The Three Different Types of Contracts

The labour contract not only plays a role in controlling the workers, but also divides them. The current workers in ChinaCol may be divided into three categories in terms of their types of contracts.

Firstly, some workers came from the original SOE. Prior to 1995, the workers were mostly local school leavers and people from the towns and villages near the city who got their jobs via ‘paying for entrance’. Then, when ChinaCol transformed to a joint venture company, approximate 1,000 of these employees were selected by managers from the original SOE. This was a very common method in the mid 1990s. Many of these joint ventures were formed in existing state-owned enterprises. Also, it was often the case that one company division would be converted into a joint venture, with the rest o f the larger enterprise remaining state-owned (Lu, 2001: 194). The workers and staff who were selected for the joint venture company were relatively young, skilled and had good individual performance. At present, the average age o f this part of the workforce is over 40 years old.

A second group of workers concluded fixed contracts with the company. The majority of them were below 40 years old and many of them came from the secondary technical school. Before the joint venture, the SOE recruited some school-leavers from local secondary technical schools. After the company established the joint

venture with the SOE, a double-track system was used to train the new workers in order to get high-quality, skilled recruits (students study basic theory and knowledge in the classroom for two years and practice in the workshop for one year). This system was introduced in line with the system of the German parent company. The company recruits about 60 students at junior grades every year in conjunction with a local technical secondary school. Before 2001, the students were junior graduates. After 2001, the school began to enrol high school graduates. When students enter this school, a contract requiring them to work for the company for four years must first be concluded. The technical school graduates are regarded as core and skilled workers.

Many o f then have been promoted to supervisory positions.

The third group o f workers in ChinaCol are temporary (or seasonal) workers.

Temporary workers have been hired since 1997. The basic requirements are that they should have graduated from junior school and be aged between 18 and 30. The recruitment process is very simple. The company posts its recruitment advertisements on the notice board of the factory and the local labour bureau. The applicants hand in their CVs and are interviewed for five to ten minutes by the staff o f the Dept, o f HRM.

A member of staff explained, ‘The temporary workers only engage in less-skilled work and are easy to manage due to the three-month contracts. It is not necessary to take time to select them seriously’.

Some of the temporary workers are laid off workers and some are from rural areas. At the end of 2003, in a new departure, about one hundred such workers were made

contract workers. One of them was Li. His story underlines the importance o f getting a contract job at ChinaCol. At thirty-two years old, he had worked as a seasonal temporary worker on three-month contracts for the previous five years. During this time, he said, he had always felt insecure but the contract that he now had - for one year only - might in future, he hoped, be extended to two years, which would make for relative job security, and as he also pointed out, this company paid the wages on time and also paid pension, unemployment and housing contributions. He had lacked all those benefits as a temporary worker. His wife works in a garment factory where it is common for workers to work 12 hours a day in order to reach their production quotas, which are impossible to meet in eight hours. In the light o f this, he is

‘definitely very satisfied with the job’.

Both the European and the Chinese managers considered promotion to a fixed contract a good method to motivate temporary workers. The head o f the Dept, of HRM made the following statement:

This method is very useful. It plays a very positive role in encouraging the temporary workers. A fair and easy method is used during the selection process.

The condition for application is at least one year’s service. The applicants are ranked in terms of their individual performance marks from top to bottom. The first 100 workers are shifted to become contracted workers.

The change in the structure o f the workforce has close relations with the implementation o f the labour contract system.

Standing (1997) argues in a wide ranging review: “More companies have been turning away from reliance wholly or largely on full-time workers to use of temporary workers, part time workers, contract labour and out-workers, and have been sub­

contracting or using other forms o f ‘outsourcing’.” The change in the recruitment policy of ChinaCol reflects this statement. A new policy is being drawn up by the HRM department. It requires that all the workers should obey the assignment o f the company. In other words, the company has the right to change workers’ posts, normally from a good to a bad one. If he (or she) refuses to shift, his or her contract might be terminated. No matter if he (or she) has an open-ended contract.

In addition, managers at ChinaCol are attempting to shorten the assembly line and are contracting out work. One workshop was outsourced to a private local company.

Thirty workers had no choice but to move their jobs to the private company, even though they complained several times. There were also plans to subcontract cleaning and security to other companies.