Why Are You Working Today?

October 4, 2010

Interesting, sort of pro-labor feature in China Daily today about working on holidays and China’s labor law. Since I’ve been incessantly beating the neo-classical free trade drum on this blog for the past week, I thought I’d return to my Lefty roots with this post.

Here’s the main point of the China Daily piece:

According to the Labor Law and the Provisional Regulations on Wage Payments, if an employer schedules employees to work on statutory holidays or rest days and the rest days could not be rescheduled, staff members get overtime at 200 percent of regular daily wages for weekends, or 300 percent for statutory holidays.

But the truth is that many citizens in Beijing have never received proper overtime pay during statutory holidays. China Daily reporters interviewed many people, but only found one manager in a multinational company who said his company followed the rules.

An online survey by Beijing News shows that more than half of the people surveyed worked overtime during the Mid-Autumn Festival and the National Day holidays – among which more than 87 percent had not yet received any overtime pay.

A few specific points first, then a general comment.

I’ve known a lot of managers over the years at foreign-invested enterprises. Some of them know about holiday/weekend wage scales, some don’t; some try to follow the rules, and others don’t give a shit (they just want to save money).

Based on anecdotal evidence only, I’d say that FIEs, particularly multi-nationals, follow the labor law in this area more often than their local counterparts. They know that if they violate local law, the risk is high for a PR disaster (just ask McDonald’s about minimum wage rules).

For those that do follow the rules, the system is not always easy to deal with. For example, if the worker in question is paid on an hourly basis, then no worries. The system was set up to deal with that person, and overtime pay is straightforward to calculate.

What do we do with a salaried employee who is paid a fixed amount every month? For the most part, everyone just looks the other way when it comes to overtime pay. The thinking here is that: 1) these workers have more flexible schedules and are “on call” as business requires; and 2) they are compensated for this kind of work schedule.

For an example, I need look no farther than the employment of lawyers at law firms. The junior lawyer understands that she/he will be available 24/7/365. The lawyer does not necessarily have a “flexible schedule” at all, but is being paid well because of more hours worked. Statutory holidays and vacation time are recognized by law firms, but if client work gets in the way, holidays are quickly ignored. The labor law itself does not specifically allow for this type of flexibility, but the system (and lack of enforcement) does perpetuate current practices.

The final piece of the puzzle here is that, as the China Daily article notes, more and more people seem to be working during holidays. I have no statistical evidence to back this up, but I have noticed this myself just among my limited group of acquaintances. I think it is a product of a host of factors, including increased holiday transportation costs, family dynamics, and business competition.

So let me make one overall point here. Businesses exist to make money. The labor law exists, for the most part, to protect workers. Overtime and holiday rules exist so that workers will have guaranteed time off.

If the labor system provides for an exception to overtime rules (e.g. salaried workers), then employers will ultimately move a lot more folks into “salaried positions” and save a lot of money on overtime. For an example of this, use the Google machine and look at the United States rules and how employers like Wal-Mart have skipped out on a variety of benefits.

Yes, I know. Chinese employers have always screwed their workers out of overtime pay. True, to some extent. On the other hand, holidays have generally been recognized until recently. Ten years ago, you couldn’t go to a restaurant or a supermarket for the first couple days of a national holiday. Now a lot of them remain open. Times have changed.

It wasn’t so long ago that if you went into an office here in Beijing at about 1:00pm, you would see a lot of people with their heads down on their desks taking a nap. That isn’t as common anymore, at least in large companies in the big Eastern coastal cities. Why? What’s the harm in letting workers have an after-lunch nap to refresh themselves? Some studies show productivity gains as a result. But no matter. The siesta doesn’t square with the 24/7 age we live in.

What it comes down to is what sort of society people want to live in. Do we want to adopt the American “macho man” work ethic, where there is no mandatory vacation, and salaried workers are encouraged to work nights and weekends to show off their tough guy status? This work ethic has already wormed its way, via the multinational, into places like Latin America, changing lifestyles in the process.

Employers say that this is inevitable due to competition.This is an excuse, of course. It’s perhaps inevitable that companies, due to competition and an abundance of labor, will withhold benefits from workers. That’s to be expected. However, when markets end up giving us a result that we don’t want, the government can come in and regulate.

Free market types would say that if the workers want their holiday time off, they will only work for employers who guarantee that benefit. If workers really valued that holiday, therefore, they would make different employment choices.

Bullshit. If you think that China’s labor market is a good example of a healthy, non-distorted market, you can bite me. Same goes for the United States and a lot of other places around the world post-recession.

More and more people here are working this week instead of staying home with their families. Is this good or bad? If bad, only the government, in the absence of strong labor unions, can do something about it.