CSS z-index not working (position absolute) [duplicate]
Remove
z-index:0;
from .absolute.
Updated fiddle here.
This is because of the Stacking Context, setting a z-index will make it apply to all children as well.
You could make the two <div>s siblings instead of descendants.
<div class="absolute"></div>
<div id="relative"></div>
http://jsfiddle.net/P7c9q/3/