Official statistics released by a Shanghai court have confirmed that labour disputes tend to be overwhelmingly concentrated in domestically-owned private enterprises.

Private enterprises accounted for 87 percent of the 148 labour dispute cases related to employee terminations that were handled by the Hongkou District Court in 2018, according to the court’s “white paper” and media reports published last week. Foreign-owned companies accounted for eight percent of the cases and state-owned enterprises, just five percent of the total.

Although the court statistics come from a small and relatively limited sample of individual labour disputes, the results mirror the findings of CLB’s Strike Map which showed that 73.3 percent of the 1,702 collective labour protests recorded in 2018 occurred in domestic private enterprises, 11.6 percent in state-owned enterprises, and just 2.9 percent in Hong Kong/Macau/Taiwan/foreign-funded enterprises and joint-ventures.

Workers protest factory closure in Shanghai in 2016

The Hongkou court pointed out that foreign and state-owned enterprises tend to be better managed and as a result see fewer labour disputes. Private enterprises, especially small and medium-sized enterprises, on the other hand, are more likely to feel the impact of external factors such as the economic downturn and are more likely to have irregular employment practices, it said.

Changes in the market economy directly affect the operating conditions of private enterprises, which in turn leads to structural instability, enterprise upgrading or transformation, closures and wholesale relocations. This results in a large number of labour disputes, some of which end up as collective labour dispute cases.

The court’s white paper recommended that, given the large number of labour disputes that occur in private enterprises, the local labour departments, trade unions and industry associations should work together to establish a labour-relations credit system that could be utilised by both employers during the recruitment process and individual employees when looking for a job.

This is not the first time that court officials have called on both employers and employee representatives to improve labour relations at source and thereby reduce the burden placed on the court system by excessive labour conflicts.

In March last year, Sun Guoming, deputy head of Beijing’s No. 1 Intermediate Court, stated that employers needed to abide by China’s labour laws and resolve labour disputes through negotiations with workers and the trade union as equal partners.

Speaking at a press conference to discuss the labour dispute cases handled by the court since the implementation of the 2008 Labour Contract Law, Sun stressed that proper employment contracts that protect the rights and interests of employees should form the basis of labour relations and that employers should “open up channels for workers to voice their demands and grievances.”

It is important to note that it is not just the court system that is overburdened with labour disputes. Before labour dispute cases can even get to the civil courts, they have to be heard by the local labour dispute arbitration committee (LDAC). In Hongkou, for example, the district LDAC handled 707 cases related to employment contract termination in 2018, of which, 148 were appealed to the civil courts.

In China as a whole, LDACs handled a total of 785,323 cases in 2017, of these cases, 169,456 were related to the termination of employment contracts, according to the China Labour Statistical Yearbook.