china recruitment fees - ihrb.orgenormous 36% of china’s workforce (china labour bulletin, 2015)....

TWC2RecruitmentCostsResearchWorkingGroup

ResearchBriefMigrantWorkerRecruitmentCosts

China

JiangHaolieJuly2016ThePeople’sRepublicofChinaisamajorcountryoforiginforlow-skilledmigrantworkers,whileatthesametime,itisalsoanemergingcountryofdestinationforirregularandfrequentlyundocumentedlow-skilledlabourfromneighbouringcountries.Themigrationtrendsaretheresultofrapideconomicdevelopment and the labour overcapacity of themassive Chinese population. Unequal economicprosperityandopportunityinChinahasalsocontributedtomassiverural-urbandomesticmigrationfromtheruralinnerterritoriestotheindustrialisedcentresofthecountry.Inadequatelegislation,poorenforcementofexistinglawstoregulaterecruitmentfees,complicatedbythegeographyofChina,andthemagnitudeandcomplexityofthelabourmigrationmarket,resultsinprevalentandexorbitantrecruitmentfeesinChina.

RecruitmentCosts–China,July2016 Page2of15

Background

TheThreeMigrationFlows

AsmuchasthePeople’sRepublicofChinaisanundisputedeconomicpowerhouse,itsGDPpercapitaat

$14,107in2015,the84thintheworld,isindicativeofserioussocialinequalityandconcomitantsocial

problems.(InternationalMonetaryFund,2016)

ThemassivebutuneveneconomicdevelopmentandgrowthofChina’surbancentres,togetherwiththe

labourovercapacityofthe1.36billionChinesepopulation,hascontributedtolargescaleeconomic

migrationoflow-skilledChineseworkers(NationalBureauofStatisticsofChina,2014).Thismigration

takestheformofbothinternalrural-urbanmigrationandoutwardinternationalmigration.Chinahas

alsoseenincreasinginwardcross-bordermigrationoflow-skilledlabourfromneighbouringcountries.

WhileChinahashadahistoricalrecordofbeingagargantuancountryoforiginforlow-skilledeconomic

migration,theeconomicpoliciesinitiatedinthe1980s1havecontributedtoanewwaveoflow-skilled

labourmigrationoutofChinaofsustainedandenormousmagnitude.Asof2015,anestimated0.69%of

allChinesecitizenslivedoutsideofChina–awhopping9.43millionChinesecitizens(International

OrganisationforMigration,2015).Ofthis9overmillion,theUNestimatesthenumberofChinese

internationallow-skilledmigrantlabourat685,000,althoughtheactualnumbersarelikelytobegreater

(UnitedNations,DepartmentofEconomicandSocialAffairs,2012).Singaporeisthesecondmostpopular

countryofdestinationforChineselow-skilledmigrantlabour,afterJapanasof2011(Chan,2011).African

nationsandEuropeannationsaswell,arepopularcountriesofdestination.

Atthesametime,thepoorereconomicopportunitiesoftheChineseruralinteriorhaveprecipitateda

burgeoningrural-urbandomesticmigrationofChineselabourtotheindustrialisedurbancentres.Atan

estimated260millioninthefallof2012,thiscategoryofrural-urbanmigrantworkersmakeupan

enormous36%ofChina’sworkforce(ChinaLabourBulletin,2015).Theseworkers,largelyintheservice

andconstructionsector,faceaglaringlackofaccesstosocialwelfare,suchashealthcareandeducation

benefitsandpensions–theresultofa1950sMao-erapolicyofhukou.Thehouseholdregistration

system,orhukou,tethersaccesstosocialwelfareservicestotheirresidentialprovincesandstatuses,

thuseffectivelyseveringrural-urbanmigrantsfromsocialwelfare(Branigan,2014).Although

governmentaleffortstocalibratethehukousystemhavebroughtalimitedmeasureofalleviationto

rural-urbanmigrantswithsomemigrantsreceivingurbanhukous,morefuturecomprehensivereforms

arebeingdeliberated.

1DengXiaoping’seconomicreformsinitiatedin1978,reversedalongperiodofChineseeconomicstagnationbyintroducingasocialistmarketeconomywithopenaccesstoexternaltrade.ThemarketeconomyhasbeencontinuedbysuccessiveChineseadministrationsandhasledtorapideconomicdevelopmentandresultantsocialchange.

RecruitmentCosts–China,July2016 Page3of15

36.2%oftheserural-urbanworkersareemployedunderlabour-dispatchagencieswhichfunctionasthird

parties,matchingandhiringoutworkerstoemployersundertemporaryshort-termcontracts(Liu,2014).

Labour-dispatchisprevalentinChinawheremanufacturingindustriesrequirelargebulksoftemporary

low-skilledlabourrespondingtoseasonaldemandsandunder-capacity.Theyarepaidlessthan

traditionaldirect-hirelabour,althoughthe2014InterimRegulationsonLaborDispatchandtheir“Equal

PayEqualWork”regulationnowinprincipleprohibitsthis.Asthelawonlycameintoeffectin2016,its

effectivenessremainstobeseen.Workersunderlabour-dispatchalsohavereducedaccesstolabour

protectioncomparedtopermanentlocalstaffduetotheroundaboutemploymentoflabour-dispatch

whichexploitsloopholesinChineselabourlaws.Figure1belowillustratesthelabour-dispatchsystem.

Inthisregard,workersmayseekredressthroughthelabourdisputeresolutionsystem.Enactedbythe

1993RegulationsonHandlingLaborDisputesinEnterprisesandfurtherrefinedbythe2008Labor

DisputeMediationandArbitrationLaw,labourdisputesgothroughafour-stageprocessofconsultation,

mediation,arbitrationandlitigation.Mediatedsettlementshowever,aresaidtobethepreferredroute

amongChineseauthoritiesandlabourcourtinstitutions(ChinaLabourBulletin,2015).

Beyondoutwardinternationalmigrationanddomesticmigration,thegrowthoftheChineseeconomyhas

madeChinaanemergingcountryofdestinationforeconomicmigration.Thisisparticularlysoof

neighbouringBurmese,VietnameseandNorthKoreanmigrantworkers,mostofwhomenterChina

throughirregularandillegalmeans,andhencenaturallyincurheftyrecruitmentfees.TheBurmeseand

VietnamesemigrantstypicallyfindemploymentinSouthernChina,attractedbythepromiseofhigher

wages,whereastheNorthKoreansarescatteredinNorth-easternChineseprovinces.Theproportionof

Figure 1: The Labour-Dispatch System in China

RecruitmentCosts–China,July2016 Page4of15

NorthKoreanlabourhasfallensincethe1990sattheheightofthefamines2,butBurmeseand

Vietnamesemigrantlabourerscontinuetonumberinthe“tensofthousands”3(Skeldon,2011).In

addition,asizeableandincreasingnumberofmigrantsfromAfricanstatesworkintheservicesectorin

China,adevelopmenthighlightedbytheemergenceofan“AfricanStreet”enclaveinGuangzhou(J.Fan,

personalinterview,31July2016).TheestimatedforeignmigrantstockresidinginChinaisestimatedat

978,046in2015(UnitedNations,DepartmentofEconomicandSocialAffairs,2015).

Theissueofrecruitmentfeesisprevalentandsevereinallthesethreemigrationflowsin,outandwithin

Chinaduetotheinadequatelegislation,laxenforcementoflawsregulatingrecruitmentfees,geography

andcomplexityofthelabourmigrationmarket,andexploitationbyrecruitmentmiddle-menwho

facilitatemigrationandemployment–anecessaryevilunderpresentconditions.

2Large-scalefloodingin1995,devastatedlargeswathesofNorthKoreancropsandagriculturalinfrastructure,leadingtowidespreadfamine,fuellingirregularflowsofNorthKoreanlabourintoNortheastChina.3Estimatesareuncertainduetotheunder-reportedandundocumentednatureoftheiremployment.

RecruitmentCosts–China,July2016 Page5of15

Detailsofpolicy

ModesandRegulationofExternalMigration

ExternalmigrationofChineselabouroccursthroughfourgeneralchannels:labourrecruitmentagencies,

directemploymentwithcompaniesworkingonoverseasprojects,migrationfacilitatedviaconnections

withrelativesworkingoverseasandtheirforeignemployers,orlessfrequently,illegalhumansmuggling

syndicates.

TermedasForeignLaborServiceCooperation,migrantlabourrecruitmentagencieshavetobelicensed

bytheMinistryofCommercetosendworkersoverseasandareregulatedunderthe2012Regulationson

ManagementofForeignLaborServiceCooperation(MinistryofCommerceofthePeople'sRepublicof

China,2012).Theserecruitmentagenciesareevolveddescendantsof1950sstate-directed“labour

export”policies4buthavesincebeenprivatised,and,numberingover8005,serveadiverserangeof

industries,fromseafaringtoconstruction.ForeigncompanieshavetoliaisedirectlywiththeseForeign

LaborServiceCooperationagenciesthatwillinturnsourceforandprovideworkers(Chen,2010).These

ForeignLaborServiceCooperationagenciesarealsotaskedwiththevocationaltrainingofworkerswho

havetoundergo40–80vocationally-relatedtrainingsessionstoqualifyforcertificationinordertogo

overseas.

Theseagenciesarelargecorporations,sometimesstate-ownedenterprises,thatoperateontheregional

levelandoutsourcetheimmediaterecruitmentofworkersinthetown,provincialandsub-regionallevel

toalargewebofsmallerintermediaterecruitmentagencies.Theseintermediaterecruitmentagencies,

whichlacklicensestosendworkersoverseas,dealprimarilywiththedirectsourcingofworkers,while

themaincertifiedagenciesmanageliaisonwithforeignfirmsandthesendingofworkersoverseas.Only

thecertifiedagencieshavethelicensetosendworkersoverseas,hencethesmallerintermediate

recruitmentagencieswillhavetorefertheworkersdownstreamtothemaincertifiedagencies.

Uncertifiedorillegalagenciesthatsendworkersoverseashavebeeneradicatedthroughthecombined

effortsoftheMinistryofCommerceandtheauthoritiessincetheRegulationswerepassedintolawin

2012(J.Fan,personalinterview,31July2016).

Itshouldbenotedthatthesmallerupstreamintermediaterecruitmentagencies,whilenotlegitimisedby

thepurviewoftheRegulations,arenottechnicallyillegalfortheyessentiallyfunctionasinformalsub-

contractorsorbrokersofthemaindownstreamcertifiedagencies.Nonetheless,thecorebusinessfocus

oftheintermediaryagenciesis,infact,therecruitmentofworkersforlocaljobs,ofwhichtheyarelegally

4Chinain1950-1970deployednumerousskilledtechniciansaspartof“FriendshipAid”projectstoAfricannations(Politzer,2008)5Sourcedfromthe“ListofInt’lLaborCompanies”onthewebsiteoftheMinistryofCommerceofthePeople’sRepublicofChina

RecruitmentCosts–China,July2016 Page6of15

certifiedtodoso.TheirrecruitingservicesforForeignLabourServiceCooperationagenciesaresecondary

totheirmainbusinessfocus(J.Fan,personalinterview,31July2016).

Thesemainagenciesthemselvesontheotherhandaresubjecttostringentandprohibitivequalifying

standardsfor“certification”orlicensingunderArticle6oftheRegulations6.

Buildingonpreviouslawsmanagingmigrantlabour,theRegulationsprovideaseriesofmeasures

protectingthewelfareofmigrantworkersrecruitedbyForeignLaborServiceCooperationagencies,

mandatingtheagenciestoprovidepersonalaccidentinsuranceforworkers,totracklivingandworking

conditionsofmigrantworkersoverseasandtoassistworkersabroadintimesofdifficulty,amongother

measures7.Unlikeprecursoremploymentagencies,theForeignLaborServiceCooperationagenciesalso

havetoensurethatthepromisedemploymentinthecountryofdestinationisindeedavailable;andthis

iscorroboratedbytheChineseembassyinthecountryofdestination,therebypreventingscams.

Article25oftheRegulationsalsoexplicitlyprohibitsthecollectionofrecruitmentfees,termedas“service

fees”,fromworkersbytheForeignLaborServiceCooperationagencies.Violationsaremadepunishable

undertheclausesofthe2008LaborContractLawofthePeople'sRepublicofChina,whichmandatesfines

ofbetween1000to5000yuan(150-770USD)perworkertogetherwithde-licensing8.

However,inpractice,recruitmentfeesarenotjustpresentbutsevere,duetothepracticeofoutsourcing

ofrecruitmenttonumerousandcomplexnetworksofintermediaterecruitmentagenciesonthesub-

regionallevelmentionedabove(Chan,2011).Workersgothroughmultipleintermediaterecruitment

agenciesfromtown-leveltoprovinciallevels,andaresometimesbouncedaround,untilfinallybeing

referredtothemaincertifiedagenciesthatretainthesoleauthorisationtosendworkersoverseas.These

intermediaterecruitmentagenciesinturnexploitthecomplexityoftherecruitmentsystemandtheir

geographicalmonopolyonthetown-levelmigrantlabourrecruitmenttoextractprofitsfromrecruitment

feesateverypoint.Thefeespaidtotheintermediariesareestimatedtobeat600to800RMB(90–120

USD).

FewForeignLaborServiceCooperationagenciesthemselvescomplystringentlywiththeregulations.This

isevidentfromtheconsistentprevalenceofrecruitmentfeesamongChinesemigrantworkersrevealed

throughresearch(OpenWorkingGrouponLabourMigration&Recruitment,2014).Workersdeparting

forSingaporehavebeenreportedtobechargedbetween30,000to40,000yuan(4,500–6000USD)in

6Theseincludeapaid-upcapitalof6millionyuan(916,000USD),legalrepresentativeswithnocriminalrecordsand“asoundinternalmanagementsystemandanemergencyhandlingsystem”7TheseclausesareprovidedforunderArticle13and16oftheRegulationsonManagementofForeignLaborServiceCooperation8ThesecanbefoundunderArticle44oftheRegulationsonManagementofForeignLaborServiceCooperationandArticle93ofthe2008LaborContractLaw

RecruitmentCosts–China,July2016 Page7of15

recruitmentfees,whileemploymentinJapanandSouthKorea,asaresultofhigherdemand,incurfees

ashighas60,000yuan(9000USD).

Thisprevalentandblatantviolationoftherecruitmentprohibitionsistypicallymadepossiblebyavoiding

theuseoftheterm“recruitmentfees”whenchargingworkers,therebycircumventingtheclausesofthe

Regulations.Suchexorbitantfeesmaybeattributedtothehighcostsincurredbytheagenciesin

deploying“marketingteams”overseastosourceforandliaisewithemployers.However,itisreported

thatsuchfeesareone-timepaymentsandarenotchargedagainwhenmigrantworkersrenewtheir

expiredcontracts(J.Fan,personalinterview,31July2016).

Thismodeofexternalmigrations,despiteitsprohibitivecosts,accountsforalmosthalfofalllow-skilled

externalmigrationoutofChina,regardlessofindustry(MinistryofCommerceofthePeople'sRepublicof

China,2016).

Aseparateandsimplermodelofrecruitmentalsoexists,althoughitisnotasprevalent.Inthismodel,a

singleChinesecompany,typicallyaconstructioncompanycontractedtoworkonanoverseas

constructionproject,fulfilstheroleofbothrecruitingagenciesandtheeventualemployer(Chen,2010).

CertifiedbytheMinistryofCommerceasaForeignServiceLaborCooperationenterprise,theChinese

companyisabletosendtheirownbodyofcontractedworkersoverseas.ThisisillustratedinFigure2

below.

Whiletheirworkersarealsoprotectedbythe2012Regulations,theystillforkoutrecruitmentfees.

Nevertheless,unliketheworkerswhogothroughmultipleintermediariesandsignmultiplecontracts,

theirworkerssignonlyonecontract,andthuspaylowerrecruitmentfees.AnILOreport9onChinese

9Chen,Xiao.(2010).SoulsinExile:AStudyofChineseMigrationWorkersinRomania.InternationalLabourOfficeforChinaandMongolia.Beijing:InternationalLabourOrganisation.P.39

Figure 2: Direct recruitment and employment of Chinese workers

RecruitmentCosts–China,July2016 Page8of15

workersinRomaniaindicatesthatworkersemployedunderthismodelpaidabout65,000yuan(9900

USD),comparedtothetypicalfeesof75,000to100,000yuan(11,400USDto15,200USD)forother

migrantworkersrecruitedthroughthelegalagencyroute.

Despitetheaffordabilityandeaseofmigrationinthismodeofmigration,itremainsuncommonasitis

firstly,restrictedtoskilledlabourand,secondly,utilisedonlybyconstructionfirmsduetotheirunique

manpowerrequirements.Moreover,thelackofinformationandinaccessibilityofthesefirmstoChinese

workerscompoundsthepooruptake.

Thethirdmodeoflabourmigrationisthroughdirectconnectionstoforeignemployersfacilitatedby

relativesorfriendsalreadyworkinginthedestinationcountries(J.Fan,personalinterview,31July2016).

Inthispopularmodeofmigration,workersneedonlyregisterforanexitpermittogetherwithevidence

ofemploymentwiththeforeignemployer.Recruitmentfees,ifpresent,aremodest.

MigrantswhogothroughthefinalchannelofillegalmigrationareunprotectedundertheRegulations

andareatthemercyofthesesyndicates.Knownassnakeheads,syndicatessmuggling10migrantworkers

outofChina,whilecommoninthe1990s,havebecomerarewithbettereconomicconditionsandthe

adventofproperrecruitingchannels(Keefe,2008).Nonetheless,snakeheadsprovideapromiseof

lifetimemigration,ratherthancontract-basedmigrantlabour,buttheillegalityofthemodeofmigration

incursexorbitantfees11whilethehazardousmeansoftravelareinfamousfortheiroccasionalfatalities12

(Thompson,2003).Thesnakeheadtradeisalsoprecipitatedbydemandforemploymentincountriesof

destinationthatofferhighwages,likeJapanandSouthKorea,whichhavestringentannualquotasonthe

entryofmigrantworkers(J.Fan,personalinterview,31July2016).

Thesemigrantsalsohavetofindtheirownemployment,unlikethepreviousthreemodeswhere

migrationispackagedwithemployment.

Internalrural-urbanmigrationandregulations

Whilerural-urbanmigrantworkersaredisenfranchisedbythehukousystem,theirbasiclabourrightsare

nonethelessprotectedinprinciple,underthe2008LaborContractLaw.Recruitmentfeesareprohibited

underArticle60oftheLawandArticle37ofthe2008LawofthePeople'sRepublicofChinaonPromotion

ofEmployment,buttheyremainprevalentnevertheless13.Thismaybeattributedtothelabour-dispatch

10Humansmugglingisdistinctfromtrafficking,intermsofthefullconsentofsmuggledindividuals,completeknowledgeofrisksandterminationofinteractionsbetweensmugglersandcustomeruponarrivalatthedestination,unlikethemarkedlymoreexploitativehumantrafficking.11Theaveragefeein2008was$70,000USD(Keefe,2008)12Inaninfamouscasein1993,10ofthe286illegalChineseimmigrantsonboardthecargoship,GoldenVenturedrownedwhentheshipranagroundthebeachatQueens,NewYork(Faison,1993).13AppleInc.in2015forceditsChina-basedsupplierstoremoverecruitmentfeesthatits1.1millionChineseworkersface,underscoringtheprevalenceofrecruitmentfees(Kan,2015).

RecruitmentCosts–China,July2016 Page9of15

system,which,toanextent,exacerbatesthemalfeasanceofemployersandtheirabilitytobypasslabour

protectionlaws(Liu,2014).

Thisloopholehowever,isbeingpatchedupwithclarificationsonexistinglegislationandsweepingnew

regulationsonlabour-dispatchfromMinistryofHumanResourceandSocialSecurity.The2014Interim

ProvisionsonLaborDispatchpromulgategreaterlabourprotectionforlabour-dispatchworkers,inline

withtheLaborContractLaw(Xu,2016).Itdoesnothoweverindicateanyprohibitionofrecruitmentfees.

Nonetheless,thoseworkersseekinglegalredressthroughtheLaborDisputeArbitrationCommittee

(LDAC)havebeentepidlysuccessful,withworkershavingaclearwininjust35.2%ofthe711,044cases14.

Workersarefurtherdisadvantagedanddis-incentivisedbythefinancialcostandtimeoflitigation

procedures(ChinaLabourBulletin,2015).

Inwardmigration

Asinthecaseofrural-urbanmigration,the2008LaborContractLawwouldinprincipleprotectforeign

migrantworkersinChina.However,thesemigrantworkersaresimilarlyalsoaffectedbythelabour-

dispatchsystemandtherecruitmentfeesthatcomewiththecontracts.Moreover,inlightoftheir

undocumentedandillegalstatus,mostillegalforeignmigrantworkersworkinginChinaareverylikelynot

coveredbytheLaborContractLaw.

Furthermore,theChineseauthoritieshavebeenhostiletowardsundocumentedmigrantworkersand

haveoverhauledthe1985LawOfThePeople'sRepublicOfChinaOnEntryAndExitOfAliens,in2012

withtheExitandEntryAdministrationLaw,afteraneight-yearprocessofdeliberations(Haugen,2015).

Thenewlawparticularlyimposesheftierpunishmentsonundocumented,low-skilledmigrantworkers.

14Whileemployerswononly11.6%ofthetime,53.2%ofthecases,howeverhadnoclearwinner

RecruitmentCosts–China,July2016 Page10of15

ProsandCons

OutwardMigration

AtthecoreoftherecruitmentfeesissueforoutwardmigrationinChinaisinsufficientlegislationand

inadequateenforcementofexistinglegislation.ThishasallowedForeignLabourServiceCooperation

agenciestointerprettheRegulationsvaguelysuchthattheymayextortexorbitantrecruitmentfeeswith

impunity.

Inasimilarvein,themassiveandunregulatednetworkofintermediaterecruitmentagencies,illustrated

inFigure3belowisabletoretainanimmenselatitudetoextractrecruitmentfees.Fundamentally,the

largegeographyofthePeople’sRepublicandtheresultantlackofaccessibilityandprofitabilityof

certifiedagenciesreachingouttoruraltownsdirectly,necessitatestheexistenceofthisintermediary

networkthatbridgesthegap.

Thelackofawider,calibratedregulatoryframeworktoaccommodatethisbiggernetworkofsmaller

intermediariesisatthecruxofthisproblem.Foronething,thestringentqualificationsforcertificationof

aForeignLaborServiceCooperationagencyincreasesthebarrierstoentryseverely,therebycreatinga

readyandprofitableinformalmarketforsub-regionalintermediaterecruitmentagencies.Thisinturns

restrictsthecapacityofthestatetoregulaterecruitmentprocessesbeyondthelevelofthecertified

agencies.

Understandably,therecruitmentfeesissueisaggravatedbyvirtueoftherealitythatthenumberof

smallerintermediatefirmscouldpossiblyrunintothetensofthousands,giventhatthemainlicensed

Figure 3: Foreign Labor Service Cooperation and intermediaries in the Chinese foreign labour market

RecruitmentCosts–China,July2016 Page11of15

onesalreadynumberover800.InNantongCity,Jiangsuprovincealone,a“LabourStreet”hasover100

mid-sizedintermediateagencieswithwhichalargerpoolofevensmalleragencieshavecontacts(Chen,

2010).

Thisthusalsoillustratestheotherfundamentalproblemofthelackofallocatedresourcestoenforce

labourregulationsamidstthesheernumberofForeignLabourServiceCooperationagenciesandtheir

intermediariesscatteredacrosstheimmensegeographyofChina.Themagnitudeofthelabourmigration

market,andunder-staffingandunder-funding,oftheresponsibleprovincialleveloffices,resultsinlax

enforcementofregulations.Furthermore,theeconomicbenefitsofallowingtheunregulatedmarketto

goonincentivisesdisinterestamongstateplannersandprovincialofficialsinenforcingthelabourlaws.

Thus,thecomplementinginabilityandinstitutionaldisinterestinenforcementleadstoacontinued

proliferationofrecruitmentfeesandlabourabuse.

Ontheflipside,ithasbeennotedthatthemarkedlymorehazardousandexorbitantchannelofthe

snakeheadtradehasbeenundercutbybettereconomicconditionsandaccesstothefruitsofChina’s

economicgrowth(Keefe,2008).Inthisregard,the2012Regulationscanbearguedtohavefacilitated

accesstoeconomicopportunitiesthroughincreasingthereliabilityandaccessibilityoflegalmigration

options.Thoughimpairedbythelackofenforcementandthehugenetworkofsmallerintermediate

agencies,thestatecertificationandstringentqualificationsofthemainrecruitmentagenciesprovidea

tokenofcredibilityandlegitimacythatincreasesappealtowould-bemigrantworkers,therebycutting

intothemarketofpatentlylessreliablesnakeheadtrade.

Similarly,thenetworkofsmallerintermediaterecruitmentagencies,althoughcomplexandalegalgrey

areathatopensamajorloopholeforthechargingofrecruitmentfees,hasallowedforthisincreased

accessibility,openingin-roadsforlegallabourmigrationoptionstothetownlevel,andultimately

economicmobility.

TheinstitutionoftheForeignLabourServiceCooperationscheme,whileflawed,hasalsoaffordedbetter

protectionsformigrantworkersasopposedtoitsprecursoremploymentagenciesthatexistedbefore

the2012Regulations.Forexample,workersareunlikelytobescammed,aspromisedemploymenthasto

beassuredtoexistbyboththeagencyandtheChineseembassyinthecountryofdestination.This,

amongotherstandardisedrequirements,isanevidentimprovementtotheoldmodesofexternal

migration.

Withrespecttotheissueofrecruitmentfees,the2012Regulationsalsoaptlytargettheprimaryavenue

whererecruitmentfeesareincurred–themiddlemenofthelabourmigrationprocess.Althoughseverely

limitedinscopeandenforceability,thelegislativefocusofthelaw,ifexpanded,calibratedandenhanced,

hasthepotentialtoeffectivelyregulatelabourrightsandrecruitmentfeesintherecruitmentprocess.In

thisrespect,theexistingqualificationsforlicensingofaForeignLaborServiceCooperationagencymay

RecruitmentCosts–China,July2016 Page12of15

provideausefulprecedentforfutureenhancementsofthelawthatcouldbeexpandedintoseparate

qualificationsfordifferentcategoriesand“levels”ofrecruitmentagenciessuchasthemainrecruitment

agenciesandtheirintermediary“sub-contractors”.

ItisalsounrealisticfortheChinesegovernmenttoimposeazerorecruitmentfeespolicyonall

recruitmentagencies.This,ifstringentlyenforced,erodestheprofitabilityofthelabourmigration

middlementrade,andwillproliferateanundergroundeconomyofunregulatedrecruitmentagencies,in

lightofhugedemand.

Instead,thestreamliningoftherecruitmentprocess,fromtowntotheactualForeignLaborService

Cooperationagency,whileambitious,couldbeconsidered.Suchstreamlininghasalreadybeenachieved

inthesecondmodeloflegalmigrationthroughthedirectionemploymentofworkersbyChinese

companiescontractedtoworkonoverseasprojects,albeitwithlowuptake.Thislowuptakeisindicative

ofthechallengessuchamodelwillhavetosurmountinordertogainfurthertraction:outreachtoa

widercross-sectionofworkers,andadaptationtodifferentindustriesandtheirlabourrequirements.

SuchamodeloflabourmigrationneverthelessretainsthepotentialtomatchChina’sburgeoning

populationofmigrantworkerstotheirpreferredemploymentandcountriesofdestination,withthe

greatesteaseandatthelowestpossiblecost.

Rural-UrbanMigration

Ontheotherhand,therecruitmentfeesissueinrural-urbanmigrationisbecominganon-issuewith

increasinginstitutionalattentionandreformofthehukouandlabour-dispatchsystem,whichthereby

removesthesystemicgroundsforrecruitmentfees.Whileeffectivenessofthenewlawsremainstobe

seen,thisdevelopmentclearlydemonstratestheobviouswherewithaloftheChinesegovernmenttoact,

whenaccompaniedwithadequatepoliticalwill.Thisisespeciallysogiventherelativelyenormousscope

of260millionrural-urbanmigrantworkers,comparedtoamere8.4millionexternal-migrationmigrant

workersandmere“tensofthousands”ofinward-migrationworkers.

InwardMigration

Conversely,therecruitmentfeesissueinundocumentedinwardmigrationisadiametricoppositewith

abjectinstitutionalneglect–theresultofalackofpoliticalinterestandpopularsilence.

TheauthorwishestoacknowledgeFanJiaoyanforherinvaluableinsightsandinputaswellasJohnGee

forhelpinproofreadingandediting.

RecruitmentCosts–China,July2016 Page13of15

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Thegreatmajorityofmigrantworkerspaylargesumsofmoneyinorder

to obtain jobs in other countries. The costs, often exorbitant, leave

workers debt-ridden and in a more vulnerable position to pernicious

labourabuse. AtTWC2,werecognisetheconsequencesofrecruitment

costsandtheurgentneedtoeliminatesuchfees.

This report ispartofa seriesofpapersanalysing thepolicies invarious

countries regulating recruitmentcosts.Through thisevaluativeprocess,

we hope to be able formulate effective policy recommendations in

reducing the recruitment costs of workers who come to Singapore.

–

TransientWorkersCountToowww.twc2.org.sg5001BeachRoad,#09-86GoldenMileComplexSingapore199588

+6562477001info@twc2.org.sg

ThefulllistofourcountrybriefsandotherTWC2reportscanbefoundat:http://twc2.org.sg/category/articles/research/

TWC2RecruitmentCostsResearchWorkingGroup