Trade Unions in the Health Sector

Case Study Summary

This study focuses on labour relations in hospitals where the type of ownership has a strong impact on the model. In G province, public sector hospitals still dominate and the private sector has been slow to develop. Although there are equal nos. of private and state hospitals, the former are generally small clinics and account for just 5% of medical resources.

Most state-owned hospitals that have gone through restructuring in G province have done so via mergers. There are also joint-stock hospital ventures, although these are a minority.

In the first section of this report we focus on labour relations in a small state-owned hospital (SOH) that are representative of this type and size of hospital. In section two we make a summary comparison with labour relations in a large SOH and a private hospital. We then look at the restructuring process in a former enterprise-owned hospital that underwent restructuring.

Xis a Grade 1 district level SOH with 100 doctors, 90 nurses and 87 beds.SOH are categorized institutional work units or public organisations (shiye danwei). Their budgets and work plans fall under a government administrative plan known as a bianzhi, a term widely used to determine the size and budget of a government or state-owned unit during the command economy but still employed in public organisations today. For formal staff employed under the bianzhi system, labour relations are not governed by the labour law but a separate set of regulations specifically for public organisations and institutional work units. Staff contracted outside the bianzhi are regarded as having entered into a labour relationship with the hospital which is governed by the labour law.

In X the local government pays the basic wage of formal staffers but benefits and bonus are decided and allocated by the hospital. It is very hard for an SOH to dismiss a permanent formal staff but this is not the case for contract workers of whom X has 31 nurses (30%) and 23 doctors (20%). The income of this group is much smaller than formal hospital staff,especially for nurses.

The barriers to employment under the bianzhi system are high and set by the state. Obviously for the hospital management it is cheaper to hire a contract nurse. The annual wage differential is 50,000 yuanagainst 30,000 yuan, with a contract nurse earning about 1300 per month against a formal nurse earning 3000. The number of contracted nurses on X’s payroll is increasing.

The basic wage of contract nurses is divided into two parts: basic+bonus. Basic is 800 yuan higher than the local minimum wage. As with the formal workers, the bonus is based on hospital’s situation. At present it is 300-400 yuan per month. There is a 15 yuan subsidy for night shift work.

Formal workers average monthly subsidies are approximately 600 yuan. In 2006, their Spring Festival bonus was 7000 yuan while contract workers got nothing. In interviews contract nurses expressed anger at not receiving a Spring Festival bonus. Hospital management said that in 2007 it would allocate a bonus of 2000 yuan to contract staff and 8000 yuan to formal staff.

Contract nurses’ contracts do not include medical insurance and they are not part of a housing fund established for formal workers that makes loans to workers who need to buy or repair their homes. Contracts for formal workers are of initially three and then five years duration and are very hard for the hospital to change or alter. Contract nurses are 3 months probation and then annually renewed. Contract nurses are recruited via an arrangement with nurses’ training schools in other provinces (chiefly Hunan and Jiangxi). Some are recruited directly ‘from society’.

There is a high level of labour mobility among contracted nurses – currently at 20% and many leave the health sector altogether after becoming disillusioned at the lack of career prospects. The hospital management is reluctant to offer too many training courses to facilitate advancement and promotion and this would probably lead to even greater labour mobility, possibly to the private sector.

Research Team found a generalized dissatisfaction among nurses. Contract nurses worked longer hours than formal nurses and the overall shortage pressure of work. Like almost all hospitals the ratio of nurses to beds in X was lower than the national stipulated requirements

Interviewees frequently referred to the decline in status of nurses and almost all of the interviewees had suffered abuse and even physical attacks. Nurses felt unequal to doctors and contract nurses felt that formal nurses held prejudices towards them. Former felt entitled to the welfare benefits that latter received.

The issues of training, quality of workforce, staff investment by employing unit and labour mobility is a key issue in China’s economy that was not foreseen. All aspects of the problem can be seen in the health sector. This situation had induced a crisis in recruitment at X hospital.

X had been recruiting contract nurses since 1996, but the methods and model of recruitment and employment conditions have not changed. In 2002, 10 contract nurses resigned en masse, which persuaded management to increase the basic wage from 650 yuan to 800 and criteria for some bonus entitlements were standardized with formal nurses Contract nurses with more than 2 years seniority and appropriate academic qualifications could apply to be come ‘staff’ (zhigong) which would give them the same status as FN. But due to policy constraints those who attained this status were still not entitled to housing funds, medical insurance and maternity insurance.

Beginning 2007 administrative constraints on participation in medical insurance were lifted in GD. However, management at X was split over the issue between those who argued that only contract nurses with zhigong status should be allowed to participate and others who felt everyone with more than year’s seniority should be eligible.

Unequal pay for the same work is a major problem in the health sector. S, a former nurse who was deputy sec of X party committee and chair of trade union, had argued for increased parity but stopped short of full equality between the two types of employment category.

No contract nurses at X had joined the union. In interviews only 2 said they wanted to. S stated that this was mainly because the union included them in all their (traditional welfare type) activities so what was the point of them joining and paying union fees?

Hugong phenomenon.

The shortage of clinical nurses had led to unqualified personnel being employed to carry out non-clinical patient care tasks. Most of these were employed by the patient and/or family! X refused to recognize them as employees but at the same time, beginning in 2002, attempted to ‘manage’ their employment and wages inside X. This was a general trend.

A three-sided dispute between an injured hugong and a patient and the hospital plus an inquiry into the contracts by the local MOL led to X contracting a labour service company to provide hugong personnel thus avoiding any potential lawsuits etc. X could benefit by taking a cut from the service company.

But the employment status of hugong remains unclear as the labour agencies involved denied that they are the actual employers. In an interview L,an agency manager,said they provide training and introductions and take 40 per cent of the peihu shouru (wage) as a management fee. Some of this is then extracted by the hospital but the L was not willing to say how much. Also L said his company will pay the hugong a 300 yuan livelihood subsidy when there is not enough work. In this scenario is the hugong employed by the patient and his family or is he/she freelance?

Interview with hugong: longest serving hugong at X with 10 years; former construction worker; in 2005, he was compulsorily drafted into the L company scheme,which led to a significant drop in income for him. His current wage is between 1000-2000 yuan per month. If he tried to work outside the labour service company he would be beaten up by their thugs. He had seen this happen and the hospital security people had not intervened.

Summary of comparison with large SOH and private sector hospital.

  • Wages are higher at large SOHs and chiefly a result of higher bonuses and ‘presents’ from patients. Specialist and consultant salaries are very high. At the SOH army hospital, the monthly wage for a nurse employed under the local state’s bianzhiwas 4000 yuan. Contract nurse wage was 2000 yuan.
  • Private hospital: Doctor-nurse differentials very large; labour relations very tense.

RT interviewed the director of a large private hospital in Dongguan who was earning three times the salary he was paid in his native Jiangsu. The formal wages of doctors in this private hospital (POH) are higher than SOH

  • Nurse wages in the POH are similar to those of contract nurses in small SOH but benefits and insurance much harder to guarantee. Many nurses in POH not fully qualified and standards of care are low. Differentials between doctors and nurses at about 1 to 1.5 but difficult to ascertain as wages were not made public by management and interviewees reluctant to say.

Restructured Hospital in M city.

State-owned company hospital in M city that had been supplying free and/or subsidized medical treatment to the company workforce and families for over 40 years. During its overall restructuring the company’s aim wasto shed its welfare obligations – such as the hospital.

In May 2001 M city government implemented a medical insurance policy and cancelled free health care. The company also cancelled its subsidy to the hospital, gave it independent accounting status and self-management of all funds. By the end of 2001, a hospital survey found that 95% of staff approved of a hospital restructuring plan.

In 2003 the second stage of restructuring went ahead with the hospital being transformed into a share-holder company. Hospital staff bought 80 per cent of the shares and the remaining 20 per cent was held by the company. The company continued to support the hospital by limiting its staff medical insurance claims to the hospital. In July 2003 an investors’ (带资者) meeting issued a new hospital constitution and elected a standing committee and supervisory committee.

Immediate performance of the new privatized hospital was spectacular. Profits hit a historical high and wages went up dramatically. Morale and prospects were much improved. Beginning from 2004, problems started. From management’s point of view it was hard to implement new policies as shares were spread evenly over the staff, who could therefore block new management policies such as job rationalization and wage differentials. Staff also blocked high salaries for new managers or equipment renewal.

A second restructuring offered two choices: a management buy-out or sell-off to private capital. At a meeting of the hospital staff and workers’ congress, staff opted for the latter. After six months an investor was found and a plan for new capital to buy out the original company’s 20 per cent stake and the remaining staff shares (80%) was formed. Guaranteeing staff interests was the key to the bargaining and although the new buy-out on the surface seemed to offer favourable terms the offer was rejected by the hospital.