Sacom

Hong Kong-listed Companies—Mainland Sweatshop Report in the First Quarter of 2009

Migrant Workers in the Construction Industry: “Contract Labor in 21th Century”

—-the Largest National Private Developer, The New World China Land, Turn Blind Eye to the Chinese Labor Law

January, 2009

Report Summary

The problem of wage arrears in the construction industry has been long regarded as a difficult problem. In the end of 2003, the Premier of the State Council of China, Wen Jia-bao, helped a Chongqing migrate worker to get an arrear wage and shed tears for the hardship of workers. Despite the six-year state efforts, the labor conditions in the construction industry do not improve much. Even in the current construction sites of the New World China Land, the rate of arrear wage reaches 100% according to our study.

Reason for Selecting “New World China Land”

In this study, SACOM selects “the New World China Land” as our studying enterprise because of two reasons. First, the New World China Land in the Chinese housing market has gained a huge profit. According to its 2007/2008 financial report, the New World China Land gains profit at HK$ 20.20 billion, up by 70%, compared with last year. It acclaimed itself as the biggest private developer in China. Second, the New World China Land has long praised itself on the ground of fulfilling corporate social responsibilities. For two consecutive years, New World China Land Limited (”NWCL” or “the Group”, Hong Kong stock code: 917) has been awarded the accolade of “2008 Best Corporate Citizen”[1]. However our research shows that the New World China Land only makes profit at the expense of its corporate social responsibilities, violating the Chinese Labor Law and its related regulations.

Method

SACOM has conducted this study from July to December,2008. Two groups of student volunteers from Hong Kong universities and mainland universities are formed. They are responsible for visiting 9 construction sites of the New World China Land in 6 cities including

Chengdu, Guiyang, Changsha, Wuhan, Shenyang, Guangzhou. The samples of interviewed workers and supervisors are 1284, which represents 13 % of total construction workers. Besides, the study covers 20 kinds of construction works in the industry.

Table 1 Selected Construction Sites

This study found 10 illegal working practices in the construction sites, violating more than 30 clauses of the Chinese Labor Law and the related regulations. Ten illegal working practices are listed as follows:

1. The rate of signing labor contracts is zero! The New World neglects the Labor Contract Law of the People Republic of China.

In the construction sites of the New World China Land, above 95% of migrant workers are led and introduced by a labor contractor (Chinese: Bao Gong Tou) to work. These labor contractors lack the knowledge of management and construction. They fail to establish a contractual relationship between the construction companies and migrant workers. As a result, the construction industry looks like enjoying a privilege of exemption from the labor contract law of the People Republic of China. Consequently the rate of signing labor contracts is close to ZERO. The only exception is the case of the construction site in He Pan, Chengdu in which migrant workers have signed contracts. However the signed contract lacks a lot of information such as wage, working hours, etc and thus failed to protect the workers.

2. Subcontracting system is the main cause for wage arrear.

The New World China Land divides the construction works into different projects and contract them out to the first-tier construction companies, but failed to monitor the subcontractors closely. The first-tier construction companies further out-sourced their projects to other construction companies, human resource companies and labor contractors. According to our study, the most complicated subcontracting process has six and seven layers. This consequently contributes to the outcome of overdue payment. The worst case of wage arrear is that workers fail to obtain their wages for three years. Consequently, construction workers borrow “living allowance” from their contractors. The living allowance is around 300-500 yuan, about 10-20% of the monthly income. In the worse construction site, labor contractors even use the food coupon rather than money to pay for construction worker

3. Punishment system is a way to squeeze down the basic wage of workers.

In the New World China Land construction sites, the construction companies have imposed a wide range of rules of sanction and fines on construction workers. The fine ranges from 10 yuan to 2000 yuan. The payment of fine will be distributed to the supervisors and managers of the construction companies as their bonus.

4. Long working hours——-the monthly working hours reaches 560 hours.

10 hours per day is a common working practice in the New World construction sites. By convention, it becomes a standard working hours. Besides, workers are required to work in the weekend and national holidays. Consequently every day could be their “working day”. Of all interviewed workers, 95% are necessary to work overtime in the sense that they have to work over 8 hours per day. However they have no choice to work overtime or not. In the construction site of the Chanjing Garden, Wuhan, Cement and Concrete workers work 560 hours in July, 2008.

5. Delay work due to poor organization is a way to exploit construction workers

Delay in work due to poor organization or natural hazard (in Chinese term “Wogong”) refers to the fact that the construction work stops when natural hazard such as raining, snowing, or poor organization such as the shortage of materials, no water supply, no electricity supply and the like occurs. During the period of delay work, workers do not have salary. Consequently their income becomes unstable.

6. Rate of participation into Social Insurance Scheme is ZERO; Difficult to claim the compensation for industrial accidents

In all investigated construction site, some of construction companies do not contribute money to purchase social insurance for workers. Some of construction companies purchase social insurance for collectivity or contribute a certain amount of the value of the project tender to purchase “business insurance”, which definitely violates the labor law of the People Republic of China. When the workers encounter industrial accidents, the construction company only shares the responsibility for the expense of hospitalization. It will not share other medical expenses after workers check out the hospital. According to our study, the injured workers fail to obtain compensation according to the law.

7. Poor living conditions; Lack of Insecurity and Privacy

The living place in the New World construction sites is much poorer than the one in factories. It is called “living area” or “sheng huo qu”. It looks like a thatched hut, lacking proper facilities. It is not merely crowded, noisy, hot, and being in poor hygiene. In addition, men and women live in the same room without privacy. Furthermore, the toilet and bathroom in the construction site are so crude that people standing outside the bathroom can see what happen inside. Consequently, sexual harassment occurs not infrequently. Last but not least, the living area lacks the supply of electricity, sometimes causing fire blaze.

8. Occupational Injury seriously hidden—80% of interviewed migrant workers have suffered contaminated respiratory tract and Tinnitus

In the highly dangerous working environment, all interviewed workers do not undergo any body and health check.

9. Lack of job training; Training schools becoming warehouse—-“Leave a hoe for entering the construction site; taking a cleaver to build high-rise building.”

More than 95% of migrant workers work in the construction sites without job training. Even 30% of migrants work in the construction sites for the first time. No migrant-workers school is provided to train migrants to be construction workers because those schools in the New World construction sites are changed into other uses such as warehouse.

10. No Provision of Protective Gears; Lax Implementation of Safety Rules

The New World construction sites only provide the poorest safety cap and safety belt for workers. Other protective gears such as hand groves and safety shoes are lacking. In the construction sites, not many workers wear safety caps. Even if workers work at height, they do not wear safety belt such that they can work faster to finish the construction project.

Against the background of 10 illegal working practices, SACOM strongly demands that the New World China Land should strengthen the management of construction companies and urge those companies to abandon the sub-contracting system. We are making five appeals as follows:

1. The New World China Land immediately request its construction companies to sign a labor contracts with all construction workers according to the Labor Law and the Labor Contract Law of the People’s Republic of China.

2. The New World China Land should ensure that the companies should give a monthly wage to all construction workers according to the Labor Law of the People’s Republic of China and 《Interim Measures for the Administration of wage payment for migrant workers in the Construction industry》.

3. The New World China Land immediately requests the construction company to purchase social insurance, particularly industrial-accident insurance, for each construction workers. Also it has to improve occupational safety and provide on-the-job training.

4. The Chairman of the New World China Land, Dr. Cheng Kar-shun, should take the lead to improve the construction practice in the property development and construction industries such that the working practice in the property development industry would violate the labor law and other related regulations.

5. The investors and customers of the New World China Land should sell and boycott its share and properties. They should persistently press the New World China Land until the labor conditions in the construction industry would be improved.

Contact Person：Viven Yau（Hong Kong：852‐94287640；Mainland：86‐130‐4582‐7087）

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[1] http://www.nwd.com.hk/html/eng/press_corporate_news.asp?itemID=362