“All cases of wage arrears for construction workers are caused by multi-level subcontracting,” said Lawyer Li Qiang of the Provincial Migrant Workers' Rights Protection Station, who has long been engaged in legal aid for workers seeking unpaid wages. He introduced that since September 2007, the station has accepted more than 2,000 cases of migrant workers seeking unpaid wages, completed 960 cases, and recovered 34.82 million yuan in wages for migrant workers. In all these cases, the difficulty in claiming wages was caused by multi-level subcontracting.

　　Multi-level subcontracting makes wage claims difficult

　　Zhao Xuezhen, a contractor engaged in the construction industry in Jinan, showed reporters an IOU. The note indicates that on August 21, 2012, Wenshang County Qiangyu Construction and Installation Labor Co., Ltd. owed Zhao Xuezhen 100,000 yuan for construction labor on Building 40 of Zhaozhuang Community in Jinan. The repayment date was October 20, 2012. The person in charge of the owing unit is Shao Qianghui. The bright red company seal and the person in charge's private seal are clearly visible. Zhao Xuezhen said: “More than a dozen of us migrant workers worked for him for nearly half a year last year, and we haven't been paid yet.”

　　On the morning of December 16, the reporter went to Zhaozhuang Community in Tianqiao District, Jinan, where the above project is located. At the infrastructure office of the neighborhood committee, a staff member around 50 years old who was unwilling to disclose his name told the reporter that they had contracted the project to a builder—a construction company in Wenshang—and that whether the company owed migrant workers' wages was not their concern. They told the reporter to find Manager Ma of the construction company to learn the situation. The reporter contacted Manager Ma, who said they had subcontracted part of the project to Wenshang County Qiangyu Construction and Installation Labor Co., Ltd., and that they could not reach the person in charge of Qiangyu Company either. The reporter managed to contact Shao Qianghui, the person in charge of Qiangyu Company. He explained: “The debt is true, but it is not labor service fees, and I didn't say I wouldn't pay. I will pay before the New Year.”

　　After a morning of interviews, the reporter clarified the ins and outs of this debt: part of the Zhaozhuang old city renovation project was contracted to a construction company in Wenshang County. That construction company subcontracted part of the labor services to Wenshang County Qiangyu Construction and Installation Labor Co., Ltd., and Qiangyu Company further subcontracted part of the labor services to Zhao Xuezhen and others. Because Zhao Xuezhen and others were the third-level subcontractors, the owner and the construction company passed the buck, making wage claims difficult.

　　On December 11, Li Daifa and 13 others who worked at a construction site in Zhangqiu came to the Provincial Migrant Workers' Rights Protection Station to seek legal aid. They were 9 men and 5 women, all in their forties and in the prime of life, from Jiangkou County and Sinan County in Guizhou Province, thousands of miles away. On August 17 this year, they came to work at a construction site in Zhangqiu under the leadership of contractor Xiao. The project was completed on November 20, but contractor Xiao could no longer be found. Li Daifa found the higher-level contractor Chen, who said that he had given all 262,785 yuan in wages for the 14 people for three months to Xiao. Li Daifa then went to the construction company for an explanation. The person in charge of the construction company said: “We did not hire you, nor do we know you. Moreover, the wages have been paid to the contractor, so you should ask the contractor for them.”

　　It is all caused by multi-level subcontracting. Construction companies split projects and contract them to major contractors, who then contract them to minor contractors; when workers finish the work and ask for wages, they are often passed from one to another, and sometimes a contractor at a certain link “vanishes into thin air.”

　　According to legal provisions, construction companies undertaking projects may only subcontract auxiliary work to qualified labor service companies, and secondary subcontracting is strictly prohibited. So, can labor service companies fulfill the role of organizing and managing migrant workers?

　　After accepting the wage claim cases of Li Daifa and others, Li Qiang immediately launched an investigation. He found that the project was contracted by a construction company in Jinan, but the company only sent a few management and financial personnel. The project construction was basically subcontracted through a labor service company to a major contractor, who then subcontracted it to minor contractors.

　　Not long ago, five Sichuan construction workers approached Li Qiang for legal aid. Upon investigation, Li Qiang found that the five had been sent to the construction site by the Jinan branch of a Sichuan labor service company, but when he went to find the branch, it had long been deserted.

　　Li Daifa and others were also dispatched to the site through a labor service company. When Li Qiang found that labor service company, he discovered that it had not signed any agreement with the construction company or the migrant workers, nor had it fulfilled any dispatch, supervision, or management duties. In fact, the law requires labor subcontracting to go through labor service companies, but labor service companies nominally participate in signing subcontracting agreements while in reality only collecting a intermediary fee; it is still the contractors who lead the workers to do the work.

　　“Many labor service companies nowadays are just a table and two chairs; in essence they mostly do labor intermediary work, completely deviating from the state's regulations on labor service companies. Once a dispute arises, they close the door and leave, and can continue operating by registering a new company elsewhere,” Li Qiang said. Most of the labor service companies he has encountered play such a “hands-off boss” role.

　　Where is the difficulty in curbing multi-level subcontracting?

　　“Multi-level subcontracting and layer-by-layer peeling in the construction market is an open secret; some projects even go through four or five levels of subcontracting. It's good enough if it reaches us after three transfers,” said Zhao Xuezhen, who has worked in the construction industry for decades and knows the industry rules well.

　　Why does multi-level subcontracting exist? A relevant person in charge of a construction company explained: “The construction industry is quite special. When there is work, we need a large number of workers; when there is no work, we are not able to support so many workers. Therefore, after contracting a project, we can only temporarily ask labor service companies to help find workers. But today's labor service companies are mostly shell companies.”

　　Construction companies are unwilling to support so many workers and are also afraid of bearing risks such as workers' injury compensation, so they temporarily recruit workers when there is work. According to relevant regulations, these construction companies can only subcontract labor services to qualified labor service companies, but the current labor service company market is rather chaotic, leaving a “foreshadowing” for multi-level subcontracting.

　　Zhao Xuezhen explained that minor contractors do not have the ability to directly obtain projects and can only take on some work from major contractors; major contractors have the ability to undertake projects but disdain to do the work themselves, or lack the ability to do it themselves, so they subcontract the project out and take the price difference. This may involve subcontracting through labor service companies, many of which are just a cover. In terms of profit, due to multi-level subcontracting, the construction company takes the lion's share, the major contractor takes a portion, and by the time it reaches the minor contractors and workers, even the most basic wages cannot be guaranteed.

　　So how can intermediate links be reduced and the “practice” of multi-level subcontracting in the construction industry be broken? Li Qiang analyzed that the state's original intention in stipulating that labor service companies undertake labor projects was to curb multi-level subcontracting. But at present, labor service companies have not played their due role. Moreover, because the construction industry is highly profitable, those who do the work cannot directly obtain projects, and those who obtain projects are unwilling to do the work themselves and only hope to “peel off” profits, making it very difficult to break the existing profit structure and, to a certain extent, neutralizing laws and regulations intended to protect migrant workers' rights.

　　“Many owners also contract projects to fake companies, unqualified companies, or even individuals, leading to repeated incidents of contractors taking the wages and vanishing,” Li Qiang believes. He suggests starting with legislation to make detailed provisions on construction project contracting procedures, contractor qualifications, and subcontracting supervision, and to severely punish owners and construction companies for illegal subcontracting.