China's Uneven Labor Revolution

Factory conditions in the People's Republic may be improving -- but service workers are getting left behind.


The Salvadors' team in front of the cafe, Kunming, China (Colin Flahive)

Had Li Ping been working anywhere else, she probably would be dead.

Three months ago, the 17-year-old had found work as a waitress at Salvador's, a Western café and restaurant in Kunming, China. Situated in a crowded alleyway known to most Kunming residents as "Foreigner's Street," Salvador's serves up an unlikely assortment of milkshakes, breakfast burritos, chickpea patties, and craft beers. And while its menu is tailored to the foreign palate (Mexican food, unsurprisingly, remains a rarity in China), Salvador's does manage to draw local patrons as well. ("A lot of foreigners here," writes one reviewer on, the Chinese version of Yelp, "but the ice cream is good.")

Most Chinese consider Kunming a pleasant, if provincial, third-tier city. The tiny village where Li Ping comes from, on the other hand, hardly makes the map. Called Dalubian Cun -- literally translated, "the small village by the side of the big road" -- Li Ping's hometown lies 500 km southwest of Kunming in the rural prefecture of Lincang. Dalubian is a bumpy two-and-a-half hour ride from the nearest main road, which itself lies an hour-and-a-half from Yunxian, a backwater "town" of 400,000 just over the hills from the Mekong River. The trip to Kunming requires a grueling 10 hours.

Though it's not uncommon for residents of villages like Dalubian to seek work in nearby cities, it's unlikely that Li Ping would have learned of Salvador's were it not for A Li, another Dalubian resident and a manager of the cafe.

A Li became one of Salvador's first employees when Americans Kris Ariel and Colin Flahive opened the restaurant in 2003. At the time, Ariel and Flahive were living in Dali, a picturesque tourist hub four hours west of Kunming. A couple of years earlier, Ariel had taken a job managing a small eatery there called Sunshine Café, but when the 2002 SARS epidemic brought business to a halt, Kris and Colin decided to strike out on their own.

The duo moved their new café to Kunming in 2004, in the process bringing on two new partners, Josh Pollock and Okano Naoko. Six months later, A Li moved with them. Before long, she'd recruited friends from back home to join the growing staff. Today, Salvador's employs 22 workers -- 11 of them from Dalubian.

Li Ping had been with Salvador's for just eight months when she started to feel sick. At first, the symptoms seemed minor -- nausea, fatigue -- but within days Li Ping felt too sick to work. When she visited a local hospital, a doctor diagnosed her with renal failure.

"They told her, 'There's nothing we can do,' " Flahive says. "What they meant was, 'There's nothing that you can afford."

At 17, Li Ping had been too young to enroll in Salvador's health insurance plan. As a result, her only hope was to make the daylong trip back to Lincang; there, she could take advantage of China's rural healthcare system, which reimburses around 60 percent of the cost of (basic) procedures. Arriving in Lincang, Li Ping expected to travel directly to the local hospital. Instead, when her parents met her at the bus stop, the three of them walked home through pouring rain up to her village.

"Her family had decided to give up treatment," Flahive explains. "For them, the debt associated with it would have been a death sentence. They didn't know what to do."

* * *

China isn't the sort of place that evokes images of idyllic working conditions.

In fact, when most Americans think about Chinese labor practices -- to the extent that they think about Chinese labor practices at all -- they tend to think of companies like Foxconn, the Taiwanese conglomerate best known as the manufacturer of iPhones and iPads. 

In January 2012, New York Times reporter Charles Duhigg published a searing expose of working conditions at Foxconn, describing tenement-like dorms, forced overtime, and lethal factory explosions. In December, just under a year later, Duhigg and colleague Keith Bradsher revisited conditions at the manufacturer , noting improvements in working hours and stronger safeguards against workplace accidents.

The vast majority of Chinese citizens, however, don't work in places like Foxconn. According to China's Ministry of Human Resources, in 2011, the country's manufacturing sector employed just 29 percent of workers; the service sector, by comparison, accounted for 36 percent of employment nationwide. Few Chinese service workers are seeing conditions improve.

"Over the past three years, wages in factories have gone up," Geoffrey Crothall, communications director for the Hong Kong-based labor rights group China Labour Bulletin, said. "But workers in shops and restaurants have been left behind."

Like manufacturing workers, restaurant, hotel, and retail employees frequently work long hours for low pay. In 1994, China instituted a national minimum wage designed to cover workers' basic living expenses. But over the past two decades, minimum wages -- which vary by province -- have been outpaced by inflation that has, at times, surpassed 7 percent. Though China's slowing economy has cooled rising prices, in third-tier cities like Kunming, minimum wages still barely exceed 4 or 5 American dollars a day.

Many service workers would be lucky to make that. According to Crothall, enforcement of labor laws -- particularly in rural areas and lower-tier cities -- remains "extremely lax to non-existent." In an interview, Eileen Otis, a professor of sociology at the University of Oregon whose research focuses on the Chinese service sector, said that many restaurant workers are denied basic benefits like housing.

"During my research, it wasn't uncommon to find waitresses living inside restaurants, sleeping on benches," Otis said.

And while waitresses and retail clerks avoid some of the most unpleasant -- and perilous -- elements of factory work, they still face a host of unique challenges. In her book Markets and Bodies, a study of service workers in China, Otis explains that restaurant workers and hotel staff face routine sexual harassment, as "the places that employ them are often also sites of solicitation by sex workers." Otis also points to a less conspicuous menace of service work: boredom. With hourly wages low, employers often overstaff, leaving workers with large chunks of idle time throughout the day. As a result, "in small establishments, boredom can easily become a major occupational hazard," Otis said.

In China, factory conditions have improved for a variety of reasons -- rising demand for labor, international pressure, and worker activism among them. Though the Chinese government continues to ban independent labor unions, worker strikes at large factories have become increasingly common. In October, for instance, thousands of workers at a Foxconn plant in Zhengzhou walked out after the factory introduced more demanding -- and time-consuming -- quality control requirements.

But service workers hired by small shops or restaurants lack collective bargaining power. "It's difficult for these workers to get together and put pressure on management," Crothall said. "Rarely do they get formal employment contracts, and it's very difficult to file a complaint."

Even workers at much larger service companies struggle to organize for improved conditions. In 2006, the All-China Federation of Trade Unions (ACFTU) -- a government-controlled group and China's only legal union -- astonished Chinese and international observers by kicking off a grassroots organizing campaign at Wal-Mart. Wal-Mart's response was equally astonishing: The company, which has faced criticism for alleged anti-union practices, capitulated to the ACFTU's demands and allowed unions to form at 22 superstores. Two years later, Wal-Mart yielded again to the ACFTU and agreed to allow collective bargaining by store unions.

And yet, despite these gains, Wal-Mart workers have been unable to dramatically improve wages or working conditions. In her book Wal-Mart in China, Sydney University of Technology professor Anita Chan argues that the collective bargaining agreements signed by Wal-Mart in 2008 resulted in negligible financial gains for store employees. In an essay co-written with Jonathan Unger and Diana Beaumont, Chan also writes that Wal-Mart continues to reduce costs by hiring many of its workers as part-time staff -- who receive no benefits -- and by requesting that employees "volunteer" for extra tasks in order to avoid paying overtime bonuses. A spokesperson for Wal-Mart declined to comment for this article.

Without an effective union or well-enforced laws to rely on, a Chinese service worker seeking better conditions can only hope to pack up and try her luck elsewhere. According to Otis, even at top luxury hotels annual turnover rates can approach 25 percent. In China, "migrant labor" means more than just moving from country to city in search of work; rather, it means migrating from job to job in a perpetual search for a better life.

* * *

For Salvador's proprietor Kris Ariel, the privations of Chinese service work are hardly theoretical. In the early 2000s, while managing Sunshine Café, Ariel learned that his co-workers were earning just 200 RMB (then worth $25) a month -- a fraction of his salary.

"At the end of the year, I'd give them 1,000 [RMB] each out of my pocket," Ariel says. "They were working as hard as I was, so it just didn't seem fair."

So when Ariel and Flahive opened their own restaurant, they knew they wanted to make fair treatment of employees a centerpiece of the operation. Soon, Salvador's was offering its workers an unparalleled suite of benefits: above-market salaries, health insurance, one-on-one English tutoring, teambuilding retreats, paid vacations, unlimited free food, and revenue sharing. While it's standard for Chinese restaurants to provide board for employees, typical housing is Spartan and cramped, with six or more workers to a room. Salvador's, by contrast, assigns two employees to each room.

It's hard to convey just how aberrational these sorts of labor practices are in China. Otis, who has dedicated her career to studying the Chinese service industry, says she's seen nothing like it. "I'm not aware of any employers who are pushing the envelope [on working conditions]", Otis said. "There just aren't role models out there."

Even for Salvador's employees and their families, the café's working conditions can take some getting used to. "When I was working at Sunshine Café," Ariel recalls, "our servers' families would hear about their new Western boss and immediately ask: 'Do they beat you?' When our waitresses tell their families about working at Salvador's, the families are shocked."

And as is so rarely the case in restaurants and factories throughout China, Salvador's employees respond by staying. The average tenure of a Salvador's worker is around three years, Flahive says, and a handful of employees have been with the company since its founding. When a number of servers decided to leave Kunming to be closer to their home villages, Salvador's owners decided to found a new café branch in Lincang. Salvador's employees contributed 50 percent of the startup costs for the new restaurant, which is staffed and managed by Kunming "alumni." Eight years after joining Salvador's, A Li still manages the Kunming branch.

* * *

It was A Li who first told Flahive how dire Li Ping's situation had become.

A Li had been trying to convince Li Ping's family to return her to the hospital, but they'd refused: A dialysis regimen would cost nearly $500 a month (on top of $2000 for initial tests and treatments), an impossible sum for a low-income rural family. And so A Li turned to her Salvador's bosses.

"At that point, we decided that we needed to commit ourselves to [Li Ping]," Flahive says. "Because it was either that or let her die."

With A Li as a go-between, Flahive and Pollock offered to drive down to Dalubian, bring Li Ping to the hospital, and cover her medical expenses -- indefinitely. At first, the family declined. But later, A Li called to tell the Salvador's team that Li Ping -- her face swollen and sallow -- had left Dalubian and was en route to Kunming.

Working with friends in the medical field, Flahive and his partners organized a bed for Li Ping at a Kunming kidney hospital. While doctors placed Li Ping on diuretics and began to schedule dialysis sessions, Flahive and his partners set out to raise the funds necessary for her continued care.

The Salvador's owners set a fundraising target of 150,000 RMB (around $24,000), enough money to last for four years, at which point Li Ping will become eligible for health insurance (and lower medical costs). Over the next two months, an online fundraising campaign raised over $5,000; proceeds from a tip box at the restaurant and a Kunming benefit concert added a couple thousand more. To date, Salvador's has raised nearly $20,000 on Li Ping's behalf.

At the moment, Li Ping is back in Dalubian, recovering from her recent ordeal and making the twice-weekly journey to Lincang for dialysis treatments. In Kunming, Flahive and his partners are heartened by her recovery, though they recognize that a long fight remains.

For Flahive, it's a commitment that doesn't stop with Li Ping, but rather includes the broader -- and perhaps more daunting -- mission of changing the way business is done in China.

Of course, transforming working conditions in China will require more than the contributions of one Western-run restaurant located a thousand-plus miles away from the power centers of Beijing and Shanghai. But Flahive says he's working to do his part.

"We've had competitors tell us, 'You can't treat your employees like that!' All along, we've made a concerted effort to prove them wrong."

This post also appears at Tea Leaf Nation, an Atlantic partner site.