In March, Bloomberg reported that according to estimates by the All-China Federation of Trade Unions, “[o]f China’s more than 300 million urban employees, an estimated one-fifth—or 60 million—are labor dispatch workers.” Surprisingly, this represents a doubling in figures since the introduction of the Labor Contract Law in 2008 – a law mandating dispatched employees be given the same benefits as regular employees and requiring the employer to bear liability if the dispatched employee’s rights are violated.
Dispatched employees are persons hired through an employment service agency, who later work at different companies or locations. Originally, the use of dispatched employees was to avoid employer liability and save labor costs, such as social insurance benefits and other benefits provided to regular employees. The Labor Contract Law intended to close this legislation gap, but without success.
In reality, the law does not bring much effective protection to dispatched employees. They now rather serve as temporary employees – under legitimate terms – so production needs during peak seasons can be met. Even though these employees sign labor contracts with the labor dispatch agencies, the law does not mandate a fixed period of service in certain receiving companies. Thus, stable employment is not guaranteed, and workers lose their sense of belonging and perhaps even their sense of loyalty. Given such “temporary” status, the dispatched employees are easily “returned” to labor dispatch agencies receiving no severance compensation.
It is also common to see that dispatched workers are often paid less than regular workers for doing the same work, not to mention the lack of an employee welfare package, such as annual and sick leave. As a result, many dispatched workers feel inferior.
In addition, the dispatched employees are plagued by excessive working hours. Excessive overtime hours are inevitable for the dispatched employees, as they usually make up the majority of the workforce. The lack of social insurance benefits is another big concern. Even though the law requires social security payments to be made by the labor dispatch agency, the reality shows a different picture. That’s why Shanghai, in February 2012, enacted a guiding opinion with the intention of reinforcing social insurance payments for dispatched employees.
The guiding opinion of Shanghai also requires the registration of labor dispatch agencies operating in Shanghai and its use of dispatched employees so as to better monitor the dispatch practice. Following Shanghai, Guangdong province drafted similar Administrative Regulations on Labor Dispatch and is soliciting the public opinion. Nonetheless, other regions with high dispatched worker numbers such as Fujian, Henan, and Anhui, have not taken further actions to streamline the labor dispatch industry through regional legislation.
More attention needs to be paid to the use of labor dispatch in supply chains and the better protection of dispatched employees’ rights. At a minimum, detailed guidance and trainings for suppliers on the sustainable use of dispatched employees should be provided.