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Crises, Bailouts, and Migrants

As in every economic downturn, those at the margins of society often suffer the most. China is no exception. The brunt of the crisis is likely to be felt most acutely by the poorest and the most marginalized of Shanghai society -- its migrant workers.

Seeking jobs and a better life, 140 million Chinese people have taken to the road in search of work. With more than one out of every three people in the city originating from outside Shanghai, they represent a sizable block of citizens who exist by and large in the shadows of urban society. As the legal status of their presence in the city is tenuous, migrants are often the target of exploitation and abuse by their employers. This is because they are likely unaware or unwilling to force their employers to comply with the laws on the books. As a result, stories of rampant negligence, workplace safety hazards, and failure to pay wages on time (if at all) are commonplace. And since a large proportion of migrants work in manufacturing or construction, such transgressions can mean serious injury or death.

Ever wary of the potential for unrest, the central government has moved to bolster migrant rights and privileges. Just this March, the CCP passed a new labor law that strengthened the protections of the migrant workers from workplace abuse and mistreatment. The government has also codified requirements that city schools enroll the children of migrant workers, an opportunity that up until now was all but impossible. Additionally, the central government was making moves to increase the minimum wage and phase out certain residency permit requirements, both major hurdles to making ends meet and eking out an existence in urban China for migrants.

For their part, migrants have become more aware of their legal rights under the law and more adept at using the legal code to their advantage. In a sharp departure from before, there have been cases where migrants have used the law in order to protest mistreatment or discrimination. In Shanghai, migrants have used legal means to gain access to schools that previously denied them entry. In Guangdong, workers have demanded wage compensation as stipulated by law for factory owners who shut down and fled. More often than not, when migrants invoke the law, or threaten to, they win. While these are merely anecdotal cases of an economy that remains heavily slanted against migrants, the fact that the cases have come to light shows improvement, no matter how infinitesimal it may be.

With the recent downturn in the economy, however, not only are additional reforms on hold, already implemented measures are in question. According to a leading demographer at Fudan University, the government has indicated to the provinces that it will allow for a more flexible interpretation of the newly minted labor law and other workplace restrictions. In effect, the government appears to be acquiescing to the dilution of the very same reforms that it had promulgated in order to help migrants. The government, deciding between economic growth and the economic and legal support for a class of economically marginalized, has sided with the former. However, supporting the manufacturing sector at the expense of the migrants means not only rolling back important advances but also threatening the livelihoods of a class of citizens who could very likely take to the streets. This is a risk that the government is apparently willing to risk for now as the other option, ignoring the health of the manufacturing sector, means slowing the economic growth that underpins China's standard of living and social stability.

Unsurprisingly, China is not alone in facing tough decisions regarding which constituency to help. In the United States, our government has been forced to decide just who is worth supporting as well: Should Washington bail out Lehman or Citi? AIG or Freddie Mac? Detroit or New York? While America struggles with how best to balance the demands of "Main Street" or "Wall Street," to invoke an overused phrase, the Chinese are similarly deciding between supporting a manufacturing sector that supports China's growth or supporting the job security and political status of migrants in China's cities.

Obviously, Beijing's and Washington's balancing act has massive implications for the future of each country's respective development and economic health. But just how both governments balance these conflicting pulls will have a profound impact on the daily lives of those at the bottom rungs of society. It is unfortunate that like so many times before, the migrants will see their hard fought gains evaporate not only because of the bad economy but also because of the resulting political triage. But China's migrants are not alone in this aspect. Indeed, in the coming years, workers from Dearborn to Dalian are likely to come out the losers of their government's attempts to balance just who to help and who to ignore in a time of economic crisis.

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