“The benefits of technological advancement should be shared by society as a whole, rather than becoming a tool for a small number of employers to undermine workers’ rights.” – Editorial – Workers’ Daily – the official mouthpiece of China’s umbrella trade union organisation
Across recent waves of automation, the most enduring fault line has not been whether machines can perform particular tasks, but who captures the savings and productivity gains they generate.1 In the context of artificial intelligence, that question has become sharply political in China, where rapid deployment of generative systems collides with a labour market still shaped by industrial restructuring, a large pool of precarious workers, and an official commitment to social stability.1 As AI tools move from experimental pilots into core business processes, the distribution of their benefits increasingly determines whether technological change is experienced as opportunity, dispossession or something in between.1
The immediate backdrop is a surge in corporate enthusiasm for AI as a way to compress labour costs in sectors ranging from customer service and data labelling to logistics and back-office administration.1 For firms operating on thin margins, replacing call centre agents or content moderators with AI-based systems can promise savings running to tens of millions of yuan across a workforce of 10 000 people. When those savings are not matched by new protections, retraining or bargaining power for employees, the technology becomes, in practice, a lever to shift income and security away from workers and towards shareholders and senior management.
China’s experience with earlier rounds of restructuring provides a powerful memory of how such transitions can play out. The lay-offs of state-owned enterprise workers in the 1990s and early 2000s created a generation marked by insecurity and grievance, even as the broader economy grew.7 That legacy shapes today’s anxiety about AI: mass replacement of workers by automated systems risks not only individual hardship but also heightened social tension, particularly in cities where service jobs have become a crucial absorption mechanism for rural migrants and displaced industrial labour.1,7 Against that backdrop, the insistence that technological progress must not become a tool for undermining workers’ rights takes on a concrete, rather than abstract, urgency.
From productivity promise to labour displacement risk
AI, especially in its generative form, promises major gains in efficiency by automating routine cognitive tasks: drafting basic responses, triaging customer queries, generating boilerplate documents, and analysing large volumes of text or image data.1,8 For employers, the economic logic is clear. If an AI system can handle the work of, say, five junior clerks at a fraction of their combined salary and without social insurance contributions, it becomes hard to resist. Even modest improvements in model accuracy can make it rational, from a firm’s perspective, to restructure departments and reduce headcount.
The risk is that this rationality at the firm level is socially destructive when replicated across thousands of enterprises. If many employers simultaneously replace segments of their workforce with AI, displaced workers may find that the new jobs created by the technology are too few, too specialised, or require skills they do not yet possess.7,8 The labour market then adjusts not through smooth transitions into higher-value roles but through periods of unemployment, downward wage pressure and an expansion of informal or precarious work.
The tension is sharpened in China, where the state retains a strong directive role and where social stability is treated as a central policy objective. Government advisers have begun warning that AI applications introduced solely to reduce labour costs, without improving services or sustainability, should face close scrutiny or explicit constraints.1 That stance implicitly challenges a purely market-driven allocation of the benefits of AI: cost savings cannot simply be converted into higher profits while workers absorb all of the transition costs.
Legal red lines and the politics of dismissal
This emerging political stance has started to crystallise in legal outcomes. Chinese courts have ruled that employers cannot justify firing workers simply because AI has rendered their current tasks redundant.2,5 In a high-profile case in Hangzhou, a technology company attempted to dismiss an employee after introducing AI tools that took over much of his work, offering a reassignment that involved a steep salary cut.2 The intermediate court found the dismissal unlawful, holding that an employer’s decision to adopt AI does not constitute the kind of external, uncontrollable change that would justify redundancy under labour law.2
Crucially, the court also rejected the idea that a substantial pay cut hidden inside a reassignment offer is an acceptable way to shift the costs of technological change onto workers.2 By treating such a move as effectively a constructive dismissal, the judgment signalled that firms cannot rely on AI as an accounting trick to convert stable jobs into worse-paid, less secure positions while claiming continued compliance with formal employment rules.2,5
This jurisprudence sits on top of a broader legal framework in which the right to continued employment is embedded more robustly than in many market economies.5 China’s Labour Contract Law places strong limits on arbitrary dismissal and treats job security as a social good, not merely a private contract matter.5 In the AI context, that framework acts as a guardrail: technological adoption is permitted and even encouraged, but not as a justification for offloading adjustment costs onto employees without negotiation or compensation.
Trade union positioning and official narratives
Within this legal and political environment, the rhetoric of China’s official trade union structures carries particular weight. As the mass representative body for workers, closely intertwined with state institutions, the umbrella trade union organisation operates less as an adversarial bargaining agent and more as a channel through which policy priorities are communicated and reinforced.5,8 When its official newspaper warns against using technological advancement to erode workers’ rights, it is not merely expressing a moral view; it is aligning labour discourse with the state’s interest in maintaining legitimacy and social stability during a disruptive technological transition.
The editorial stance reflects both defensive and strategic considerations. Defensively, the union apparatus needs to demonstrate that it can protect workers from the most predatory forms of AI-driven restructuring, or risk appearing irrelevant to a younger generation of employees in digital and service sectors.5,8 Strategically, it participates in shaping a narrative in which China can pursue technological leadership while claiming a distinctive social model, one that contrasts with images of unregulated automation and gig work precarity elsewhere.
This positioning does not erase underlying tensions. Many workers are not formally unionised or lack genuine bargaining leverage within their workplaces, especially in private tech firms and platform companies.8 Enforcement of labour protections remains uneven, and there is a large grey zone where AI tools intensify workloads or surveillance without leading to outright dismissals. Nevertheless, the articulation of a principle that technological gains should be socially distributed rather than concentrated provides a reference point for workers, regulators and courts.
Algorithmic control, visibility and hidden labour
Debates about sharing the benefits of AI often focus on headline figures: how many jobs might be replaced, how much productivity might increase, what fraction of GDP growth can be attributed to automation. Yet a substantial part of AI’s labour impact lies not in visible job losses but in the reconfiguration of work through algorithmic control and the creation of largely invisible labour behind the systems.8
Chinese-developed AI models depend on vast quantities of human-labelled data, content moderation, and platform maintenance work, much of it outsourced, low-paid and weakly protected.8 These workers, who generate the training data that underpin sophisticated models, often lack clear paths to benefit from the subsequent productivity gains. Meanwhile, for employees in call centres, warehouses or delivery services, AI-powered scheduling and monitoring tools can increase pressure, reduce autonomy and tighten performance metrics, even if headcount stays constant.
In this sense, the risk is twofold. First, AI can be used to directly displace segments of the workforce. Second, even where jobs remain, AI systems can become instruments for intensifying labour, extracting more output per worker without commensurate increases in pay or security. When trade unions and courts insist that AI should not be turned into a tool for undermining rights, they are implicitly contesting both forms of impact: the overt substitution of machines for people and the subtler erosion of working conditions through algorithmic management.2,5,8
Economic models of sharing technological gains
In economic terms, the argument centres on how the surplus generated by AI is divided between capital and labour. If the introduction of an AI system raises a firm’s output or reduces its costs, the additional surplus can be decomposed into higher profits, increased wages, better working conditions, lower prices for consumers, or public revenues via taxation. Absent countervailing power, the default tends to favour capital holders and senior executives.
Some analysts formalise this distribution using production functions in which output depends on both traditional labour and an AI-enhanced component, with bargaining over wages determining how gains are shared. While the specific mathematics may vary, the underlying logic is straightforward: when workers lack the power to insist on a share of productivity improvements, their relative position deteriorates even if overall economic output rises. In that scenario, technological advancement can coexist with stagnant or falling real wages and heightened insecurity for large segments of the workforce.
China’s institutional framework gives the state tools to intervene in this distribution. Minimum wage policies, social insurance requirements, and judicial interpretations of labour law all shape the bargaining landscape in which AI adoption occurs.2,5 If courts repeatedly rule that firms cannot dismiss workers or cut salaries under the pretext of technological change, employers may be pushed to find ways to use AI that complement, rather than replace, existing staff: reassigning employees to higher-value tasks, investing in reskilling programmes, or reducing working hours without cutting pay.
Such complementarity is not automatic and may be more feasible in some sectors than others. High-skill knowledge work, for instance, may lend itself to human-AI collaboration in which professionals use generative tools to enhance their output, while retaining control over final decisions. Low-skill routine work, by contrast, may be more susceptible to straightforward automation. The underlying normative claim – that benefits should be shared – thus implies a need for targeted policies to prevent sectors at greatest risk from bearing disproportionate costs.
Counterarguments and employer perspectives
Critics of strong labour protections in the context of AI often argue that constraining firms’ ability to restructure will slow innovation, reduce competitiveness and ultimately harm workers by limiting growth and job creation.1,7 From this perspective, allowing employers to freely adopt AI and adjust their workforce is necessary to ensure that domestic firms can keep pace with international rivals, especially in sectors where global competition is fierce.
Employers may also contend that attempts to legislate or adjudicate against AI-driven redundancies misunderstand the reality that technological change inherently involves creative destruction. Protecting existing roles too rigidly, they argue, risks locking labour into obsolete tasks and freezing the economy in less efficient configurations. Some worry that courts declaring AI-driven restructuring illegitimate could create uncertainty, deter investment and encourage firms to relocate to jurisdictions with more permissive regimes.
These objections highlight a genuine tension: how to maintain dynamism and openness to innovation while preventing technology from becoming a one-way conduit for transferring risks and costs onto workers. Proponents of stronger protections respond that the choice is not between technological stagnation and unfettered automation. Rather, it is between different institutional arrangements for managing transitions – some of which spread adjustment burdens across firms, workers and the state, and others of which concentrate them on those with the least bargaining power.5,8
International comparisons and distinctive features
Globally, debates over AI and labour rights span a spectrum. Some advanced economies emphasise data protection and algorithmic transparency, while leaving employment relationships largely governed by existing redundancy and discrimination rules. Others focus on reskilling and social safety nets, aiming to ease transitions without imposing strong constraints on firms’ restructuring choices. China’s emerging approach, with its combination of strong formal limits on arbitrary dismissal and an official labour narrative emphasising social stability, occupies a distinctive position on this spectrum.5,7,8
One distinctive feature lies in the central role of the state in both promoting AI development and arbitrating its labour impacts. Government plans and industrial policies actively support AI research, infrastructure and deployment, while the same state apparatus, through courts and labour agencies, signals boundaries for how far employers can go in using AI to cut jobs.1,5 This dual role can generate tensions – for instance, between local governments eager to attract high-tech investment and national-level concerns over social unrest – but it also means that labour impacts are not treated as an afterthought.
Another distinguishing element is the prominence of social stability as an explicit policy objective. In a political system highly sensitive to large-scale unemployment or visible worker protests, there is a pragmatic incentive to ensure that AI does not trigger sudden waves of dispossession. Protecting workers from being summarily replaced by AI can thus be understood not only as a matter of justice but also as a tool of risk management for the state.
Why the distributional question matters now
The urgency of clarifying how AI’s benefits are shared arises from the speed and breadth of current deployment. Unlike earlier waves of automation targeted mainly at manufacturing or narrowly defined clerical tasks, contemporary AI systems reach into creative industries, legal and financial services, health care administration and even elements of management decision-making.7,8 As more layers of the economy become susceptible to algorithmic substitution or augmentation, the number of workers whose roles are reshaped by AI expands far beyond a single sector.
In this context, a clear public stance that technological advances should not be repurposed as mechanisms for eroding labour rights performs several functions. It sets expectations for employers considering AI-driven restructuring, warning that they may face legal and reputational risks if they treat workers as disposable inputs in a cost-minimising exercise.2,5 It gives workers and their representatives a discursive and legal basis to challenge unfair practices, from unjustified lay-offs to exploitative algorithmic management. And it positions the broader society to debate, rather than passively accept, the terms under which AI is integrated into everyday economic life.
There is no guarantee that such a stance will fully prevent the concentration of technological gains in the hands of a small group of actors. Powerful firms with access to capital, data and engineering talent remain well-placed to dominate AI markets and capture outsized returns. However, by embedding labour-protective principles in law, judicial practice and official discourse, China is attempting to tilt the playing field away from a pure race to the bottom in labour costs.1,2,5,8 Whether this experiment succeeds will depend not only on rulings and editorials but on continuous enforcement, worker organisation and the willingness of policymakers to adjust course as new challenges emerge.
What is already clear is that the contest over AI is not only about whose models are most powerful or whose infrastructure is most advanced. It is also about whose lives improve, whose become more precarious, and who has a say in that process. Framing technological advancement as something to be shared by society at large, rather than wielded as a tool to weaken the bargaining power of those who perform the work, draws a line between two possible futures: one in which AI deepens existing hierarchies of power, and another in which its benefits are mediated through institutions that recognise workers not as expendable inputs, but as stakeholders with rights that do not vanish when a new machine comes online.
References
1. “AI wave sparks alarm in China with call to protect worker rights” – The Straits Times – https://www.straitstimes.com/business/economy/ai-wave-sparks-alarm-in-china-with-call-to-protect-worker-rights
2. Job fears, security risks spark call for Chinese government ‘red lines … – 2026-03-26 – https://www.scmp.com/economy/china-economy/article/3347940/job-fears-security-risks-spark-call-chinese-government-red-lines-ai-applications
3. Chinese Court Rules Employer Can’t Fire Worker Because AI Took … – 2026-05-13 – https://www.fisherphillips.com/en/insights/insights/chinese-court-rules-employer-cant-fire-worker-because-ai-took-his-job
4. China Bans AI Firings: Protecting Workers from Automation? – 2026-05-29 – https://www.youtube.com/shorts/TNl9wjf_R08
5. China’s new rule on AI and job replacement – Facebook – 2026-05-05 – https://www.facebook.com/groups/921133736436729/posts/1406966534520111/
6. China’s labor law says a job is a right-even in the age of AI – 2026-05-02 – https://mronline.org/2026/05/02/chinas-labor-law-says-a-job-is-a-right-even-in-the-age-of-ai/
7. China Protects Workers from AI – Instagram – 2026-05-15 – https://www.instagram.com/reel/DYXl2P-gihu/
8. China is getting worried about AI & jobs – Matt Sheehan’s Newsletter – 2026-04-06 – https://mattsheehan.substack.com/p/china-is-getting-worried-about-ai
9. How Chinese AI Models Impact Labor Rights and Worker Visibility – 2025-05-06 – https://www.hks.harvard.edu/centers/carr-ryan/our-work/carr-ryan-commentary/how-chinese-ai-models-impact-labor-rights-and
