Senior labour officials in Guangdong are urging the central government to make it a crime for bosses to close their factories and flee without paying workers’ wages. Provincial officials will submit a proposal for a new criminal law to the National People’s Congress next year in bid to deter bosses from skipping town.

During September and October, in Dongguan alone, 117 factories closed leaving 20,000 workers without wages, and the local government to pick up the bill. Local government officials are clearly angry and understandably want to punish the guilty, but the bosses who cut and run are just the most extreme example of managerial malpractice. Bosses routinely cheat workers out their wages and lay employees off without proper compensation, and most stay exactly where they are with little or no consequences. Local governments should focus more helping workers seek redress through existing administrative channels rather than just bringing runaway bosses to justice.

Guangzhou has seen a massive upsurge in the number of labour arbitration cases related to back-pay this year, especially since the Labour Arbitration Law was implemented on 1 May, streamlining procedures and making the process free to workers filing a claim. The director of the Guangzhou labour and social security bureau’s arbitration office, Xie Yingjian, said that by the end of November, more than 60,000 cases had been filed, about the same number as the combined total for the previous two years.

“About 60 percent of them are claims for back-pay, with most of the rest being appeals for compensation from people who have been made redundant,” Xie told a press conference on 8 December.

The rise in the number of applications has created a backlog of more than 9,600 cases, many of which, Xie admitted, would take a long time to process. Arbitration committees across China are understaffed and overburdened, but nowhere more so than in Guangdong, which according to Peng Peng, a researcher at the Guangzhou Academy of Social Sciences, handles about 25 percent of all labour disputes in China with only about seven percent of the country’s arbitrators. Staff levels in many local labour departments are still based on the number of formal employees in the administrative region or those with urban residency, a ridiculous practice in Guangdong where in many cities the majority of the population are migrants.

The need for wage arrears claims to be dealt with quickly and effectively is even more urgent now given mounting unemployment crisis in the province. If migrant workers can not find new jobs and cannot reclaim wages in arrears, they are left with little option but to return to their home towns. The National Bureau of Statistics estimates that some nine million migrant workers have already left the coastal region this year and returned inland, and some regional governments have already reported problems coping with the influx.

If migrant workers had more confidence in the local institutions of public redress, they would be more likely to stay and fight for their rights. Although the new Arbitration Law does make it easier for workers to file claims, the government urgently needs to invest more in human resources if the promise of the new law is to be fulfilled. Not only does the number of labour officials need to increased, they must be competent, fair and impartial, and not swayed or intimidated by local business interests.

For more information on the arbitration system and the problems workers face seeking redress, see CLB’s April 2008 report Help or Hindrance to Workers: China’s Institutions of Public Redress.