Observation Weekly 09｜Towards Capital: Revision of Wage Payment Regulations in Shenzhen and Shanghai

Jul 6, 2021

This series of amendments to the wage payment regulations aiming at reducing the burden of "business" and centered on capital interests are quietly changing the core spirit of the original regulations-while creating more market flexibility, it has also spawned more Uncertainty about labor conditions.

At the end of 1994, in order to cooperate with the implementation of the first "Labor Law", the Ministry of Labor formulated the "Interim Regulations on Wage Payment", the core of which is to help clarify the composition of wages, working hour system and overtime calculation, payment time, wage adjustment and other factors that both employers and employees are most concerned about. arrears and other issues. Strictly speaking, this is a regulation that restricts and regulates the wage payment behavior of employers, so as to ensure that workers can finally get their due labor remuneration. The "Interim Regulations" encourages local cities to formulate local regulations according to their own circumstances.

This provisional regulation, which seems to be from the perspective of workers, has been implemented in various places in the next two decades or so. In fact, it has little sense of existence among both employers and employees, and the government's law enforcement and supervision are also weak. This can be seen from the perennial high incidence of wage arrears and repeated prohibitions. With the changes in market labor patterns and the pursuit of flexibility and low-cost labor, some provisions of the "Wage Payment Regulations" have begun to be regarded as the core factors hindering market vitality. In the past few years, some prefectures and cities have begun to revise the regulations to loosen the restrictions on companies in terms of salary payment time limit, overtime pay calculation, bonus payment, etc., such as Guangdong, Shanghai, Jiangsu, Shenzhen, etc. This series of revision measures aimed at reducing the burden of "business" and centered on capital interests are quietly changing the core spirit of the original regulations - while creating more market flexibility, it also creates more labor conditions Uncertainty.

Retrospective amendments found that Shanghai’s “Enterprise Wage Payment Method” and Shenzhen’s “Amendment to Employee Wage Payment Regulations (Draft)” have undergone major adjustments in 2016 and 2021, respectively, and the trends are very consistent. This article will compare them one by one, try to interpret the revisions and changes in depth, and understand how the labor-oriented "Wage Payment Regulations" is moving toward "overcoming obstacles" for capital.

2016 Amendment to the "Wage Payment Measures for Enterprises in Shanghai"

In August 2016, the Shanghai Municipal Government made large-scale revisions for the first time to the wage payment method, which has been in place for nearly 15 years, based on the past judicial practice of labor disputes. Although the revision helped to clarify and update the relatively vague concepts in the original text to a certain extent, it also showed a great bias towards enterprises and strengthened the flexibility of enterprises in management.

1. Enterprises do not need to report in advance for the delayed payment of wages, and there is no need to compensate for late payment of wages in arrears. Article 10 of the New Measures deletes the "stipulation that the enterprise is temporarily unable to pay wages on time due to the difficulties in production and operation, and the capital turnover is affected, and the delayed payment of wages needs to be reported to the competent department for recordation", that is, the unit does not need to report for the late payment of wages. , only after negotiation with the trade union or employee representatives of the enterprise, the payment of wages can be postponed for one month. This measure deletes the "recording" clause. Under the circumstance that the trade union of the enterprise is actually controlled by the management, it will undoubtedly allow the enterprise to delay the payment of wages legally and without restrictions, and enhance the flexibility of enterprise management.

In addition, the original method stipulates that after the enterprise is found to be in arrears of wages, it must also pay 25% of the compensation to the laborer when making up the wages. The new method deletes the "25% compensation" clause. The new method only requires that only in the case of overdue non-payment after being reminded by the human resources and social sector department, it is necessary to pay more than 50% of the payable amount and less than 100% of the amount of compensation. This change has exempted companies from illegal costs, and companies can repeatedly delay and owe workers wages for several months, but workers have no remedy.

2. Enterprises can subtly split wages and reduce overtime wages. Article 9 of the New Measures adds the base standard for calculating overtime wages, etc., which specifies that the calculation base for overtime wages and vacation wages is the monthly wages for normal attendance corresponding to the employee's position, excluding year-end bonuses, commuting subsidies, Work meal allowance, housing allowance, mid-night shift allowance, summer high temperature allowance, overtime wages and other wages paid under special circumstances.

Regarding the calculation of overtime pay, the original regulations stipulated that it should be converted according to the "standard of wages for normal working hours", and wages generally include hourly wages, piece-rate wages, funds, allowances and subsidies, wages for extended working hours, and special circumstances. Salary and other parts [Note 1]. However, the revision of this standard clause is obviously due to disputes and disputes arising from the long-term use of the minimum wage standard by most companies to calculate and pay workers overtime pay. This revision just legalizes the company's previous routine illegal operations: allowing companies to flexibly split the composition of workers' wages and pay overtime wages based on a minimum base, thereby achieving the purpose of reducing costs.

3. Opening up space allows companies to reduce wages in disguised form to punish workers. Article 17 of the new measures stipulates that “if a worker violates labor discipline or rules and regulations (“disciplined by the employer”—deleted), and the enterprise reduces his salary, the reduced salary shall not be lower than the minimum wage standard stipulated by this city” . This clause deletes the necessary precondition for "being punished by the employer", which means that when an employee violates discipline, the company can directly reduce his salary.

Regarding the issue of fines, because the Administrative Penalty Law only grants administrative/judicial authorities the power to impose fines, the issue of whether companies can exercise the power of fines against employees has always been controversial. However, Shanghai's new measures obviously not only allow companies to "legally" bypass this restriction, and reduce employees' salaries for "disciplinary violations", thereby realizing the management of fines for employees in disguise; moreover, the salary level after the fine does not even need to be compared with the same position. The average salary standard , to achieve a disguised salary reduction. Enterprises can use this trick to punish employees in disguised form or even force them to leave without having to pay corresponding financial compensation.

2021 "Shenzhen Employee Wage Payment Regulations Amendment (Draft)"

On July 15, 2020, it was clearly pointed out in the letter of the Guangdong Provincial Committee of the Chinese People's Political Consultative Conference that Shenzhen will become a pioneer in exploring a "more operational, forward-looking, and nationally optimal" labor relations legal system in the construction of my country's socialist pilot demonstration zone. On October 11, 2020, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the document "Shenzhen Construction of the Pilot Demonstration Zone of Socialism with Chinese Characteristics Comprehensive Reform Pilot Implementation Plan (2020-2025)", which proposed that "Shenzhen is allowed to explore and adapt to new technologies, new A special working hour management system required for the development of business formats, new industries and new models.”

Under the support of such policies, Shenzhen has gradually started its measures to amend its labor relations laws. On May 27, 2021, the first meeting of the Standing Committee of the Seventh Shenzhen Municipal People's Congress deliberated for the first time the "Amendment to the Regulations on Employee Wage Payment in Shenzhen (Draft)". The support of the amendment to improve the flexibility of enterprise management and reduce labor costs should not be underestimated, and the practical impact of the demonstration area is also far-reaching.

When the Shenzhen Municipal Government proposed to revise the regulations, it emphasized that with the economic downturn, the economic benefits of some large and medium-sized enterprises have declined, and the structural problems of difficult financing and high costs for small and micro enterprises are still prominent. Therefore, stabilizing enterprises and employment is the current priority. It is an urgent task to get rid of the shortcomings of the system and mechanism that hinder the social mobility of labor. The first task of the regulations is to "enhance the flexibility of the labor market and stimulate the vitality of market players." Compared with Shanghai, the changes made by the Shenzhen Amendment are far worse.

1. The "irregular working system" does not apply to overtime wages. The amendments amend Article 20 of the original Regulations to read, "If the irregular working system is approved by the human resources department, the provisions of Article 18 of these Regulations shall not apply", that is, employees who adopt the irregular working system shall work on statutory holidays. If not, overtime will no longer be paid at 300% of the employee's normal working hours wages (original regulations). This also means that in industries/posts that adopt the irregular working system, regardless of the working hours, employees will no longer be entitled to overtime wages, and the corresponding workers' right to rest and leave will be difficult to implement.

The overtime wage payment specification for the special working hour system is always emphasized in the earliest "Interim Regulations on Wage Payment" (1994). However, as the policy continues to move towards the capital standard, regulations in Guangdong Province, Shenzhen City and other places have gradually lifted the restrictions on this.

Regarding the special working hour system, as early as June 2009, the Shenzhen Municipal Bureau of Labor and Social Security issued the "Shenzhen Trial Measures for the Approval and Management of the Implementation of the Irregular Working Hours System and the Comprehensive Calculation of Working Hours System". The significance of this document is to expand the special working hours. The scope of application of the working hour system has expanded the special working hour system originally only applicable to enterprises in the transportation industry and seasonal operations to the extent that most private enterprises have the right to apply . The "Shenzhen 2020-2025 Plan" released in 2020 reinforces this policy orientation. This also means that in the future reform of Shenzhen's socialist pilot demonstration zone, the application of the "special working hour system" will be fully liberalized, and the new regulations will make the core affected groups - blue-collar workers engaged in informal employment and new forms of Internet business. of workers—real incomes have fallen significantly.

It is believed that more legal revisions to promote and strengthen the "special working hour management system" will come one after another.

2. The period of salary payment has been greatly extended. Articles 11 and 12 of the current regulations stipulate that the employer should pay the wages of the previous month before the 22nd of this month at the latest, otherwise it will constitute arrears of wages [Note 2]. However, the amendment proposes that, in order to enhance the flexibility of market entities in terms of labor and employment, and in light of the actual production and operation of enterprises, this amendment adjusts the regulations on the payment date of wages, and extends it to one month after the expiration of the payment period, in order to reduce the need for employment. unit burden. Delaying the payment of wages for one month increases a large amount of cash flow reserves for enterprises, but for workers, it is equivalent to "depositing" wages for 2 months in disguise, so how to solve the rent, water, electricity, meals, etc. during this period ? This is not considered by the regulations.

When the “Guangdong Province Wage Payment Regulations” was revised in 2016, the Provincial Department of Human Resources and Social Security recognized that the current regulations have a relatively broad wage payment cycle, giving employers greater autonomy in employment, and no specific payment date is rigidly stipulated. Employers generally don’t pay the previous month’s wages until the end of the second month . “Workers generally have to hold down their wages for two months, and once arrears of wages occur, the loss will be greater, and the difficulty will also increase” [Note 3]. At that time, a request was made to limit the payment of wages by enterprises "not later than the 10th of the second month", but in the end the Provincial People's Congress did not approve it for unknown reasons.

Based on the original regulations, Shenzhen's move to relax the wage payment period again is obviously not to serve the workers, but will only intensify the efforts to make the workers more controlled by the enterprise, and it is difficult to achieve economic freedom of choice. The ability of workers to resist risks in economic life will be greatly reduced, and it is quite a return to the era of "coercing workers by withholding wages". This will obviously increase the probability of large back pay or collective incidents, and will it accumulate anger and trigger a bigger social crisis?

3. Modify bonus calculation rules to reduce costs and restrain workers. Article 14 of the current regulations stipulates that when the labor relationship is terminated or terminated, the employees' monthly bonuses, quarterly bonuses, year-end bonuses and other wages before the payment cycle is calculated and paid according to the actual working hours of the employees. In the amendment, this stipulation has been revised to: "issued in accordance with the labor contract or the employer's rules and regulations", that is, the "final interpretation right" for the payment of year-end bonuses and other income is completely handed over to the employer.

In the past, there have been a number of lawsuits related to the recovery of year-end bonuses in Shenzhen, especially related to large companies such as Huawei. Laborers have been able to win some bonus rights and interests through this clause. The purpose of the amendment is clearly to stifle such litigation and directly deprive workers of some of their productive value. All kinds of bonuses themselves are the embodiment of employees' work remuneration, but they are issued separately at different times by the employer with different eyesight. It can be expected that in the future, employers will use year-end bonuses/quarterly bonuses to restrain employees from leaving, or take the opportunity to pay less bonuses, so that the labor value of laborers will be invisible.

4. The minimum wage standard has been adjusted from two years to three years. In the Ministry of Labor's "Minimum Wage Regulations" document, it is pointed out that the minimum wage adjustment should comprehensively refer to factors such as the average wage of employees, economic development level, employment status and other factors, "adjusted at least once every two years". However, this regulation changed quietly in 2015: at the end of 2015, the Ministry of Human Resources and Social Security issued a non-public document "Notice on Further Doing a Good Job in Adjusting Minimum Wage Standards" (Ministry of Human Resources and Social Security [2015] No. 114), suggesting that local governments can modify The minimum wage adjustment period and range, in an effort to reduce the labor cost of enterprises, amend the "Minimum Wage Regulations" in disguise.

The amendment also revises the adjustment of Shenzhen’s minimum wage, which is in line with the adjustment made in Guangdong Province in 2017 (Shenzhen Special Economic Zone is not regulated by the Guangdong Province Regulations). In 2017, the Guangdong provincial government set a national precedent, and in the "Work Plan for Reducing the Cost of Real Economy Enterprises", the province's minimum wage adjustment time limit was changed from "at least one adjustment every two years to at least one adjustment every three years". Shenzhen's follow-up adjustment this time is obviously also to "reasonably control" the rising labor costs of enterprises. From the previous experience of Guangdong Province, cost control is not only reflected in the extension of the adjustment interval, but also in the adjustment ratio from the previous increase of about 20% every two years to 10% every three years. Then, as the city with the highest housing prices in the country, under this amendment, how should wage increases every three years offset the depreciation of workers' real wages under the influence of inflation? This move may put grassroots workers in a more vulnerable state.

In addition, the amendment quietly removed the requirement for the receipt of salary slips, that is, the unit only needs to provide employees with a copy of their own salary list without the need for employees to sign for receipt. This seems to have little impact, but under such regulations, how can employees and enterprises self-certify that they have received/distributed salary slips in accordance with the law? While companies still have the possibility of not issuing any pay slips (which is common in most companies), employees may instead be passively in a situation where they cannot prove themselves.

Capital Interest Driven Regulation Amendments

Looking at the amendments to the regulations in Shanghai and Shenzhen, all of them have the following characteristics: First, the core of the regulations is to improve the flexibility of employment. The extension of the salary payment period in Shanghai and Shenzhen, and the relaxation of overtime salary restrictions on the irregular working hour system in Shenzhen have all made it easier for enterprises to reserve ample cash flow and make flexible work arrangements based on production capacity or cost. Secondly, vigorously assist enterprises to reduce employment costs , including: Shenzhen revised the minimum wage to be adjusted every three years for the first time, the revision of the irregular working hour system will help enterprises reduce overtime pay expenses, and the adjustment of bonus calculation rules; Shanghai allows Companies can smartly split wages to reduce overtime pay, etc.

Finally, reduce the cost of illegal business. Shanghai allows companies to postpone the payment of wages without the need to report in advance, and does not need to compensate for late payment fines for arrears of wages, and can also make employees compromise by reducing wages in disguised form, etc.; while Shenzhen allows companies to have the right to “interpret” the rules of bonus calculation and distribution, which can be used to In order to contain workers, companies do not need to provide employees to sign for pay slips.

Combining the two major revisions of wage payment regulations in Shanghai and Shenzhen, as well as the leading measures in Guangdong Province in recent years under the guidance of business policies [Note 4], the “regulations” are capital-oriented and reflect the new economy. An important feature of the labor policy under the current situation is a market mechanism that serves flexibility and reduces the labor cost of enterprises. However, it is clear that behind the revision of regulations driven by capital interests, workers, as the object of revision, are invisible or even sacrificed.

Compared with the Shanghai revision, which also focuses on the interests of the capital, the reason why the Shenzhen initiative has attracted many public attention is that it is regarded as the leading position of the pilot demonstration zone for socialist construction. Shenzhen's efforts to promote the special working hour system, revise the minimum wage adjustment interval, and extend the wage payment period and other new labor policy adjustments are nothing more than "exploring the way" for the implementation of the entire industry in the country in the future. The impact will be more profound.

Some media pointed out that under the double crisis of the economic downturn and the epidemic, international and Chinese manufacturers are outflowing to Southeast Asia and other low-cost countries, chasing cheap labor, which forces Shenzhen to implement salary reductions through wage payment policy reforms to attract enterprises. investment [Note 5]. But at the same time, it is undeniable that the current market is experiencing inflation and a general decline in purchasing power. Now, coupled with the new wage policy, the situation of future workers will be even more worrying. In the long run, this general direction of labor policy, driven by capital interests and accelerating the flexibility of the labor market, is definitely problematic.

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