Back to Basics on Overtime in China

by Wenjuan Yao, Verite China Program Director, and Dan Viederman, CEO

SHANGHAI—Excessive overtime in Chinese manufacturing is a persistent problem. Verité finds it in social audits, and many of the companies with which we work have said that they continue to struggle to get overtime under control at their supplier factories. It is common that workers spend days in a row, long hours at a time, at their factories. This is generally in excess of the 60 hours a week total work that most Codes currently allow; and it certainly exceeds the unrealistically low limit of 36 overtime hours per month allowed by Chinese law.

The causes of this persistent problem, like other social compliance problems, are complex and interrelated. Buyers have a role to play, as do agents and vendors. Clearly the factory management has the most direct influence. We discuss these causes and their solution in our recent white paper, “For Workers’ Benefit: Solving Overtime Problems in Chinese Factories. “

But even in the absence of perfect control we need to make progress, and we shouldn’t measure ourselves simply by a compliance benchmark. As a way station towards the ultimate goal of compliance we should focus on two things: the willingness of workers to work overtime, and the benefit that accrues to them when they do. 

Chinese workers are legendary for liking overtime and seeming willing to work. But our surveys indicate that there’s a limit to this willingness—a preference for about 66-70 total hours a week. Certainly there are workers who are willing to work longer, but even they don’t have an infinite appetite for work, and the excessive working weeks of 90 or 100 hours come at the behest of an employer-- not because workers desire that much time on the line. Much of the time workers do not receive overtime premiums for their extra work, a convenience and financial benefit for the factory.

Sometimes productivity improvements are suggested as a way to limit overtime—not least by those who make a living designing productivity programs. But Verité has spent time in factories where productivity improvements have only increased the pressure on workers. These factories have chosen to spend the “productivity bonus” on things other than worker welfare. For productivity to lead to reduced working hours, factories have to make a policy decision to limit time spent.

What should brands look for? Fundamentally, buyers need to ensure that:

1. Overtime is voluntary.  This means that workers are able to say ‘no’ to a request for overtime without providing a reason, and without being pressured, penalized, or punished. The only way to learn if this control is in place is to gather information in a secure way from the workers themselves.

2. Workers must be paid legal overtime premiums for extra work hours.  In China this means 150% of wages for overtime beyond 8 hours a day, 200% for weekend work, and 300% for legal holidays. If premiums are provided, workers benefit more from the overtime they work. Also, the costs of ‘business as usual’ excessive overtime will increase for the factory. At some point, factories will find it cheaper to add another line or add more workers rather than simply utilizing the effort of their existing workforce. In this way, compliance with overtime premiums will create a market force for better compliance.

3. Lastly, workers shall not be asked to work more than 11 hours a day and must receive one day off in every 7 as a minimum.  This is a basic protection for their health, and should not be negotiable.

If workers are free—truly free—to choose or decline overtime; if workers are paid for the hours that they work; and if workers are presented with some minimum level of ‘required’ rest, Verité believes that the worst abuses will be avoided, and workers themselves will be in a position to meet their own needs.