be supported through technical assistance, subsidies, and other means by national and local
bodies so that they can be of better service to their membership who cannot access or who need to
supplement benefits provided by formal social protection mechanisms such as PhilHealth.
Legislation on Occupational Safety and Health
The right to minimum standards of occupational safety and health is guaranteed in
Article XIII, Section 3 of the Constitution. Books III and IV of the Labour Code implement
this mandate in general terms and prescribe maximum working hours, provision of protective
equipment and clinics, among others. For specific occupations, the minimum conditions of
health and safety are found in the Manual on Occupational Safety and Health Standards.
The occupational safety and health provisions mentioned, however, are applicable only
to workers falling within an employer-employee relationship. Thus, workers in the informal
economy are excluded from the coverage of the Labour Code.
The mandate of the Occupational Safety and Health Center, Bureau of Working Conditions,
Employees Compensation Commission (ECC) and similar bodies should cover both formal and
informal workers; resources should be made available for them to develop their programmes and
services for informal workers. Such programmes and services, some of which are at the pilot stage,
should also be institutionalized in the local government through budgetary allocations in their
local health development plans. These should include the training of trainers among homeworkers
and other informal workers as well as continuous awareness-raising to prevent and minimize work
related and accidents.
Local Government Code (Republic Act 7160)
Significant in relation to the need for visibility and voice of workers in the informal economy
is Article X, Section 9 of the Constitution. This article provides that ‘Legislative bodies shall have
sectoral representation as may be prescribed by law.’ The Local Government Code passed in 1991
says in Section 41 that ‘...there shall be one (1) sectoral representative for women, one (1) from the
workers, and one (1) from any of the following sectors: urban poor, indigenous cultural communities,
disabled persons, or any other sector ay may be determined by the sanggunian concerned within ninety
(90) days prior to the holding of the next elections, as may be provided by law...’ These representatives
from local sectoral groups would be elected as members of municipal, city and provincial councils
nationwide. The Local Government Code also mandates sectoral representation in local special
bodies such as Regional and Municipal Development Councils, School Boards, etc. Enabling
rules should be enacted to realize local sectoral representation in practice. This would increase
opportunities for participation of women and informal workers in local politics and governance.
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The Local Government Code also empowers local authorities to create development
committees in order to strengthen the participation of its constituents in the development process.
Its significance lies in the bottom-up decision making process whereby interventions generated
are the product of consultations and consensus among stakeholders. Further, the creation of a
committee for workers in the informal economy will assist the local legislative council in crafting
a policy framework and in creating concrete interventions for the sector.
Philippine Country Programme for the Informal Sector
In the Philippine context, advocacy for informal workers has been going on for almost two
decades, with the main impetus provided by organizations of such workers and their allies. In the
beginning, this advocacy was an uphill climb producing little result, since decision-makers were
not sufficiently aware of and sympathetic to the plight of informal workers. In recent years, this
advocacy has been considerably strengthened with the more visible multi-sectoral involvement
not only of informal sector organizations and other civil society groups, but also of national
government agencies, local government units (LGUs) and United Nations agencies such as the
International Labour Organization (ILO), United Nations Development Program (UNDP)
and the United Nations Development Fund for Women (UNIFEM). Efforts from these various
stakeholders converged in what is known as the Philippine Country Program for the Informal
Sector, the longer title of which is Institutionalizing Programs and Policies for the Informal Sector
through the Local Government. This programme came into being through Resolution No. 2 (Series
of 2003) of the Social Development Committee (SDC) based in the National Economic and
Development Authority (NEDA) co-chaired by the Secretary of the Department of Labour and
Employment (DOLE) and the Secretary of Socio-Economic Planning.
The SDC, which has a sub-committee on the Informal Sector (chaired by DOLE and with
secretariat and management support office lodged at the Bureau of Rural Workers – BRWDOLE), also has five Technical Working Groups (TWGs), one each for social protection;
productive resources; capability building, organizing and representation; policy and statistics; and
resource mobilization and advocacy, consistent with the components of the Country Program.
The Country Program was rolled out at the LGU level with the involvement of 17 cities
and municipalities in Metro Manila, plus Angono and Rizal, tasked with implementing their
local action plans for the institutionalization of policies and programmes for the informal sector
through CLIPPS (Capacity Development of Local Institutions to Promote and Protect the
Informal Sector).
These local initiatives continue today under a more focused intervention called ‘Unlad
Kabuhayan Program Laban sa Kahirapan’ (DOLE Worktrep Program) targeting the working
poor in the informal economy in cooperation with LGUs so that their livelihood projects can
grow into viable and sustainable enterprises.
Gender-Related Laws
Since many workers in the informal economy are women, it is important to see what genderrelated laws are relevant to their situation.
At the international level, the Philippines is a state party to the Convention for the
Elimination of Discrimination Against Women (CEDAW). It has ratified ILO Convention No.
100, aimed at eliminating gender-based discrimination in employment. It is also a state party to
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ILO Convention (1953) prohibiting night work, but there is now a push to review the Labour
Code provision implementing this Convention due to perceptions that it is discriminatory to
women who want to take advantage of opportunities to work at night.
The Philippine Constitution provides for equality of women and men at work in terms
of pay as well as working conditions. To promote this, the Labour Code, specifically Articles
135 and 136, prohibits gender discrimination in employment, particularly against married and
pregnant women. However, pre-employment discrimination is not yet addressed, and could be
prevented by prohibiting advertisements mentioning sex preferences for certain jobs.
Separate legislation also guarantees maternity protection and benefits for women. These are
still inadequate when measured by international standards. The situation could be remedied by
extending maternity leave with pay, providing pre-natal and post-natal services, breastfeeding
entitlements and protection against harmful work.
There is a law providing limited paternity leave for husbands of women who have just
given birth, but this benefit is still limited and could still be extended and expanded to include
unmarried couples in common-law relationships.
There is an Anti-Sexual Harassment Act, but this could still be strengthened by including
harassment between peers, providing penalties for non-enforcement in firms and institutions, and
putting in safeguards against retaliatory acts.
Aside from the limitations and flaws mentioned above25 these measures normally apply only
to women employed in formal establishments. Informal workers hardly benefit from them at
all. It is important therefore to push for the Magna Carta for Women that has been pending in
Congress for a number of years. It aims to affirm women’s rights and facilitate women’s political
and economic empowerment. It includes chapters focusing on ‘marginalized sectors’, including
women in the informal economy. The bill needs more extensive discussion and support among
the sectors concerned, and should be made consistent with the provisions of the Convention on
the Elimination of Discrimination Against Women (CEDAW).
Other Laws Pertaining More to the Self-Employed
The following laws can also be considered labour laws insofar as they cover microentrepreneurs, self-employed and other sectors in the informal economy.
The Social Reform and Poverty Alleviation Act (Republic Act 8425 of 1998) provides an
entire section on microfinance services for the poor, and states that the protection and welfare
of workers in the informal sector shall be one of the flagship programmes of the Social Reform
Agenda, thus making it a clearly pro-informal sector policy. In its implementing rules, it was
specified that the focus shall be on protection by labour laws, security at the workplace, protection
against harassment and abuse, access to programmes and services catering to their special needs,
and organization into unions, cooperatives and other forms of associations. It also provides
representation for informal worker organizations in the National Anti-Poverty Commission
(NAPC) through the Workers in the Informal Sector Council (WISC).
An Act for Women in Micro and Cottage Business Enterprises (Republic Act 7882) provides
assistance to women engaging in micro and cottage business enterprises, and other purposes,
particularly those who have been engaged for at least one year with a daily inventory of goods
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worth not more than 25,000 pesos (~US$62.50) or with any business equipment with a book
value of not more than 50,000 pesos (~US$1,250). (US$1= approximately 40 Philippine pesos,
February 2008.)
An Act Promoting the Integration of Women As Full and Equal Partners of Men in
Development and Nation Building (Republic Act 7192), better known as the Women in
Development and Nation Building Act, is a related legislation to RA 7882. It seeks to provide,
among other things, that:
women shall have the capacity to borrow and obtain loans and execute credit
arrangements under the same conditions as men; women shall have equal access and
rights to all government private sector programs granting agricultural credit, loans and
non-material resources, and shall enjoy equal treatment in agrarian reform and land
resettlement programs; and a substantial portion of official development assistance funds
shall be utilized to support programs and activities for women, among others.
An Act to Promote the Establishment of Barangay Microbusiness Enterprises (BMBEs),
Providing Incentives and Benefits Therefore, and for Other Purposes (Republic Act 9178), also
known as the Barangay Micro Business Enterprises (BMBEs) Act of 2002, that lends legitimacy
to what has been generally put aside as ‘underground’, thus, acknowledges the economic
contribution of microenterprises, and expresses the need to ‘promote the establishment of
Barangay Micro-Business Enterprises (BMBEs)’ in the communities.
RA 6810 or Kalakalan 20, enacted in 1989 as a special legislation for the informal sector,
which attempts to formalize countryside and barangay business enterprises by exempting them
from certain taxes and regulations. This law seeks to enhance entrepreneurial undertakings and
promote self-reliance.
An Act to Strengthen the Promotion and Development of, and Assistance to, Small- And
Medium-Scale Enterprises, Amending for That Purpose Republic Act No. 6977, Otherwise Known
as the ‘Magna Carta For Small Enterprises’ And For Other Purposes, May 1997 (Republic Act
8289). The main feature of the law provides that all lending institutions, public or private,
‘shall set aside at least six per cent (6%) and at least two per cent (2%) for small- and mediumenterprises, respectively of their total loan portfolio’.
All of the laws mentioned need to be amended to ensure the rights of informal workers and
micro-entrepreneurs (especially the women among them) as well as their access to credit and other
productive resources.
As specific targets of assistance, women are not at all mentioned in the Magna Carta on
SMEs, the BMBE Law, and to a large extent, the Social Reform and Poverty Alleviation Act
(RA 8425). Women’s particular needs and interests as regards microfinance and microenterprise
development, which are different from those of men, are not at all considered. Neither are the
basic sectors covered by RA 8425 described as comprising women and men.
The manner by which microenterprise has been defined and redefined (from up to P150,000
to up to P3 million) surfaces the intersecting of gender with class-based discrimination, leading
to a lack of clear access of women in poverty. Under this law, bigger business concerns (mostly
owned and run by men) have more advantages and benefits at the expense of the smaller (micro)
ones (mostly run by women who are at the lower rungs of the capitalization ladder), and workers,
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mostly women in the informal sector (who need not be paid a minimum wage, for example).
Moreover, most of the laws have a strong bias for credit or minimalist model of microfinance and
microenterprise development, which is primarily concerned with the financial sustainability of the
providing institutions, not really with poverty reduction and/or women’s empowerment. Women
clients tend to be heavily disadvantaged by high interest rates and transaction costs, and low
lending ceilings insufficient to lift them out of poverty.
Most of the laws are silent on the rights and entitlements of workers in micro-enterprises,
and there is hardly any articulation of the needs and interests of workers in the informal economy,
much less of the women who comprise much of this sector. The informal sector is mentioned
in the BMBE Law only in one line in the declaration of policy which says that it should be
integrated into the mainstream economy. The Social Reform and Poverty Alleviation Act is
better because it clearly identifies workers in the formal and informal sectors as basic sectors with
clear representation and participatory mechanisms in the work of the National Anti-Poverty
Commission. On the BMBE law, which exempts micro-business from complying with the
minimum wage, there seems to be a consensus among trade unions and informal sector groups
that this exemption should be withdrawn.
Recommendations towards amendment strongly promote the inclusion of gender concerns
in guiding principles, mandates, goals and objectives of the laws as well as in the implementing
mechanisms. Women’s groups and enterprises as ultimate beneficiaries of the laws and the
resources they provide must be specified. Also, women’s participation in decision-making bodies
assigned to carry out such laws must be reflected. The laws must recognize the intersection
of gender, class and other inequalities, and seek to redress discrimination based on all these
inequalities. Specifically, the use of sex-disaggregated data and gender-based methodologies in
research, planning, monitoring and evaluation must be prescribed and reporting on compliance
by the concerned agencies must be mandatory. Not to be neglected is the use of gender-fair and
inclusive language, mentioning the phrase ‘women and men’ as actors and beneficiaries whenever
possible. Finally, there must be a stronger initiative for gender mainstreaming in microfinance and
microenterprise development at all levels of governance in accordance with the state obligation
articulated in Article 2 of CEDAW to ‘pursue by all appropriate means and without delay a policy
of eliminating discrimination against women...’ 26
Subsectoral Laws and Policies
Aside from the laws of more general application analyzed earlier, there are policy issuances
pertaining to specific subsectors of workers in the informal economy which deserve mention.
Department Order No. 5 on Home Work
Articles 153 and 154 of the Labour Code concern homeworkers and direct the Secretary of
Labour to regulate employment of industrial homeworkers. It was in 1992 when the advocacy
work of home-based workers’ organizations such as PATAMABA (Pambansang Tagapag-ugnay
ng mga Manggagawa sa Bahay, or National Network of Homeworkers) and their supporters
within and outside government finally bore fruit and then Labour Secretary Ruben D. Torres
issued Department Order No. 5 substantiating and putting into operation the abovementioned
articles. This Order now constitutes Rule XIV, Book III of the Labour Code’s Implementing
Rules and Regulations.27 Among its salient provisions are:
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1) The right to self-organization of homeworkers and the registration of homeworkers’
organizations which ‘shall be entitled to the rights and privileges granted by law to legitimate
labour organizations’;
2) Registration of employer, contractor and subcontractor;
3) Immediate payment for home work after delivery of goods, and remittance by the contractor/
subcontractor or employer of contributions to the SSS, Medicare, and ECC;
4) Standard output rates determined by time and motion studies to equalize piece rates received
by workers in the factory or main undertaking of the employer and homeworkers performing
the same job or activity, individual/collective agreement between employers and homeworkers,
or tripartite consultations with representatives of government, employers and workers;
5) Prohibition of any deduction from homeworkers’ earnings for materials lost, destroyed, soiled
or damaged save for certain conditions;
6) Liability of the employer, jointly and severally with the contractor or subcontractor if the
latter fails to pay the wages or earnings of his/her workers;
7) Regulation of employment of minors as homeworkers; and
8) Prohibition of homework in dangerous occupations.
Until now, however, this Rule has not been tested in action. It has to have penalties and
sanctions against erring employers, contractors, and subcontractors to be effective.
The plight of homeworkers can also be further addressed through the ratification of ILO
Convention 177 on Home Work.This seeks to uplift the conditions of homeworkers so that they
can experience the same treatment, exercise the same rights based at the very least on the core
labour standards of decent work, and receive the same entitlements workers in the formal and
other sectors are legally enabled to enjoy. Among these are the following: 1) the right to establish
or join organizations of their own choosing and to participate in the activities of such organizations;
2) protection against discrimination in employment and occupation; 3) protection in the field of
occupational safety and health; 4) remuneration; 5) statutory social security protection; 6) access to
training; 7) minimum age for admission to employment or work; and 8) maternity protection. The
campaign for ratification in the Philippines started as early as 1996. It is now finally bearing
fruit with the commitment of trade unions, employers, and government bodies, principally the
Department of Labour and Employment (DOLE) and the Office of the President to pursue the
ratification process. The campaign needs to be pursued to its logical end – concurrence by the
Senate through the Senate President.
Executive Order 452 Providing Security of Registered Vendors
This promulgation provides security to vendors in their workplace. They are protected
from being arbitrarily deprived of their livelihood by unjust ejection from their workplaces or
demolition of their stalls, provided that they comply with existing national and local laws and
ordinances. Under this law, vendors are encouraged to form an association in order to empower
them.
This issuance may in the long run prove beneficial to women who earn their income as
vendors in the informal sector. One unique issue under this promulgation is security at the
workplace which is properly the concern of the Local Government Unit (LGU). Some LGUs
have actually provided vending sites around municipal halls and other vacant government spaces
for their vendor constituencies as a result of informal worker advocacy.
To date, many of those who are supposed to enforce the Executive Order, and those who
are likely to benefit from it, are not even aware that such a law exists. As a result, vendors are still
Philippines
191
subjected to harassment coming from law enforcement agencies at the local and national levels.
Furthermore, since the Executive Order does not have the status of a law passed by Congress,
local government units are emboldened to contravene its spirit through their own resolutions.
Conscious of this, vendors groups attempted to push for a bill in the 13th Congress to ensure
their rights but this initiative did not prosper.
Republic Act 6685 and Department Order No. 13 on Construction Workers
RA 6685 was enacted to address the plight of construction workers. This piece of legislation
aims to promote local hiring and enhance alternative skills that will open opportunities for
construction workers towards an alternative form of employment.
To date, non-enforcement of RA 6685 (particularly on minimum wage and holiday benefits)
is attributed to lack of understanding and appreciation of the merits of supporting construction
workers. Likewise, contractors are fearful of organized groups. Among construction workers, the
fear of not being hired at all prevents them from joining or being associated with an organization.
Department Order No. 13 (1998), entitled The Guidelines Governing Occupational
Safety and Health in the Construction Industry, prescribes the provision of personal protective
equipment, construction safety signage, emergency facilities, mandatory certification and safety
information. These guidelines, however, are not rigorously observed in informal settings.
Towards a Magna Carta for Workers in the Informal Economy
The absence of comprehensive legislation that can cover the cross-sectoral concerns of all
subsectors has led to intensified lobbying and advocacy for a Magna Carta for Workers in the
Informal Economy. A bill for this, crafted with the participation of Homenet Philippines, the
Association of Construction and Informal Workers, as well as other stakeholders, was filed in the
14th Congress in August 2007.
The recent shift to a rights-based framework of development and the ILO’s decent work
agenda emphasizing core labour standards, means the following fundamental rights of informal
workers will be recognized, promoted, protected and fulfilled by this bill: 1) the right to selforganization; 2) the right to enhance their entrepreneurial skills and their capabilities to become
more productive and self-reliant thereby ensuring participation in mainstream economic activities;
3) the right to be free from any form of discrimination, whether this be based on gender, age,
ethnicity, political, religious or sexual orientation, etc.; 4) the right to just and humane working
conditions, access to productive resources, and social protection, including occupational and
reproductive health services; 5) the right to represent their organizations in a continuing process
of consultation and dialogue towards maximizing the provision of a comprehensive package of
reforms, interventions, and services in accordance with their articulated needs and interests; and 6)
the right to access justice by enactment of national and local policies towards alternative dispute
resolution.
This bill offers a comprehensive, integrated, rights-based and gender-responsive policy
instrument to address empowerment issues and bring the workers in the informal economy closer
to their dreams.
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REFERENCES
Asper, Tony (2007). Power Point presentation on contractualization discussed during the Labour Agenda meeting
convened by the FES, Manila, 7 November 2007.
Battad, Leo (2006): Gender Analysis of the Philippine Labour Code. In Gender Analysis of Selected Economic Laws.
Published by the University of the Philippines Center for Women’s Studies for UNIFEM.
Betonio, Jr., E.R. (2004): Labour Flexibility and Representation in the Philippines.
Cabanilla, Phoebe and Josephine Parilla. (2004) Legal Policies and the Situation of Women in the Informal Sector in
the Philippines. A paper presented to the Committee on Asian Women, Bangkok, Thailand.
Coordinating Committee on Human Rights (2006): Report of the Philippine Government on the Implementation
of the International Covenant on Economic, Social and Cultural Rights. (ICESCR)
Department of Labour and Employment. Bureau of Rural Workers. Inventory of Laws and Policies Affecting the
Informal Sector. 2004.
Department of Labour and Employment. Country Program: Philippines. Institutionalizing Programs and Policies for
the Informal Sector through the Local Government. 2003.
Farolan, Ma. Martha. ‘Social Protection and Legislation for Workers in the Informal Sector’, Chapter 2 in Handbook
of the Informal Sector. Bishop-Businessmen’s Conference for Human Development and DOLE (1998).
Gallin, Dan (2002): ‘Organising in the Informal Economy.’ http://www. wiego.org/papers.lab_ed.pdf.
Homenet Southeast Asia (2006): Social Protection for Home-based Workers in Thailand and the Philippines, coauthored by Donna L. Doane, Rosalinda Pineda Ofreneo and Benja Jirapatpimol, published under the auspices
of the Ford Foundation.
Illo, J.F.I. (2005) ‘Prospects for People Living in Poverty to Participate in Growth-Oriented Enterprises’ in Review
of Women's Studies, Special Issue on Gender, Globalization, Culture and the Economy (Vol. XV, No.2; July to
December 2005).
ILO (2002), Women and Men in the Informal Economy: A Statistical Picture, p. 20 (Table 2.2). Geneva: Employment
Sector, ILO – based on data prepared by Jacques Charmes from official national statistics, 1994/2000.
ILO Press. ILO Primer: The Challenge of Informal Work in the Philippines.
Informal Sector Coalition of the Philippines. A Compilation of Laws and Issuances on Women and Children in the
Informal Sector. (August 1999).
Lazo, Lucita. Toward A Philippine Magna Carta for the Informal Sector. (Background Paper, June 2000).
National Commission on the Role of Filipino Women (2004). State of the Filipino Women Report.
Pineda Ofreneo, Rosalinda, with Jocelyn Bellin and Mylene Hega (2007): Women Garments Workers in Philippine
Economic Zones – Towards an Organizing and Advocacy Agenda under Trade Liberalization. Part of a multicountry study sponsored by the Committee on Asian Women.
Pineda-Ofreneo, Rosalinda (2001): ‘Confronting the Crisis: Women in the Informal Sector.’ in Carrying the Burden
of the World: Women Reflecting on the Effects of the Crisis on Women and Children, edited by Jeanne Illo and
Rosalinda P. Ofreneo. Quezon City: Center for Integrative and Development Studies, University of the
Philippines.
Pineda Ofreneo, Rosalinda and Phoebe O. Cabanilla. in Beyond the Crisis: Questions of Survival and Empowerment,
edited by Jeanne Illo and Rosalinda P. Ofreneo. Quezon City: Center for Integrative and Development Studies,
University of the Philippines and Center for Women Studies (2003), pp. 41-78.
Pineda Ofreneo, Rosalinda, Joseph Lim and Lourdes Gula. ‘The View from Below: Policy and Program Implications
of the Impact of the Financial Crisis on Subcontracted Women Home-based Workers’ in the Hidden Assembly
Line- Gender Dynamics of Subcontracted Work in the Global Economy, edited by Radhika Balakrishnan.,
published by the Kumarian Press, 2001.
193
Philippines
Pineda Ofreneo, Rosalinda. (2006): Gender Analysis of Philippines Laws on Microenterprise and Microfinance from
the Perspective of CEDAW and Other International Instruments. In A Gender Review of Selected Economic
Laws in the Philippines. University of the Philippines Center for Women s Studies.
Proceedings on Metro Manila Workshops on the Promotion and Protection of the Informal Sector toward Action Planning
(2002).
The Republic of the Philippines. The Philippine Labour Code.
The Republic of the Philippines. National Statistical Coordination Board 2005 Statistical Yearbook.
Trinidad, Arturo Q. ‘Support Programs of NGOs, LGUs for the Informal Sector.’ In Handbook of the Informal
Sector. Bishop-Businessmen’s Conference for Human Development and DOLE (1998).
UNDP and DOLE. Resource Mobilization and Advocacy: Strengthening Good Governance in Local Government Units
for the Promotion and Protection of the Informal Sector (Proposed Bilateral Program on Technical Cooperation).
ENDNOTES
1.
2.
3.
4.
5.
6.
7.
In 2000, unemployment was recorded to be 10.14 per cent of the labour force, and underemployment
19.9 per cent. National Statistical Coordination Board. 2005 Statistical Yearbook (2005). Beginning 2005,
unemployment figures became lower because of new criteria for defining the unemployed. Thus in April 2006,
unemployment was placed at 8.2 per cent, but underemployment was at a very high 25.4 per cent.
The industrial sector – particularly manufacturing which is supposed to produce the greatest number of jobs
as the country progresses – has been stagnant at 14 to 17 per cent since the 1960s; in 2003, the percentage
was 15.7 per cent (National Commission on the Role of Filipino Women (2004), State of the Filipino Women
Report. Chapter 2, p. 6). Agriculture showed a declining trend in employment from 1.7 per cent in 1980 to 37
per cent in 2003 (Ofreneo, R. E. ‘From core to periphery: Why has the Philippines failed to industrialize’ in A
Nation in Crisis: Agenda for Survival published by the Fair Trade Alliance.)
Illo, J.F.I. (2005). See Table 6. Distribution of working-age population, by type of economy, October 2001.
‘Prospects for People Living in Poverty to Participate in Growth-Oriented Enterprises’ in Review of Women's
Studies, Special Issue on Gender, Globalization, Culture and the Economy (Vol. XV, No.2; July to December
2005). The employment-population ratio has not improved since 2002, when only 46 per cent of women were
employed compared to 73 per cent of men.
National Statistical Office. October 2002-2005 Integrated Survey of Households Bulletin, Table 6: Employment
Indicators: Women and Men Aged 15 Years and Over, 2002-2005; National Statistical Coordination Board.
Women and Men in the Philippines 2006 Statistical Handbook, Table 2.4: Labour Force and Labour Force
Participation Rate by Highest Grade Completed and Sex, Philippines: 2002-2004 on p. 32. Note, however,
that women who finished college had more participation in the labour force than other women with lower
levels of education.
Sibal, Jorge V. (2006) ‘Strengthening Offshoring in the Philippines: Issues and Concerns.’ University of the
Philippine Forum. July-August.
Proceedings of the Labour Agenda meeting sponsored by FES Manila, 7 November 2007.
On one side is the Trade Union Congress of the Philippines (TUCP) which comprises a moderate force
enjoying representation in government and tripartite bodies. On the other side is the Kilusang Mayo Uno
(KMU) which espouses a ‘genuine, militant, anti-imperialist’ mould of unionism. It belongs to the national
democratic movement, which has taken the brunt of state repression in the form mainly of extra-judicial
killings of trade unionists and other activists. Partido Manggagawa (PM) is another left-oriented party list
group which used to have a seat in Congress. It takes a direct socialist line, which distinguishes it from KMU.
Bukluran ng Manggagawang Pilipino (BMP) belongs to the PM formation. The Federation of Free Workers
(FFW), formerly with the World Confederation of Labour (WCL), is identified with the Christian Democrats
and like TUCP, has had relatively harmonious relations with government. The National Confederation of
Labour (NCL) and KATIPUNAN are other progressive blocs of left-oriented federations.
194
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
Asian Labour Law Review 2008
Informal employment now comprises 71 per cent of non-agricultural employment in Asia. (WIEGO website –
http://www.wiego.org/stat_picture)
Labour and Social Trends in ASEAN 2007: Integration, Challenges and Opportunities. (2007) International
Labour Organization.
National Labour Force Survey of Business and Industry, 2005 (2005). Table IV. Comparative Sizes of Formal and
Informal Sectors 1999 and 2005.
Resolution concerning decent work and the informal economy, document of the 90th session of the General
Conference of the International Labour Organization (2 , 2002, Geneva.
Gallin, Dan (2002): ‘Organising in the Informal Economy.’ http://www.wiego.org/papers.lab_ed.pdf..
Ibid.
National Commission on the Role of Filipino Women (2004). State of the Filipino Women Report, Chapter 2, p.
18.
National Commission on the Role of Filipino Women (2004). Chapter 2, p. 19.
The habal habal is a motorcycle outfitted with extenders on both sides as well as the back of the driver’s seat,
where as many as six passengers are accommodated.
International Labour Organization (1998): Gender Issues in Micro-Enterprise Development, Briefing Note.
http:///www.ilo.org/public/english/employment/ent/papers/gender.htm, pp. 4-5.
Ibid., pp. 5-6.
See Table 6. Distribution of working-age population, by type of economy, October 2001, in Illo (2005).
Department of Labour and Employment. Bureau of Rural Workers. (2004) Inventory of Laws and Policies
Affecting the Informal Sector.
These minimum standards include: 1) Normal hours of work shall not exceed eight hours a day (Article 83.
Normal hours of work); 2) If workers perform their job for over eight hours, they shall be provided with
overtime pay and night differential pay for those working between 10 pm and 6 am. (Article 86. Night-shift
differential and Article 87. Overtime work); 3) Workers are entitled to a rest period of not less that twenty-four
(24) consecutive hours after every six (6) consecutive normal work days. (Article 91. Right to weekly rest day);
4) Night work prohibition for women workers (Article 130. Night work prohibition); Right to a yearly service
incentive leave of five days with pay if a worker has rendered at least one year of service. (Article 95. Right to
service incentive leave).
Betonio, as cited in Asper.
Homenet Southeast Asia (2006), p. 318.
Homenet Southeast Asia (2006), p. 320.
Largely based on Battad (2006).
A more comprehensive analysis of these laws can be found in Pineda Ofreneo.(2006).
DOLE (2004), p. 11.
195
Thailand
Extending Labour Protection
to the Informal Economy in Thailand
Bundit Thanachaisethavut, Dr.Voravith Charoenlert & Suntaree Saeng-ging
1. Contemporary Snapshot
G
lobalization and economic restructuring have led to the growth of the informal economy
all over the world. There are many factors contributing to the rapid growth of the informal
economy. Increasing competition has led companies to seek and adopt employment flexibility in
order to cut costs, and in turn, informal relations between employers and employees. Economic
crisis and company restructuring have caused massive lay-offs; new employment is often found in
the informal economy. Labour law, social protection and governmental institutions are outmoded
and ineffective in coping either with flexible employment or production chains running across
national boundaries or regions involving producers in a variety of employment relations.
In Thailand, attention needs to be paid to the informal economy because of its importance
to the Thai economy and society. The majority of its workers are not protected. Although the
informal economy makes up almost 50 per cent of employment, the rights of workers in the
informal economy are unequal to those in the formal economy.
Definitions of the Informal Economy
The International Labour Organization (ILO) defines the informal economy as economic
activities that have no protection or regulation under the law or having insufficient protection
because these activities are conducted outside the legal framework. It can also refer to activities
covered by laws that are scarcely or not enforced because of inappropriate regulation, the burden
for those concerned, or the high cost of doing so.
The ILO divides persons in the informal economy into three groups.1
1. Employers of small enterprises having few workers;
2. Self-employed/own-account workers and unpaid employees;
3. Workers in small enterprises of informal activities or workers with no definite employer
or employment contract such as home workers or producers under production contract.
In Thailand, the Social Security Bureau of the Ministry of Labour has concluded its
preparatory activities on the extension of social protection to informal economy workers in 2006
and set the definition as follows: Informal economy workers are those outside the protection of
the social security law. These workers can be divided into two groups.
1. Those who are employed and receive income such as home workers, trade contract workers
or seasonal agricultural labourers.
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2. Those who are self-employed with no hired labour such as drivers with their own or hired
vehicles, farmers with their own cultivated or hired land, street vendors, petty traders or
pharmacists, lawyers, doctors or dentists.
According to the National Economic and Social Development Board (NESDB), ‘informal
economy’ refers to the production of goods or services that generate income and employment
occurring outside of the management or supervision of governmental bodies. They are generally
small production units run by the community or self-employed persons who may hire workers
or use family labour. They may be legally registered or unregulated by law. According to the
NESDB, the informal economy is composed of:
1. Non-formal production of goods and services. This refers to economic activities that, while
not illegal, are neither regulated by law nor taxed. There are no definite wage payments and
no employment systems; production is in small units, vulnerable to volatile markets and
uncertainty. These activities include:
•
Those engaged in production including small farmers and agricultural labourers,
home workers, small producers, small family businesses, row-house shops, community
businesses, group businesses and self-employed groups.
•
Those engaged in trade and services consisting of vendors, repairers of personal
belongings or household equipment.
•
Those engaged in transport, consisting of for-hire motorcyclists, van, taxi and boat
drivers.
•
Those engaged in domestic work, consisting of production for family consumption,
remunerated domestic labourers, child care givers, and care giving for elderly and sick
persons at home. Although these kinds of work are important for maintaining the
family, they are neither paid for nor counted in the national income figures.
2. Production of illegal goods and provision of illegal services. These refer to production,
distribution and services in illegal activities such as illegal gambling, drug trafficking,
smuggling (including illegal trading in weapons, oil and pornography), sex and human
trafficking (such as slave trading, child trafficking and prostitution), trading in wildlife and
rare protected plants, corruption in the public and private sectors, money laundering and
international crimes.
Overview of the Informal Economy in Thailand 2
Studies conducted by the NESDB find that the informal economy contributes almost as
much to GDP as the formal economy (not including illegal activities). In 2001, the informal
economy generated value amounting to 2.33 billion baht (US$ equivalent: US$75,161 million;
1 US$ = approximately 31 Thai baht), or 45.6 per cent of GDP. Part of this contribution, about
33.3 per cent, is accounted for in the GDP while the remaining 12 per cent is unaccounted for.
There are an estimated 34.67 million employed persons in Thailand. Around 22.10 million
persons—67.8 per cent of all employed persons—work in the informal economy and outside the
protection of the social security law. Of these, 42.1 per cent work in the agricultural sector and
31.2 per cent are employed off-farm.
Ministry of Labour statistics show that there were 8.52 million workers employed in the
country. The Social Security Fund (SSF) covers establishments with one or more workers. In
January 2005, it had registered 7.84 million workers under its coverage.
Thailand
197
A survey on the demand for social security for 2003 conducted by the National Statistical
Office estimated that 24.9 million informal workers—about 70 per cent of all employed
persons—were outside social protection.
The legalized informal economy refers to the unregulated sector with limited protection;
it is distinct from the illegal economy. The majority are small establishments such as household
enterprises. Small farmers rely mainly on family labour and constitute a major source of
employment and income for many of the underprivileged groups in society, especially those with
less education, low skills and no capital.
Though these informal activities are not considered very productive, their numbers
have recently swelled and are now growing rapidly. For example, the number of commuter
motorcyclists in the Bangkok Metropolitan Area has increased over sevenfold in the past 20 years,
i.e. from 16,000 motorcycles and 1,570 stations in 1984 to 108,506 motorcycles and 4,440
stations in 2003. The number of street vendors has increased from 24,192 in 1986 to 25,653 in
1998. Entry into this business is quite easy as it does not require much capital. Between 1999 and
2001, the number of home workers has increased by about 80 per cent, from 226,473 to 406,473
households. The majority of home workers are engaged in manufacturing, especially of textiles
and garments. Community enterprises such as those the government supports through the OTOP
or One Tambon (sub-district) One Product policy generate employment and income for rural
and urban communities.
Activities in the informal economy play an important role in the increase in production
and employment for a large part of the population, around 50 per cent of all employed persons.
They are part of supply chains, providing labour, raw materials and intermediate products in the
economic system, the starting ground of new entrepreneurs, and the provider of cheap, consumer
products. At the annual NESDB conference in 2004, there was a recommendation of participants
from many sectors, for the government to regulate the informal economy and to emphasize social
protection over economic aspects of the phenomenon. According to this recommendation, the
government should:
1. Alleviate poverty and promote income distribution. This can be achieved through product
and service development of the informal sector and promotion of secure employment and
income.
2. Provide those working in the informal sector rights and social protection equal to workers in
the formal sector.
3. Create transparency in society by suppressing the illegal economy and its negative impacts.
2. Thai Labour Laws and Decent Work in the Informal Economy
The 87th International Labour Conference in 1997 upheld decent work in both the formal
and informal economy as a goal and means of development. The International Labour Office
supports policies and technical assistance to governments, employers’ and workers’ organizations
to promote decent work and reduce decent work deficits.
The ILO Director General’s report entitled Decent Work in the Informal Economy was
presented at the annual International Labour Conference in 2002. It stated four fundamental
areas of the ILO’s efforts to promote decent work: labour rights, productive employment, social
protection and social dialogue. The report noted particularly that the working conditions relating
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to these four areas would improve if workers are organized and able to collectively bargain for
improvements.
Labour Rights Protection
ILO conventions provide protection to all who work, without discrimination based on
birthplace, nationality, ethnic, sex, age, religion, race, working status, economic or social status.
Thai labour laws do not protect all kinds of employees. The Labour Protection Act (LPA)
covers employees in the private sector but does not cover some groups of private employees. They
can be placed in three categories
The first group is employees protected under other special laws. These include persons
‘working for central administration, provincial administration, and local administration’ and
those working for ‘state enterprises under the law governing state enterprise labour relations’.
Others protected under special laws include teachers in private schools, and particular groups
exempted from the LPA, including employees of the Airport Authority of Thailand who are
exempted from labour protection and relations acts by the 1989 Airport Authority of Thailand
Act 3 and directors, officials and employees in public transit organizations set up under the Public
Organization Act of 1999, who are not covered by the labour protection and relations acts, social
security law and workmen compensation fund.4
The second group is employees who receive limited protection on certain issues. One such
example is those working in other peoples’ homes for non-commercial purposes such as domestic
workers, child care, cooking, cleaning, washing, gardening, night watch or other work related
to residential areas. Domestic workers receive some protection such as the requirement that the
employer pays wages at least once a month and provides working facilities. Sexual harassment by
the employer is prohibited as well as other types of discrimination against women and children.
They must arrange for at least six days off each year for those working over one year. Employees
employed in non-profit organizations such as foundations also fall into this second group, as they
receive certain protection such as equal wage payment for women and men doing the same work.
The Workmen's Compensation Act (WCA) does not extend protection to workers in non-profit
organizations. (See below for more on the WCA.)
The third group is employees who have protection different from the LPA. Employees can
be the subject of government regulations concerning employment relations, thereby receiving
protection that is potentially different from those determined by the LPA. For example, pregnant
workers who are employees in managerial positions, doing professional or secretarial work as well
as those in all forms of financial or accountancy work, are protected against compulsory overtime
work. As for employees in direct sales, employers must pay to these employees commission
derived from the sale of commodities. These employees have no right to overtime work except
when employers agree to pay for it. Special regulations are also made for employees in fisheries,
home-based workers, and seasonal labour.
The Right to Organize and Collectively Bargain
The 1976 Labour Relations Act (LRA) deals with setting up worker and employer
associations, collective bargaining, and dispute settlement. After 30 years of implementation the
legislation is outdated as compared to the labour protection and social security laws, which were
the result of the reforms that the labour movement demanded of the Ministry of Labour.
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199
The Act has a number of significant limitations. The LRA is not applicable to employees
employed in government and state enterprises, as well as other activities exempted by Royal
Decree. Strikes are prohibited in the important economic sectors of the railway, post office,
telephone and communication, electrical power distribution or water works, medical centres,
cooperatives, land, water and air transport. The LRA gives employees with Thai nationality
and older than 20 years the right to form trade unions and become union committee or subcommittee members. Thai workers younger than 20 years old and foreign workers have the
right to become members of trade unions but may not form unions or be members of union
committees.
Right to Social Protection
Workmen's Compensation Act:
The objectives of the Workmen's Compensation Act (WCA) are to pay compensation
to employees who suffer from work-related injuries or diseases, or work-related death or
disabilities. The Fund covers employees of contributing employers. Coverage is required of
all private enterprises with one or more employees. The following groups are exempted from
coverage: domestic workers; central, provincial and local governmental administrative bodies;
state enterprises; employers in private school businesses; employers in not-for-profit ventures;
employers who are ordinary citizens that employ workers in non-business ventures; and employers
in the vendor business.
Social Security Act:
As for social security funds, its objectives are to provide benefits to insured persons in cases
of injury, disease or death that are not work-related, and includes maternity, invalidity, child
allowance, old age pension and unemployment insurance. For employees of registered employers,
the social security fund is pooled from a three-part contribution, which is to say, equal parts by
employers, employees and the government. Covered enterprises include those with one or more
employees, with a number of important exceptions.5
The Social Security Act (SSA), which has an office under the Ministry of Labour, permits
employees who were previously covered by the social security law (but have since been removed
from work) to become voluntarily insured. Article 39 sets the following qualifications and
conditions for this coverage:
1. Being previously insured according to Article 33 (i.e. employee in a covered establishment)
and having paid contributions for not less than 12 months
2. Not receiving invalidity benefits from the Fund
3. Must apply personally within six months after terminating employee status
4. Paying contributions, calculated on the basis of the monthly wage rate for all persons
5. Fulfilling a duty under Article 39 to send a monthly contribution by the 15th of every
month 6
Four reasons are found in Article 39 for terminating the status of an insured person.
Contributions are not made in three successive months; leaving the job; death; and reemployment as an insured employee under Article 33.
In practice, contributions are based on a monthly minimum wage rate of 4,800 baht. Five
benefits are set out in Article 39—sickness, invalidity, child birth, child allowance and retirement;
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unemployment insurance is not included. An insured person under Article 39 must pay a
contribution of 9 per cent of the monthly minimum wage (4,800 baht) or 432 baht a month.
This is in contrast to employees benefiting from employers’ contribution and pay only 4-5 per
cent of his or her wage to be entitled to six benefits (Article 33). At present, the number of
persons insured under this article has increased from 19,436 persons in 1996 to 179,512 persons
in June 2004.
Many labour organizations and the Unemployed Workers Network have sought to have the
Ministry of Labour revise Article 39 so that unemployed workers are required to pay only one
part of the normal tripartite contribution, arguing that the unemployed already face economic
hardships and have low income that barely make ends meets. Most of the unemployed workers
had been insured, and had paid contributions for a long time; some may not have used their
rights for sickness or maternity benefits. Therefore, they should be able to receive the benefit
from their past contributions, which may be lost during a period of unemployment. It has also
been argued that it is the government’s duty to accommodate unemployed workers in the Social
Security scheme in the name of equalizing social benefits.
The Social Security Board decided in August 2004 to oppose a revision of the SSA that
would have reduced the contribution of the unemployed to one part. The reason given was that
the benefits paid to insured persons according to Article 39 are higher than the contributions and
that the use of the service is increasing every year.
The SSA allows self-employed persons to be voluntarily insured. This includes taxi drivers and
street vendors among others. Article 40 of the Royal Decree (the SSA) states that self-employed
persons may pay the entire contribution at a high rate, without support from government budget
or an employer. They are entitled to only three benefits: invalidity, death and maternity. Health
benefits were not included. The reason given for not covering health at that time (prior to 2001)
was that health care was made available through health cards which anyone could buy at the price
of 500 baht for a family of five persons. Since 2001, health care was made available to everyone
through the universal health insurance scheme, better known as the 30 baht scheme. In 2004,
there were only seven insurers covered under Article 40.
The Definition of Employer
The definition of ‘employer’ is the same in all the four labour laws discussed in this section.
An employer is a person who agrees to accept an employee for work by paying him or her wages,
including a person entrusted by the employer to act on his or her behalf and, where the employer
is a juridical person, a person authorized to act on behalf of that juridical person and a person
entrusted by an authorized person to act on its behalf.
Article 5(3) of the LPA, also defines employer to include labour contractors, that is, an
entrepreneur who makes an arrangement against payment of a lump sum, with a person entrusted
to supervise the performance of work and to be responsible for the payment of wages to an
employee. The employees who have been procured by persons, not employment service agencies,
to work even a part of or the whole of the production process or business under the responsibility
of the entrepreneur, are also the employees of the employer.
Therefore, under the LPA, there are several types of employers, including those who recruit
workers to work directly under them and/or those who recruit intermediaries as the employers’
representative. In conclusion, an employer can be a labour contractor, subcontractor or
contractor.
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Table 1: Definition of employer and employee in four Thai labour laws
Name of the law
Definition of employees
1998 Labour Protection Act
1975 Labour Relations Act
1994 Workmen Compensation Act
1990 Social Security Act
Accept to work for employer and receive wage payment in any kind
Accept to work for employer and receive
wage payment
Employed to work for employer and receive
wage payment in any kind but do not
include domestic worker in house with no
business operation
Employed by employer and receive wage
payment in any kind but do not include
domestic worker in house with no business
operation
Another type of employment relationship, the ‘hire of service’, falls under the Civil and
Commercial Codes. It can be summarized as a contract where it is assumed that the two sides of
it, an employer and an employee, have the following characteristics:
1. The employment contract can be a written or verbal agreement, excluding trade contracts
between employers and home-based workers.
2. The employer has the authority to contract and oversee how his or her employee works. The
employee can be punished or discharged from the job if he or she does not comply with, for
example, the employer’s setting the number of working or leave days, hours of work, how
work is to be performed, etc.
3. The employee will receive payment according to duration of work or by piece rate. The
employer has to pay the agreed wage even though the work is unfinished.
4. The employer is required to provide tools to his employee and the employee must work in
the employer’s establishment or a location provided by the employer.
5. An employer cannot send his or her employee to work for another employer without consent
from the employee and the employee cannot ask another worker to work in his or her place
without consent from the employer.
6. The employer is responsible for any damages caused to third persons by an employee working
under the orders of the employer.
The main difference between hire of services and hire of work are:
1. Hire of work aims at the result of the performance of work while hire of services aims at the
labour of the employee, not necessarily the work that is to be done.
2. Hire of work gives the contractor no power to interfere in the work process of the
subcontractor. With hire of services employees work under the supervision of the employer.
On the basis of these principles, the authority of an employer to control the work of
the employee is the most important element of an employment contract. If a worker works
independently outside the control of the employer or contractor, can independently organize the
work process, can choose working time, and must find raw materials or tools, he or she is not an
employee under the existing labour protection law. Many of these workers are those found in the
informal economy outside the scope of labour law. The problem is that at present many employers
have changed employment contracts so as to avoid the responsibility of paying wages and welfare
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contributions according to the labour law without giving up real authority to supervise the work
of the worker concerned.
In general, informal economy workers are workers who are under neither hire of services
contracts nor employees of employers within the definitions of persons protected under the
four main labour laws, that is, the Labour Protection Act, Labour cAct, Social Security Act and
Workmen Compensation Act. These four laws have the same definition of ‘employee’, meaning
those workers who are employed by employers and receive a wage. The WCA and SSA do not
include domestic workers in their coverage.
Progress and Limits of Protection to Informal Economy Workers
Based on the specific authorization in the LPA,7 the Ministry of Labour has drawn up
Ministerial Regulations to provide protection to home workers8 and agricultural workers,
effective 8 August 2004 and 13 April 2005 respectively. The protection given to these two groups
of workers will need a different approach from that taken by the LPA.
The Case of Home Workers
The home workers to which the 2004 Ministerial Regulation refer are:
1. Workers who receive work contracts from an employer to produce, assemble, repair or
process;
2. Those who work at a location that is not the establishment of the employer;
3. Those who work to earn a wage;
4. Workers who use all or part of raw materials or production instruments of the employer;
5. Those who work, contracted to be performed at home, are a part or a whole of the
production process or business in the responsibility of the employer.
Self-employed workers are thus excluded from this definition of home workers.
This Ministerial Regulation has divided home workers into two main groups. These are first,
those who use raw materials or tools of the employer, who are thus considered employees under
protection of the ministerial decree, and second, home workers who buy raw material or tools on
their own, who will not receive protection from the Ministerial Regulation.
The Ministerial Regulation establishes certain protection for home workers. Employers
who contract work to be performed at home must make a declaration to the labour inspectorate
according to the requirements set by the Director General of the Social Welfare and Labour
Protection Department. The employer must report by sending a letter seven days before delivering
work and every time work is delivered thereafter. The report must contain the names and number
of employees, the types of work performed, the date of delivering work, the method of payment,
and the workplace of the employees, the raw materials or instruments provided.
An employer who contracts work to be performed at home must make a written employment
contract that must be signed by both the employer and the employee, and a copy of the contract
must be given to the employee. The work contract must contain at least eight specified items.9
Any other items will depend on the agreement between the employer and employee and can be
mentioned in the contract. The employer has the responsibility to pay the employee the wage
according to time and location specified in the work contract within 15 days after the completed
work is delivered. The employer has the right to deduct money from an employee’s wage in the
following cases:
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1. To pay personal income tax of the employee;
2. To pay debt to a credit cooperative or welfare fund which benefits the employee,
provided that the deduction is accepted by the employee;
3. To compensate for damages to machinery, equipment or raw materials of the employer
caused by negligence of the employee, but with written agreement from the employee.
For 1. and 2., deduction cannot be over 10 per cent for each item, and for all items must not
be above 20 per cent of wages unless with the agreement from the employee.
Employers are prohibited from giving hazardous work to the employee, including work
related to explosives or fireworks, dangerous chemicals or poisonous materials, or cancerous
substances, including 13 items under the supervision of the Minister of Labour and Social
Welfare, such as benzene, chromium, etc.
Employers have the duty to oversee safety of the workplace by providing safety equipment
and setting safety standards for home workers.10
The Regulation also upholds home workers’ rights according to the LPA.
For example,
1. The employer must provide equal treatment of employment between men and women
employees.
2. The employer must provide the same wage for the same work between men and women.
3. Sexual harassment of women and young workers by the employer, foreman, or
supervisor is prohibited.
4. The employer has the duty to provide safety equipment as required by law.
5. The employment of children less than 15 years of age is prohibited.
6. The employee has the right to make a complaint with labour inspectors for disputes
concerning wage payment or file a complaint in court.
Analysis of the Ministerial Regulation on Home Workers and ILO Convention No. 177
The ILO Home Workers Convention No. 177 and Recommendation No.184, 1996,
establish a definition for home workers and the perimeters for their protection. Home work is
defined in the Convention, and can be summarized as:
1. Work carried out by a person, where:
•
the workplace is in the worker’s home or a place chosen by the home worker, but
not the workplace of employer; and
•
payment is received.
No account is to be taken of who provides equipment, raw materials or other inputs for the
work.
2. Home work does not include:
•
employees who occasionally take work home rather than working at the factory or
establishment of the employer.
•
persons who have the degree of autonomy and economic independence necessary
to be considered self-employed under national laws.
3. ‘Employer’ refers to an ordinary or legal person who contracts out work, directly or
through an intermediary.
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The scope of Thai law has at least two shortcomings as compared with Convention No. 177.
First, it defines the employer as one who provides raw materials and working equipment;
the ILO Convention does not set this requirement, specifically conveying home worker status
‘irrespective of who provides the equipment, materials or other inputs used’.11
Second, Thai law does not define the employer to include an intermediary; Convention No.
177 defines the term employer as ‘a person, natural or legal, who, either directly or through an
intermediary, whether or not intermediaries are provided for in national legislation, gives out home
work in pursuance of his or her business activity’. 12
In order to protect the rights of home workers, Convention No. 177 proposes that a national
policy on home work be formulated to promote equal treatment between home workers and
other wage employment, especially with respect to:
(a) the rights of home workers to establish or join organizations of their own choice and to
participate in the activities of such organizations;
(b) protection against discrimination in employment and occupation;
(c) protection in the field of occupational safety and health (OSH);
(d) remuneration;
(e) statutory social security protection;
(f) access to training;
(g) minimum age for admission to employment or work; and
(h) maternity protection.
An examination of the Ministerial Regulation and the SSA reveals that Thai law does not
provide home workers with protection in the areas of remuneration, training, social security or
maternity leave. Indeed, the bulk of the Ministerial Regulation’s content does not enhance the
protection of home workers.
Discussions with home workers reveal a lack of understanding about the objective of the law,
as some home workers see this law as a way to register home workers just so that taxes or social
security contributions can be collected. This is perceived to be the overriding objective since in
practice employees may not comply with the particular requirements under the written contract,
because it is complicated and the employer may not be accustomed to the requirements. If the
employer refuses to make written contracts, the employee or home worker may well not demand
them, fearing that the employer will retaliate by reducing or ending work orders. Finally, most
home workers cannot find their employer so that written contracts can be made, since most home
workers get orders through an intermediary and not directly from the factory.
In December 2004, a training workshop for labour inspectors was organized by the
Department of Labour Protection and Welfare to prepare for enforcement of the new Ministerial
Regulations. The following example problems and obstacles in labour inspection among home
workers were identified at the training workshop:
1. The labour inspectors lack knowledge about and an understanding of home workers,
and guidelines for enforcement are unclear. For example, it is unclear whether or not
intermediaries are employers of the employee, or whether labour inspectors have the power
to go and inspect the workplace since the residence and workplace are identical.
2. Home workers’ workplaces are difficult to access. They are often very far away and widely
dispersed; working hours are very irregular. These factors prevent labour inspectors from
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carrying out their duties effectively.
3. Employers do not cooperate. They prohibit their employees from revealing information on
employment, suspecting that the authorities will use this information to collect taxes and/or
social security contributions, or for trade competition.
4. Employers may feel that these provisions increase administrative burdens by, for example,
requiring the preparation reports to inspectors or written work contracts. Employers are also
obliged to have permission before sending hazardous work out to home workers.
5. Not wanting to be bound by written contracts which may be used in court, employees do
not cooperate in preparing them. They wish to avoid having to pay taxes on the basis of such
contracts.
In 1997, the Ministry of Labour created a home workers’ section within the Labour
Protection and Welfare Department. It was then responsible for promoting the organization of
home workers and exploring appropriate ways to protect them. This section was dismantled after
the reform of the government structure in October 2002 and the work placed instead under the
Job Promotion Section within the Employment Department, which plays the role of promoting
employment for home workers. The role of protecting home workers falls on regular labour
inspectors under the Bureau of Labour Protection. To this day, there continues to be no link
between labour protection and employment promotion.
In 2003, the Employment Department established a policy to promote home work and to
set up a home workers’ fund. The latter was intended to provide home workers access to credit.
Both regulations are in force today.
Finally, the Labour Protection Bureau of the Labour and Social Welfare Department is
responsible for the enforcement of the law. Without close cooperation with the Employment
Department of the Ministry, the work of the Bureau protecting rights in line with the Ministerial
Regulation may have an impact on home workers’ employment security and organization; that
is, employers and home workers might find it difficult to maintain the employment for fear that
compliance with the Ministerial Regulation will increase the cost of labour (e.g. OSH equipment)
as well as taxation. Therefore, the work on employment promotion e.g. orders, marketing, skills
development and loans, will be necessary for both home workers and employers.
Box 1. Approach and procedures for the implementation of the measures to
promote home workers
The following procedures were some of the concluded outcomes of the training
workshop on the procedures in implementing the Ministerial Regulations on home
workers held in December 2004.
1. Set up a registration bureau for home workers, in the official employment bureaus
in the provinces and Bangkok.
2. Nominate the employment bureau and the director of the Bangkok Employment
Bureau to become the registrar of home workers in order to give advice and
suggestions to home workers, promote and support home workers to organize and
to promote skills development.
3. Register home workers’ organizations meeting the following qualifications.
1) The group must have not less than 10 members.
2) Members must not be under 15 years old.
3) The group has clearly stated occupationally-related objectives.
4) The group has named leadership.
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4. Qualifications are needed for borrowing from the home workers’ fund. They
should include:
1) being a home workers’ group registered with the employment department;
2) being a group with clear management;
3) being a group organized for not less than six months;
4) being a group owning assets or capital not less than 10,000 baht; and
5) having a contact address.
The Case of Agricultural Workers 13
The Ministerial Regulation for the Protection of Workers in the Agricultural Sector, 2004,
covers agricultural work, including work related to cultivation, animal husbandry, forestry, salt
farming and fishing, but not sea fishing. Employers covered by the Ministerial Regulation are
those who neither hire workers year round, nor are engaged in agro-processing enterprises. (The
LPA, on the other hand, covers agricultural enterprises that hire workers all year round or those
which process agricultural products such as canning pineapples or processing fish in a factory.)
Workers covered by the Ministerial Regulation have the following protections:
1. The right to at least three days of holidays after working 180 days continuously. Authorized
holidays are included in the 180 days. In case the work is discontinued, the counting of
the working day will also stop unless there is proof of the employers’ intention to avoid
application of the Regulation.
2. Double the usual wage must be paid if the employer demands his worker to work during a
holiday or to have holidays of less than three days.
3. Employees have a right to be paid sick leave of not over 15 days.
4. The employment of children less than 15 years old is prohibited. Children between 13-15
years old can be employed during school vacation but not to do hazardous work which may
have a bad impact on health or work that prevents the proper development of children.
Parents must give permission for such work.
5. Employer must provide clean drinking water.
6. In the case of employees staying with the employer, the employer must provide a clean and
safe place for them.
7. The employer needs to provide other welfare benefits to his employees as required by the
Director-General of the Department of Labour Protection and Welfare.
8. Covered agricultural workers receive certain rights under the LPA, mostly the same
protection as home workers but with additional benefits such as rights to maternity leave, the
exemption of pregnant women from dangerous work, and a prohibition on the termination
of pregnant women. Maternity leave is provided to workers without pay.
9. Wages must be paid at least every 15 days, and wage deductions are prohibited, unless the
employee agrees. No advance wage payment may be given for work to be done.
10. There is no requirement for a written agreement or contract.
11. In the case of subcontracting or contract farming, the principle contractor is held responsible
for all workers in case the subcontractor fails to pay wages to its employees.
The OSH regulations in LPA (Regulation No. 103) are also applicable to agricultural
workers covered by the Ministerial Regulation. Workers under the Ministerial Regulation are also
eligible for the Workers Welfare Fund (Regulation No. 134).
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Analysis of the Regulation
The Ministerial Regulation for agricultural workers is quite different from that for home
workers. It was not designed to resolve issues arising from the nature of agricultural work, as was
the case with home workers. With its focus on extending protection to agricultural enterprises
excluded by the LPA, the Regulation has plainly targeted small-scale agricultural employers, and
is not aimed at resolving more complex relational issues associated with the employment in the
informal economy.
Consistent with self-employment, there is no standard wage set for agricultural workers. Yet
workers are dependent on the employers for their means of making an income. Despite there
being no clear definition of ‘employer’ in the Regulation, the burden to comply with it simply
falls on small farmers who need to employ labour at certain times.
The Ministry of Labour organized a workshop on the Ministerial Regulations on 30 June
2005. Participating agricultural workers identified several problems and demands much in line
with a view of them being ordinary employees entitled to benefits given to agricultural workers
engaged by larger enterprises.
They included:
•
having holidays for every 60 days of work since there is no crop that lasts for 180 days;
•
having social security benefits with the accident compensation fund from the employers.
•
changing the regulation so as not to allow the employer to lay off women because of
pregnancy;
•
increasing publicity given to the Ministerial Regulations.
There are two things that workers in the informal economy most desire:
•
representatives of agricultural workers at the village level to look after their interests, in
coordination with the village council and local authorities; and
•
a guaranteed market price for agricultural products.
3. Informal Labour Network and Demand for Extension of the Law
The movement of Informal Labour Network (ILN) with the Foundation for Labour and
Employment Promotion, the non-governmental organization (also called Homenet Thailand)
working on informal labour rights, and the Working Group on Law finally and successfully
pushed to have the 2003 Ministerial Regulations on Home Workers and the 2004 Ministerial
Regulation for the Protection of Workers in the Agricultural Sector as the two first laws for
informal workers; yet the limitations of those laws are still high. There is still lack of clarity
about the definition of ‘home worker’ and the regulations cover only workers who are working
with employer’s raw materials and tools, and do not cover ‘contracting farmers’ in the case of
agricultural workers. There are also important elements such as, for instance, unfair pay and
access to the Social Security Fund (SSF), and the lack of effective implementation of ensuring
compliance with the regulations.
ILN, Homenet Thailand, and their alliances see the needs and demands and continue to
advocate for improvement of the Ministerial Regulations’ implementation and law amendments.
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1. Draft and advocate for the Labour Protection and Homeworker Promotion and
Development Act
Based on the decent work principle ratified by the ILO Home Workers Convention No. 177
and Recommendation No. 184, and the fundamental rights of labour to eliminate all limitations
that exist, the movement has developed a draft containing the following essential elements:
-
Redefinition of home worker to include the family members who are assisting a home
worker, and improvement of the definitions of employer or hirer, because some persons in
the production line do not aim to earn monetarily from the business; and on the purposes
of work distribution and occupational assistance and promotion. Definitions must also
cover different patterns and types and contract of home work as well. Furthermore the draft
stipulates:
- Wage payment administration based on the decent work principle. Its aim is that payment
for the same decent work be re-classified and re-scaled to be the same or similar according to
value and quantity.
- The concept and principle of informal labour and home worker promotion and development
within the labour protection law. The concept of promotion and development must include
access to information, technology, skills, credit loans, capital funds and organization
development; thus home workers would be strengthened through their occupations and
result in better work and life quality and security.
- Greater responsibility taken up by the employer’s side on health and on a safer working
environment, and on any sickness, disability and death caused from work, as well as
prohibition of hazardous material and chemical substance delivery and preparation of
personal protective equipment, as already indicated in the 2003 Ministerial Regulations on
Home Workers.
- The establishment of two committees as national mechanisms, in order to work laws
out at the policy level and supervise law enforcement, and a local committee to work on
labour conflict and bargaining mechanism. The local committee should be composed of
informal labour representatives, employers, attorneys, lawyers, academia, NGOs and related
authorities.
Movement on the Act demanded
While the Informal Labour Network,IHomenet Thailand and its alliances have been drafting
their demands for amendment of the ministerial legislations, the Ministry of Labour has its
own draft as well. The difference is in the concept and major principle. The Ministry of Labour’
s draft still has unclear definitions of employer or hirer and pattern of work. There is no fair
pay protection and promotion and development of home workers, and no labour bargaining or
conflict mechanism. Thus ILN, Homenet Thailand and the Working Group on Law organized
a series of exchange forums with the Ministry of Labour between November 2006 and March
2007.
In the meantime, Thailand’s temporary Constitution of 2007 has stipulated that the
submission of the new law to the National Council (NC) must go through three channels:
- the Ministry which authorized the draft law submits it to the Cabinet for acceptance in
principle and the NC works on it before announcing the effective date and enforcement of
the law which the Ministry of Labour has processed. The Cabinet accepts the law since 24
April 2007.
- At least 25 NC members propose the draft law to the NC for review and announce the
effective date of the law.
- The Commission of Labour and Social Welfare submits the draft to the Parliament, which
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is the channel that Homenet Thailand utilized through the Commission Chair, on 25 April
2007, for considering and effectiveness of the law.
After 21 May 2007, the Meeting of the Commission appointed a sub- committee to work on
the Draft and it was agreed that Informal Labour Network representatives and Ministry of Labour
representatives would work together to integrate and modify the two drafts by 1 August 2007.
However the Network representatives and Homenet Thailand had a meeting with the Decree
Committee considering the drafts and agreed to support the draft of ILN and Homenet on the
decent work principle and confirmed their support to the Cabinet.
In the meantime, the Decree Committee and NC and all the law-issuing procedures have
been stopped and suspended by the election law according to Thailand’s temporary Constitution
of 2007. ILN, Homenet and their alliances in the movement on informal labour law demand
that the government must plan for further movement in the newly-elected Thai Parliament and
possibly have the Ministry of Labour and the former Decree Committee in the process. They also
demand citizens’ rights under the new Constitution to advocate for the desired laws through a
given procedure (i.e. notwithstanding the temporary suspension of law-issuing procedures under
the 2007 temporary Constitution).
2. Recommendations on Contract Farmers
Co-mechanism to develop protection pattern for contract farmers
The 2004 Ministerial Regulations for the Protection of Workers in Agricultural Sector
does not really extend to protecting contract farmers. Homenet Thailand has moved forward
continuously proposing its demands and advocating the concepts in the amended law.
Following two meetings with the Labour Minister on 28 February and 18 March 2007,
a working team was established composed of Ministry of Labour officials, contracting farmer
representatives, academics, agricultural NGOs and Homenet Thailand representative to work on
the amendments.
Proposal from Homenet Thailand and Alliances on Contract Farmers
The Contract Farmers Group (CFG) in the Network with Homenet Thailand and the Law
Working Group analysed the labour relations in the contract system and found relations that fall
outside the definition of employment. The relations provide for no supervision and control and
involve two types of contracts: 1) hire to produce for the purpose of completing pieces of work
and 2) advance trading for the purpose of ownership transferring. These processes are based on
conditions and time agreement with limited bargaining power on the agricultural workers’ side
and no fair rules nor regulation from the state’s law enforcers. Companies offer workers unfair
contracts, written to make sure they absolutely controlled and assured any damage would be paid
in any way by the farmer contractee. These contracts force, violate and limit the farmer contractee’s
rights and decision-making. Every single detail of the agreement is stipulated solely by the
company and all risk, damage and unexpected burdens are the contracting farmers’ responsibility.
Moreover, some regulations and measures may have been written down as amended agreements
and added to the contracting farmers’ burden. The proposal of Homenet and alliances is a
demand for a ‘fair contract’ under the state authorities’ legal protection, providing for a fair
relationship between contract farmers and business companies. Some details are:
-
All companies holding contract farm business or similar must be registered under the law
that could be under Ministry of Labour, Ministry of Agriculture, Ministry of Commerce or
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any states’ appointed mechanisms.
All contracts signed between two parties in these business must be registered by state
authorities.
All contract agreements must include the price of the produce.
All contract farmers should be able to access necessary information, for instance, product
price administration, risks and dangers of the production process and anticipated costs in the
production process.
Unfair treatment and actions should have clear remedies, for instance, for termination in the
middle of the contracting period, quotas cut without good reason or explanation, forcing a
worker to produce only for one specific company, etc.
No black-listing or termination of the contract when a contract farmer demands rights
protection.
Assign a mechanism for and have fair processes of conflict resolution, to be worked out by a
board or committee composed of three parties:
These are the proposals to protect the rights of contract farmers, which need to be pushed to
be effective in the law.
3. Demand for Extension of Social Security to Informal Labour
Extension of law proposed by Homenet Thailand
Homenet Thailand continues to demand that the law extension be fixed to include these
following concepts:
1. Based on the fundamental principle of equal shares in all negative and positive parts of the
same business, all informal labour from every occupational group should be included in the
Social Security Scheme and their contribution to the Social Security Fund thus established
should be rated based on income and they should be able to receive social protection and
welfare in their worst times.
2. The state and employer must be responsible for contributing partially to the Social Security
Fund, in addition to the worker.
3. Based on equal treatment and non-discrimination among labour, formal and informal,
workers of all occupational categories working in the informal economy should be covered
by the amendment of the Social Security Act. The social security system must cover all seven
types of informal labour contingencies; sickness, disability (the two including work-related
injuries and diseases), death, child birth, child care pension and unemployment. All these
must be included in the compensation fund. The contribution rate of the worker must not
be over five per cent of income.
4. Home workers, contract farmers and other informal labour groups who are challenged by
the risks from having no social security, must be the first few groups that should be provided
access to the social security system.
5. The Bureau of Social Security must design the administration of the Social Security Fund to
be established, emphasizing participation of the informal workers as the true owners of the
fund.
6. Bureau of Social Security, Ministry of Treasurer and concerned authorities must support
community welfare as another social security system for informal labour and citizens.
Present situation of the extended law
Following the persistent activities of Homenet Thailand and its alliances, the Bureau of Social
Security Scheme has prepared for the law extension since 2004 and set up two sub-committees
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to work on the law extension; 1. A sub-committee for feasibility study on the extension of the
social security law, and 2. A sub-committee for drafting the law extension, respectively. Both
sub-committees have Homenet Thailand’s representatives’ participation. The sub-committee
draft mainly concerns privileges, the rate of contribution to the SSS and opening of the draft
to participation from all parts of the informal workers. The draft has been revised several times.
Several issues in the draft include:
1. Voluntary entry to the SSS, which tends to create the risk that the only poorer economic
status informal workers would see the importance of entering.
2. Only informal workers would send their contribution to the SSS but the state and employer
would send none, and
3. In fact informal workers have the same risks as formal workers. But the Bureau of Social
Security Scheme has prepared to implement provision of pensions in the form of financial
management or savings.
The political changes in September 2006 opened a new opportunity for the second subcommittee to develop the latest draft as detailed:
1. Agree to recruit all informal workers into the formal SSS system on the principle of equal
treatment and non-discrimination.
2. The contribution rate to SSS based on income, at the rate of about 4.5-5 per cent of the
income and based on studies of estimated incomes of informal workers.
3. Contribution from the government.
4. The concept of compensation of earning deficit during sickness and maternity leave, which is
a progressive concept at this stage.
There is worry about government budget allocation on the contribution, sustainability of the
fund and the funding of administration and management. These lead to
1. Reluctance to protect in case of unemployment, and
2. The start of a pilot scheme on informal workers who are in better economic situations; a
body of about six clearly defined groups, such as taxi driver cooperatives and the tour guide
groups, for example.
Right now, with a relatively new government in office, the draft sub-committee cannot
perform its duties. ILN is thus using this opportunity to revise its proposals and make them more
concrete so that real implementation can be enabled after the new government has settled down.
4. Conclusion
It could be said that none of the major labour laws of Thailand – Labour Protection Act
1998, Labour Relation Act 1975, Workmen Compensation Act 1994, or Social Security Act
1990 – cover workers in the informal economy. They get stuck within the old-fashioned labour
relation concepts, such as control and supervision and administration by employers, ownership of
production inputs, i.e. tools, equipments and raw material, and the assumption that the purpose
of the production is for wage payment. At present, the relationship has been shifted to other
complicated forms to avoid responsibility and take advantage of the weaknesses and gaps in labour
laws, which are outdated and exclude more than half of Thailand’s labour from protection.
With their own awareness and demands to mutual help, these informal workers have set
up their own groups and networks. They demand nothing more than the fundamental rights
of labour. They have strong support from academia, labour law and legal aid organizations and
individuals, NGOs and the ILO. The movement of labour protection alliances has brought about
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great changes in the concept of labour protection in Thailand and in the progress towards pushing
a new draft law.
However, the capacity of the state’s own mechanisms is still limited. A new vision, concept
and practice is required on the part of concerned authorities, i.e. the Ministry of Labour, Bureau
of Social Security and Parliament. The question remains as to how a new amended law can be
efficiently and effectively implemented. The ILN and its alliance must work harder in putting the
new law into effect once it is passed.
References
Tajgman, D., Ed., (2006), Extending Labour Law to All Workers: Promoting Decent Work. 2 in the Informal Economy
in Cambodia, Thailand and Mongolia, Bangkok: International Labour Office.
Bundit Thanachaisethavut, ed. (2002). Enforcement of the Labour Protection Law. Bangkok: Arom Pongpangan
Foundation - Labour Resource Centre (APFLRC) and American Centre for International Labor Solidarity
(ACILS).
______ (2003). ‘Comparative Studies on Workman’s Compensation Fund and Social Security Fund.’ Studies on
Social Security Related Royal Decrees and Ministerial Regulations. Bangkok: APFLRC/ACILS.
______ (2003). ‘Proposed Draft Labour Relation Law by Workers’ Organisations in Thailand, APFLRC, Workers’
Solidarity Committee and Federation of Electrical Appliance and Electronic in Thailand.’
______ (2003). ‘Problem of Enforcement of Labour Laws under Globalisation.’ Paper prepared for the Labour
Group’s Meeting during the 4th National Law Conference on Legal Measures Concerning FTA Negotiation.
Held at the U.N. Convention Center, Bangkok, 15-16 September 2003.
______ (2005). Thai Labour Movement in 2004. Bangkok: APFLRC-Friedrich Ebert Stiftung (FES).
Chalit Meesith (2003). ‘Subcontracting and Impact on Law and Policy on Women Workers.’ Paper presented during
the Seminar on Textile and Garment Industry under the Quota System. 21 December 2003, Bangkok.
Chalit Meesith and Sitthisak Samsri (2000). Preliminary Report on Labour Law and Home worker, HomeNet,
supported by ILO.
International Labour Organization (2003). Decent Work and Informal Economy. Bangkok, International Labour
Office.
National Economic and Social Development Board (2003). Annual Report for 2003, Mid-Term, Ninth Economic and
Social Development Plan, 2002-2006. Bangkok: NESDB.
Social Security Office (2005). Preparatory Documents for the Extension of Social Security to the Informal Sector.
Institute for Health Research ‘OTOP and Health of the Thai People’ article in Health Knowledge (January 2005).
213
Thailand
ENDNOTES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
International Labour Organization, Decent work. Report of the Director-General to the 87th Session of the
International Labour Conference. International Labour Office (Geneva, 1991).
Tajgman, D. Ed., (2006) Extending Labour Law to All Workers: Promoting Decent Work in the Informal Economy
in Cambodia, Thailand and Mongolia, International Labour Office, Bangkok.
Article 6.
Article 38.
Domestic workers; government officials and regular employees of the central administration, provincial
administration and local administration except for temporary employees; employees of foreign governments
or international organizations; employees whose employers’ office is in the country but being stationed
abroad; teachers or headmasters of private schools under the Private School Law; students, nurse students,
undergraduates, or apprentice doctors who are employees of schools, universities or hospitals; employees of Red
Cross Society; employees of State Enterprises; employees of agriculture, forestry, fishing enterprises who are not
employed all year and who are not engaged in other work; employees employed for temporary or seasonal work;
employees of Chulaporn Research Institute; employers who are ordinary citizens, who employ workers in nonbusiness ventures; vendor businesses.
Contributions falling delinquent are subject to a charge of 2 per cent per month.
Article 22 which states ‘agricultural work, sea fishing, transport work or sea transportation, home-based work
and other works stated in the royal decree will in the ministerial regulations provide the protection to workers
in various cases different from this Act’.
The Ministry of Labour used the word ‘home workers’ because this ministerial regulation focuses on subcontracted workers and excludes self-employed workers
1. Date, month, year and location where contract is done 2. Name and surname, age, address of employer and
employee 3. Workplace of employer and employee 4. Types of work 5. Date, month, year and location where
work is contracted 6. Wage 7. Date, month, year and location where work completed is delivered 8. Date,
month, year and location where wage is paid.
Such as safety equipment with the same standard as formal workers and providing employees with a safety
manual which provides guidelines for the use of material or equipment to prevent accidents.
Article 1(a)(iii).
Article 1(c). Emphasis added.
Some of the information presented in this section is derived from the Workshop on Labour Protection for
Workers in Informal Economy, Home Workers and Agricultural Workers, June 2005, in Khon Kaen province.
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Viet Nam
215
Viet Nam
Van Thu Ha
1. A Contemporary Snapshot
S
ince the launch of the Renovation (‘doi moi’) Policy in 1986, Viet Nam has quickly entered
the whirlwind of globalization with its export-oriented economy and the fast development
of its private sector. Viet Nam has become a WTO member in 2006 and has been ranked sixth
among the most attractive economies in the world in terms of foreign direct investment (FDI). It
will be a rising star in Southeast Asia in terms of attracting FDI in the coming years.1 From 2003
to 2006, there was an addition of 260,800 workers in FDI enterprises, i.e. a 37 per cent increase,
and many domestic private enterprises became sub-suppliers for transnational corporations
(TNCs).
Viet Nam is a young nation having a labour force of more than 43 million people (2006),
which is 51.5 per cent of the total population. One million new labourers joined the labour force
every year from 2003 to 2006. The unemployment rate declined from 5.78 per cent (2003) to 4.82
per cent (2006) in the urban areas. The number of unemployed women was higher than that of
unemployed men.2 The economy developed very fast, with a yearly average GDP growth rate of 7.9
per cent (2003 – 2006) and a declining general poverty rate (28.9 per cent in 2002, 19.5 per cent
in 2004).3
The informal sector mobilizes a major part of the labour force: about 33 million people (77
per cent), including the farmers. The informal economy contributes more than one third of GDP
(37 per cent on average in 2003-2006). These figures are only an approximate reflection of the
reality, due to unreliable statistics. According to the World Bank, it was more than 50 per cent in
2003.4
Who are regarded as the workers in the informal economy? All economic activities that, in
law or in practice, are not at all or insufficiently covered by formal arrangements,5 – the informal
sector comprises much more than 33 million people. It includes seasonal, casual, domestic and
home workers, workers in unregistered enterprises (family/micro enterprises, craft villages), selfemployed workers such as street vendors, small traders and producers, as well as farmers and a
part of the workers active in the formal sector, but who, for some reason or another, are out of
any formal arrangements, especially workers in labour-intensive enterprises, and migrant workers.
In 2005 and 2006, the strong equitization (a kind of privatization) process6 in the state
economy transferred a great number of redundant workers to the private sector. Many if not a
majority of them (100,400 redundant workers, according to the statistics7 ) joined the informal
sector due to age limits set for entry into the formal sector. According to one research, two thirds
of redundant workers, after state-owned enterprise (SOE) equitization, said their life became
worse,8 their situation changing from stable to unstable jobs.
While the cultivated land for households in rural areas is already very small in size (about
350-500 square meter per head), because of the ongoing urbanization and industrialization
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process, the government is narrowing down even more the land allocation for agricultural
production, forcing rural people to move out in order to look for new kinds of jobs. From 2000
to 2006, about 2.5 million farmers lost their jobs. In some areas of the Red River Delta region,
17 per cent of farmers became workers after losing agricultural land, compared to 10 per cent
before that process.9 On one hand, the women farmers join the groups of seasonal workers,
domestic/home workers or vendors, scrap-iron dealers; on the other hand, men farmers join
groups of casual and mobile construction workers at certain periods of the year, while continuing
to do farm work. Young people from the rural areas seek jobs away from home, out of agriculture.
Quite a portion of them have the opportunity to work abroad through the State labour export
programme or private labour enterprises.10 After a few years working abroad, they seek other
labour export opportunities or start small businesses with their savings. But the majority of them
become workers in family/micro/small enterprises, shops, restaurants, or migrant workers in
export-processing zones (EPZs) and industrial zones (IZs), which are mushrooming all over the
country.11
In labour-intensive enterprises, especially in IZs and EPZs,12 young female migrants from
rural areas arrive to work, hoping that with an independent and stable job, they can save money
and send some of it back home to support their families. But because of the common practice
with the employers to follow orders at short notice and minimize production costs, they make a
precarious living and suffer from bad working conditions, therefore they spend limited spans of
time at their workplace. In short, they are classified as formal workers, but in practice, they are
informal workers. They can be considered informal workers as they have short-term contracts
or even no contracts at all, and accordingly also have no social or health insurance and are faced
with poor working conditions and low salaries that force them to return home or find other jobs
after a few years of work. Many girls and women end up seeking jobs abroad or agreeing to marry
foreigners (e.g. Taiwanese and Koreans), and then get exposed to slavery work or precarious living
conditions overseas.
Generally speaking, informal workers in Viet Nam are facing the following concerns:
-
Bad working conditions. Farmers, especially women, are chronically or in long-term contact
with pesticides due to the misuse of the recommended restrictions and their unawareness of
the existence of regulations to protect them. Women workers in labour-intensive enterprises
also suffer from exhaustion and stress affecting their health in the long term.13 Workers in
small and medium enterprises, handicraft and traditional job villages, are affected by the
highest ratio of lung and nose diseases (40 per cent) due to a polluted working environment,
as well as by muscle and bone diseases (13 per cent) due to wrong working posture. 14 Eightyfour per cent of small and medium construction workers are farmers (working during nonbusy agricultural periods of the year). More than 90 per cent of them have no instructions on
occupational safety and health (OSH). In 2002-2006, 18 per cent of accidents happened in
the sector of construction (34 per cent in civil, industrial and transportation constructions),
with 23 per cent of total death rate.15
-
Unstable income and precarious living. Eighty per cent of the population is earning less than
515,000 VND (Vietnamese dong) —approximately US$33 per month.16 The average
monthly income of women is equal to 85 per cent of the income of men (66 per cent in
agriculture and 78 per cent in industry). Many of them, especially migrant workers, have
difficulties in getting access to basic social services.
-
Lack of appropriate legal mechanisms for social security. Informal workers only have access
Viet Nam
217
to voluntary medical insurance. For OSH protection, they can legally have access to
compensation mechanisms in case of accident, but in practice, the mechanisms are rarely
used.
-
Lack of organization for the informal workers to help them claim their rights. There are several
socio-political organizations and local NGOs paying some attention to informal workers.
The Women’s Union organizes women, the Youth Union organizes young people and the
Farmers’ Union organizes farmers in general. These unions are considered semi-governmental
bodies, similar to Vietnam General Confederation of Labour (VGCL), because they are
paid for by the government. But at the same time, they collect membership fees from their
members. So, they all have dual responsibilities: one towards the Communisty Party (which
leads both the government and these mass organizations), and one towards their members.
Very similar to in China, the unions have high membership rates, but their programmes
focus more on disseminating the Party’s and the Government’s directives and policies on
social issues, such as family planning and HIV/AIDS, as well as on job creation for the
members, rather than focusing on labour rights and creating conditions for decent jobs.
In principle, the Labour Union allows informal workers to join the organization through
professional unions, but in practice this is not successful. The dual responsibilities of the
above organizations (towards the Party and the Government and towards their members)
makes it difficult for them to be the real voice of their members.
2. Summary of the Labour Laws in Relation to Informal Work
The Labour Code of Viet Nam, approved by the National Assembly’s ninth term on 23
June 1994, came into effect on 1 January 1995. The Code institutionalized the Vietnamese
Communist Party’s ‘renovation’ direction after 1986 regarding the labour relations and
management. It covers issues such as employment, apprenticeship, labour contracts, collective
bargaining agreements (CBAs), wages, working time, rest time, labour discipline OSH, specific
provisions on women labour, children/adolescents and other types of labour, social insurance,
labour unions, settlement of labour disputes, state management of labour and inspections, and
handling violations of labour legislation. The Code regulates labour relations between workers
and employers and directly related social relations, and applies to all workers, organizations and
individuals using contracted labour in all economic sectors and all forms of ownership, as well
as to apprentices, domestic workers, and a number of other jobs, with the exception of workers
doing outwork (i.e. work done at home which is done at the order of factories) (Articles 1-2 and
137). The Code is considered one of the most comprehensive and progressive labour laws in the
region, creating a more suitable legal framework for labour relations during the transitional stage
from a centralized economy to a market economy. This is reflected in the ILO membership status
of Viet Nam. From 1980 to 1985 and from 1992 up to date, Viet Nam ratified 18 conventions
among 188 ILO’s conventions, including five out of the eight fundamental conventions (see
Appendix 1).
The current Labour Code (amended in 2007) still keeps the same structure of 17 chapters,
as in the original one. However, its contents were revised, adjusted three times (in 2002, 2006
and 2007).18 Several contents have been specified in separate laws such as the Law on Vocational
Training (2006), the Law on Vietnamese Employed on Contract Abroad (2006), and the Law on
Social Insurance (2006).
The Labour Code version of 2002 included revision of almost all the chapters of the 1994
one, with minor changes and additions, in order to better match the new situation of the country’s
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economy, with its rapidly growing private sector. The 2006 Labour Code comprehensively
amended Chapter 14 on labour dispute resolution, reflecting the fact that, with the yearly increase
of FDI and flourishing domestic private enterprises, the violations of the labour laws have caused
an increasing number of strikes, especially in 2005 and 2006, while the law regulating labour
disputes has proven helpless.
The review of the Labour Code directly related to informal work is mainly based on two
amendments, including relevant decrees, circulars and specific laws. It focuses on two main
aspects: arrangements for social security and mechanisms for enforcement. The first aspect
includes how to ensure good working conditions, a decent income and effective social protection.
The Labour Code tries to ensure this with detailed regulations on OSH, working time, minimum
wage and social insurance. The second aspect refers to institutions dealing with Labour Code
violations and labour disputes, the legal framework for collective action and labour union work.
How the Labour Code Arranges For Social Security of Workers
Working Conditions Seen From the Angles of Work Time and Occupational Safety and Health
Conditions
1. Work Time
Work time should not exceed eight hours per day or 48 hours per week (40-44 hours per
week for administrative and non-productive agencies and state-owned enterprises).19 Workers and
employers can agree on extra work time, but this should not exceed four hours per day and 200
hours per year. The 2002 Labour Code added some exceptional cases granting extra work time
of up to 300 hours per year (Article 69) to enterprises producing and assembling export products
in the garment and textile, footwear and leather, and seafood processing sectors. However, this
is far from what was actually happening. Long working hours were quite common, especially in
the garment and footwear sectors. Workers had to work extra 400-600 working hours per year. A
research study conducted in 2003 in six footwear factories revealed that all the factories still relied
on long working hours, especially in the footwear sector where workers claimed to work 11 hours
a day on average, six days per week.20 The employers claim this was due to short notice of orders
and inflexible deadlines. Extra working hours are supposed to be agreed on a voluntary basis, but
in fact are often forced, as the employer had informed the workers at too short notice. Forced to
accept, the workers often worked in such tense conditions that the only way to defend themselves
was through a work stoppage. There were clear cases where workers participated in a strike
because of exhaustion as they just wanted to get some days off.21 Workers were also not allowed
to take annual leave, or even sick leave, due to a complex procedure for approval. In practice, sick
workers dared not stop working or they would decide to take a day off without specifying the
reason and receive a salary that was reduced by 60,000-100,000 VND at the end of the month.22
But this is only one side of the picture. In labour-intensive enterprises, workers have to work
perfunctorily and discontinuously for several months, for an income of less than US$20 and
they have to accept extra shifts in other months of the year. This leads to a practice of ‘borrowing
money in the summer and paying back in the winter’, as one female worker said.23 Such a practice
increases the vulnerability of the workers and pushes them towards the informal sector.
2. Occupational Safety and Health (OSH)
Regarding OSH, the Labour Code clearly stipulates the responsibilities in OSH of all the
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parties concerned, including the Government, the employer, the workers and the labour union.
The Government integrates an OSH programme into its socio-economic development plans and
its state budget. It also invests in scientific research, supports the production of OSH equipment
and issues OSH standards, procedures and mechanisms.24 The employer must fully provide
employees with individual labour protection tools and knowledge, and ensure and improve
OSH at the shop floor, coupled with several specific conditions for women workers. In 2006, the
Labour Code was improved thanks to new laws on social insurance and on gender, which give
detailed regulations for the protection of female workers (in the cases of pregnancy, maternity,
feeding a baby under 12 months, etc.) and for people working in hazardous and noxious
conditions. Workers have the right to refuse a job or to leave the workplace if they become aware
of the threat of an occupational accident. When suffering from occupational accidents or diseases
attested by a doctor’s certificate, the worker has the right to be assigned an appropriate job and to
benefit from social insurance, or an allowance equal to it paid by the employer if the enterprise is
not yet part of a social insurance system. The employer is responsible for covering all the medical
costs of first aid and any treatment due to occupational accidents and diseases. The employer has
to pay at least 30 monthly salaries to workers whose working capacity has been reduced by at least
81 per cent. The 2002 Code added the responsibility of the employer and his legal obligation to
compensate for occupational accidents and diseases that reduced the worker’s working capacity
from five per cent up to 80 per cent.25 In the 2002 Code the social insurance had already covered
21 occupational diseases and the 2006 Code added four new ones. This, in theory, has broadened
the target group for OSH compensation to informal workers. However, not many of them benefit
from the law (as will be explained further below).
According to a recent OSH survey done by MOLISA (Ministry of Labour, Invalids & Social
Affairs), the working conditions and environment at national level are worrying, with 30 per cent
of enterprises offering bad to very bad working conditions, 50 per cent of enterprises offering
average working conditions and only 20 per cent of them working conditions meeting legal
standards.26 Another survey by NILP (National Institute for Labour Protection) conducted in
2,036 small and medium enterprises (SMEs), home industries and traditional craft villages reveals
that almost all those enterprises do not pay any attention to acquiring individual OSH equipment
for workers. 27
Occupational accidents are increasing at an alarming rate. In 2003-2006, 2,119 people were
killed at the work floor and 18,451 injured in 20,052 accidents. Compared to 2002, the number
of deaths increased by 4.5 per cent in 2003, 17 per cent in 2004, one per cent in 2005 and nine
per cent in 2006.28 This severely underestimates the real number of victims, as even the Vice
Minister of MOLISA Le Bach Hong has stressed, only 3,400 out of 160,000 enterprises (2.13
per cent) provided OSH reports.29 The common practice of the employers is to cover up serious
accidents in order to avoid punishment and reduce the compensation to be given to the affected
people. The highest risk sectors are construction, electricity and natural resources, and the most
vulnerable workers in these sectors are the mobile workers.
5,018 out of 53,863 workers who had a health check were reported to have contracted jobrelated diseases in 2006 (up 381 per cent compared to 2005).30 This sudden rise can be explained
partly because of the four new officially recognized occupational diseases approved in 2006.
The most common OSH violations mentioned by MOLISA in its 2006 labour inspection
report include: absence of OSH training, of declaring, surveying or listing occupational accidents,
no organization of regular health checks for workers, or medical examinations to discover
occupational diseases, etc.31 As for female workers, the most common violations included the
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dismissal of pregnant workers and workers feeding their children less than 12 months old.32 In
2003, they also faced limited access to the toilet with ‘toilet cards’, and no payment for workers
during breastfeeding time (though by law 30 minutes breastfeeding time during work is paid).33
3. Social Protection
By law, the workers receive social insurance in the case of sickness, occupational accident and
disease, maternity, retirement and death. This is regulated in more details in the Law on Social
Insurance (Articles 21-68).34 The compulsory social insurance mechanism before 1 January 2003
applied to people working in enterprises employing ten workers or more. In enterprises of less
than ten workers, this insurance was added to the salary. This article was amended so that for
workers with less than a three-month contract, the social insurance money is added to the salary,
but if afterwards the workers go on working or sign a new fixed-term contract, the compulsory
social insurance must be applied as above (Article 141). In the case of people working abroad,
the rules in the matter of social insurance still prevail if they benefit from paid social insurance
before leaving (Law on Social Insurance, Article 2). This change helped to include many workers
from the informal sector into the social insurance target group, because there are many small-scale
enterprises that have less than ten workers. The Law also included people working abroad.
Compulsory insurance for unemployment is a new regulation that was added to the 2002
Labour Code and will come into effect on 1 January 2009. By this, the State specifically regulates
the re-training of jobless workers (Article 140) and the social insurance becomes compulsory.
Under this new insurance regulation, the State has to contribute to the unemployment insurance
fund. Labourers will thus have a right to receive unemployment benefit, which provides support
for their vocational training and finding a new job. But only workers having 12 to 36-month
contracts or open-ended contracts and working in enterprises employing at least 10 workers can
have access to this insurance (Law on Social Insurance Law, Article 2).
According to the Assembly’s committee in charge of social affairs, currently, more than 40
per cent of the labourers having a right to compulsory social insurance do not really benefit from
it. Even among the workers benefiting from it, a number of them cannot get the full payment
from the employer. Many enterprises use the money intended for social insurance payments
and the workers’ contributions to social insurance for other purposes.35 This means that more
than 40 per cent of the formal workers become informal workers in a sense because they can
not have access to social security. There are many ways to avoid paying social insurance, such as
declaring a false number of workers, reducing the salary fund (real payments are higher than the
salaries shown in the wage scale and wage table, which is the basis for calculating social insurance
payment), not signing a labour contract, extending the probation period, signing fixed-term
contracts for long-term jobs, accepting to pay a fine rather than social insurance. Being indebted
to the social insurance scheme is a common practice in enterprises. The Social Insurance Office
of Ho Chi Minh City just handed over to the local Department of Labour, Invalids and Social
Affairs (DOLISA) a list of 39 FDI enterprises owing 37.5 billion VND for nearly 10,000 workers.
Many of these enterprises appropriated the six per cent of the workers’ salaries which were
supposed to be the workers’ contribution to social insurance.36 That six per cent of the workers’
salaries together with an amount equal to 17 per cent of workers’ salaries paid by the employer
were supposed to be submitted to the social insurance office, but the enterprise used it as part
of capital for their business, and so when workers would get sick or suffer accidents, they could
not get compensation from their social insurance. This is a serious problem because the plunder
by the enterprises of the workers’ social welfare system could be punished and deterred if there
were more inspections and if the fines for violating the law were not so low. (Employers can earn
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interest from depositing the workers’ insurance money (17% of workers’ salaries) in a bank, and
use that interest to pay for the low fines in case inspectors discover their violation of the law.)
The main issue of female workers is the maternity policy. On top of the fact that employers
avoid signing labour contracts and paying social insurance, very few female workers benefit from
the maternity policy. In theory, they are supposed to have access to maternity benefits within
the social insurance scheme or through payment by employer. However, in practice, employers
evade their obligations in many ways, such as offering fixed-term contracts, dismissing pregnant
workers, or forcing female workers not to have any children during the first three years of work.37
The Workers’ Income Seen From the Angle of the Minimum Wage Policy
The State has introduced a minimum wage system based on the cost of living.38 The
minimum wage is used to calculate the salary of any type of labour and subjected to adjustment
when a rise of the cost-of-living index (consumer price index - CPI) causes a drop in the real
value of the workers’ wage. The Labour Code of 2002 allows private enterprises to work out their
own wage scales and tables, and their own production norms based on certain principles given by
the State, instead of following wage scales and production norms directly dictated by the State.
Decree 3/2006/ND-CP regulates that the lowest salaries to be paid to workers who received
vocational training (including workers trained by the enterprise) should be at least equal to 107
per cent of the minimum wage.
There are two minimum wage systems, one applied to SOEs and domestic private enterprises
and the other to FDI enterprises. The latter has been changed four times (see Appendix 3). In
Vietnamese dong (VND) the minimum wage in FDI enterprises is supposed to be adjusted
each time the cost-of-living index rises by ten per cent—in order to attract FDI—but it has not
changed since 1999. So, in 2003, this minimum wage was not changed39 although the CPI from
1999 to 2002 was 4.76 per cent.40 It was not adjusted in 2005 either, though the CPI by then
had risen to 17.26 per cent (since 1999),41 and though the minimum wage in SOEs and the
domestic sector had already been adjusted twice. According to VGCL and MOLISA, while from
1999 to January 2006, the market wage had increased by 40 per cent, the CPI by 28 per cent,
and the VND/US$ exchange rate by 14 per cent, the minimum wage in the FDI sector was still
the same.42 On 6 January 2006, the minimum wage was finally adapted, rising to US$45.5 (in
FDI enterprises), but this rise is nothing compared to the growth of the profit made by of the
enterprises. The revised minimum wage is still too low and not fair, given the fact that the average
profit of the enterprises during the last few years increased by 41.2 per cent a year and the work
productivity by 18.3 per cent, while the workers’ salaries only increased by 12.6 per cent.43
From 1999 to January 2006 the state kept the the minimum wage level at US$45-40-35 in
FDI enterprises and allowed the enterprises to use VND for paying salaries. The state fixed the
minimum wage level due to the consideration of the rise of CPI and inflation. The Law demands
adjustment of the minimum wage in accordance with the rise of the cost-of-living index by 10 per
cent up, but it does not clearly say that whether the State or the enterprises is obliged to adjust
it. On one hand, neither the State nor the enterprises respects the law. On the other hand, the
State did not revise the unrealistic ten per cent rule nor establish a systematic yearly adjustment
system based on the changes in CPI. So, compared to the 1999 salary level, the real income of
the workers obviously declined every year. Moreover, the workers’ income was greatly lowered
due to the exploitation methods commonly applied to intensive labour. The common methods
included increased production standards and extended working hours, lower payment per unit in
order to force the workers ‘voluntarily’ work overtime if they wanted to get higher income, as well
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as lack of clear policy regarding payment of overtime work. This all explains why, in spite of long
working hours and more intense working speed, the average income of the workers in the FDI
sector is still low, not higher anyway than the income of workers in other sectors (earlier on, they
had been quite different).44
Most workers in the industrial zones earn an average monthly income of 600,000-700,000
VND in Vietnamese private enterprises and 800,000-1,000,000 VND in FDI enterprises
(including the bonuses). With that income, only residential workers can meet their basic needs,
but for migrant workers, it is even more difficult because they have to cover other expenses such
as the house rent.45 With such low salaries, the workers have to live in very bad conditions in
order to minimize their costs. They are generally accommodated in an average living space of 2 to
2.5 square meters, five or six workers often sharing a room of 12 square meters, having no light or
ventilation.46 This badly affects the workers’ health in the long term.
However, apart from the minimum wage, another problem is that the government uses a
very complicated salary scaling system. The minimum wage is only a base for calculating salary
levels that differ according to different types of labour and working skills, as well as for calculating
wage tables and scales that take into account the workers’ experience and seniority (minimum
wage multiplied by coefficients of position, skill level, working shift food, yearly increase,
etc.). Only ten per cent of the enterprises (mainly SOEs) apply this system to develop their
salary scaling table for workers.47 The complexity of calculation and consequent neglect of the
system leads to the development of not two but three salary systems: in SOEs, domestic private
enterprises and FDI enterprises. Under the very general guidelines of the State,48 each enterprise
develops its own salary tables and scales, but there is a common point between all of them, which
is the very small difference between salary levels (only US$0.6 to 1.2).49 Some FDI enterprises
in Bac Giang province show a difference of only 5,000 VND (US$0.3).50 In Hai Phong City,
only two per cent out of 6,000 domestic private enterprises and 4.7 per cent out of 210 FDI
enterprises registered their salary scaling table with DOLISA.51 Neither did the employers consult
the labour unions when preparing the salary scaling table, nor did they publicly inform the
workers as required by the law. Normally, FDI enterprises pay their workers at a salary level that
is a little bit higher than the minimum wage, but they use it as the floor level for basic salaries, so
that almost all the workers receive the basic salary of 800,000 VND, while the criteria for salary
increase are education, labour productivity and ranking but not experience (which is rarely used).
For the last three years, only 70 per cent of the workers had their salary scaled up.52 There are
enterprises in Da Nang province where the workers have not received any salary increase in ten
years.53 Questioned by the labour union why the Labour Management Office could accept that
kind of salary scaling, the reply was that they did not have any mechanism to deal with it. Thus,
salary increases have added almost nothing to the workers’ income in the private sector.
This explains why migrant workers who want to have a job that allows them to send
some money back home to support their families, must accept to work in bad conditions for
long hours. With starvation wages, no housing allowance, no kindergarten, this can only be a
temporary solution and can hardly ensure their position in the formal sector in the long run.
Institutions Dealing With Labour Code Violations and Labour Disputes
The Labour Code gives a clear description of a labour inspection and a labour dispute
resolution system.
Several improvements have been made in recent years to strengthen the labour inspection
system. The number of labour inspectors has increased and the organization is being restructured.
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223
Since 2003, the inspection of labour sanitation has been combined with the inspection of labour
safety in order to simplify the mechanism. However, up to now, no guidelines for its operation
have been enacted and there has been no implementation.54 The inspectors are responsible for
certain areas/regions, so they can understand better the local situation and be more proactive in
dealing with labour issues. A self-monitored checklist on the respect of the Labour Code has been
developed to support labour monitoring in the enterprises.55 In 2006, the ministerial and the
provincial inspectors increased respectively by 160 per cent and 190 per cent the monitoring of
the implementation of the labour legislation, compared to 2005. The number of law violations
discovered by the provincial inspectors increased by 389 per cent and the administrative penalties
by 170 per cent, in comparison to 2005. The total of the fines is 4.333 million VND.56 However,
the Government has not yet fulfilled its inspection role. The whole country has only about 300
inspectors. To cover 20,000 private enterprises and 5,000 FDI enterprises, it would need at least
10 years.57 As an example, if the five inspectors in Khanh Hoa province want to inspect all the
companies having at least 50 workers, at a speed of 20 enterprises per year, it would take them
100 years to inspect them all.58 Thus the informal workers as well as workers in smaller factories
benefit very little, if at all, from the government inspection system.
Besides this administrative tool to enforce the law, the State provides a legal framework
and mechanisms for solving individual and collective labour disputes for all kinds of labour. The
Grassroots Reconciliation Committee (grassroots C) and the Labour Reconciler of the District
Labour Management Office have the right to help solve labour disputes at their first stage. Ath
the second stage, the District People’s Court can do it if the reconciliation endeavours have failed
in the case of individual labour disputes, or the Provincial Arbitration Committee (PAC) and the
Provincial People’s Court in the case of strikes or collective labour disputes. The Labour Code of
2002 tried to simplify the labour dispute-solving system. The whole Chapter 14 on labour dispute
solution was comprehensively revised in the Code amendment of 2006, aiming at strengthening
the role of the State in law enforcement by dividing the labour disputes into three types:
individual labour disputes, collective labour disputes about rights, and collective labour disputes
about benefits. According to this system, there are three labour dispute solution procedures, in
which, the People’s Committee President of a district or town has the right to solve the dispute at
the second stage, i.e. in case of collective disputes about the workers’ rights, instead of the PAC.
The 2006 Code shortened down almost by half this procedure of three stages and gave detailed
regulations about strikes and strike resolution.
From 2003 to 2006, the number of strikes was much higher than during the six previous
years (798 strikes compared to 567). The number of strikes has progressively increased (in 2006
alone, there was more than one strike per day on average), mainly in FDI enterprises (73 per
cent of the strikes, compared to 61 per cent from 1999 to 2002 and 55 per cent from 1995 to
1998 - see Appendix 5). Ninety per cent of the strikes were due to the employers violating the
law and the rights of the workers59 in matters related to low salary, late payment, long working
hours, bad working conditions, lack of social and health insurance, lack of sick leave, maternity
leave or annual leave, ‘bad’ behaviour of the managers, etc. Recently, the strikes have become
more frequent, are of a larger scale and duration, include more workers and are more critical.60
Almost all the strikes are considered spontaneous and illegal because they do not follow the legal
procedure, which is generally considered too complicated and unfeasible: ‘In practice, it has
been prove that during the last ten years and more, the grassroots reconciliation committees and
reconcilers have not been able to solve collective labour disputes, and the Arbitration Committees
and Courts were almost jobless’.61 Only one legal case out of hundreds of illegal strikes was
reported in the media. In enterprises where there are grassroots labour unions, the workers went
on strike without any involvement of the grassroots labour unions.
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The 2006 Labour Code adjusted the dispute solution mechanisms by allowing to use better
legal tools and limiting spontaneous strikes. However there are many questions about their
feasibility. When Grassroots Reconciliation Committees are established by the employers on a
50/50 (employers/workers) per cent basis, the labour union people dare not intervene directly
to defend the workers, so the workers lose trust in them. In order to overcome this problem,
the 2006 Code proposed the appointment of a ‘third person’, agreed by the employer and the
labour union. Another new point in the 2006 Code is that, in the case of collective disputes
about the workers’ rights leading to a work-stoppage (Article 159), the president of the District
People’s Committee is responsible for seeking a temporary solution.62 ‘Temporary collective
work stoppages’ are not considered by the labour union as strikes because they do not include
a set of different steps of which the work stoppage is only considered as the final one. From a
practical point of view, this allows the workers to take a warning action to call for the support
of the Government if the employer does not respect the law and the Grassroots Reconciliation
Committees do not work properly. However, strict requirements about the organization of strikes
can be seen as a challenge to the workers and the labour union movement.
Informal workers can have access to the mechanism for individual dispute solution based on
the labour contract and termination conditions, which are considered as legal evidence for the
worker. There are four types of labour contracts. Three of them are written: open-ended contract,
12 to 36-month contract, seasonal or under 12–month contract. The fourth one is verbal and the
most common to informal workers: less than 3-month contract, or housework.
Several studies and investigations show that in different kinds of private enterprises, between
16 per cent and 92 per cent of workers have not signed labour contracts63 due to the fact that the
employers extend the probation time and do not sign or do not fully sign the labour contract; in
some cases employers simply sign it with key staff, or sign only a less than 3-month contract with
workers doing regular long-term jobs. The workers without a formal contract are actually informal
workers. In principle, a verbal contract is a very weak legal evidence for workers in case of labour
dispute, making it impossible for them to be protected by the legal labour dispute system.
What Institutions Provide a Legal Framework for Collective Action and Labour Union
Work?
Organized workers can negotiate with the employers through collective bargaining about
working conditions, and workers’ rights and benefits. Although three of the eight fundamental
ILO conventions have not been ratified by Viet Nam, including the Right to Organize and
Collective Bargaining Convention of 1949 (No. 98), the main contents of the convention are
reflected in the Labour Code. The obstacle for signing this convention is the mechanism for the
development of CBAs. The representative of the workers in collective bargaining and in signing
the agreement must be delegated by the steering committee of the enterprise labour union or
the temporary grassroots labour union, which has legal status only when it is established under
the labour union law, officially recognized by the higher level labour union.64 Thus, the right to
organize and to collectively bargain falls under the sole authority of the labour union.
A collective bargaining agreement (CBA) mainly consists of commitments about
employment and security of employment, working time, rest time, salary, bonus, labour norms,
OSH and social insurance that are in line with the Labour Code and elicit more favourable terms
for the workers (Articles 44, 46). The 2002 Code added some amendments in order to make
the CBA more workable. The CBA takes effect on the date it is signed, and the signed CBA is
considered invalid when it contravenes the law. The Provincial Labour Management Office has
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225
the right to declare the CBA partly or wholly invalid, while the rights of both sides have to be
defined in accordance with the law. 65
According to VGCL, only 20 per cent of the enterprises of the private sector have CBAs 66
and in general they only formally meet with the legal requirements. Most CBAs are only copies
of the legal stipulations and very few clauses provide any additional benefits for the workers.
Several agreed items bestowed by the employer are not put in the CBA, such as shift meals,
transportation, housing, hard work bonus, so that they are easily forgotten. The CBA negotiation
procedure is violated and getting workers’ approval is just a formality. Moreover, even when there
is a CBA, the employers do not strictly follow what they have signed. 67
The CBA mechanism functions at work floor level where there is a labour union, which,
as said before, works in the framework of a ‘one-union system’, in accordance with the Labour
Union law. Thus the labour union has the right to participate in the development of the Labour
Code (regarding minimum wage and OSH) and to monitor the Labour Code enforcement, to
participate in the State management of labour and to solve problems regarding labour relations.
The law guarantees the legal status of a grassroots labour union if its establishment follows the
labour union law regulations, and the employer must recognize the labour union, cooperate
with it, provide favourable conditions for the labour union’s activities and not discriminate nor
interfere in the labour union’s organization and activities.
The 2002 Labour Code amended one important article about enterprises having no
grassroots labour union and about newly registered enterprises where, after six months of
operation, the local or sectoral labour union must organize a grassroots labour union and have the
right to appoint a temporary labour union steering committee while waiting for the establishment
of a normal labour union. The employers must provide favourable conditions for the early setting
up of a grassroots labour union and not block the establishment and operation of a labour union
in an enterprise (Article 153). The Vietnamese national labour union system has four levels, from
the centre down to the grassroots level (see Appendix 2). Workers in enterprises and organizations
have the right to set up and join a labour union in the framework of the Vietnamese labour union
regulations.
The Labourers’ associations (i.e. professional unions gathering freely and labourers working
in a same geographical area or professional sector) established in accordance with the law have the
right to join the labour federations (Article 1– Labour Union Law, Article 14 – Labour Uunion
Regulations). This is an important channel for informal workers to organize themselves and join
the labour union, although the efforts by the labour union to organize the informal workers has
been very limited until now due to their lack of experience and capacities, but also because this is
not considered as a priority. Moreover, a CBA can only be negotiated within one enterprise, so it
is not yet a tool for informal workers to negotiate better conditions, in accordance with the law
and the regulations.
Although the 2002 Labour Code (Article 153) requires the establishment of labour unions,
the ratio of grassroots labour unions in the private sector is still very low. Ms Hoai Thu, Director
of the Assembly’s Social Affairs Committee declared that 85 per cent of Vietnamese private
enterprises and 65 per cent of FDI enterprises still have no Labour Union.68 The employers of
the private sector, especially FDI enterprises, do not want to set up grassroots labour unions and
deliberately ignore the law or even create obstacles for the establishment of grassroots labour
unions; or they imitate the labour union style in SOEs, meaning that the grassroots labour unions
are led by the company’s vice director or personnel manager. Another kind of violation is the
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Asian Labour Law Review 2008
organization in private SMEs of ‘family-style grassroots labour unions’ led by the employer’s
relatives. There was only one such legal strike reported, but there were cases where the presidents
of a grassroots labour union and staff were dismissed because they participated in a strike or
supported it.69
Although the labour union has an important position in Vietnamese society and Government
structure, its dual function weakens its role towards its members. For the labour union, protecting
the workers’ rights is only one among many objectives, which are to ‘stabilize production and
business, see to the rights and the benefits of both sides in labour relations and of the State’.70 This
duality explains why, in the last few years, the role of the labour union in labour dispute solution
has been very weak. There is very little information available about the number of professional
grassroots labour unions and the way they perform. In the case of one handicraft union in Ho Chi
Minh City (10th District Labour Union), the professional union helped the workers have access
to a labour contract, get information about OSH and jobs.71 The labour union took some other
initiatives to organize the informal workers under professional unions.
3. Responses, Initiatives, and Struggles
Legal Initiatives
There are several legal initiatives in favour of the informal sector. The most remarkable
ones are the Law on Social Insurance of 2006 and the Decree on Medical Insurance of 2005. As
mentioned above, the Labour Code has tried to offer social insurance to a larger target group.
However, there is still a huge number of people who have not yet accessed to this social security
network (about 33 million workers in the informal sector, including the farmers, a group that is
almost three times bigger than that of the workers joining compulsory social insurance.72 The
Law on Social Insurance of 2006 developed a new mechanism of voluntary social insurance that
allows all labourers to have access to it (effective from 1 January 2008). However, it only covers
the last two items, i.e. retirement and death, but not the whole list of items that are considered as
compulsory.
The voluntary medical insurance was introduced in 1994. Its first target group was the school
students, but the aim was to expand it later to all the people. In 2003, there were more than five
million people benefiting from this insurance, and in 2007 more than 11 million.73
In 2005, a broader target group benefiting from the compulsory medical insurance and a
new scheme for voluntary medical insurance applied to all people, with government subsidy to
support the poorest, was introduced by decree.74 The compulsory medical insurance applied not
only to workers having a contract of three months or more and to children less than six years old,
but also to other target groups such as the poor, aging people, veterans, commune kindergarten
teachers and other commune officials, health workers, etc. That increased the number of people
benefiting from the policy from 18 million to 34 million (the percentage of the beneficiary
population going up from 20 per cent to 40 per cent). The objective is that, by 2010, 100 per
cent of the population will benefit from medical insurance. 75
With these two legal initiatives, the informal sector has access to some aspects of social
security, such as sickness, retirement and death. Other issues such as occupational accidents and
diseases, and maternity are still out of reach.
Other legal documents related to the informal sector are the Law on Vietnamese Employed
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227
on Contract Abroad (2006), and the draft Farmer Law.
The Law on Vietnamese Employed on Contract Abroad of 2006 was an attempt to formalize
the situation of the informal workers in this sector. It clearly regulates the working conditions
and guarantees the labour rights of those workers. However, its enforcement is a big problem,
especially when the host country offers no legal protection for foreign workers, e.g. for domestic
work. Also, a new decision was issued on 31 August 2007, setting up a fund to support the
workers working abroad in case of death or sickness, when they have to be repatriated before the
end of their contract (Decision144/QD-Ttg).
In 2006, the Farmer Union started drafting a new Farmer Law, but it has not been finalized
yet. This law will define the rights and responsibilities of the farmers, the Farmer Union and the
Government. It will cover important issues such as employment, social insurance, land use and
management, promotion of agriculture and agricultural products. However, it is not clear yet how
the labour rights of the farmers will be addressed.
Labour Union Advocacy and Movements
VGCL remains the main and only government-recognized labour union federation. VGCL
has increased free and paid legal aid services for labour union members, labourers and labour
unions. In 2004, there were two important decrees of VGCL on the organization and operation
of union legal aid services.76 In 2007, the union had set up 13 centres, 30 offices, and created 375
groups for legal aid, employing 838 counsellors and collaborators from the central down to the
grassroots level, and providing legal aid to 14,914 people.77 This is a good mechanism to support
workers in general and informal workers in particular. Apart from this, located next to the door
of EPZs and IZs, there are labour union offices providing information and advice to workers in a
more proactive way.
Some of the priorities of the labour union strategy are:78 1) to strengthen the worker and
labour union movement through law dissemination and legal aid support, so as to make the
workers be aware of their own rights and help them defend themselves; 2) to develop models in
grassroots labour union and professional unions, so that they can organize themselves and operate
in an appropriate way within enterprises, especially in the private sector, but also for informal
workers; 3) to raise awareness among the workers and the labour union staff about the legal
mechanisms and polices directly related to their rights; 4) to monitor the implementation of the
policies related to the workers, in particular in matters of salary, CBAs, labour contracts, policies
regarding workers made redundant during the restructuring of SOEs, social insurance, medical
insurance and the policies for female workers.
We can already see some encouraging results, such as a more successful advocacy for the wage
and the housing policy for workers, and the signing of pilot sectoral CBAs. The labour union
newspapers had informed the public at large about the destitute living conditions of the workers.
The government agreed to develop a special housing programme for workers in EPZs and IZs,
through policies regarding master planning, land, tax, finance, credit, etc. The sectoral CBA that
will be tested in 2008 in the garment sector will be of utmost importance for the collective action
of the workers, including the informal workers. The labour union widely consulted labour unions
at different levels and among its members regarding the Labour Code amendment of 2006 to
canvass support for its recommendations—even though, according to some labour union staff, the
labour union recommendations were only partly taken up in the amended Code. For example,
workers are allowed to go on strike to protect their rights and benefits and a work stoppage can be
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accepted as a first step in a labour dispute solution process, which is a practical solution so long as
the full strike procedure is still too complicated.
The labour union also developed other initiatives, such as disseminating the Grassroots
Democracy Decree in stock and private enterprises in order to make them aware of the democratic
rights of the workers, heighten their awareness on the importance of signing CBAs, increase blue
collar participation in the grassroots labour union steering committees, establish reconciliation
committees in order to assist grassroots labour unions in solving labour disputes, and creating a
fund for the protection of the union staff.
Although the national labour union goes on playing multiple roles, in the current debates
in preparation of the coming Labour Union Congress in 2008, labour union leadership and
staff have been arguing a lot about what should be the first priority of the labour union, i.e.
representing and protecting the workers’ rights. They look quite straightforwardly into the current
weaknesses of the labour union. As said in the VGCL website, ‘when translating the labour union
directives, many labour union levels ‘unintentionally’ forget the ownership role of the workers,
are not close enough to the grassroots level and so don’t understand the essential needs of the
workers, adopt a mainly ‘top-down’ and bureaucratic approach, consider the workers as having
to meet the targets fixed by the management rather than having the right to be protected and
represented by the labour union’, and it should affirm that ‘the workers have the right to elect
their own leaders, especially at the grassroots level, the labour union’s role not being to assign staff
for leading the grassroots labour unions’.79 Having seen the above discussions, we expect that the
Viet Nam labour union can improve its role in the future.
Other New Ways of Organizing Workers
A new way of organizing workers outside the work floor has been initiated in several
provinces by mass organizations such as the Youth Union and the Women Union, which are
centralized state-established unions of similar nature to the VGCL as a Labour Union. So,
migrant workers in dormitories are organized in clubs, in which workers have the opportunity to
discuss in regular meetings on different topics, including the labour law, the law on women and
family, on gender, health and HIV, and to share their concerns about the workplace. The clubs
also give the workers the opportunity to negotiate with the dormitory owners on issues such as
security, hygiene or the access to water. In these kinds of activities with migrant workers, the
Women Union and the Youth Union cooperate with each other and also with the labour union,
according to the issues. This work allows workers to organize themselves around issues that cannot
easily be discussed at the workplace.
Several local NGOs and foreign NGOs have been working with informal workers, such as
migrant workers, street vendors and small traders, on basic social services, micro-credit, productive
health and HIV/AIDS. This provides workers with the opportunity to analyze their situation and
to learn practically how to organize themselves.
4. Recommendations
The above survey is a quick look at the informal sector in Viet Nam from 2003 to 2006, seen
from the angle of the Labour Law. Here are some initial recommendations regarding the informal
sector:
• Based on case studies of the different target groups, the Government should provide an
appropriate mechanism for giving access to social security to all the workers, translating it
Viet Nam
•
•
•
•
•
•
•
229
into specific stipulations of the Labour Law or into a separate law;
OSH protection should be developed in a separate law to cover the formal and the informal
workers;
The Government should promote appropriate maternity policies for the informal female
workers;
The Government should merge the different current minimum wage systems into a single
one, adjust it yearly, and propose clear regulations for a simplified salary scale and table
system that can be used as a reference by the workers, including the informal workers, in
their negotiations. The minimum wage should reflect appropriately the economic growth
and the cost of living, and address the basic needs of the workers;
A more effective mechanism to encourage the informal workers to organize themselves
should be developed;
An appropriate mechanism should also be developed for the informal workers to help them
negotiate collective agreements and protect their rights and benefits;
The Government should better support the informal workers in having a better access to
information and resources, as well as to basic social services;
The Farmer Law should include regulations ensuring a decent job to farmers, good working
conditions and mechanisms to empower them in their relationship to buyers and suppliers.
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Appendixes
Appendix 1. List of Ratifications of the International Labour Conventions by Viet Nam
Of eight fundamental conventions, five have been ratified (C100, C111, C182, C138, C29),
and one is under consideration (C105).
Of four priority conventions, one has been ratified (C81).
Three conventions have been newly ratified since 2003 (C138, C29, C144).
Viet Nam - List of Ratifications of International Labour Conventions
Member from 1980 to 1985 and since 1992, 18 Conventions ratified (17 in force)
Convention
Date of Ratification
C. 6 C. 14 C. 27 C. 29 C. 45 C. 80 C. 81 C. 100 C. 111 C. 116 C. 120 C. 123 C. 124 C. 138 C. 144 C. 155 C. 182 3 October 1994
Night Work of Young Persons (Industry) Convention, 1919 (No. 6)
Weekly Rest (Industry) Convention, 1921 (No. 14) Marking of Weight (Packages Transported by Vessels) Convention, 1929 (No. 27)
Forced Labour Convention, 1930 (No. 29) Underground Work (Women) Convention, 1935 (No. 45) Final Articles Revision Convention, 1946 (No. 80) Labour Inspection Convention, 1947 (No. 81) Equal Remuneration Convention, 1951 (No. 100) Discrimination (Employment and Occupation) Convention, 1958 (No. 111) Final Articles Revision Convention, 1961 (No. 116) Hygiene (Commerce and Offices) Convention, 1964 (No. 120) Minimum Age (Underground Work) Convention, 1965 (No. 123) Minimum age specified: 18 years
Medical Examination of Young Persons (Underground Work) Convention, 1965 (No. 124) Minimum Age Convention, 1973 (No. 138) Minimum age specified: 15 years Tripartite Consultation (International Labour Standards)
Convention, 1976 (No. 144) Occupational Safety and Health Convention, 1981 (No. 155) Worst Forms of Child Labour Convention, 1999 (No. 182) 3 October 1994
3 October 1994
5 March 2007
3 October 1994
3 October 1994
3 October 1994
7 October1997
7 October1997
3 October 1994
3 October 1994
20 February 1995
3 October 1994
24 June 2003
9 June 2008
3 October 1994
19 December 2000
In the last few years, ILO has supported and is still supporting Viet Nam in its efforts to renovate
the labour inspection mechanism, to introduce the tripartite consultation model, to promote
labour relations and mechanisms for improving working conditions, as well as conduct specific
projects for children and women. There is a framework document about the national cooperation
between VN and ILO from 2006 and 2010 for the promotion of decent work (signed in July
2006), regarding job opportunities for all, the freedom to choose, effective and equitable work,
OSH, social security and respect of workers’ dignity.
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Viet Nam
Appendix 2: Labour Unions
The Vietnamese Labour Union (labour union) has four levels: Viet Nam General
Confederation of labour (VGCL); national sectoral labour unions and provincial/city labour
federations; above-grassroots labour unions (including local sectoral labour unions, district labour
federations, EPZ labour unions, company labour unions); grassroots labour unions (with at least
five members) and professional unions (with at least ten members). The labour unions at each
level are established and directed by higher level labour unions and have specific rights and duties.
The rights and duties of the grassroots labour unions differ according to their type, whether labour
unions in state administrative offices, social organizations, state-owned enterprises, cooperatives,
or private enterprises.
The responsibility of the grassroots labour union in a private enterprise is mainly focused
on disseminating the labour laws and policies, helping the workers sign a labour contract,
representing workers collectively in negotiating and signing CBAs, monitoring the enforcement of
the laws, policies and CBAs, participating in grassroots reconciliation committees and in solving
labour disputes.
Labour union leaders are elected by secret vote for two years in grassroots labour unions
and for five years in higher level labour unions. The highest decision-making role is played
exclusively by the labour union Congress and the labour union Steering Committee which has
the leading role between two congresses. Labour unions cover their operational costs thanks to the
membership fee (equal to one per cent of the workers’ monthly salary). They also do their own
fund- raising and get support through the compulsory contribution of the enterprise regulated by
the Government (equal to two per cent of the salary fund of the enterprise). However, since 1999,
in order to encourage FDI, the government has waived this two per cent labour union fee.80 This
measure is currently being reconsidered, but there has not been a final decision yet.
Vietnam General Confederation of Labour (‘Congdoanvn’)
Contact Information
Headquarter Office:
82, Tran Hung Daostr., Hoan Kiem district, Ha Noi
Tel: 04 9421 181
Fax: 04 8223 323
Email: [email protected]
Website: http:/www.congdoanvn.org.vn
Branch Office in the South:
Address: 85 Cach Mang Thang Tam Road, District 1, Tp Ho Chi Minh
Tel: 08 8395 005 – 08 8395 006
Fax: 08 8398 272
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Asian Labour Law Review 2008
Labour Union Statistics
There are 64 provincial labour federations, 20 central sectoral labour unions, about 2,000
labour unions at the above-grassroots level.
2002
2005 (June)
Grassroot labour 61,791/
76,678/
unions and 9,609
14,543
occupational
associations: total/
in the private sector
Union membership/ 4,345,081/
5,245,592/
total of workers in
5,078,834
7,828,201
enterprises having a
labour union Percentage of union 11%
12.3%
membership
compared to total
workforce
Source: Congdoanvn, 14 January 2006 and 20 June 2006; Statistics 2006.
2006
(after half of the labour union
term 2003-2008):
81,781
Added 769,037 members of
which 550,000 members in
private sector; 265,000 members
in administrative sector; and
decrease by 52,000 members
in SOEs due to re-arrangement
and equitization
13.9%
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Viet Nam
Appendix 3: Minimum Wage Adjustments from 2003 to 2006*
Sector
2003
2005
Domestic 290,000 VND
350,000
enterprises (increased by VND
and the 80.000VND
government compared to the
sector minimum wage
set in 2001)
FDI 626.000-556.000-
enterprises 487.000 VND
and foreign (the same as the
agencies
minimum wage
set in 1999)
2006
2008
450,000 VND
(US$28.5)
620,000-580,000540,000 VND
(US$38.3-36-33.4 )
870,000 –
790,000 –
710,000 VND
(US$55.5 and 45)
1,000,000 –
900,000 –
800,000 VND
(US$62-55.7-49.5)
*Note: Three levels of minimum wage are given, based on living costs in the big cities, smaller cities or towns, and
other places.
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Asian Labour Law Review 2008
Appendix 4: Main Events Since 2003
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Medical Insurance Decree 63/2005/ND-CP, issued on 16 May 2005
2002 Labour Code and decisions, circulars to guide on the Code implementation
2006 Labour Code and decisions, circulars to guide on the Code implementation
Law on Vocational Training, approved by the National Assembly on 29 November 2006
(effective from 1 June 2007)
Law on Vietnamese employed on contract abroad, approved by the National Assembly on 29
November 2006 (effective from 1 July 2007)
Law on Social Insurance, approved by the National Assembly on 29 June 2006 (effective
from 1 July 2007)
labour union regulations (13 October 2003, 9th Congress of Viet Nam labour union)
ILO Minimum Age Convention No. 138, ratified on 24 June 2003
Agreement of the revised ILO regulations to remove old conventions dated 15 March 2006,
signature of the national framework document of cooperation between Viet Nam and ILO
for the period 2006-2010 on the promotion of decent work, on July 2006
National programme on OSH until 2010 (approved by Decision 233/2006/QĐ-TTg dated
18 October 2006)
ILO Forced Labour Convention No. 29, ratified on 5 March 2007
Law on Gender Equity approved by the National Assembly on 29 November 2006 (effective
from 1 July 2007)
Enterprise Law approved by the National Assembly on 29 November 2005 (effective from 1
July 2006)
Environmental protection law approved by the National Assembly on 29 November 2005
(effective from 1 July 2006)
Revised Law on Labour Disputes approved by the National Assembly on 29 November 2005
(effective from 1 June 2006)
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Viet Nam
Appendix 5: Strikes From 1995 to the End of June 2007, by Type of Enterprise
Year
Number
of
Strikes
1995
60
1996
59
1997
59
1998
62
1999
67
2000
71
2001
89
2002
100
2003
139
2004
125
2005
147
2006
387
30 06 2007 154
Total
1519
State Owned Enterprises
Number %
of
Strikes 11
18.3
6
10.2
10
16.9
11
17.7
4
6
15
21.1
9
10.1
5
5
3
2.2
2
1.6
8
5.5
4
1
1
0.6
89
5.8
FDI Enterprises private
Number %
of
Strikes
28
46.7
39
66.1
35
59.4
30
48.4
42
62.7
39
54.9
54
60.7
66
66
101
72.7
93
74.4
100
68
287
74.2
111
72.1
1025
67.5
Source: Legal Department, VGCL; Lao Dong No. 194, 22 August 2007, Thu Huong
Domestic
Enterprises
Number of
Strikes
21
14
14
21
21
17
26
29
35
30
39
96
42
405
%
3.5
23.7
23.7
33.8
31.3
23.9
29.2
29
25.1
24
26.5
24.8
27.3
26.7
236
Asian Labour Law Review 2008
REFERENCES
Legal Documents
1.
The Updated Regulations on the Revised Labour Code in 2007, Law on Vietnamese Employed on Contract Abroad,
Labour Union And Labour Union Organization Law. (2007) Social-Labour Printing House, Hanoi.
2.
Grassroots Democracy Decree in stock and private enterprises (attached to Decision 87/2007/ND-CP) dated
28 May 2007 (www.mot.gov.vn, accessed 6 June 2007)
3.
Decision 40/2005/QD-TTg dated 28 February 2005 on the establishment of the National OSH Committee.
4.
Decision 233/2006/QD-TTg dated 18 October 2006 on the National OSH Programme until 2010.
5.
Decree 135/2007/ND-CP dated 16 August 2007 on administrative punishment in social insurance (DongnaiIndustry), 2 October 2007.
Studies and surveys
1.
ActionAid International Vietnam (AAV) (2003, 2004, 2005) Migrant workers in Viet Nam (a summary
research report), Ha Noi, September 2005 and five full reports in Ha Noi, Hai Phong, Da Nang, Binh Duong,
Ho Chi Minh City, Hanoi.
2.
VGCL (2002) Issues to know about the Labour Code, Labour Printing House, Hanoi.
3.
Institute for Workers and Labour Unions (2007) Survey research on labour relations in FDI enterprises, 14
August.
4.
Institute of Development Studies (2006) Report on the Ethical Trading Initiative Impact Assessment 2006,
University of Sussex, part 2b VN.
5.
Nguyen T.C. (Ed.) (2003) Working conditions and occupational health of women workers, NILP.
ENDNOTES
1.
2.
3.
4.
5.
6.
7.
8.
9.
NGO Resource Centre (NGORC), 8-14 October 2007.
The unemployment rate in urban areas in 2003 was 6.9 per cent women and 4.4 per cent men. Gender Statistics
for the FirstYears of the 21st Century (2004) Committee for Advancement of Women.
Percentage of the population living in poverty: general poverty rate is 28.9 per cent in 2002, 19.5 per cent in
2004 (calculation based on the monthly average expenditure per capita in different years, as follows: 2002:
160,000VND; 2004: 173,000VND); food poverty rate is 9.9 per cent in 2002 and 6.9 per cent in 2004
(measured on the basis of the monthly average income per capita and food poverty line, with monthly average
income per capita in different years, as follows: 2002: 146,000VND in urban areas, 112,000VND in rural
areas; 2004: 163,000VND for urban, 124,000VND for rural dwellers).
Vietnam Chamber of Commerce & Industry (VCCI) (2004) Report on Formalization of the Private Sector in
Vietnam and the Role of the Local Government.
International Labour Organization. (2002) 90th Conference.
Under the equitization process in Viet Nam, many heretofore state-owned enterprises became joint-stock
companies with 49% ownership by private partners.
Government Statistics Office, 2006.
Vietnamforumcsr.net, 16 July 2007, Development and Integration Centre.
Statistics of Deputy Minister of Agriculture and Rural Development (MARD), Tran Luu-Van Phuc (SGGP),
Kinh Te Nong Thon, 22 April 2008.
Viet Nam
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
237
From 1999 to 2005, there were about 350,000 exported labourers. The Vietnamese government’s plan for
labour export in 2006-2010 was 100,000-120,000 workers per year, mainly to Taiwan, Malaysia, South Korea,
Middle East, Japan. Source: Ministry of Labour, War Invalids and Social Affairs (MOLISA), www.cesti.gov.vn,
Labour export of Viet Nam – Cam Thuy.
On average, 37 per cent are migrants from other provinces, but more than 50 per cent of them are migrants
working in IZs and EPZs of Ho Chi Minh City, Dong Nai and Binh Duong provinces. Ngyuyen, V.T. (2007)
Tap chi cong san, No. 10 (130).
EPZs are bigger and export-oriented, legally established by the Prime Minister, the IZ are smaller, can be both
exported and domestic and are legally established by provincial authorities.
Nguyen, T.C. (Ed.) (2003), Working Conditions and Occupational Health Of Women Workers, National
Institute of Labour Protection (NILP).
NILP (2007) Survey in 2036 small and medium enterprises, handicraft, and traditional job villages, 8 August.
VnEconomy, 6 December 2007, according to a MOLISA survey in small and medium construction companies.
Government Statistics Office, 2004.
Survey 2002 figures, Congdoanvn, 15 June 2007.
The Labour Code of 2002 is the first revision and adjustment of the Labour Code of 1994. It was passed by
the Assembly’s 10th term on 2 April 2002 andcame into effect on 1 January 2003, adjusting and revising 50
out of 198 articles and adding six new articles. The Labour Code of 2006 is the second amendment, approved
on 29 November 2006; it came into effect on 1 July 2007, adjusting and revising 21 articles, adding 21 new
articles and keeping two original articles (160 and 161) of Chapter 14. Finally, the Labour Code of 2007 is the
third amendment, approved by the Assembly’s 11th term and coming into effect on 2 April 2007. This is a very
minor amendment. The National Ancestor Memorial Day has been added as a public holiday, bringing up to
nine the number of days off that workers have the right to take per year.
Decree 188/1999/QD-TTg dated 17 September1999 and Circular 23/1999/TT-BLDTBXH dated 4 October
1999.
Institute of Development Studies, University of Sussex, 2006.
Dong Nai newspaper, 25 July 2007.
Action Aid International Vietnam (AAV) (2005), research in Hai Phong.
Ms. Le Thi Tuyen, worker in the export footwear company Huu Nghi, AAV (2005), research in Da Nang.
The State issued regulations on chemical safety (68/2005/ND-CP dated 20 May 2005), security for fishermen
and fishing shifts (66/2005/ND-CP dated 1 April 2005), a list of individual OSH equipment (different
regulations of MOLISA 955/1998, 1320/1999, 722/2000, 205/2002.etc.), a list of dangerous goods and
regulations for shifting them (decree 29/2005/ND-CP dated 10 March 2005), mechanisms for the registration
of machines and equipment, materials and chemical products requiring strict OSH rules (Circular 23/2003/
TT-BLDTBXH dated 3 November 2003), administrative punishment in industrial exploration materials
management (64/2005/ND-CP dated 16/5/2005), etc.
From five per cent to 10 per cent: a compensation of one and a half month salary, then an additional amount
equal to 0.4 of one month salary for every further one per cent – Circular 10/2003/TT-BLDTBXH.
Sai Gon Giai Phong, 4 March 2005.
NILP, 8 August 2007.
Figures from MOLISA, VTC News, 6 February 2007, VnMedia, 24 February 2006, SGGP (Organ of the
Communist Party, Viet Nam), 4 March 2005, TTXVN (Viet Nam News Agency), 18 February 2004.
VnMedia, 24 February 2006.
700/28.653. Source: Ministry of Health.
MOLISANET, 31 January 2007.
Lao Dong, 9 September 2006.
According to a 2003 survey by MOLISA, 50 per cent of workers in 170 enterprises experienced the problems
of limited access to the toilet by the use of ‘toilet cards’ and non-payment of workers during breastfeeding time.
Sickness (30-60 days per year). Occupational accident and disease (an allowance equal to five months of the
monthly salary if the working capacity is reduced by five per cent and an additional amount equal to 0.5
months of the monthly salary for each further percentage; besides that, there is a monthly allowance equal to 30
per cent of the monthly salary if the working capacity is reduced by 31 per cent and an additional amount equal
238
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
64.
65.
66.
67.
68.
69.
Asian Labour Law Review 2008
to two per cent of the monthly salary for each further percentage; an additional monthly nursing allowance
equal to 100 per cent of the monthly salary if the working capacity is reduced by 81 per cent or more. One
allowance of 36 months of the monthly salary in case of death, the relatives inheriting the death benefit);
- pregnancy;
- retirement (45 per cent -75 per cent of the monthly salary on average) and
- death (10 months of the monthly salary, the relatives inheriting an amount equal to three months of the
monthly salary at least or a monthly allowance for four relatives (maximum), each one having the right to an
amount equal to 50-70 per cent of the monthly salary).
MOLISA, 26 July 2007.
Nguoi Lao Dong, 20 September 2007.
Lao Dong, No. 300, 31 October 2006.
Articles 56 and 57.
Article 4, Decision 53/1999/QD-TTg.
Department of Planning & Investment (DPI), Ho Chi Minh city, 9 November 2007.
Consumer Price Index (CPI) increased 3% in 2003, Ministry of Finance (MOF), 29 December 2003, 9.5% in
2004, Thaibinhonline, 27 December 2005.
Letter to the Prime Minister, No. 4510/BL DTBXH-TLDLDVN, 31 December 2005.
5 September 2006, Ministry of Finance (MOF) website, 23 August 2007.
Workers and labour union Institute, 2007.
Nguyen, V.T. (2007) Tap Chi Cong San, No. 10 (130) 2007.
ActionAid International Vietnam (AAV) (2005), Research in Binh Duong.
Assembly Report, 2006.
Methods of developing salary tables and salary scales, as well as production norms, attached to the circular
13/2003/TT-BLDTBXH.
Workers and labour union Institute, August 2007.
Lao Dong, No. 248, 9 September 2006.
Ibid.
Workers and labour union Institute, August 2007.
Lao Dong, No. 248, 9 September 2006.
NILP, 27 October 2005.
Decision of 1/2006//QD-BLDTBXH dated 16 February 2006 and its regulation 31/2006/ND-CP dated 29
March 2006; and, Decision 02/2006/QD-BLDTBXH dated 16 February 2006.
MOLISANET, 31 January 2007.
Bui Ngoc Thanh, Director of the Assembly’s administrative department, Assembly meeting on 29 March 2006
Lao Dong, No. 34 dated 9 February 2007
MOLISA conclusion on the presentation of the law amendment project in the Assembly meeting – Lao Dong,
No. 91 dated 21 April 2007
Vietnamnet, 4 May 2006.
VN Economy, 13 February 2006.
Decree 133/2007/NĐ-CP dated 8 August 2007.
AAV research (2005) in Binh Duong; Cong An Nhan Dan, 3 March 2007; Dien Dan Doanh Nghiep, 3
November 2006; Lao Dong, No. 279, 10 October 2006; Lao Dong, No. 119, 26 May 2007; Lao Dong, No.
175, 31 July 2007.
Decree 133-HDBT dated 20 April 1991 guiding on labour union law.
Article 48, Decree 93/2002/ND-CP dated 11 November 2002.
Nguoi Lao Dong, 19 September 2007.
Workers and labour union Institute, August 2007.
Thanh Nien online, 11 August 2006; Manh Quan.
Such as the case of the footwear company Thuan Thanh in Hung Yen, Lao Dong, No. 79, dated 7 April 2007.
Viet Nam
70.
71.
72.
73.
74.
75.
76.
77.
78.
79.
80.
239
Decision 5A/NQ-BCH, 7 July 2005.
Quan10.hochiminhcity.gov.vn, 17 November 2006.
Voluntarily social insurance: adaptability to economic integration - Kim Thoa. Ha Noi electronic newspaper, 6
June 2007 (accessed 12 September 2007).
Voluntary medical insurance, situation and solution for development, MOH website, 2 December 2004; the
government covered the cost of voluntary medical insurance for a minimum amount of 800 billions dong each
year, Lao Dong, No. 288, 11 December 2007.
Decree 63/2005/ND-CP, issued on 16 May 2005.
Farmer Union website, 12 July 2005 (accessed on 12 December 2007).
Decision 785/QD-TLD and Decision 786/QD-TLD dated 27 May 2004.
Lao Dong, No. 210, 11 September 2007.
Represented in decisions and action programs such as the Decision 5A/NQ-BCH dated 7 July 2005 about
strengthening law related tasks of the labour union in the new situation, Decision 04/NQ-DCT dated 3 April
2006 about strengthening the dissemination and education work of labour union in the new situation, and
Action program of Vietnam labour union to implement decisions of the 10th congress of the Communist Party
(Paper 1245/TLD dated 1 August 2006).
Nguyen, Q. N., Congdoanvn, 17 July 2007 and 20 September 2007.
Article 4, Decree 53/1999/QD-TTg.
240
Asian Labour Law Review 2008
241
India
South Asia
242
Asian Labour Law Review 2008
India
243
India
Pallavi Mansingh
I
ndia’s economic development model that was guided by state intervention and trade protection
until the 1970s underwent a major shift in 1991 when the country opted for liberalization and
introduced economic reforms. The reforms resulted in a fundamental shift in the development
strategy – replacement of an import–substitutive industrialization strategy by an export-oriented
one.1 Architects of the reforms argued that the new market-led growth model of India’s economy
driven by the private sector and foreign investments would lead to a higher growth rate and
the effects of this would trickle down to the masses. India’s economic performance in the postreforms period indicates increasing growth rate. The average growth rate in the ten year period
from 1992-93 to 2001-02 was around 6.0 percent, and India became one of the fastest growing
developing countries in the 1990s.2 The growth rate has moved up further during the last five
years and between 2002 and 2007, an average 7.8 per cent growth rate was recorded. 3
The resultant wealth generation in several sectors has helped India add a few hundred
billionaires and a few thousand more millionaires, thus creating a façade of a Great Leap by
the White Tiger. But this reorientation in the policy framework has had major implications
on employment and social security. While the reforms focussed on economic efficiency, it is
argued that they led to a ‘jobless growth’.4 With regards to the labour market, it was argued that
rigidities constrain large industrial investments. Thus since the 1990s, there have been attempts to
attract investments by informalizing employment. It is important to note that India had a huge
informal sector even in the pre-reform period. Since the start of liberalization the organized sector
has witnessed stagnation or even decline in employment because of retrenchment, displacement
of labour, growing casualization of workers, and organized attempts to curtail workers’ rights
including freedom of association and the right to collective bargaining. All these have weakened
the trade union movement.
The following account attempts to capture some of these dynamics of informalization. The
first of the three sections, entitled Contemporary Snapshot, outlines the increasing informalization
in India’s economy, particularly in the organized sector, and highlights the worsening working
conditions in the informal sector. Section 2 discusses the existing labour laws and how they apply
to informal sector workers. Section 3 examines the responses, initiatives and struggles in the
context of increasing informalization.
1. Contemporary Snapshot
The Informal Sector in India
The informal sector in India has been defined in several ways. As per the System of National
Accounts (1993),5 it refers to productive units characterized by a) a low level of organization,
b) little or no division between labour and capital and c) labour relations based on casual
employment and/or social relationships as opposed to formal contracts. These units belong to
the household sector and cannot be associated with other units.6 The Directorate General of
Employment and Training (DGET) which is a key source of data on the informal sector, reports
244
Asian Labour Law Review 2008
employment within the unorganized sector derived as a residual of the total workforce minus the
workers in the organized sector. But the DGET definition does not take into account informal
employment in the organized sector.7 The National Sample Survey Organization (NSSO),
adopted the following criteria for identification of the unorganized sector: 1) in the case of
manufacturing industries, the enterprises not covered under the Annual Survey of Industries are
taken to constitute the unorganized sector and 2) in the case of service industries, all enterprises,
except those run by the government (central, state and local body) and in the public sector are
regarded as unorganized.8
The National Commission for Enterprises in the Unorganized Sector (NCEUS) recently
defined the sector and unorganized workers as follows: the ‘Unorganized Sector consists of all
unincorporated private enterprises owned by individuals or households engaged in the sale and
production of goods and services operated on a proprietary or partnership basis and with less than
ten total workers.’ Unorganized Worker is defined thus: ‘Unorganized workers consist of those
working in the unorganized sector or households, excluding regular workers with social security
benefits provided by the employers and the workers in the formal sector without any employment
and social security benefits provided by the employers’.9
The ILO defines the informal sector as large-scale economic activities that remain outside the
world of full time, stable and protected employment.10 According to the Self-employed Women’s
Association (SEWA), the informal sector in India includes home-based workers, vendors, manual
labourers and service providers. It accounts for up to 70 per cent of gross domestic product and
over 40 per cent of exports; of the total workforce, 93 per cent operate within the informal sector,
and 60 per cent of these are women. 11
These definitions indicate the complex nature of informal employment in India. It is clear
that the lack of job security and social security are key characteristics of informal employment.
However, in order to understand informalization in India we need to go beyond these definitions
as they do not provide sufficient insights to understand the conditions of informal workers. It
is important to look at the dynamics of the informal economy including informalization in the
formal sector and the vulnerable working conditions of informal workers.
Growth of the Informal Economy – Some Recent Trends
Employment trends indicate that growth of employment has largely taken place in the nonagricultural segment and the growth of jobs in agriculture has been significantly slow. The growth
rate of the workforce in agriculture is estimated at 1.73 per cent from 1999-2000 and 2004-2005
compared to 4.53 per cent in the non agricultural segment (Table 1).
Table 1. Total Workforce in Agricultural and non Agricultural Sector by Activity Status in
1993-94, 199-2000 and 2004-05 (million) 12
Activity Status
Agriculture
1993-94
Self-employed
143.19
Regular wage workers
3.31
Casual employee
91.84
Total 238.34
Non-agriculture
Total
60.94
47.83
27.22
135.99
204.13
51.13
119.06
374.33
245
India
1999-2000
Self-employed
137.28
70.93
Regular wage workers
3.46
55.59
Casual employee
96.93
32.57
Total 237.67
159.09
2004-05
Self-employed
166.18
92.07
Regular wage workers
2.83
66.72
Casual employee
89.91
39.75
Total 258.93
198.54
208.21
59.05
129.5
396.76
258.25
69.55
129.67
457.46
Besides, most of the employment growth taking place is located in the informal segment
of both the organized and unorganized sectors. According to the DGET, the organized sector
employment declined by 910,000 during the period 1997 to March 2002 (more than half of
this decline was in the manufacturing sector); during the single year 2001-2002 it declined by
420,000.13 While there is a manifold increase in investment, output and profit in the organized
sector—e.g. capital intensity has grown—the NSSO reports that employment intensity has
come down.14 Downsizing and cutting costs through practices such as substitution of regular
employment through fixed terms or contracts is becoming increasingly common in both the
public and private sectors. The dominant perception of the trade unions is that much of the
economic growth is ‘job-less’ rather than ‘job-led’.15
Table 2 indicates how formal employment is declining even in the organized sector. Out of a
total of 394.9 million workers in the unorganized sector only 1.4 million fall in the formal worker
category, i.e. those having access to social security. In the case of the organized sector actually only
33.4 million workers fall in this category. Hence only 7.6 per cent of the workers in India can be
called formal; the rest 92.4 per cent fall in the informal category.
Table 2. Estimated Number of Workers by Sector and Type of Worker 16
Informal/ Unorganized Sector
Formal/Organized Sector
Total
Informal/Unorganized Sector
Formal/Organized Sector
Total
Informal/Unorganized workers
1999-2000
341.3 (99.6)
Formal/Organized Total
workers
1.4 (0.4)
342.64 (100.0)
20.5 (37.8)
33.7 (62.2)
54.12 (100.0)
361.7 (91.2)
2004-05
393.5 (99.6)
35.0 (8.8)
1.4 (0.4)
396.76 (100.0)
29.1 (46.6)
33.4 (53.4)
62.57 (100.0)
422.6 (92.4)
34.9 (7.6)
457.46 (100.0)
394.9 (100.0)
Note : Figures in brackets are percentages
Source : NSS 61st Round 2004-05 and NSS 55th Round, 1999-2000, Employment Unemployment Survey
Computed
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Asian Labour Law Review 2008
Table 3 reveals a reduction in the number of formal or regular workers in the organized
sector. The employment growth of 7.82 million in the organized sector between 1999-2000 and
2004-2005 includes a negative growth of 0.5 million in its formal segment.
Table 3. Increase and Growth Rate of Employment in the Organized Sector, by Activity
Type 17
Activity Status
Informal Workers
Formal Workers
Increase in employment between 1999-2000 & 2004-05 (million)
Self-Employed
0.23
0.59
Regular Wage employee
6.01
-1.09
Casual Labour
2.07
0
Total
8.31
-0.5
Growth Rate between 1999-2000 & 2004-05 (%)
Self-Employed
8.95
6.46
Regular Wage employee
12.42
-0.75
Casual Labour
3.99
0
Total
8.05
-0.32
Total
0.82
4.92
2.07
7.82
7.01
2.53
3.99
3.02
In the informal sector, self-employed workers are a huge category. They account for 56.5
per cent of the workforce. They constitute: a) those employed in agricultural occupations such
as farmers doing marginal, small and big work in agriculture on their own land and obtaining
a major part of their income from own cultivation and not wage labour.18 Their number is 166
million for 2004-05; b) self-employed in the non-agricultural segment who are own account
workers, unpaid family workers and employers (with one to ten workers). They number 92
million.
In addition, growth of informal employment is also accompanied by increasing levels of
poverty and vulnerability. According to the latest reports of the NSSO, while the overall poverty
ratio of the workers was 19.3 per cent, there was a sharp difference in the poverty ratio among
unorganized workers (20.4 per cent) which was almost five times higher than that of the organized
workers (4.1 per cent).19 It is also important to note that in 2004-05 the poor and vulnerable
comprised 77 per cent of the population (totalling 836 million people, with an income roughly
below $2 in purchasing power parity terms).20 The NCEUS notes that while the percentage of
population below the poverty line has come down, albeit at a slower rate in the 1990s compared
to the 1980s, the movement is within the category of broadly poor (41 per cent) or the poor
and vulnerable (77 per cent). ‘There is no doubt that this ‘Shining India’ has expanded in the
past and is still expanding at a very high rate. But this picture is spoiled by a virtually stagnant
consumption expenditure and miserable working and living conditions of the 77 per cent of our
population who are poor and vulnerable. This group includes the overwhelming population of
the dalits and adivasis, Other Backward Classes and Muslims. This is the other world which can
be characterized as the India of the common people, constituting more than three-fourths of the
population and consisting of all those whom the growth process has by and large bypassed.’21
247
India
Figure 1: Ratio of Female to Male Income 22
This increasing
informalization has some
gender dimensions.
Macro data shows
low levels of female
workforce participation
rates – 28.3 per cent as
compared to men 54.7
per cent in 2004-05. 23
This indicates that a large
proportion of women
in India continue to
engage in flexible forms
of work and household work which is unaccounted. NSSO data also indicates a concentration
of employment of women in lower paid jobs – 56 per cent self-employed; 25 per cent casual
workers, 19 per cent employees.24 There is also an increasing gender gap in wage (See Figure 1).
The following section examines conditions of work in the informal sector in India with an
emphasis on women in the sector.
Conditions of Work in Informal Sector
Increases in the labour force in informal employment settings are characterized by low wages
and earnings and lack of job security and other benefits.25 Informal workers are systematically
denied the status of regular workers by their employers – engaging them as trainees, recruiting
through contractors and engaging subcontractors.
Table 4: Comparisons of Characteristics of the Formal and Informal Sector 26
Particulars
Formal sector
Informal sector
Job security
Working hours
Wages
Social security including medical
Allowance and sick leave
Labour laws including right to
Freedom of association and
Collective bargaining
Employee-employer’s relation
With employment control
Safe work environments
Unionization
High
Fixed/regulated
Regulated/minimum wages
Most provided
Low
Not fixed/not regulated
Not regulated/no minimum
None or little
Protective
No or little legal protection
Issue of appointment letter
Without appointment letter
Safer and secure working conditions
Homogeneous, highly organized
And better networked
Vulnerable to dangerous and
Hazardous work
Heterogenous, unorganized
And scattered
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Asian Labour Law Review 2008
The above table (Table 4) shows how workers in the informal sector are prone to
vulnerabilities and insecurities. According to the ILO report—The Other India at Work (2005)—
job security, good working conditions, remuneration commensurate with the work, adherence to
workers' rights, social protection and conducive human resource management -- are missing in
the informal sector.
In export-oriented industries such as garments, conditions of work are extremely tough and
challenging. The industry has managed to keep working hours extremely flexible. Industry argues
that seasonal flexibilities in the industry demand deregulation of working time. A study done by
the Centre for Education and Communication (CEC)27 which looks at the working conditions
of 14 Tier-I garment manufacturers and exporters in Delhi, NOIDA (New Okhla Industrial
Development Area) and Gurgaon reveal that out of a total sample of 159 workers, for a whopping
64.78 per cent of the workers, working hours stretched up to 16 hours or more a day (including
overtime). Though both permanent and contract employees work long hours, among those
working for more than 16 hours a day, the percentage of contract workers was double that of the
permanent workers. Considering that the statutory minimum wage is for a nine-hour working
day, only 0.63 per cent of the workers are actually getting the minimum wage. The rest of the
workers worked from 10 to 16 hours or more a day to get the minimum wage. Workers are forced
to work overtime, which is not compensated at the premium rate.28 Almost half (46.54%) of the
workers said they were deprived of social security benefits. Even among the workers who receive
social security benefits, it is observed that social security is understood only in terms of Provident
Fund (PF) and Employees State Insurance (ESI). Workers getting other social security benefits
such as gratuity, crèche, maternity benefits, coverage under accident schemes and retrenchment
benefits are negligible in number. In case the workers try to form a union, the management resorts
to unfair practices such as declaring an illegal lockout or closure or retrenching workers. Out
of the sample, only 3.14 per cent of the workers regularly participated in trade union activities.
Conditions are worse in subcontracted units and home-based work.
In the case of the leather industry, a study by CEC29 reveals that in Chennai, taking the
total emoluments (including wages, benefits and overtime) into account, almost one fourth of
the respondents earn less than Rs.2,000 per month and half of them earn less than Rs.3,000,
significantly lower than the minimum wages set in the industry. Combined with the fact that
about 50 per cent of the respondents were employed on casual terms, this makes it a highly
informal labour market even in the large units that were studied.
A study on the electronics industry reveals that employers in the industry have resorted to
several manoeuvres to deter workers from organizing. They have segregated them in terms of
nature of employment, wage, annual increment and systems of wage payments.30
Women in Informal Sector
Among informal workers, women represent a more vulnerable group. Women workers
in the informal sector constituted 91.38 per cent of the total women workers. Women often
enter the labour market as secondary earners in the household but they soon become important
contributors to the family income. The choice of women to work is often constrained at two
ends—their domestic and child care responsibilities and lack of education and skill and their
being often obliged to undertake less productive, less remunerative and more vulnerable forms of
work.31 Following are some of the recent trends in employment of women:
First, from the 1990s, export-oriented industries such as garments and leather have employed
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women in huge numbers. Employers prefer women workers as they are docile, willing to accept
inferior work conditions and a lesser wage and do not engage in unionization. Women do not
demand permanent contracts. They are easier to hire and fire at will and also—according to
external demand conditions—life cycle changes such as marriage or child birth can be used as
proximate causes to terminate employment.32 A study shows that in the garment industry in
Bangalore the number of females working in the industry declines as age increases. Most of
the young women work only for a few years and then discontinue their jobs due to marriage,
childbirth etc. The trend was exactly the reverse in the case of male workers whose proportion
tended to increase as their age increased.33
Second, gender discrimination enters at the time of their entry into the labour market itself.
In the lowest jobs in the garment manufacturing hierarchy such as helpers and thread cutters
women comprise more than half of the workforce.34 In Delhi women were mostly engaged in
moti work (similar to hand embroidery and embellishments) which were also the jobs with the
highest rates of casualization: women were employed and thrown out frequently.35
Third, gender discrimination is manifested in the form of lower wage, poor working
conditions and restricted avenues for promotions to supervisory positions. In the textile industry,
the jobs of supervisors and machine operators are male-dominated, while the preparatory
work of making of fibre and yarn, spinning and winding are dominated by women.36 The ILO
2005 study37 quoted earlier based on a field study in small manufacturing clusters (engaged in
production of textiles, garments and carpets) notes that more women than men reported injuries
at work. Two-thirds of the women surveyed said the average duration of maternity leave was 90
days, but without remuneration. Women reported harassment through verbal comments and
remarks. Another study on the automotive industry reveals that women were made to stand and
work in shifts ranging from 8 to 16 hours.38
Fourth, according to the NSSO data, female workers in the informal sector were found to be
working more from their own dwellings compared to the male workers. In the rural areas nearly
66 per cent of the female informal sector workers were found to be operating from their own
homes and in the case of males this was only 20 per cent. In the urban areas the corresponding
proportions were 52 for females and 12 per cent for males.39 This indicates that more women
than men are engaged in home-based work. Home-based workers are one of the most vulnerable
categories of the workforce. In the absence of a formal employer-employee relationship, job
insecurity, income insecurity and absence of social security become more pronounced in this
sector.
Fifth, new practices amounting to bonded or slave labour can be seen emerging in export
industries. In the textile and garment industry in Coimbatore and Tirupur, a scheme called
Sumangali has been introduced by the employers in which jobs are given to young, unmarried
women, mainly between 16 and 20 years of age, for a period of three years. They are promised
Rs 30,000 to Rs 50,000 to be paid in bulk at the end of three years. During the period of
employment they are kept as apprentices. They are entitled to only nine days of leave including
all festivals.40 These women often do 12-hour shifts standing in front of machines. Many of them
are unable to cope and leave midway.41 This needs to be seen in conjunction with the reduction
of the permanent workforce in the last few years through retrenchment and voluntary retirement
schemes. When demand rises, the mills appoint apprentices.
Thus we see that as the labour market processes are moving towards more insecure and
vulnerable forms of labour utilisation, and the condition of women is worsening. Household
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duties and reproductive responsibilities predominate even the engagement of women in economic
activities is increasing. Employers’ preference for female workers emanates from cost cutting
strategies and results in the persistence of gender discrimination at the workplace. The ILO
has identified women as the largest discriminated group at the workplace.42 Discrimination in
terms of wage, working conditions and career development persists even in the new employment
opportunities generated by exports.
Section 2: Labour Law and Administration
Socially oriented policy directives at the time of India’s independence called for legislations
to protect industry and workers. The state acted as a custodian of workers’ rights. Labour rights
were enshrined as part of the constitutional framework and many laws were made to protect
workers, though most were applicable only to the organized sector. This policy orientation has
changed since India adopted economic reforms. In order to provide an enabling environment to
industry, the state has been gradually withdrawing from its role in labour administration. In the
following section we examine the existing legislations for workers in India and the ground realities
of implementation and how far these legislations serve the informal sector workers.
Core ILO Conventions ratified by India: India is a founding member of the ILO and
has ratified the following four of the eight Core Conventions: ILO Forced Labour Convention
(No. 29), Abolition of Forced Labour Convention (No.105), Equal Remuneration Convention
(No.100), Discrimination (Employment Occupation) Convention (No.111). But it has yet to
ratify Freedom of Association and Protection of Right to Organized Convention (No.87); Right
to Organize and Collective Bargaining Convention (No.98); Minimum Age Convention (No.138)
and Worst forms of Child Labour Convention (No.182).
The Industrial Disputes Act 1947 (IDA): This is a key legislation which seeks to defend the
rights of the workers and ensures job security. It enumerates the procedures for conciliation and
arbitration in a dispute, closures, lockout, retrenchment and compensation and is applicable to
units which have more than 10 permanent workers or ‘workmen’. After an amendment in 1982,
it was made mandatory for any employer to seek the prior permission of the government before a
closure, in case it employs 100 or more workers (IDA Section 25 O).
Trade Union Act: This 1926 legislation sets out procedures for registering trade unions. It
gives a legal status to them and facilitates unionization both in the organized and the unorganized
sectors. The Act lays down that no legal proceedings in a court can be held against a union, its
officer or member for any act done in furtherance of a trade dispute.43
The Contract Labour (Regulation and Abolition) Act, 1970: The Act seeks a progressive
abolition of contract workers. It prohibits the engagement of contract workers for core activities
of the firm. Contract workers can legally be engaged only in jobs that are outside the core
activities (such as loading unloading or gardening). It was enacted following the recommendation
of the first National Commission on Labour in 1969 and is applicable to establishments where
the work is carried out by 20 or more workers as contract labourers. It specifies that the principal
employer and the contractor have to register the establishment and obtain a licence. This act aims
to prevent denial of job security in cases where it is feasible and of social security where it is a legal
entitlement. 44
Factories Act 1946: This Act deals with health, safety and conditions of work. It is applicable
to all units having 10 or more workers and all units having 20 or more workers which lack power
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(such as electrical power). The act limits the hours of work to 48 in a week and up to 60 including
overtime.
The Payment of Wages Act 1936: This Act seeks to ensure that wages are disbursed by the
employers within a stipulated time frame and without any unauthorized deductions.
The Minimum Wage Act 1948: This Act requires appropriate authorities to fix minimum
wage rates. It also requires that the government should review and revise the minimum wage rates
at intervals not exceeding 5 years.
Equal remuneration Act 1976: This Act states that employers must not discriminate on
the basis of sex in the recruitment of workers for the same or similar work, or in any terms or
conditions of employment, such as promotion, training or transfer. However, priority reservation
in recruitment is allowed in relation to any ‘class or category of persons’. 45 Employers are also
subject to record-keeping requirements. But in practice this is limited to the organized or rather
the public sector.
Employees State Insurance Act 1948: The ESI Act provides for compensation in the
event of sickness, maternity and employment injury. It covers all industries except those which
are seasonal in nature. The Act entitles employees to benefits such as treatment in hospitals
maintained by the Employees State Insurance Corporation. It states that the employer is obliged
to give a stipulated maternity leave with pay and that employees cannot be dismissed during
period of sickness or maternity.
Employees' Provident Funds and Miscellaneous Provisions Act, 1952: The act is
applicable to any employee in any kind of work, manual or otherwise, in an establishment and
who gets wages directly or indirectly from the employer. All the employees (including casual,
part time, daily wage contract etc.) other than those excluded by a wage ceiling are required to be
enrolled as members of the fund.46
Payment of Bonus Act (1965): This Act says any person who has worked a minimum of 30
days in a financial year and whose salary is Rs 3,500 per month is eligible for bonus. This is at the
rate of 8.33 per cent of the wage.
Workmen’s Compensation Act, 1923: The Act provides for compensation to workmen or
their survivors in cases of industrial accidents and occupational diseases resulting in disablement
or death.
Maternity Benefit Act, 1961: The act regulates employment of women before and after
child birth and provides for 12 weeks maternity leave, medical bonus and certain other benefits.
Payment of Gratuity Act, 1972: The act provides for payment of gratuity at the rate of 15
days’ wages for every completed year of service or part thereof, in excess of seven months. No
wage ceiling for coverage under the Act.47
Industrial Employment (Standing Order) Act 1956: This regulates the conditions of
recruitment, discharge and disciplinary action applicable to factories employing 50 or more
workers. It requires employers to classify workers under different categories such as permanent,
temporary, probationary, casual, apprentice and substitutes.
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Child Labour Prohibition and Regulation Act 1986: This act bans the employment of
child labour in certain occupations and regulates it in certain others.
The Ground Realities – Some Recent Trends
For the past decade and a half, based on an assumption that the existing structure of
labour laws is rigid, the industry has been pushing for a whole set of reforms. A huge case is
built up in favour of these reforms. It is argued that some labour laws have become archaic and
counterproductive and need to be changed in order to enhance productivity. Another argument
is that a flexible labour regime will promote employment generation—to quote from the speech
of the prime minister Dr. Manmohan Singh to the 40th Session of the Indian Labour Conference
in 2005, ‘If our manufacturing base has to grow and if employment opportunities have to be
created, we must make our labour laws less rigid.’ 48 Two examples49 illustrate the position of
the industry: 1) With regards to the IDA, industry has been arguing that the threshold limit for
closures should be removed. Permission should not be a prerequisite for lay offs (IDA Section
25 M) or for retrenchments (section 25 N). Furthermore in section 2 (q), industry seeks that the
term ‘strike’ be redefined to include ‘go slow’, ‘work to rule’ and mass casual leave. Also, 2) in
further proposed Amendments to the Factories Act: employers seek an increase in working hours
to 60 hours a week and a maximum of 12 in a day. This is also in line with what many export
industries are practicing, namely, a two-shift system of 12 hours each.
What is missed in this assumption is the fact that even within this existing ‘rigid’ regime
there is a huge amount of flexibility. Any further reduction in these standards may lead to further
squeezing of the workers in terms of wage or working conditions.
Some important points that must be noted: First, labour in India is a subject under the
purview of both the central government and the states. While there are central legislations
in place, the outlook and political orientation of the state government often determines the
functioning of the labour machinery. With an overall policy directive to favour industry and
foreign investments, several states such as Andhra Pradesh, Maharashtra, Uttar Pradesh, Rajasthan
and Gujarat have taken initiatives to make changes in the labour laws and inspection procedures.
Second, the judiciary in India too is playing its complementary role in the globalization
process by giving some judgments against the workers. One example is the Supreme Court order
in 2003 that said government employees had no fundamental, legal or moral right to go on strike.
While there are some instances of pro labour judgements—in a 1997 judgment (Vishaka v. State
of Rajasthan), the Supreme Court directed the central and state governments to adopt suitable
measures including legislation on sexual harassment at the workplace—such instances are few.
Third, the tripartite mechanism is non-functioning. Many statutory and non-statutory
tripartite committees including those on implementation of ILO conventions have not been
called for years, by the government. One example is the tripartite committee on textiles.
Fourth, figures on strikes and lockouts also suggest that the power of employers vis-a-vis the
workers is increasing. During the decade 1981-90, prior to the phase of economic reforms, India
lost 402.1 million man days due to industrial conflicts. In the subsequent decade 1991-2001 the
number came down to half—210 million—largely as trade unions and workers were hesitant to
go on strike due to the fear of job loss or closure of the unit. In fact 60 % of the man days lost in
the post reform period was due to lockouts and less than 40 % due to strikes.50 In addition, there
is a plethora of cases that lie pending in the labour courts. In May 2000 there were 5,333,038
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cases pending in the Indian Labour Courts, out of which 28,864 had been pending for over 10
years. 51
The collective bargaining power of the worker is shrinking as trade unions are becoming
weak. Even in what was their stronghold, the public sector, their strength has been declining as
new recruitments are not taking place and old workers are being offered voluntary retirement
schemes and the like. In industries where new employment is being created, retention of their
present job has become the primary agenda for workers. Since 1992 to date, more than 100 of
the 240 public sector corporations did not have wage revisions. The government announced that
companies had to mobilize resources to pay for workers’ wages and that the government would no
longer subsidize wage increases.52
Fifth, in India informal workers in both the organized and unorganized sectors are denied
any protection which would accrue to a worker who fits the legal definition of a ‘workman’ or has
a permanent contract. Employers use various tactics to deny workers the status of a ‘workman’
such as hiring them as trainees or apprentices and hiring through contractors or subcontracting
work.
Subcontractors and labour contractors form the second layer in the production chain are able
to ignore all labour laws. Such units are unregistered. In many cases they have licences for jobs
such as loading and unloading but they engage in other production activities such as stitching. In
case of legal proceedings against them, they can declare bankruptcy and close the unit and thus
there is no way the workers can get their claims addressed.
The informal workers usually have no proof of being workers; they are not given
appointment letters, sometimes even after being in service for long periods. And even in cases
when they are given contract letters, they may not be authentic; they may not carry the seal or
logo of the company. The workers are not given wage slips, the provident fund account is not
maintained, ESI card is not given, and employers try to show a break in service.
The administration sides with the employers in restraining collective actions of the workers.
Trade unions are denied registration. In many cases there are bureaucratic delays and workers’
files are kept pending for months at a time.53 The TU Act has been recently amended and the
number of people necessary for registration increased from seven to 100 or 10% of the workforce
of a unit. 54
Following are two instances which indicate that where the government has tried to integrate
concerns of the unorganised workers in the policy framework, there are huge gaps:
The National Policy for Urban Street Vendors, 2004: One of the main objectives of the
policy is to provide facilities for appropriate use of identified space including the creation of
hawking zones in the urban development/zoning plans.55 The policy argues against forced eviction
of hawker/street vendors. It talks about ward committees in large cities and town committees in
smaller towns with representatives of street vendors to deal with issues of vendors. It recommends
a system of registration of street vendors and non-discretionary regulation of access to public
spaces in accordance with the planning standards and nature of trade/service. However, while the
policy tries to promote a supportive environment for earning livelihoods to the street vendors, the
social security, which is one of the most critical needs of the unorganized sector, remains a gap
left by this policy. It is suggested that social security schemes should be financed by contributions
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from street vendors as they are self-employed. In other sectors, employers contribute to the
schemes along with their workers.56
Unorganised Sector Workers Social Security Bill 2007: The government of India has
floated 14 legislations in eight years57 for a comprehensive legislation on social security for
Unorganised Workers. In 2007 the Government of India put forth a revised version of the
Social Security Bill. It addresses some of the social security provisions, such as old age, pension,
medical needs, etc, but it offers social security in the form of welfare schemes. The bill lacks
a comprehensive character. Moreover, clarity on crucial issues such as budgetary provisions,
coverage and a time frame for implementation is missing.
Section 3: Workers’ Response, Initiatives and Struggles
Trade unions in India have traditionally concentrated on organizing workers within the
fold of a formal employer-employee relationship. Collective bargaining and negotiations through
trade unions have defended the rights of the workers in terms of their wage, working condition,
job security and social protection. But clearly the focus has been on organizing where the
status of a worker is clearly defined as a wage earner, the central point of organizing being the
workplace. Women workers have been neglected and even in industries where women dominate
in employment such as garments and textiles, the unions have been dominated by men.
The situation of informal workers is very different from formal workers: first, their nature of
employment is different from regular workers—they could be temporary, casual, contract or part
time. They shift their workplace frequently. They could be working under layers of subcontractors
and split in different units and that creates the problem of tracing the accountability. Second, the
concerns of these workers are different and are related more to income security, job security and
protection of livelihoods rather than issues like increments and bonus. Third, in the organized
sector there is often a clear divide between the concerns of the regular workers and the casual
workers as the casual and contract workers are hired to replace the regular ones. Fourth, for a
huge portion of the informal sector workers, a formal employer-employee relationship is absent
and they are often self-employed, involved in home-based work.
Initiatives to organize informal sector workers and women workers have come from both the
central trade unions as well as the new unions of the unorganized sector. At the policy level the
trade unions in India have played a key role in protesting against the proposed labour reforms,
against judicial decisions and against employers’ action at the central level, at the state level and
through their federations. Trade unions often form joint action committees and address common
issues on contractualization and informalization. Trade Unions have also organized contract
workers along with regular workers, including workers in Special Economic Zones (SEZs). The
Centre of Indian Trade Unions organized workers in the Chennai Export Promotion Zone in
1995. They took up the issues of minimum wage, social security (ESI) and child labour among
others and were successful in negotiating with the government and management.58 The All India
Trade Union Congress is organising workers in garment units in the NOIDA SEZ. Some trade
unions have women wings, which function by and large according to their own priorities and
programmes. But participation of women in the central leadership of the movement remains
restricted.
The central trade unions have organized Anganwadi workers. These are an all-women
workforce working under the Integrated Child Development Scheme of the Government of
India engaged in teaching pre-school children, maintaining records of children and taking care
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of their nutritional needs. They received less than the minimum wage and were denied the status
of a government employee by being called volunteers or part-time workers. They demand the
government for regularization, increase in remunerations and introduction of retirement benefits.
The struggle of anganwadi workers spread across several states of India and was taken up with
much enthusiasm by trade unions. Several heroic struggles such as a 10-day hunger strike in July
2006 in which around 20,000 anganwadi employees from 22 states participated59 and the action
of 10,000 anganwadi workers in May 2007 courting arrests60 have taken place, putting critical
pressure on the government.
Another key initiative is that of SEWA, which links the products of its self-employed
members to the market. It presents a model of providing community social protection, job
security, access to credit and marketing support. Micro credit schemes are extended through
the SEWA Bank. SEWA represents the combination of strategies of a cooperative and a trade
union. D. Saini in a case study of SEWA61 identifies the following elements: 1) organizing
for empowerment, 2) credits and savings through the SEWA Bank, 3) capacity – building of
members, 4) facilitating formation of cooperatives by SEWA members, 5) women’s leadership,
6) healthcare, 7) childcare, 8) work security assurance, 9) food security and 10) education and
knowledge acquisition. As a trade union, SEWA offers its members a combination of services
including organization into trade groups, cooperatives or producer groups, collective bargaining
and opportunities for members to develop local leadership abilities. In urban areas SEWA’
s early street vendor campaigns were based on organization and mobilization, and focused on
negotiations with the local state and suppliers.62
Another case is of the garment industry in Bangalore. A study63 on the Bangalore garment
industry notes that the sector had failed to attract the mainstream trade unions because of the
predominantly female and semi-rural nature of the workforce as well as the decentralized nature of
the industry which was spread out in small units rather than concentrated in large ones. NGOs in
Bangalore are building networks and organizing women using neighbourhoods and creating Self
Help Groups, or SHGs. A women trade union called Mahila Garment Workers has been formed.
It acts as a pre-union body to address issues related to civic life. Workplace related issues are dealt
with by the Garment and Textile Workers’ Union (GATWU). GATWU represents a strategy
different from the traditional unions – struggles at the workplace including dharnas and strikes
are not a part of its active strategy. It tries to mobilize international opinion and transnational
agreements to bear on local manufacturers.64 GATWU is affiliated to the New Trade Union
Initiative (NTUI).
The NTUI is a mainstream national union with no political affiliations. NTUI believes that
in the current context of globalization it is necessary to go beyond national boundaries, and seek
to deepen international solidarity and alliance of labour movements.65 In its founding conference
in 2006 it was emphasized that unions must address broad-based social issues such as caste and
gender that have a direct bearing on labour issues. At the industrial level, the major focus of
the initiative is to build a single industrial federation to facilitate an industry-wide collective
bargaining strategy.66 The initiative’s main concern is to build a national federation of all
independent unions through a participatory process of the unions themselves.67 The NTUI along
with GATWU concentrates on wage as a strategy for organizing through building a transnational
solidarity among garment workers.
To sum up, several efforts are being made by trade unions to organize informal sector
workers and women workers. Central trade unions and their women’s wings are taking up
these issues. Labour activists and new initiatives are taking up issues left unaddressed by the
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traditional unions and using new strategies including distancing themselves from political parties
and forming international alliances. But it is crucial for these initiatives to sustain themselves
while operating within the larger context of the declining role of the state and the dynamics of
globalized capital.
Conclusion
India has a huge informal economy as more than 92 per cent of its population is engaged
in informal work. With economic growth there is increasing informalization of employment
and a reduction in formal or regular workers even in the organized sector. Workers in the
informal sector are prone to vulnerabilities. They lack job security, wage security, social security,
labour rights including right to freedom of association and collective bargaining and a safe work
environment. In industries which operate through subcontracting chains, the condition of the
workers worsens as we move down the chain.
Women workers in the informal sector constitute 91.38 per cent of the total women
workers. They have to combine both productive and reproductive roles and this makes them more
vulnerable. There is a sexual division of labour at the workplace manifested in the nature of work
performed and remuneration for it. Women are largely confined to low paid jobs involving less
skill than men.
While there are national laws to protect the rights of the workers, the state is gradually
withdrawing from its role in labour administration. The informal sector workers are not protected
through the existing legislations.
Trade unions and labour support organisations are making an effort to organize workers in
the informal sector including experimenting with new strategies. The case of anganwadi workers
reflects the importance of the approach to regulate any form of employment. SEWA is an example
of how cooperatives and unionization can be integrated. As part of their strategy GATWU and
NTUI are experimenting new ways of organizing garment workers. In a situation where capital
is located across national boundaries and where the state is playing a regressive role in defending
workers’ rights, there can be no one method for organizing workers. Any organizing effort should
be sustained and practical and leading to social protection and job and income security.
ENDNOTES
1.
2.
3.
4.
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Government of India. Economic Survey 2007-08, p. 4.
Declaration adopted by the national assembly of workers against anti-labour policies held in New Delhi on 15
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5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
257
This is a conceptual framework that sets the international statistical standard for the measurement of the market
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Kulshreshta, A.C. and Singh, G. (2001) ‘Informal Sector in India: Its Coverage and Contributions’ in Informal
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Raveendran, G. et al. (2006) ‘Redefining of Unorganized Sector in India’, National Commission on Enterprises
in the Unorganized/Informal Sector, India Expert Group on Informal Sector Statistics (Delhi Group), 11-12
May 2006, New Delhi, India. Source: http://mospi.nic.in/Manual%2002.doc
National Commission for Enterprises in the Unorganised Sector (NCEUS) (2006) ‘Report on Social Security
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International Labour Organization (2001). Reducing the Decent Work Deficit: A Global Change. Geneva.
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Srivastava, R. (undated) Widening Exclusion: Informalization in the Indian Economy, NCEUS
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Ibid.
NCEUS (2007) ‘Report on Conditions of Work and Promotion of Livelihoods in the Unorganized Sector’, p. 4.
Srivastava (2007)
Dutt (2007)
Dutt (2007)
NCEUS (2007), p. 6.
Ibid., p. 8.
Government of India, NSSO 55th Round; Institute of Social Studies Trust (ISST) & United Nations
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NCEUS (2007), p. 76.
ISST & UNIFEM (2007)
Raj, A. and Kapoor, R. (2001) ‘Productive Linkages of Indian Industry with Home-Based and Other Women
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Ahn, P.S. (2007) ‘Organising for Decent Work in Informal Economy’, ILO Subregional Office and Bureau for
Workers’ Activities, New Delhi, as quoted in Thakur and Venkata (2007).
Field study was conducted in 2005-06, a study by the CEC on Wages and Structural Changes in Garment
Industry in Delhi and NCR Region, source: www.eias.org/publications/bulletin/2006/julyaug06/ebjulyaug06.
pdf
The premium rate is double the regular hourly rate.
The field study was conducted in 2006-07: CEC’s Study on Leather Industry in India.
Vanamala, M. (2001) ‘Informalization and Feminisation of a Formal Sector Industry: A Case Study’, Economic
and Political Weekly, pp. 2381-2383
India Rani, U. and Unni, J. (2003) ‘Women, Work and Insecurities’ in Working Paper no 135, Gujarat
Institute of Development Research, GOTA, Ahmedabad.
Ghosh, Jayati (2005) Informalization and Women’s Workforce Participation: A Consideration of Recent Trends in
Asia, source: www.policyinnovations.org/ideas/policy_library/data/01178
Karnataka , Rajashekhar, D. et. al. (2007) ‘Women Workers in Informal Employment: The Status of Agarbathi
and Garment Workers’ in, Indian Journal of Labour Economics Vol. 50, No. 4.
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Garment Industry and Labour Rights in India- The Post MFA Context, Krishnamurthy, Sujana, Centre for
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Ibid.
NCEUS (2007) p. 82.
International Labour Organization (2005) ‘The Other India at Work’
Vanamala (2001) Op. cit., p. 2385.
NSSO, press note on the informal sector conditions of employment 2004-05
http://labourfile.org/ArticleMore.aspx?Id=826
www.hinduonnet.com/fline/fl2420/stories/20071019508010700.htm
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‘Major Labour Legislations of the Century’, Labour File January-April 2000.
Papola, T.S. and Pais, J. (2007) ‘Debate on labour Market reforms in India’, Indian Journal of Labour
Economics, Vol. 50, No. 2.
www.ilo.org/public/english/employment/gems/eeo/law/india/equal.htm
http://epfindia.nic.in/epf.htm
http://siadipp.nic.in/publicat/invpub/lobourlaw.htm
Prime Minister’s address to the 40th Indian Labour Conference, (New Delhi : 9 December 2005), pp. 3-4.
Source: http://labour.nic.in/lc/40ilc/40ilcpmspeech.doc
Background Document, Seminar on Labour Laws for Textile and Clothing Sector, CITI, 24 August 2006
Shenoy, P.D. (undated) Globalisation and its Impact on Labour in India. Source: www.ris.org.in/India_Globalis
ation_Its%20Impact%20on%20Labour%20in%20India_P%20D%20Shenoy.pdf.
Sivananthiran and Ratnam as quoted in Fagernas, S. (2007) Labour Law, Judicial Efficiency and Informal
Employment in India, Centre for Business Research University of Cambridge, September.
Venkatratnam (2005) as quoted in Shenoy, P.D. Globalisation and its Impact on Labour in India.
CEC’s Study on Griziano Case (upcoming in 2008)
http://indiacode.nic.in/fullact1.asp?tfnm=200131
Source: http://www.nationalstrategyforurbanpoor.org/yashada/html/informal_sector/i_s_schemes.htm
Bhowmik S.K., Social Security for Street Vendors source: http://www.india-seminar.com/2006/568/
568_sharit_k_bhowmik.htm
Press Release, Social Security Now Campaign Source: http://www.socialsecuritynow.org/inthe%20press.htm
CEC (2004) Proceedings of the on First National Exploratory Meeting for an All India Garment Workers Welfare
Board, 26-27 March 2004, India Habitat Centre, New Delhi.
http://pd.cpim.org/2006/0813/08132006_anganwadi%20workers.htm
Hemlata, K. (2007) ‘Dynamics of trade Unionism Among Anganwadi Workers’ in Labour File, Vol. 5, No. 5
and 6.
Saini, D.S. Securing (2007) ‘Working Class rights for Informal Sector Workers in India: A Case Study of Self
Employed Women’s Association’ in Indian Journal of Labour Economics, Vol. 50, No. 4.
Devenish, A. and Skinner, C. (2004) Organising Workers in the Informal Economy: The Experience of the Selfemployed Women’s Union, 1994-2004, School of Development Studies, University of KwaZulu-Natal.
Roychowdhury, S. (2005) ‘Labour Activism and Women in the Unorganized Sector: Garment Export Industry
in Bangalore’ in Economic and Political Weekly Vol. XL, No. 22-23.
Chowdry, S.R. (2007), ‘Informality in Globalised Forms of Production’, Indian Journal of Labour Economics,
Vol. 50, No. 4.
www.revolutionarydemocracy.org/rdv12n2/ntui.htm
http://ntuiindia.org/For%20a%20New%20Initiative.doc
http://ntuiindia.org/For%20a%20New%20Initiative.doc
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Pakistan
Azra Sayeed
1. Contemporary Snapshot
P
akistan has finally emerged from an eight-year military dictatorship with a democratic
government after elections were held in February 2008. The previous regime had heavily
favoured the neoliberal agenda of developed countries, particularly the United States. Ordinances
and policies adopted by the previous regime had widespread impact on the social conditions
in Pakistan. In 2007, there had been a rise in political turmoil in the country, which escalated
with the suspension of the Chief Justice Iftikhar Chaudhary in March 2007. On 3 November,
under the Provisional Constitutional Ordinance the chief justice along with more than 50 other
judges were removed and replaced by a puppet judiciary. The assassination of Benazir Bhutto,
Chairperson of the Pakistan Peoples Party on 27 December 2007, further heightened the
political as well economic chaos in the country. Although, there is now a democratically elected
government in place, the country remains under turmoil, with foreign exchange reserves at low
levels, as well as military operations in the northern areas of Pakistan in a continuation of the socalled US ‘War on Terror’. Washington has provided nearly US$10 billion to control the socalled terrorists operating in the northern regions. There have been air strikes by the US military
as well inside Pakistan territory. As a result of continued military operations, more than 500,000
people have been displaced and are taking refuge in various parts of the country against military
attacks of their own government.
Impact of Globalization
The political and military turmoil is a result of the many years of dictatorial rule of (retired)
General Pervez Musharraf. The trade liberalization agenda of the Musharraf regime can be
seen through the various anti-people, anti-labour ordinances passed in the past eight years. The
Industrial Relations Ordinance of 2002, considered to be a draconian labour law, has not granted
the agricultural labour force and the informal sector workforce the right of association, which
means that 90% of the workforce is unprotected.
Another example is the Corporate Farming Ordinance passed in 2001, under which the
government has allowed all stock exchange-listed companies to lease a minimum of 1,500 acres
of agricultural land in Pakistan for 50 years, renewable for another 49 years. This ordinance in
essence has bypassed land reform for a vast majority of landless peasants in Pakistan in favour of
leasing land to the corporate sector. Earlier governments had already allowed the seed sector to
be liberalized in Pakistan. With the seed sector declared an industry that could face liberalization,
free imports of expensive seeds followed. Privatization in the agriculture sector has allowed
inundation of expensive imported agriculture inputs from transnational corporations, as well
as further mechanization of labour processes. Deregulation policies along with high fuel prices
have resulted in astronomical price increases of agriculture inputs. For example, fertilizer cost in
Pakistan has gone up from approximately US$17 to US$53, rise of more than 300% in a oneyear period (2007 to 2008). This increase comes on top of a steady increase in the prices of all
agricultural inputs in the past five years. Alongside, there has been a decrease in employment of
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the agriculture labour force. This has had an immense impact on wages, especially for the female
labour force. In Sindh province, daily wages can be as low as US$0.50 a day, which is not enough
for even a single meal for two persons, let alone a family.
The phasing out of the Multi-Fibre Arrangement (MFA) in 2004 has further impacted the
labour force, especially in the textile and garment sector. According to trade statistics, the overall
textile and garment sector exports account for 66.65% of total exports.1 The US and EU are the
major recipients of Pakistan’s textile and clothing exports, amounting to US$1,882 million and
946 million Euros in 2006.The textile industry is mainly based in non-mill (cottage industry)
and small and medium-sized plants. Cottage industry accounts for 90% of cloth and 80% of
apparels.2 The term ‘cottage industry’ by itself defines the presence of informal labour.
A majority of the workers in the garment sector are women. The phasing out of the MFA
has led to a decrease in jobs for them. No government statistics are available for the number
of women employed in the sector, According to Rubina Jamil, Chief Executive Officer of the
Working Women’s Organization, a vast number of units have closed down in the past few years,
which means fewer jobs available in the sector. Mechanization has further shrunk job availability.
A summary of the impact of trade liberalization, especially in textile and agriculture would
be as follows: on the one hand the cost of production in all sectors has increased, with emphasis
on the agricultural production sector, while on the other hand the downscaling of the textile
industry has resulted in a decrease in available jobs. Both agriculture and textiles remain the major
sectors in which a vast number of male and female labour are employed and both sectors have
been unable to either increase employment opportunities or the quality of life of workers.
Similar liberalization has been seen in transport, education, recreation and health sectors.
Foreign companies are now running long route services connecting various towns in the country.
Trade liberalization has opened the country to a large number of international food chains
including Pizza Hut, McDonald’s and Subway.
The few job openings in the recreation and transport industry hardly provide a viable job
opportunity or security for the vast number of unemployed in the country. The internationallyowned transport and recreation companies provide jobs for a very small number of workers. For
example, Sammi Daewoo, a South Korean-owned transport company, was reported in 2006 to
operate a fleet of 150, employing approximately 3,000 employees.3
In addition, the few jobs being opened up by the transport and recreation sector, are
exploitative and oppressive for women, given the strong patriarchal feudal biases prevalent in the
country. An example is that of locally owned and operated bus services vying to compete with
international chains. They hired women to provide hostess services. Generally, these routes were
run from Karachi, to smaller cities. It was observed that these women faced sexual innuendoes
and molestation. Most of these women were being paid no more than US$50 per month and
had minimal education.4 Young women in fast food chains are required to wear trousers as part
of their uniform, and do not wear a long scarf (called dupatta). They come from low-income
households and their westernized uniforms would be unacceptable in their communities. This
exacerbates social tensions.
In essence the increase in new jobs has taken place in a sector which does not really provide
a large number of jobs. Given that fast food chains such as McDonalds and Pizza Hut have
more than a 100-150 outlets in the entire country, and generally, not more than 10 waitresses/
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waiters at each outlet, one can assume that there are no more than 5,000 to 7,000 staff in the
sector. Hence, in essence they do not provide employment opportunities to a large workforce.
The largest expansion in services has been in the financial sector which has opened avenues for
just the educated professional classes. As was predicted, globalization has meted out harsh living
conditions to the unskilled, semi-skilled and uneducated working class. Industrialization has failed
to take root in Pakistan. The current year 2008 shows starkly that the much publicized growth in
this decade was superficial. According to the Asian Development Bank,
The first half of fiscal year 2006 was marked by a slowdown in both industry and
agriculture. Output of cotton declined by an estimated 10.9% from an all-time high
of 14.6 million bales harvested in fiscal year 2005. Production of sugarcane, another
major summer crop, is also estimated lower than last year. The growth of large-scale
manufacturing slowed to 8.7% in the first quarter of fiscal year 2006 from 24.9% in
the same period of last year, primarily due to capacity constraints.... Among individual
industries in the first quarter, growth of textiles tumbled to 7.2% from 29.6% year
on year. Automobile assembly and electronics, which has shown the fastest expansion
among subsectors in the last two to three years, also decelerated.5
The impact of privatization and deregulation policies in Pakistan has led to steady increases
in the prices of household goods and services, and this has forced labour to accept poor conditions
of work in the formal as well as informal sectors. The year 2007 was marked not only by political
turmoil, but some of the highest price increases on record for food items. In early 2007, under
the trade liberalization-driven policies of (former) Prime Minister Shaukat Aziz, 500,000 tonnes
of wheat were exported. By late 2007 there was an acute shortage in the country of wheat, which
is the staple for 160 million Pakistanis. Now the government has been importing wheat at double
the price at which it had been exported. By mid-2008 the cost of flour has escalated to as high as
Rs (Pakistan rupees) 30 to 40 per kilogramme (US$0.4 to 0.5). Prices of basic items including
onions, tomatoes and other vegetables, pulses and edible oil have all escalated. Red meat, poultry
and fish range from Rs 150 to 300 per kg (US$1.80-3.75), out of the reach of Pakistani workers.
Similarly milk is selling at US$0.50 per kg and eggs at US$0.80 per dozen. Khaleeq Kiani,
quoting World Bank data, has reported in the Pakistani newspaper, Daily Dawn, that ‘average
earnings for salaried employees in 2003-04 were Rs 4,088 per month (US$68). This would place
a typical family of six with one person employed, below the poverty line. (Statistics on) earnings
(by the) self-employed are not available but are believed (to be) much lower’.6 The current high
increase in prices has no doubt further impacted the life of the working class.
With the average earnings of labour in the informal urban sector estimated at no more than
US$60-70 per month and with rural workers barely making US$37 per month, the rising cost of
living means further deprivation, hunger and misery for a vast majority of the working force in
Pakistan.
The State of Labour in Pakistan
According to the Pakistan Statistical Yearbook 2007, the country’s population stands
at 158.7 million, with the male and female distribution at 82.1 million and 76.1 million
respectively. However, it should be noted that the last census was held in 1998 and the next
census was due this year (2008). The Pakistan Economic Survey 2006-7 estimates the total
population at 151.55 million, of whom 105.37 million are categorized in the working age (which
is defined as 10 years or above). The labour force is estimated at 48.95 million and of this, 46.94
million are deemed to be employed. Of the employed workforce, 69.2% are in the rural areas and
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30.8% are in urban areas. The total workforce in agriculture is 43.37%, of which 41.43% is ruralbased.
The informal sector in Pakistan is the same as defined by the International Labour
Organization (ILO), and refers ‘to modes of production and enterprises that range from smallscale production units, home-based work in production chains and self-run micro-enterprises
to bare minimum economic survival activities such as street vending, rag-picking and domestic
work.’ 7
The total informal sector workforce in non-agricultural work in urban and rural areas is
41.25%. The entire rural agricultural labour force is categorized as informal. Thus the nonagricultural informal workforce and the rural agriculture workforce together comprise 82.7%
of the total labour force. The urban-based agriculture workforce is being reported at 1.95% but
the Pakistan Economic Survey does not define this group. But if it is included, the strength of
informal labour goes up to 84.6%. (See Table 1.)
Table 1: Pakistan Informal Workforce 2005-6
Rural workforce
Urban workforce
(%)
(%)
Employed Workforce
69.2
30.8
Agriculture Workforce
41.43
1.95
Informal Workforce
20.77
20.48
Total Informal Workforce
43.38
41.25
84.6
Source: Pakistan Economic Survey, 2006-7.
Meanwhile, the Government of Pakistan admits the number of unpaid family helpers,
especially women, is increasing. 8 The figures are a stark indication of the impact of trade
liberalization polices on the labour force in Pakistan. The past few years have seen a sharp
escalation in imports. For instance, in 2005-06 Pakistan exported US$16.5 million worth of
goods and imported US$28.6 million. This shows the high trade deficit the country is facing.
The Informal Sector
Rural Informal Sector: Non-Agriculture
A major part of the workforce is employed in agriculture, but considerable numbers are
engaged in other occupations in rural areas. These include carpet-making, sports goods and
surgical equipment. There are also cottage industries engaged in embroidery work, handicrafts,
bangle-making and various ethnic handmade products including bed linen, rallies (quilted
blankets) and women’s wear. Each of these occupations contributes to not only the national
income but to foreign exchange earnings, but the contribution of workers in the rural areas is
ignored and their labour rights and human rights grossly violated.
A prime example is the carpet industry, which produces a high value product, aimed basically
for export. Although the industry yields rich revenues, there is tremendous exploitation of the
workforce in this sector. The carpet industry is comprised of the weaving sector and the stitching
and washing sector. According to trade unionist Niaz Khan, it is possible to form trade unions
in the stitching and washing sectors albeit with difficulty, but not in the weaving sector.9 Much
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of the weaving sector is based in rural areas with the handlooms set up in people’s homes. The
labour in this sector includes men, women and children. According to a research report, there are
approximately 1.2 million children under the age of 15 years working in this sector. 10
The general practice is to either lease a handloom to a household, or women from that
household or others from adjoining homes work on it. Two or three women work on a
handloom. However, there could be more than nine workers engaged on one loom. Wages are
paid on a daily basis with rates as low as Rs 80. The work is being shifted more and more to the
rural sector as labour there is cheaper, willing to work at much lower rates than in urban areas.
Similar patterns are seen in football manufacture. Women and girls make footballs on a
piece-rate basis. A large number of women and children are involved in this sector and the final
product is exported. Kits for making footballs are supplied by sub-contractors, and women are
paid per piece based on the quality of the football being made. Generally, there are three qualities:
The highest quality of football is produced for international games, and then there are lower
qualities for consumers. Women work on all qualities of balls, but there is a biased view that the
best quality of football cannot be made by women. This keeps women from being paid the highest
piece rate. Earnings from football can be as high as Rs 4,000 per month which is equivalent to the
average Pakistani income for labour. One woman takes the responsibility of household chores and
others work on the piece rate product. This pattern is also seen in the carpet industry.
A large number of workers in Sindh and Punjab provinces are employed in brick kilns. A
whole family works in the kiln and working hours are not specified. People work all days of the
week and are paid per brick delivered. A family of three or four members can produce about
1,000 bricks in a day and earn Rs 200 (US$3.3) per day. However, payment system varies.
In some areas workers are paid Rs 1,000 at the end of the week and the rest of the payment is
withheld. This is a way of ensuring that they return to work. Brick kilns are known to employ
bonded or slave labour. The low wages in this sector lead workers to take loans from the brick
kiln management which ends in the whole family becoming indebted. They cannot leave the kilns
without paying off the accumulated debts. In addition, as the workers are unable to read or write
they do not know the full extent of their debts. Children as young as six years old are engaged in
brick kilns. Families are not allowed to leave the premise. The ILO says Pakistan has 1.7 million
bonded labourers.11 No concrete figures are available as to the number of people working in brick
kilns, but older studies show nearly one fourth of bonded labourers are in the sector. Women and
children comprise a large share of the workforce.
Rural Informal Sector: Agriculture
The biggest number of workers is engaged in agriculture. In the two major agricultural
provinces Sindh and Punjab, women work along side men in preparing the land, sowing, looking
after the crops and finally picking or cutting the harvested grain. Animal husbandry remains
largely informal, with a high participation of women in the caring and breeding of animals.
However, the sale of animals in local markets is a task carried out entirely by men. Livestock work
is shared by women in the provinces of Balochistan and North Western Frontier Province as well.
The situation of the agriculture workforce is among the worst in Pakistan. Growing trade
liberalization has resulted in massive increase in the cost of production. For instance, the cost of
diesel alone has gone up from Rs 10.8 in 1999 to Rs 24.76 in 2004. Diesel now sells at Rs 38. In
other words from 2004 to 2008 the cost of diesel rose by 53.4%. Given the emphasis on green
revolution technologies and use of tractors, seed drills and tube wells, the cost of diesel is critical
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in determining the cost of agricultural production. Chemical fertilizers too have become dearer
by almost 300% in a year. The cost of wheat seed has risen from Rs 600 per 40 kg to in 2006 to
Rs 1,200 and then Rs 1,600 per 40 kg in 2008. In US$ equivalent, the increase is from US$10
to US$13-20. However, the cost to the common people is reflected more accurately in rupees, as
wages have more or less remained stagnant in rupees.
An important indicator with respect to labour is the decline of sharecropping patterns in
Pakistan. According to renowned agriculture economist Mahmood Hasan Khan, the overall trend
in Pakistan has been a decline in sharecropping. Land which had been cultivated by sharecroppers
has now been taken over by owners themselves. At present, 90 per cent of owners cultivate
their own land, whereas 30 years ago this number was 75 per cent. Of the two big agricultural
provinces, in Sindh the tenant-operated area has gone down from 63% to 21%, and in Punjab
from 48% to 23%. This data is indicative of the increasing number of landless peasants in the
country. Those who were tenants have now become labourers working on daily wages or seek
non-agriculture work.
The increase in the number of agricultural workers has been a direct result of the increased
cost of production as detailed above. A case study on sunflower production documents the
impact of liberalization in the seed sector. The cost of sunflower seed imported from transnational
corporations such as ICI has risen to Rs 1,200 for one acre. In addition, the introduction of seed
drills has wiped out the work for women who used to be largely responsible for sowing seed.
Thus during the sunflower season (August to February) the only work available for women is in
harvesting. For this work a family is paid Rs 250 per acre. The per person wage does not come
to more than Rs 40 to 50 or US$0.50 a day. In addition, the work is arduous: it entails cutting
the sunflower head at the tip of the stalk. Women have to work with their hands raised above
their heads. The result is muscular pain especially in their necks and shoulders. Moreover, the
sunflower plant is thorny and leaves abrasions and cuts on their hands. All this for a mere Rs 40
which does not even get them a single full meal. Workers often say they had been sharecroppers
but with mechanization as well as increasing cost of production land owners have reduced them
from tenancy to mere casual labour.
Similar working conditions prevail in other crop operations, be it onion picking, cotton
picking or sowing and harvesting wheat or rice. Wheat harvesting is the most revered work,
although it means toiling under the terribly hot summer sun in Punjab and Sindh. For cutting
one acre of land, workers are given 40 to 60 kg of wheat. Agricultural labour migrates from
district to district seeking wheat harvest work. As workers are short of cash it is difficult for them
to buy wheat from the market. Their food security is ensured only possible if they are able to store
wheat while the harvest is going on. Constant migration in search of work is a strenuous activity
for women as they take their children with them. A family sets up camp in the fields wherever
they find work. They make temporary shelters around poles, covering it with quilts or sometimes
grass. For nearly two months they go from one place to another. This can lead to friction between
workers belonging to the area and those who have come as migrants, who are willing to work for
even lower wages (in kind).
Urban Informal Sector
Although a vast number of people working in the informal economy is rural-based, many
urban workers too are engaged in informal labour. Men, women and children are all represented
in such work even in urban areas. Women can be home-based as well as working in small units
in their neighborhoods. The home-based work includes bangle-making, garment work such as
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cutting and sewing bulk orders, packaging of goods (such as candies), candle-making, embroidery
work, aprons, key chains, home decorations, bead jewelry, integrated circuits processing, incensemaking, cardboard boxes, paper and cloth bags. These are a few examples of the items made in
informal work places in cities and small towns around Pakistan.
The payment is on piece rate basis and the range varies drastically based on the product.
However, no matter what the product, wages are extremely low, and workers face great
exploitation. For instance, intricate embroidery work on a women’s shirt can fetch a mere US$2
or $3 a day. Tailoring charges (cutting and stitching) for ready-made men’s wear (shalwar and
kameez) are Rs 25 (US$0.42) and for boys Rs 15 (US$0.25). The labour chain is spread from
big urban centres to small towns. Middlemen access shop keepers, taking orders for ready made
garments and pass the work on to women in small towns, villages and squatter settlements,
depending on their own links to particular communities. If the middlemen buy fabric themselves
at wholesale prices from urban centres, they are able to get Rs 70 (US$1.20) and Rs 150 (US$2.50)
for small and big suits.
Fisheries
A very different informal sector work which caters to global markets is the shrimp industry in
Karachi. Once the shrimp has been caught (an operation monopolized by international trawlers
working in Pakistani waters) it is brought to shanty sheds in squatter settlements close to the
Karachi coastal belt or to fisher folk communities. Women and children are the main, if not only,
workers in this sector. Their chore is to shell the shrimp. For one pail of shrimp (generally 10 kg
of shrimp) women and children are paid Rs 10. The working conditions are abysmal. The shrimp
peeling huts have huge blocks of ice to stop the shrimp from rotting. The hut is dank and cold
and pervades with a fishy stench hard to put up with. Women and children are seated on low
stools with rivulets of dirty water sloshing around, soiling their their feet and clothes. The workers
suffer many cuts and abrasions working with shrimp scales. Working hours stretch from early
morning (as early as 3:00 a.m.) when the shrimp catch comes in. In most cases the work finishes
by noon. However the work is seasonal and there are months when shrimp peeling continues in
the afternoon as well.
Labour is drawn from the Sindhi fisher folk communities but in the squatter settlements
there are many migrants from Bangladesh and Myanmar. They are undocumented migrants
escaping the harsh economic and political conditions of their own countries.
All contracts are based on verbal negotiations. Delays in payment and paying less than agreed
terms are common hazards. Women often work late into the night as they are forced to ensure
some amount of the house work is done too after they have toiled on the shrimp.
Arbitrariness
A large number of factories, especially those in the garment and textile sectors have closed
down in the past decade or more. Thus more and more formal units have taken to operating as
informal ones, beneath the radar of state authorities and legal supervision, even though they are
supposed to be governed by the labour laws of Pakistan.
A common problem is that workers are not given an appointment letter and thus are unable
to have proof of employment based on which they can demand their rights. Such violations are
common in both national and international companies. Another method of evading the law is to
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terminate workers before the probationary period of 90 days ends and rehiring the same workers
after a few days. It is also quite common for workers to be employed for long periods without
being given confirmation letters or any other proof of employment.
The government has raised the minimum wage to Rs 6,000 (US$75). However, this remains
very much unenforced. Even if minimum wages are given to government employees, the vast
labour force employed in the private sector both in the formal and informal sectors is unable to
demand it.
2. Labour Laws for the Informal Sector
As has been pointed out above, more than 80% of the workforce is employed in the informal
sector. The trend is for more and more work being created in the informal sector.
The World Bank has been advocating flexible labour policies which favour rules that would
be beneficial to the business sector. According to Khaleeq Kiani:
The World Bank has advised the government to reduce regulations on labour market,
cut down hiring and firing costs and allow redundancy as fair ground for dismissals
as it believes the tight regulation is resulting in lack of investment in the workforce
and reducing regular jobs….The Employment and Services Conditions Act 2006 is
a consolidation of 11 separate laws governing conditions of employment and wages
for a number of sectors into a new draft act. It focuses on consolidating existing laws,
removing overlapping and inconsistencies and allows greater flexibility, particularly
on the hiring and firing side and working hours tilting towards the capitalist and
proposes restrictions on women’s working hours. The nine-month limit on contract
term is considered as one of the most inflexible hiring legislation in South Asia, the
term ‘temporary worker’ has been abolished to increase labour market flexibility
by eliminating the time limit on term contracts. The new laws would increase the
maximum hours per week to 60 hours from 48 hours and maximum hours per day
from 10 to 12, increasing the maximum number of overtime hours from two to four
per day. 12
The Employment and Service Conditions Act 2006 was passed in 2007 and is being
criticized for protecting the business sector over the working class. One of the most contested
amendments is the increase in working hours for women. In a strongly feudal and patriarchal
culture increased working hours for women will result in extreme hardship on them, as they still
have the burden of rearing and caring for their children as well as the entire household.
An international standard which can provide some safety net to some of the people engaged
in the informal sector is the Home Based Work Convention 1996 (C-177), adopted by the
International Labour Organization. The Home Work Convention calls for national policies
promoting the equality of treatment between home workers and other wage earners, in areas
including:
• the right to establish or join organizations of their own choosing
• protection against discrimination in employment or occupation;
• protection in the field of occupational safety and health;
• statutory social security protection;
• minimum age for admission to employment or work, thereby preventing the use of
child labour in home work; and
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maternity protection.
However, Pakistan has not ratified this convention as yet, which means there is no legal
protection available for a large section of informal workers, of whom a majority are women.
3. Strategies for Informal Labour
In the period 1990-2007, it has become amply clear that labour rights groups have had to
find new and creative means to defend workers’ interests. This process has started in Pakistan. A
major thrust has come from women’s rights groups, as the living conditions in communities has
deteriorated drastically. It is the informal sector that employs most women.
In Pakistan, women workers’ rights activists have sprung from among both the trade
union movement as well as those working for people’s rights in the informal sector. One such
organization is the Women Working Organization (WWO), formed by trade union activists. The
WWO works with 3,200-3,500 women in the informal as well as the (so-called) formal sector by
focusing on the communities they come from. They engage with women working in government
and semi-government sectors such as the Pakistan Telecommunication Corporation Limited,
Water and Power Development Authority as well as women working in small enterprises such as
beauty salons. WWO’s work is spread in seven districts of Punjab. According to Rubina Jamil,
Executive Director of WWO, it is difficult to access women at work places as company transport
takes women from inside the factory and drops them in their localities. It offers a convenience
to workers but also prevents women from being organized with outside help, as only people
identified as company workers are allowed to enter those vehicles. As workplace organizing is
difficult, it thus becomes most effective to organize women in the communities they come from.
The WWO organizes town and district committees which interact with women in their homes.
Women in the many units which mostly operate outside the purview of labour laws are advised
to ask for appointment letters. It is now common practice in Pakistan not to provide workers with
appointment letters, the most basic requirement for employees putting forward demands to their
employers.
The WWO also approaches home-based working women such as those providing services
to the carpet or football industries. The organization conducts awareness-raising strategies for
these women jointly with trade unions working in a specific industry, such as the Itehad Workers
Union Carpet Industries Pakistan.
Some other methods of organizing home-based women has been employed by many nongovernment organizations. A common tactic is for the NGO itself to provide work and then
organize the workforce to recognize various rights. For instance, women rarely have a sense of the
number of hours they work and do not compute their wages as per the time they have spent on
the job. Patriarchal control prevents them from knowing the true worth of their work. Women
themselves tend to judge their skills to be of little value.
One example of such an NGO initiative is that of Roots for Equity, which works with homebased workers in Sindh and peasant women in Sindh and Punjab Province. It interacts with more
than 3,000 women, motivating them to reach the market themselves with their products. The
members produce articles ranging from bead jewellery to handicrafts, which are sold by women
who are willing to go to the market. As for those women who are not willing to go to the market
themselves, they are taken to various markets and shown the value of their work. Women are
taught to compute the cost of the raw materials they use, add in their own labour costs and be
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able to set a sale price for their products. Apart from making women understand the market value
of their skills, Roots for Equity also seeks to politicize the women, to help them understand the
exploitative and oppressive strategies they are up against.
Similar strategies are being used by NGOs to politicize small farmers and landless peasants
to be able to understand the impact of agriculture trade liberalization policies on their lives.
Groups from different political orientations (radical to reformist) are forming farmer networks
and associations. The strategy differs based on the NGOs’ political orientation. Those believing
that globalization will win the day are teaching workers, both men and women, to cope with the
onslaught of capitalist policies as well as to teach them how to serve the business sector better. On
the other hand, those that believe trade liberalization policies embedded in the WTO framework
as well as the IMF World Bank policy framework need to be challenged and dismantled are
concentrating on resistance tactics. For example, in the agriculture sector, where a majority of
the informal workforce is to be found, the clarion call is for food sovereignty demanding total
control and access over land, seed, water and other agricultural input. Land reform is now being
demanded as a key policy intervention to halt the rising hunger and poverty.
REFERENCES
Chimni, B.S. and Das, B.L. (eds). (2006) ‘Multilateralism at a Crossroads: Reaffirming Development Priorities’, The
South Asian Yearbook of Trade and Development 2006, Centre for Trade and Development (CENTAD), pp.
114- 145.
Hisam, Z. (2006) ‘Collective Care Arrangements in the Informal Labour Market: Road Transport Workers in
Pakistan’, Economic and Political Weekly, 27 (May), pp. 2099-2106.
IRIN (2008) ‘Pakistan: Bonded Labourers, Children Eke Out Existence at Brick Kilns’, 17 January cited at http://www.
irinnews.org/report.aspx?ReportId=76296.
Javed, T. (2005) ‘Strengthening Democracy and Democratic Institution in Pakistan’, Islamabad, Pakistan Institute of
Legislative Development and Transparency, June.
Khan, M. H. (1981) Underdevelopment and Agrarian Structure in Pakistan. Vanguard Publication Ltd.
Kiani, K. (2006) Daily Dawn, 25 December.
Klein, N. (2000) No Space, No Choice, No Jobs, No Logo. London: Flamingo.
Pakistan. Pakistan Statistical Yearbook 2007.
Pakistan. Pakistan Economic Survey 2006-2007.
Roots for Equity (2005) ‘Sunflower: The Smiling Face of Lucre, A Study on the Impact of Sunflower Seeds on
Women Farm Labour’, in Intensifying Working Women’s Burden: The impact of Globalization on Women Labour
in Asia, Taguiwalo J. (ed), Manila: Asia Pacific Research Network, pp. 281-320.
Society for the Protection of the Rights of the Child website. http://www.sparcpk.org/crs_child_labor_1.php.
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Pakistan
ENDNOTES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Chimni B.S. and Das B.L. (eds), ‘Multilateralism at a Crossroads: Reaffirming Development Priorities’, The
South Asian Yearbook of Trade and Development 2006, Centre for Trade and Development, p. 114.
Ibid, p. 117.
Hisam, Z. (2006) ‘Collective Care Arrangements in the Informal Labour Market: Road Transport Workers in
Pakistan’, Economic and Political Weekly, 27 (May) p. 2102.
Until early 2007, the Pakistan rupee was stable at Rs 60 per US$. Since then it has been steadily depreciating
and in late 2008 stands at Rs 82 per US$.
Asian Development Outlook 2006: II. Economic trends and prospects in developing Asia: South Asia: Pakistan,
at http://www.adb.org/Documents/Books/ADO/2006/pak.asp.
Kiani, K. , Daily Dawn 25 December 2006.
Javed, T. (2005) Strengthening Democracy and Democratic Institutions in Pakistan’, Islamabad, Pakistan
Institute of Legislative Development and Transparency, June.
Government of Pakistan (2007) Pakistan Economic Survey 2006-7. p.198.
Personal communication with author.
http://www.sparcpk.org/crs_child_labor_1.php.
IRIN (2008) ‘Pakistan: Bonded Labourers, Children Eke Out Existence at Brick Kilns’, 17 January. http://www.
irinnews.org/Report.aspx?ReportId=76296.
Kiani, Op Cit.
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271
Contributors
Contributors
Introduction: Rights for Asia’s Invisible Majority,
Social Justice for All Working Women and Men
Rene E. Ofreneo, Ph.D. is Professor at the School of Labor and Industrial Relations, University
of the Philippines. He has published widely in academic journals and ILO publications relating to
flexibilization, informal work and industrial relations. He is a Regional Council member of Asia
Monitor Resource Centre. His email address is: [email protected].
Reclaiming Labour Law and Beyond
Dae-oup Chang, Ph.D. is Lecturer at the School of Oriental and African Studies, London. He
has published widely in academic and labour journals, as well as books with themes covering
Asian transnational corporations, the Asian construction industry, and informalization of labour.
He is the former Research Coordinator and also former Board member of Asia Monitor Resource
Centre. His email address is: [email protected].
East Asia
China
Prof Ye Jing-yi is Professor of Labour Law and Social Security Law at the School of Law,
Peking University. She is involved in anti-discrimination law and several ILO projects. She is the
Secretary of the Social Legislation Society and editor/writer of several books and journals on the
topic of labour law. Her email address is: [email protected].
Hong Kong
Wu Mei Lin has been involved in the women workers’ movement since the 1980s. She is now
Coordinator of the The Hong Kong Women Workers’ Association (HKWWA). Founded in
1989, HKWWA has been working with grassroots women in Hong Kong to fight for their rights
as women and as workers. Besides working on policy advocacy, HKWWA works with grassroots
women at various fronts to tackle the problem of marginalization and pauperization of women.
It organizes casualized women workers for collective action. Her email address is: workwomen@
hkwwa.org.hk.
Japan
Kazuko Sakai is a researcher on women’s work-related issues, particularly problems of part-time
workers. Michiko Hiroki is Representative of the Asian Women Workers’ Center (AWWC),
Japan. The email address of Ms. Hiroki is: [email protected].
Both Ms. Sakai and Ms. Hiroki have been concerned with women’s work-related issues and have
been actively involved in the labour and women’s movement since the early 1970s. They are
secretariat members of Equality Action 21 and AWWC.
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Established in 2000, Equality Action 21 is a nation-wide NGO working for legal change in
order to eliminate discrimination against female workers and to achieve gender equality. The
membership consists of several opposite-party Diet members, academics, lawyers, female activists
and female workers. Its activities include lobbying, conducting research and organizing study
sessions and symposiums.
AWWC was formed in 1983. As a network member of the Committee for Asian Women,
AWWC has been engaged in activities such as publishing newsletters and brochures, and
organizing exchange programmes to connect the working women of Asia and Japan.
Korea
Aehwa Kim is currently working for Committee for Asian Women, a Bangkok-based labour
network, as an Executive Committee member. At the same time, she is working for Korea
Alliance of Progressive Movements and Korea Alliance against FTAs. Her activities usually
include research and campaigning on trade issues. Prior to this position, she worked for Asia
Monitor Resource Centre in Hong Kong and Korea Immigrant Workers Advocates based in the
USA. Her email is [email protected] or [email protected].
The Korea Alliance of Progressive Movements is a permanent solidarity structure made up of
coalitions and organizations of various regions and sectors, including labour, farmers, women,
students, and a progressive political party.
Macau
Alex H. Choi teaches politics and third world development at the University of Macau. His
research interests include political economy of development, migrant workers, globalization, and
democratization. He worked with Asia Monitor Resource Centre as a research associate in the
1980s. His email address is: [email protected].
Mongolia
B. Batkhishig is a lawyer, advocate and master of law. She has been working as a law teacher,
advocate in a law institute and human rights organizations, since 2001. Now she has been
working as a lawyer in the Human Rights Advocacy programme of the Centre for Human Rights
and Development (CHRD). The CHRD is a non-partisan, non-governmental and non-profit
organization for the protection of human rights and promotion of social justice in Mongolia. It
was established at the initiative of human rights activists, researchers and lawyers in 1998. The
email address of CHRD is: [email protected].
Taiwan
Liu, Wan-Ling started her career in labour activity since working in Ching-Jen Labor Health
& Safety Service Center. Since the closure of Ching-Jen Center, she is a now a reporter and
researcher of Taiwan Labor Information & Education Association (TLIEA). TLIEA is well
known in Taiwan for Coolloud Web (http://www.coolloud.org.tw), which is TLIEA’s most
important work. On Coolloud Web, you can find updated reports and reviews about Taiwan
social movements. Besides Coolloud Web, TLIEA also takes part in labour research, education
and advocacy for international labour solidarity. The email address of TLIEA, through which Ms.
Liu can also be contacted, is: [email protected].
Contributors
273
Southeast Asia
Cambodia
Dennis Arnold is currently a PhD student in the Department of Geography at the University
of North Carolina at Chapel Hill. His research interests include the political-economy of
development, global production networks, labour and migration, and industrial transitions
in Southeast Asia. Prior to his position at UNC-Chapel Hill, Dennis was the International
Coordinator of a Bangkok-based labour NGO, the Thai Labour Campaign, and a researcher with
the Asian TNC Monitoring Network. Dennis is a 2006 graduate of the MA in Human Rights
Programme at Mahidol University. His email is [email protected].
Indonesia
Dr. Hesti R. Wijaya is the Head of the Women's Studies Programme, Post Graduate Studies,
Brawijaya State University, and also is currently a member of the National Advisory Board of
Homenet Indonesia. Her email address is: [email protected].
Laos
The Special Correspondent resides in Laos after a career of 30 years in labour issues. Labour is
an issue of particular sensitivity in Laos, so the writer prefers to remain anonymous.
Malaysia
Irene Xavier is a woman worker activist from Malaysia. She is currently Coordinator of
Transnationals Information Exchange Asia. The email address of Ms. Xavier is: tieasia@streamyx.
com.
Philippines
Rosalinda Pineda Ofreneo is Regional Coordinator of Homenet Southeast Asia. She is also
Professor and Chair, Department of Women and Development Studies, University of the
Philippines Diliman. Her email address is: [email protected].
Phoebe O. Cabanilla, who has an M.A. in Women and Development from the University of the
Philippines, serves as technical consultant of Homenet Southeast Asia.
Josephine C. Parilla is sectoral representative of the Workers in the Informal Sector Council
(WISC) of the National Anti-Poverty Commission (NAPC). She is the National Education
Coordinator of the PATAMABA (National Network of Informal Workers) and the Finance
Officer of Homenet Southeast Asia.
Thailand
Bundit Thanachaisethavut is from Arom Pongpangan Foundation.
Dr.Voravith Charoenlert is Professor at the Faculty of Economics, Chiang Mai University.
Suntaree Saeng-ging is from Foundation for Labour and Employment Promotion and
Coordinator of Homenet Thailand. Her email address is: [email protected].
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Vietnam
Van Thu Ha is Vietnamese and has a MA in Philosophy and Bsc in Economics. She has 11 years
of experience working with the Viet Nam government as a researcher and 12 years of experience
in the development sector, working with several foreign NGOs and local organizations such as
women unions, farmer unions and labour unions. She spent five years working specifically on
labour issues, focusing on worker organization and labour union capacity-building.
This paper presents her own ideas and reflects her own positions, not those of the organization she
is working for now.
South Asia
India
Pallavi Mansingh is Programme Manager, Trade and Labour Rights at the Centre for Education
and Communication, New Delhi. Her email address is: [email protected].
Pakistan
Azra Sayeed is Executive Director of Roots for Equity. She is an activist working for the rights
of small and landless peasants, especially women. She currently serves on the Programme and
Management Committee of the Asia Pacific Forum on Women Law and Development. Her
email address is: [email protected].