China is facing a surge of labour unrest, as manufacturers experience a slowing demand for their exports to Europe and the US. Another contributing factor has to do with Chinese workers becoming more aware of their rights.
Just last week, 6,000 workers went on strike at an electronics plant in Shanghai, demanding higher severance pay after the factory announced its move to Suzhou.
Last month, employees from Motorola’s Beijing and Nanjing factories protested against a decision to layoff workers.
There was also the high-profile case of workers who threatened to commit suicide over poor working conditions at Foxconn, the manufacturing plant that makes Apple’s products.
Experts said China's new generation of workers are better educated and have more access to information through the internet. They are also less likely to tolerate employer abuse.
In a report by Channel News Asia, Shanghai Veritas Law Corporation's managing partner, He Lijuan, said: "There is a lot of contention when it comes to the amount of severance pay. For the employee, he will try to maximise this compensation amount. But the law in China is not too clear and detailed when it comes to labour compensation. Regarding the amount to be paid, sometimes even professionals, including lawyers and arbitrators, may have varied opinions."
Some companies hire workers through labour outsourcing services, which means that the companies do not sign contracts directly with workers.
This leaves employees at a huge disadvantage when it comes to compensation.
Allstart Law Firm's dean, Sam Wei, was quoted as saying: "The company only has to end its contract with the employment agency so its cost of terminating workers is very low. For the employment agency it's also simple. It will give you a job when there is one (and) when there isn't, it will just pay you the minimum wage stipulated in Shanghai."
Industry insiders are calling for labour outsourcing rules to be changed in order to better protect lower-paid workers.