In the first six months of 2010, ten young workers at electronics giant Foxconn jumped to their deaths from the roof of their dormitories in Shenzhen. At the same time, strikes at
Honda automotive parts suppliers in Guangdong triggered a wave of worker protests across China. It was clear that the long-simmering and deep-seated discontent and anger felt by
many workers in the “factory of the world” was beginning to boil over.
The Chinese government responded quickly and generally positively to the protests, calling on employers to improve pay and working conditions, and to treat young workers with
respect and compassion. Nearly all local governments raised the minimum wage, on average by 20 percent. Most adopted a relatively lenient attitude towards strikers, only sending in the
police when public order was deemed to be threatened. Although these measures were helpful up to a point, they still betrayed the government’s determination to control or manage labour
conflict from above rather than allow labour and management to resolve their differences themselves.

In Guangdong, however, the provincial government took a different path and drafted legislation that, if implemented, would allow labour conflicts to be resolved peacefully within
enterprises, without the need for government intervention. The provincial Regulations on the Democratic Management of Enterprises (广东省企业民主管理条例) would create a
legally-binding mechanism in which workers can demand and negotiate for pay increases with management. Moreover, if one third of the workforce (one fifth of the workforce in
early drafts) demand talks with management on wages and work conditions, the trade union at the enterprise is obliged to organize and conduct such negotiations.

This is not the first time such hands-off approach has been proposed. The Ministry of Labour floated a similar idea back in 1993 in which the primary responsibility for dispute resolution
lay with workers and management, with the government playing an auxiliary role as and when required. For a number of political and economic reasons, this model was never
implemented and there is certainly no guarantee that Guangdong’s new regulations will work either.
As this report shows, previous attempts by the government to find a legislative fix to labour conflicts have had limited success. Laws designed to protect workers’ rights and interests
have not been enforced and employers have been allowed to dominate and control the labour relationship by unilaterally determining pay and conditions, hiring and firing employees at
will. At the same time, worker organizations that could stand up to the bosses have been suppressed by the government. And many small enterprises have been squeezed by taxation o such an extent that they have little profit left to share with their employees.
In order to assess the significance of Guangdong’s draft regulations and place them in a historical context, this report looks back at the changing dynamics of labour relations in
China during the reform era, discusses the government’s strategies for managing labour conflicts, and analyzes in detail the effectiveness of the two most important labour laws
implemented thus far; the 1994 Labour Law and the 2008 Labour Contract Law.

It concludes that the Guangdong regulations are, in part at least, a departure from traditional government thinking because rather than continuing to swim against the tide of economic
reform and development, and assuming the government alone can resolve labour conflicts, the regulations actually encourage the workers themselves to get involved in the process.

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