| Labour audit and conditions improvement services | China Labour audit and conditions improvement services
Dealing with Chinese labour legislation and worker conditions can be complex for any company doing business in China. Legal liability is on the increase, and pressure groups are putting the spotlight more than ever on companies with any perceived or other environmental or social violations.
Understanding of China’s unique labour situation and good working conditions can mean increased worker productivity, decreased defects and a positive reputation for Corporate Social Responsibility, with international investors and consumers, and the Chinese government.
Supply chain auditing and compliance improvement programmes
Click here to read about ERM China’s Supply Chain auditing and compliance improvement services and experience.
Chinese labour law
Chinese labour laws are not particularly arduous, but adhere to a complex framework where national legislation is implemented differently at the successive layers of administration, provincial, municipal, and city level. Frequently, specific development zones have their own implementation regulations for labour legislation.
ERM can provide an assessment of compliance with Chinese labour laws to identify possible process and system improvements to mitigate this social risk more effectively. It is also important to involve your lawyers to provide actual legal advice. For companies with little presence in China, ERM can identify major issues for focused subsequent remedial action, and suggest good practise improvements.
Why is social auditing and China labour systems improvement important?
In addition to the obvious reason that illegal working practices may result in legal action, there are significant risks to reputation from ignoring worker conditions in China.
Chinese worker protests have increased rapidly in recent years. Police statistics showed there were nearly 60,000 public protests in 2003, an average of 160 per day. In Anhui province, approximately 10,000 textile workers and retirees protested over the decreases in pension payments, the lack of medical insurance and compensation for injuries. (New York Times, December 2004). With the current levels of outsourcing to China affecting job rates in the West, no company can afford protests of this type against their operations.
With evidence of a growing shortage in labour in the region there are also good financial reasons for assuring good worker conditions. The myth that there is an endless supply of labor in China is just that: a myth. During 2004, factories in some provinces had to shut down due to insufficient labour resources with many factories working at only 70% capacity. Better working practices will be an attraction for those seeking work.
Manufacturing also faces competition from the agricultural sector. In 2004 agricultural output quickly rose to place rural workers under less pressure to migrate in search of work. In the cities, concerted efforts are being made by the government to protect migrant workers to ensure that this sector of the workforce is paid properly for its work.
As the evidence shows there is a real business case for organisations wishing to enter the Chinese marketplace to improve worker conditions.
ERM has more than 10 years experience in China working with companies to audit and establish their Environment, Health and Safety systems. This experience shows that a common audit of labour conditions using a tick box approach is not always enough.
The social auditing process
Auditing is not a guarantee of compliance and is best used as part of a wider program of partnership development to gain further assurance that your partners or suppliers are committed to meeting the law.
China labour law audits focus on the specific laws agreed as needing attention with the client, and explicitly do not address international or industry standards, or company codes of conduct.
These diverse standards and codes can also be assessed by ERM, but in our experience it is essential to distinguish between what is legally required and what is voluntarily preferred.
ERM conducts China labour law audits and labour systems improvement in a carefully planned manner to ensure that it is absolutely clear what is being audited, how and to what degree of confidence.
Key client decisions include:
- Which laws are to be audited
“Labour” means different things to different clients, and often to different people in the same company. Typical China labour law audits include the 1994 Labour Law, and related laws on collective bargaining, minimum wages, insurance and welfare administration, child and forced labour, trade unions, female employees and juvenile employees (aged above 16). It is customary practice to provide a generic assessment of EHS issues, but full due diligence against EHS obligations is conducted by means of a specific EHS Audit and formal Environmental Site Assessments.
- Determine the actual physical locations
This enables local implementing regulations to be included. We have operating experience across the region and in particular in the major manufacturing locations of Guangdong, Fujian, Zhejiang, Shanghai, Jiangsu, Shandong, Tianjin, Beijing, Liaoning and Jilin.
- Agree the scale of the audit
The scale of sampling determines the degree of confidence.
- Agree the scale of interviewing
The number of interviews with employees, supervisors and managers provides additional, subjective quality to the audit. This is particularly valuable for developing improvements.
- Assess the probability of success
Where the Client has little or no prior experience with a factory or facility, a pre-audit visit is essential to assess the receptiveness of the management to the main audit. It also provides an opportunity to conduct a ‘drive by’ assessment of the general situation.
Global Reach
ERM has offices with social auditing specialists in Beijing, Shanghai and Guangzhou, as well as specialists in our Hong Kong and Taiwan offices. ERM’s Asia-Pacific teams can also conduct social audits in Japan, South Korea, Vietnam, Thailand, Malaysia, Singapore and Australia.
HSE (health, safety, environment) training & audits:
Please see ERM Health and Safety services.
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