A Short Paper on the Problem of Silicosis in gemstone-processing industry and the legal loopholes in the implementation of the Prevention of Occupational Disease Law
Labour Action China
Feb 2007

Introduction

Massive foreign direct investment (FDI) and a strong labour supply has earned China the name of "the world's factory". However, under the glittering façade of the economic miracle lies another side to the story. Guangdong Province, known as a "job paradise" for migrant workers, has attracted millions of workers from China¡¦s poor regions after the inauguration of the Open Door Policy in 1979. The development of a market economy resulted in massive and rapid inflow of foreign direct investment and manufacturing investments mainly coming from nearby North Asian countries such as Hong Kong, Taiwan and Korea. The investments are concentrated in the "3L" sector--the labor-intensive, low-skilled and low-end sector. While the flow of foreign capital accelerates the speed of economic growth and accumulation of local capital, however, occupational health and safety conditions have not kept pace with the nation's breakneck industrialization.

In this paper, we give a general overview of the occupational disease conditions in China with special reference to silicosis in the gemstone-processing industry, by looking into the following three questions:
1. How serious is the problem of occupational disease, and of silicosis in particular, in the gemstone processing industry in south China?
2. What are the difficulties faced by the silicosis-afflicted workers in their pursuit of compensation?
3. In what respects do such difficulties reflect the legal loopholes in the implementation of the Prevention of Occupational Disease Law in China?


General Overview of Occupational Disease Conditions in China

According to the Chinese government, more than 16 million Chinese workers are exposed to toxic or hazardous conditions in the workplace. These statistics do not include workers in village and township enterprises or in small workshops, where workers' health and safety situations are much graver, nor those workers whose occupational diseases have been certified and who have returned to their hometowns. The Chinese government describes the phenomenon as the "Three Transfers". Occupational diseases have been transferred from the urban to the rural, from economically more developed to less developed regions, and from developed countries to developing countries.

According to the latest official statistics released by the Ministry of Health and the State Administration of Work Safety in 2006:

1.ĆAs many as 90 percent of the patients suffering from diseases relating to the workplace are migrant workers
2.ĆAbout 200 million Chinese people are at risk of contracting occupational diseases, and most of those at risk work in small-town industrial enterprises
3.ĆAbout 16 million enterprises are identified as poisonous and hazardous
4.Ć700,000 people are afflicted by occupational diseases every year
5.ĆThe annual economic losses from work injuries and occupational diseases amount to 250 billion yuan
6.Ć618,632 industrial accidents were reported; death toll: 109,143
7.ĆAbout 320 workers in average die of work injuries every day
8.Ć2,456 fatal incidents occurred in the coal mining industry; death toll of 3,818

Silicosis as the Top Occupational Hazard

Of the various occupational diseases, silicosis is the single most prevalent one, accounting for as much as 75 per cent of all cases. According to the Ministry of Health, China has accumulated 665,043 cases of pneumoconiosis since 1950, with the figure equaling the total cases of the rest of the world. While more than 143,000 sufferers have died, there are still 522,000 sufferers on record. Each year, 15,000-20,000 more cases are reported and more than 6,000 patients die of the disease. The annual death toll of silicosis is even higher than that of coal mine accidents.

The statistics may understate the situation in China's thriving industrial centers in the south, where tens of millions of migrant workers produce the bulk of China's exports at the expense of their lives. Analysts estimate that the actual number of silicosis cases is ten times higher, due to the fact that few manufacturing enterprises provide migrant workers with employment contracts, physical check-ups and health records, not to mention the small-scale township enterprises.

Alarming situation on silicosis in gemstone processing industry

Silicosis, or the so-called "dust-lung disease", is an incurable occupational ailment which afflicts workers through the inhalation of an airborne crystalline silica dust, a workplace toxin that progressively debilitates the lung's capacity. Over the past few years, silicosis has become especially rampant because of the "inspection vacuum" in hazardous industries in the early years of capitalist industrialization in the developed coastal regions of China. The sharp increase in the number of silicosis cases in Guangdong province is highly related to the rapid growth of the jewelry and gemstone processing industry.

According to Chinese Customs, China's jewelry export grew 24.99 percent year on year to US$4.96 billion during the January-November period of 2005. During the 11-month period, China exported precious metal jewelry worth US$1.826 billion, diamonds worth US$1.278 billion and pearls and gemstones worth US$128 million. Of all the export-processing regions, southern Guangdong Province contributes the most--55.43 percent of China's total jewelry exports, which was US$2.75 billion. The province has become the largest jewelry and gemstone-producing area in the country. With the growing capacity of China's jewelry processing industry, Hong Kong's jewelry enterprises have seized the opportunities and completed a massive transfer of jewelry manufacturing activities from Hong Kong to mainland China over the past decade. As the leading exporter of imitation jewelry and the second largest exporter of precious jewelry in the world following Italy, Hong Kong represents over 50 per cent of the province's jewelry exports.

Yet measures to prevent and treat occupational diseases have lagged far behind the rapid economic development. According to an official source, as much as one third of the province's silicosis cases originate from this particular industry. More than half of the jewelry processing factories have been found to exceed the maximum legal limit of dust level. The rampancy of occupational diseases are due to several factors: inadequate law enforcement by local governments, poor ventilation in the workplace, excessively long working hours, a lack of protective equipment and the almost total absence of health and safety training programmes.

Given the adverse working conditions and the lack of consciousness of occupational health and safety among workers, many of the sick workers identified have contracted the illness after only one or two years of working in the industry. In the cases identified by our organization over the past two years, over 200 workers in several Hong Kong-invested jewelry factories in Huizhou and Shenzhen have been found to be in the late stage of silicosis. Many of them have lost the ability to work and the disease is advancing relentlessly. Over 20 have died and nearly 50 others are in serious condition.

Two cases of silicosis-afflicted workers in the gemstone manufacturing industry

Since 2004, Labour Action China has been in touch with workers who have contracted silicosis, who are from different Hong Kong-invested gemstone processing factories in southern China, and we launched a campaign in Hong Kong to support collective cases of the silicosis-afflicted workers to fight back compensation from their Hong Kong employers. We organized several of the affected workers and their family members to come to Hong Kong to negotiate with their employers and to stage protests, in collaboration with other labour organizations in Hong Kong, at the company headquarters and at local jewelry trade fairs.

The following two notable cases give a brief account of the legal struggles of the silicosis victims. They also reflected the difficulties faced by the migrant workers in pursuing compensation under the current defective compensation claim system and the legal loopholes in the implementation of the PRC Prevention of Occupational Disease Law.

Case 1: Feng Xingzhong - Battle Cry for Responsibility of "Dust Lung"

Mr. Feng Xing-zhong, 34-year-old, a peasant migrant worker from Sichuan Province of China. In 1992, his fellow villagers introduced him to come to Guangdong Province to start his factory worker life. In 1993, he came to work at Ko Ngar Gems Factory in Huizhou city of Guangdong province. For 8 years, he worked as a cutting worker at a workplace that had no occupational safety measures. He worked for 12 hours per day and had only one day-off per month on average; in peak season he even had to work for 20 hours a day. There was no extra compensation for overtime. He received around USD150 per month for his labour.

"At that time, we did not have any consciousness to protect ourselves, but the boss knows the danger in this industry. In my workplace, there were three fans and one air exhauster installed, but they were not functioning at all. Sometimes we quarreled with the management for giving us one more facemask. He just provided three or four facemasks for us per month that is definitely not enough. The air was full of dust, our sputum was black in colour; our nostril was black in colour too. If the gemstones were colored in black, red or whatsoever, our nostril, hair and clothes would also be colored in the same manner. "

Employment Relations Erased with Factory Relocation

In 2000, the factory organized a body checkup for the whole workforce and six workers including Feng were found to have symptoms of silicosis. The factory told the workers that they had tuberculosis and advised them to go back to their homes in Sichuan to take rest. Feng and his co-workers stayed in Sichuan taking tuberculosis medicine for two whole years while their health conditions deteriorated. Finally they found that they had contracted silicosis, classified stage II, in repeated diagnoses. From 2002 onwards, Feng started the legal struggle against his employer for compensation. He went back to Huizhou City but the factory had already relocated to Haifeng City with the factory name changed from Ko Ngar Gems to Gaoyi Gems. Relocation, in fact, is one of the common tactics used by the employers to avoid legal responsibility for the workers. The boss absolved himself of any responsibility. In 2002, Feng started fighting for his compensation by pursuing a lawsuit against Gaoyi Gems at the Haifeng County Court and later at the Shanwei Municipal Intermediate Court. However, both courts dismissed his case on the grounds that he had no "employment relations" with the Gaoyi Gems Factory.

In early 2005, he lodged another application for arbitration for his compensation at the Huidong Labour Dispute Arbitration Committee in Huizhou city. Though the Huidong LDAC instructed Ko Ngar to pay Feng compensation and reimbursement for his medical fees, which only amounted to about 34,000 yuan, the ruling was non-binding in nature. Moreover, as the factory had been relocated to Haifeng, the case became subject to a different territorial jurisdiction and the ruling could not be enforced.

Win record compensation after long fight

Staunch and steadfast, Feng did not give up. He lodged a civil lawsuit against Ko Ngar Gems Factory at Huidong County People's Court in June 2005. After a nearly four-year legal battle and amid a steady deterioration of his health, on 22 Dec 2005 in Huizhou City (where Ko Ngar Gems was first located), the court ruled that Feng was entitled to a total of 463,761 yuan, in a compensation package that included a lump sum payment of 219,000 yuan to cover Feng's continuous medical treatment. It is the first time that a court has awarded compensation on this vital count and taken continuous medical treatment into account in the compensation.

It sets a good precedent for future compensation cases involving occupational illnesses in the Guangdong jewellery industry. However, the calculation of the amount of long-term medical treatment was not yet standardized. The sum was only in reference to the compensation standard of industrial injury on an estimation of 10-year coverage. Though Feng won his court case, the battle did not end with the court victory. Feng's employer did not comply with the court ruling and refused to pay despite the victim plaintiff's filing of an execution order with the Huizhou court. Labour Action China complained to the HK Trade Development Council to support the plaintiff. On 26 September 2006, Feng and his former employer Ko Ngar Gems Factory reached an out-of-court agreement under the mediation of the Huizhou court judge. Feng finally received an amount of RMB430,000 in a one-off compensation.

Case 2: Deng Wenping ¡V A Silicosis Fighter Died After Years of Struggles

Deng Wenping, a migrant worker who contracted silicosis while working at a Hong Kong-invested jewellery factory in Huizhou of southern China due to the poor workplace environment, finally died of his illness on 5 January 2006, after years of struggles for his life and just compensation.

Deng was only 36 years old when he died. He was diagnosed of silicosis in 2000, after just three years on the job as a stone cutter and polisher in Perfect Gems Factory. Generally speaking, the average incubation period for this type of pneumoconiosis was seven to eight years. Deng's diagnosis suggests that the workplace conditions of the factory were particularly ghastly. According to the workers, the factory sealed up all the windows without any ventilation or exhaust system.

Fight for compensation amid deterioration of health

In 2001, Deng received 90,000 yuan in compensation from the company and his employment relationship with the company was terminated. He went back to his hometown for medical treatment, but soon after found that his health was deteriorating rapidly and he was unable to afford the medical fees. In 2002, Deng sought arbitration from the Boluo County Labour Dispute Arbitration Committee, but was turned down because he had exceeded the 60-day time limit for seeking arbitration. He later applied a court lawsuit against Perfect Gems but he lost the case. At the same time, his illness deteriorated from the second stage to the final stage. In August 2004, he filed a second lawsuit on the grounds that his disease had degenerated to the third stage. However, he was rejected again because the court said that he had signed the compensation agreement with the company and thus he had no ground to a second appeal.

After the mediation of the local government and intervention of Hong Kong labour groups by a series of public events highlighting the plights of the workers, Deng and several other silicosis-afflicted co-workers reached an out-of-court agreement with the company. Deng received a total of 230,000 yuan in July 2005 from his former employer, Perfect Gem & Pearl Manufacturing Company. Despite finally receiving the compensation, Deng's family was close to bankruptcy due to the high medical cost and the prolonged legal battle with the employer.

Problems faced by Chinese workers on compensation for occupational diseases and the legal loopholes of implementations of the laws

(1) The "collective non-intervention" of the local government bodies
The victims of occupational disease complain most about local government bodies for not implementing laws, rejecting the appeals of the workers and on some occasions even siding with the employers to deprive them of their legal right to compensation and protection. Cases of workers blocking roads, going on strikes or sending collective petition to various levels of the government reflected the workers' depression in the pursuit of their rights and compensation.

(2) Employers use various means to shake off legal responsibilities
Article 44 of "General Principles of Civil Laws" states that, "In case of separation or merger of enterprise, the rights and responsibilities of the enterprises should be taken up by the legal representative(s) of the changed enterprise." The above article does not apply when employers relocate the factory, change the name of the factory or change the legal representatives in order to avoid legal responsibilities for compensating injured workers. In many cases, the injured workers become unable to prove their employment relations with the closed or relocated factory. The Labour Dispute Arbitration Committee has often even refused to handle the cases, claiming that the Committee cannot take up a case when factory in question has moved out of the county and its business license has expired.

(3) Worker-Unfriendly Litigation Procedures
3.1 Arbitration
According to the Occupational Disease Prevention Law, the first step required before civil case litigation is to put forth a case to the labour arbitration committee. To put forth a case to the committee, workers must provide a number of documents including a diagnosis of the occupational disease, a work injury certificate and a work capability assessment certificate from authorized bodies. In order to obtain these documents, they must first provide evidence of employment relations and the history of employment. However, migrant workers have a high turnover rate and change jobs frequently. Often they do not have work contracts or proper employment documents. In some cases, the employers simply refuse to provide employment documents. This prevents migrant workers from taking the first step to claim back their legal rights.

The second problem is the recognition of medical diagnosis. Even with legitimate employment documents in hand, workers still face another difficulty before putting forth their case to the arbitration. The Prevention of Occupational Disease Law allows victims to obtain medical diagnosis certificate at the authorized institutions either at the place of origin or the place of work where the victim has proof of staying for over a year. The high mobility and job turnover rate of migrant workers provide a chance for the employers to dispute medical diagnosis done in where the victim has less than a year's stay. This, together with the bureaucratic attitude of the local court and government that simply rejects medical diagnosis that are done in provinces outside Guangdong province, do nothing but put the life of these victims under further risk.

Thirdly, according to Regulations of PRC on Settlement of Labour Disputes in Enterprises, a party to a labour dispute must petition for arbitration to the arbitration committee in writing within 6 months from the date when he knows or should have known that his rights have been infringed upon. After six months, the arbitration committee shall accept a petition only if a party failed to observe the time limit due to force majeure or other justifiable reasons. First, the meaning of "should know that his rights have been infringed" is vague and in fact, most of the victims knew neither their rights nor their degree of illness until they received the certification of their disability level from authorized bodies. The process of obtaining this certification is lengthy and may result in exceeding the six-month time limit stipulated in the clause. Second, this clause is in contradiction with Article 17 of the Injury Insurance Law which allows victims whose employers have not filed on behalf of the employees for injury certificate, to have a one year period to apply for insurance claims unilaterally after they have secured the medical diagnosis. In the above situation, a victim may spend a year acquiring an injury certificate while passing the time limit for filing for labour arbitration.

3.2 The validation time for litigation is too short

The Article 82 of the Labour Law stipulates that a plaintiff should file a written application to a labor dispute arbitration committee within 60 days starting from the date of the occurrence of a labor dispute. The arbitration committee may generally make an adjudication within 60 days from the date of receiving the application. In many cases, "the date of the occurrence of a labour dispute" is usually interpreted as the date of the diagnosis or discovery of the disease. However, after receiving work ability assessment results from the authorized bodies, victims have to take time to go to various hospitals for assessment, and collecting employment records, on top of raising money; to do so may take longer than 60 days. In other words, the time frame for workers in collecting evidence for safeguarding their rights is limited to 60 days only, which many migrant workers are simply not aware of; and may lead workers to end up missing the chance for litigation.

3.3 The compensation scale and coverage on silicosis is not clear and sufficient

The Labour Law, the Prevention of Occupational Disease Law and regulations on work injury insurance provide for compensation to workers who have contracted occupational disease. However the compensation scale is provided by local regulations which do not have a clear scale and method of calculation. This allows employers to use the legal loopholes to offer private settlement deals to the victims. Worker plaintiffs lack bargaining power and legal references to claim higher compensation. In many cases, they may accept a deal, only to find later that it is not enough to cover long-term continuous treatment.
In the case of silicosis, compensation is commonly paid in a lump sum pegged to the scale of normal industrial injuries. Yet as a chronic and incurable occupational disease, silicosis should not be categorized together with work injuries, given that the disease is latent and deteriorating in nature. The compensation scale and coverage between chronic occupational disease and industrial injuries should be made separate. Moreover, the continuous medical treatment cost should be an indispensable item in the calculation of compensation in terms of content and scale.

3.4 Upgrading work injury insurance for deteriorating conditions

According to Article 28 of the Regulation on Work Injury, "Within one year after the release of the work ability assessment result, the injured worker, the immediate family, the employment unit or the authorized assessment body may demand re-assessment of work ability if deteriorating conditions are proven." The worker may be liable to upgrade work injury insurance if they provide proof about further loss of work ability due to deepening of silicosis in this case. The employer and the local social security bureau should adjust the insurance and compensation payment accordingly. However at present it is not clear who should pay for upgraded work injury insurance in case of termination of employment relation. The worker has to take the case to court again for arbitration. This means at present the law only provides occupational disease and injured workers with lump-sum compensation. There is no regulation or procedure to demand that employers or the local social security bureau pay victims for continuous medical treatment.

4. Enforcement of the Penalty Clause in the Law
The Prevention of Occupational Disease Law has clear provisions on the responsibilities of the enterprises. These include the enterprises having responsibilities to install prevention measures (Chapter 2 and 3), to ensure workers' participation in safety and health management (Chapter 3), to insure workers and report in case of diagnosed cases (Chapter 4) as well as penalty for violations (Chapter 5). The Civil Law Principles also contain provisions on criminalization of the owners of enterprises where "serious incidents" of safety issues involving casualties of 3 and above. However in most of the identified cases, the companies that are in obvious violations of all these provisions are seldom penalized. These companies are free to close down and relocate their production sites which in actual practice undermines present legal regulation.

Practical Actions to Improve Occupational Safety and Health

National-level actions
1. Classify the gemstone processing industry as "hazardous sector" and set up without delay regulations and mechanisms to improve the occupational safety and health as well as the working conditions of the workers, including those informally employed.
2. Devise a practical mechanism to implement the International Labour Organization (ILO) Convention 155 concerning occupational safety and health.
3. Review the Prevention of Occupational Disease Law, the Work Injury Insurance Law and the Safe Production Law in defining the liabilities of enterprises that relocate, sub-contract production or change company and registration for compensating workers that have contracted occupational disease. The rights of occupational disease victims to have easy access to legal aid should be provided in the laws. The scale of various kinds of compensation especially that for continuous medical treatment should be clarified in regulations, now that a few litigation cases have established precedents on the scale question for reference.
4. Strengthen the intensity and scope of inspection on occupational risk assessment and control.
5. Collect and disseminate data on occupational accidents and disease in a transparent and authentic approach.
6. Carry out rehabilitation and health programs specifically for silicosis-afflicted workers
Enterprise and industry-level actions
1. The Chinese and Hong Kong companies where silicosis cases have been found immediately give compensation adequate to cover the needs of the victims and their families.
2. The local and international trade associations disqualify the membership status of the companies that violate workers' rights.
3. The organizers of jewelry trade fairs ban companies that seriously violate labour rights from taking part in their exhibitions.
4. The International Jewellery Trade Association (CIBJO) enforce a program that regulates its members to set up a national industrial fund to cover the compensation, medical expenses, rehabilitation of silicosis victims, and development of technology to improve workplace safety.
5. CIBJO and jewellery retailers also develop a monitoring program on the labour as well as safety and health standards of the industry.


Looking Forward

Silicosis cases are reported widespread in the gems and jewelry factory of Dongguan, Panyu, Huidong, Huizhou and Haifeng in South China. More factories are planning to move to the marginal remote areas where law enforcement is more relaxed by local governments for the sake of attracting investment. With poor occupational health and safety awareness, workers will be vulnerable to pay off live and health for daily bread. Employers should provide safe and healthy working conditions, immediate medical treatment and compensation to victims.

LAC will continue to achieve the objectives of providing legal and other support to occupational disease victims, to strengthen the organizing efforts of the silicosis victim organizers, to advocate for improvement in the implementation of laws related to work injury compensation and occupational disease in China, and lastly to pressure and influence the labour practices of the jewelry industry. In advocacy and campaigning work, we will continue our local and international campaign by direct actions targeting the global jewelry industry and the international trade fair organizers and labour organizations. We will also continue to facilitate the solidarity networking and exchange within the Chinese workers and across the border for building a united front of workers¡¦ action in China.

Please visit our website: http://www.jewelrycampaign.net/eng/index.htm