An international conference to mark the 60th anniversary of the Universal Declaration of Human Rights opened in Paris on 4 December. The International Seminar on Business and Human Rights (www.anniversaryseminar.org) is chaired by Mary Robinson and attended by business leaders and human rights activists from across the globe.
China Labour Bulletin was invited to contribute a paper examining the current struggle for workers' rights in China, with a focus on recent initiatives by the All-China Federation of Trade Unions (ACFTU) to increase factory-level unionization in the private sector and promote the use of collective bargaining. It assesses how foreign companies, international trade unions and overseas NGOs can best assist Chinese workers' own efforts to improve their situation in the workplace.
The key question of if and how workers will be able to participate directly in the ACFTU's collective bargaining initiative will be addressed in a forthcoming CLB research report on the ACFTU's current role and reform prospects.
CLB's submission to the seminar is published in full below.
The Case of China:
The Challenge of Labour Unrest in a Communist-run Capitalist Economy
CHINA LABOUR BULLETIN
I. China's Workers on the Move
This presentation is not a case study based on one or more individual companies, or on one particular instance of labour conflict in China. Rather, it seeks to address the broad range of interconnected factors and issues that together make up the "labour relations problematic" in China today, three decades after the country first moved toward a market economy under the one-party state. Moreover, this paper points to a series of recent trends, both in the emerging workers' movement and also within official labour-relations policy developments, that provide grounds for hope that the government's goal of building the Harmonious Society could – at least in the key area of workers' rights and labour relations in the private sector – be significantly less illusory a prospect than it may seem to be. Hence, it is the overall relationship between workers and private-sector employers in China, and how best this relationship can best be improved under current conditions, which forms the main focus of this "case study." The insights and analysis presented here are based largely on China Labour Bulletin's own practical program work and experience on the mainland over the past few years.
This year China celebrates the 30th anniversary of the historic "reform and opening" policy. This groundbreaking initiative led China out of political isolation and back into the world community and, among many other things, has helped lift an estimated 400 million of people out of poverty. But despite this impressive macro-economic progress, workers throughout China are still at a fundamental disadvantage. In the burgeoning private sector, in particular, they are routinely required to work illegally long hours, employers frequently withhold wages and fail to provide mandatory labour contracts or social security benefits, and many workplaces are fundamentally unsafe or hazardous to workers' health. China's estimated 150 million migrant workers and their families continue to face widespread social and institutional discrimination. In short, the scale and depth of workers' rights violations across the country continues to be huge. Faced with the enormity of this challenge, it is often assumed by outside observers – and by many Chinese – that since China is not a democracy and independent trade unions are banned there, little can be done to advance labour rights standards for most Chinese workers, and especially for the migrant workers who have largely powered the country's economic miracle over the past decade and more.
The purpose of this presentation by CLB is, firstly, to suggest that such pessimism is unfounded; and secondly, to show that Chinese workers are steadily acquiring the will and the practical means to accomplish most of the "heavy lifting" in the labour rights' arena by themselves. For outside observers whose main picture of the labour rights situation in China today has come from media reports portraying workers – whether in the country's disaster-prone coal mines, or in the foreign-invested manufacturing sweatshops of Guangdong and elsewhere – as passive and helpless victims of entrepreneurial greed and callousness, this assertion may come as something of a surprise. But the other, less well-known narrative told by workers across the country, who in recent years have been fighting back – both individually and collectively – against unacceptable employment conditions and poor workplace safety standards, clearly bears out such a conclusion. For nowadays, Chinese workers are not passively accepting maltreatment and abuse. They are taking to the streets in protest. They are going on strike. They are collaborating with workers' rights NGOs to publicize and resolve their grievances. And they are seeking, more and more, to defend their rights and interests through domestic legal channels.
II. Government Responding Constructively
For their part, local governments in China – which previously would send in the police to suppress any sign of organized labour unrest – have in the past few years tended to react in a more enlightened and constructive manner, by seeking to play the role of arbitrator and deal-maker between disgruntled workers and their employers. This important development is – again perhaps surprisingly – a more or less direct result of China's recently emerging labour movement. Worker protests and labour conflict are seen by the authorities as a threat to social and political stability, and as worker militancy increases, the authorities feel a greater need to compromise and conciliate. The international human rights movement has always believed that "outside pressure works" as a means of promoting positive change. Most hearteningly, in China nowadays it seems that pressure from within, and from the grassroots' level of society, is also starting to work.
The same dynamic can be seen with respect to the important series of new labour laws that the Chinese government enacted this year. The Labour Contract Law, which went into effect in January 2008, has helped protect workers and has encouraged or compelled more employers to provide them with proper labour contracts and social security insurance. Also, the Labour Dispute Mediation and Arbitration Law, which went into effect in May, for the first time made labour-dispute arbitration commission rulings legally binding in a wide range of routine cases, such as those involving unpaid overtime hours or wages in arrears. It also abolished the arbitration application fee and extended the time limit for filing an arbitration case from 60 days to one year. And a third new law in China, the Employment Promotion Law, which also came into force in January, for the first time contains a specific ban on various widespread forms of employment discrimination. All of these laws, to a significant extent, represented concessions by the government in the face of growing pressure and demands for change from the country's workforce, and were basically aimed at defusing worker unrest before it spirals out of control.
It remains an open question as to how the current global financial crisis may impact the Chinese government's policy stance towards the labour rights situation and rising worker demands for change. With the recent sharp fall in demand for Chinese goods in the U.S. and other Western markets, thousands of factories in southern China have already been forced to close down, and tens of thousands more are expected to do so within the next half year or so, leaving millions of workers without jobs. Economic downturns usually bring a reduction in workers' leverage and bargaining power over employers, so will the Chinese government now back-pedal on the labour law reforms of this year? The corporate community is certainly pressing it to do just that; but for other macro-policy reasons it is unlikely to do so in any major way.
Foremost among these is the need to maintain social and political stability: the recent fall in the country's GDP growth rate from around 12 percent to some 9 percent would hardly occasion alarm elsewhere, but China's leaders have consistently said that a growth rate of 8 percent is the minimum needed in order to forestall widespread public unrest. With tens of millions of new school and university graduates entering the workforce each year, a rapidly growing income divide between town and country, and the urgent need to establish viable health and education systems and an effective social security safety net, the government cannot afford to ignore the hardship inflicted by the current economic crisis on many millions of ordinary citizens. It is also in the enviable position of having vast foreign exchange reserves that can be mobilized to alleviate that pain and thereby reduce the potential for major social unrest. So, while some backtracking and concessions to business are likely as the world financial crisis unfolds, the authorities' overall commitment to the Harmonious Society project is unlikely, for domestic political reasons, to fundamentally waver in 2009 and beyond.
III. The ACFTU: Becoming a More Committed Voice for Workers?
The key element in the achievement of greater labour rights protection in any country, over the past century and more, has been the emergence of a strong trade union movement – and China, in CLB's view, will surely be no exception to this rule. As mentioned, the government still does not permit independent union organizing of any kind, so the All-China Federation of Trade Unions (ACFTU) has a government-backed monopoly in this area. But this major caveat notwithstanding, there are a series of positive signs that the official trade union is now moving in broadly the right direction. In fact, this formerly more or less moribund body is showing increasing signs of life, and over the past year or so it has initiated a range of new policies designed to make the union more genuinely representative of workers' rights and interests. It's important to stress that the ACFTU is doing this mainly because the central government – with a view to safeguarding social stability – has ordered it to do so. Nonetheless, the potential of these recent policy steps for labour rights' improvement, in CLB's view, is quite far-reaching. Here are the main recent events and policy initiatives:
- Over the past few years, the official union has been conducting a major drive to unionize the previously neglected private sector, which encompasses almost 5 million enterprises. In summer 2006, the union took on its toughest target multinational, Wal-Mart, and quickly succeeded. Now all 100-plus Wal-Mart stores in China have an ACFTU presence. And while the authorities' claim that it was company workers themselves who organized these union branches was not actually true, the attendant official publicity served to give the "green light" to workers elsewhere in China to do just that in their own workplaces. The government's current goal is to establish ACFTU branches in 80 percent of such enterprises by the end of 2008. Those established so far are mostly pro forma unions only – but the PRC Trade Union Law also permits workers themselves to form factory-level unions, provided they affiliate with the ACFTU.
- Hard on the heels of this national unionization drive came an official ACFTU push to promote the use of collective labour contracts in the private sector – single, overarching agreements that would give equal protection to all employees in a given workplace, as opposed to the individual labour contracts that have prevailed in China until now. Again, Wal-Mart was the first company to be targeted, and similar collective contract agreements are currently being "negotiated" with various other major multinationals in China. (Again, these are mostly pro forma agreements, without any genuine negotiating element involved; but they provide a basic framework for future improvement.)
Also, the three new labour laws introduced this year, though far from perfect, have further tilted the balance of power between workers and employers in favour of improved labour rights' protection. But in certain parts of China, local governments have acted to push the envelope much farther in this direction.
- In particular: Shenzhen's new Implementing Regulations (Shishi Banfa) for the PRC Trade Union Law, enacted on 1 August 2008, for the first time in Chinese legislation use the term "collective bargaining" (jiti tanpan), instead of the previously dominant, much weaker concept of "collective consultation" (jiti xieshang). Indeed, the Implementing Regulations forthrightly proclaim that collective bargaining – previously a no-go area in China – will henceforth be the "core focus" of the union's work throughout the city.
- Also in Shenzhen, the government recently passed the Regulations on the Promotion of Harmonious Labour Relations in the Shenzhen Special Economic Zone. Under these regulations, once collective bargaining is requested by either side, after a ten-day period, neither party can refuse to negotiate. A similar rule has also been introduced by the city government of Shenyang, in the northeast of China. Indeed, in the latter case fines of up to 20,000 yuan – both for enterprises and their CEOs – are stipulated for refusal to negotiate with workers.
Meanwhile, in Hebei Province, in an avowed attempt to safeguard workers' rights and interests and reduce labour disputes, the provincial government has implemented new Regulations on Enterprise-level Collective Consultations between Labour and Management. The Hebei regulations – China's first at provincial level on collective worker-management negotiations – which went into effect on 3 January, specify that the bargaining process between labour and management "should be open and equal, seeking consensus and giving equal weight to the interests of the enterprise and the workers, safeguard workers' actual pay levels, and conform to enterprise productivity levels and local economic conditions."
- Significantly the regulations explicitly state that where there is no trade union at the enterprise, the workers' negotiating representatives should be "democratically elected by a majority of the employees." Where there is a union branch, workers' representatives should be recommended (tuijian) by the union and scrutinized by the workers' congress. Delegations from both sides should have the same number of representatives, and each side may include experts or advisors from outside their ranks to assist in the negotiations.
All of this – from factory-level trade unions throughout the private sector to virtually mandatory collective bargaining in certain Chinese cities, with more likely to follow soon – adds up to an unprecedentedly pro-labour policy package. Thus, 2008 has been a red-letter year not only on account of the Beijing Olympics, but also – and in the long-term perspective probably more so – as regards the creation of a more worker-friendly employment scene. Indeed, the latter is vital if the central government's Harmonious Society project – a concerted drive to address the widespread social injustices engendered by a quarter century of unchecked economic growth – is to succeed. In the process, the ACFTU itself appears to have started, at least, its long-awaited transition from being the labour-discipline enforcement arm of the state to playing the role of a more committed and effective advocate for workers' rights – although such an outcome is by no means guaranteed.
IV. Four Main Tools or Forces for Change
A good macro-policy climate, such as that now emerging in China, is one thing. But more important still are the practical means and methods available for actually realizing the policy goals at issue. This is especially so in the case of the labour rights project in China, since the government is in no position – on its own – to simply "enforce" good labour standards in a top-downwards manner. The majority of domestic enterprises, and many multinationals too, are likely to be highly resistant to this endeavour; and as the experience of most other countries has shown, the labour force needs to be closely involved in the process if it is to work – an element that has hardly been the hallmark of labour relations in China to date. A more organic and multi-level approach is thus called for, one that encompasses and brings together different social and economic forces and different practical tools and methods.
Below, we look at the four main actors and methods which, in CLB's analysis, currently hold the greatest promise and potential in this regard. They are: 1) the emerging workers movement; 2) pro-worker litigation; 3) collective bargaining; and 4) corporate social responsibility initiatives.
WORKERS MOVEMENT
Again, the main factor behind the above-mentioned "new thinking" on labour-relations issues within official circles has been the unavoidable reality of a growing workers' movement, as expressed in countless instances of labour protest and resistance against abusive employers across the country in recent years. Although spontaneous, disorganized and without clear direction, this proto-movement is nonetheless increasingly a force to be reckoned with. Indeed, despite the ubiquitous presence of the state-run ACFTU, CLB would characterize it as being, essentially, a workers' movement at a "pre-union stage" of development – reminiscent of those that arose in Europe in the late 19th century or in the U.S. in the early 20th. As noted, China's top leadership and local authorities are effectively now factoring rising worker militancy into their policymaking deliberations, and in a largely benign manner. Certainly, the leaders of strikes and protests are much less frequently arrested and imprisoned than they were ten or even five years ago. Moreover, foreign companies doing business in China will, in our view, ignore this crucial new social factor at their peril.
China's workers movement is growing in three important ways. First, actions like strikes and protests have been increasing exponentially over the last 10 years. According to official figures, there were more than 90,000 "collective incidents" nationwide in 2006, probably a majority of which involved workers. A more specific figure was provided by the Guangdong ACFTU: in 2006, 875 instances of mass protest, defined as involving 30 workers or more, arose in that province over the issue of non-payment of wages alone. The total number of protestors in these mass incidents was 74,000 – an average of 85 workers per incident. Unlike in the past, however, collective protests are no longer automatically viewed by the authorities through an overtly political lens. Whereas Lech Wa??sa and Solidarnosc posed a risk to the Communist government of Poland because the state was the employer and therefore, inevitably, the direct target of worker dissatisfaction and demands, in most of China today, the private sector is the primary employer. Hence, when a labour dispute occurs, the workers' demands do not automatically become politicized. In fact there is no obvious need for them to do so, and the government can instead play the role of a facilitator between two equal, civil-society actors – workers and employers – by providing formal channels and institutions for dispute resolution and thereby facilitating a consensual, negotiated solution. The extent to which China's leaders themselves now appreciate this key distinction, and hence are less instinctively hostile toward worker activism than before, can be seen from their growing tolerance of workers who resort to strike action in pursuit of workplace fairness and justice. Indeed, a senior ACFTU official in Guangdong Province recently stated publicly that the legal right to strike in China is "just one step away". (The right to strike, nominally included in the 1975 PRC Constitution, was formally removed in the Deng Xiaoping-inspired 1982 revised version.)
Second, the workers' scattered and disorganized "proto-movement" is increasingly finding support, institutionally, from a growing network of labour rights NGOs around the country. In Guangdong Province, for example, there are estimated to be up to 40 such organizations that focus on migrant worker issues alone. Granted, these civil society organizations operate in a legally "grey" area, since the process of registering as a non-profit organization is very difficult in China. Nonetheless, these organizations perform important functions such as training workers, educating them about their rights, and in some cases also helping them to defend those rights through the legal system, via formal dispute resolution and litigation. In addition, in the Pearl River Delta alone, it has been estimated that there are now over 500 "citizens' advocates" (gongmin dailiren) in operation self-made experts in labour law, usually migrant workers themselves, who take on other migrant workers' labour dispute cases for a small fee and represent the plaintiffs in negotiations with (or proceedings against) employers.
The Beijing-based Yirenping Centre is a good example of a civil society organization that has sought to change China's labour situation on a variety of levels. China has an estimated 130 million Hepatitis B carriers, and many of them find that once they successfully interview for a job, their job offer is taken away once the health check shows that they have tested positive for Hepatitis B. Indeed, it's estimated that up to half of the country's HBV carriers are unable to find work solely because they are HBV positive. The Yirenping Centre provides legal support to these victims of job discrimination, and to date it has helped bring more than 30 lawsuits on such grounds against companies such as Nokia, Foxconn, and Coca-Cola. It has been successful many times in either winning financial compensation for victims of discrimination or ensuring that a prospective employee can keep his or her job. Using its newfound legal experience, Yirenping has also been able to hold a nationwide series of "training the trainers" seminars attended by Hepatitis B carriers, professors, lawyers and leaders of the NGO community. The organization also runs a lively Internet forum for Hepatitis B carriers that has over 300,000 participants nationwide. The Internet has proven to be a valuable resource for advocacy and experience-sharing purposes, for Yirenping and many other NGOs working in the labour rights area.
And third, individual workers are taking advantage of the Internet and text messaging to advance their own rights and to create informal networks with other workers about working conditions in various factories. For example, the case of Huang Weimu, who has recently became an Internet celebrity, is a perfect example of this phenomenon. As a migrant worker who was fed up with years of abusive working conditions, Huang decided to sign up with a factory that fails to provide labour contracts and treats workers poorly and then to document the working conditions there. He eventually found work at the Huisheng Garment Factory in Guangdong, where he worked for five months, while stealthily collecting evidence of labour violations. Huang then went to the local Labour Department and sought more than 55,000 yuan in compensation for the ill-treatment he had experienced at the factory. At the same time, he used the Internet to publicize the evidence he'd gathered. Huang's story and his efforts to rally public support were reported in the state-run television network CCTV, the Beijing News, and many other media outlets. He was eventually awarded 12,500 yuan by the Panyu Labour Dispute Arbitration Committee. Huang's case is a vivid example of how the Internet has allowed migrant workers, previously a "voiceless" community, to start asserting themselves and draw wider attention to their problems. It's also an example of how the workers movement is steadily gaining strength from the grassroots.
PRO-WORKER LITIGATION
As is clear from the raft of new labour legislation introduced in China this year, the Chinese central government is doing a reasonably good job of implementing its duty as the state, under international agreements such as the ICESCR that it has ratified and as a full member of the ILO, to promote and protect acceptable labour standards nationally. But on the level of implementation and enforcement, it has largely failed the test – mainly because local governments across the country have a different agenda. The latter usually view proper adherence to labour law as posing a threat to local economic development (it would "drive away investors" and so forth.) As a result, local labour bureaus, who provide the factory inspectors and auditors, are discouraged from doing their jobs effectively. In any case, local authorities employ far too few OSH and labour-standards inspectors and auditors to be able to have a meaningful impact on the situation; and all too often, monitoring officials can be bought off by delinquent employers seeking favourable inspection reports.
If local governments are unwilling or unable to enforce national labour laws, however, in recent years workers have had substantial success in seeking redress through China's well-established institutions of mediation and arbitration and also through the judicial system. Indeed, official figures show that once a labour dispute case has been accepted for adjudication, the worker plaintiff has a much greater chance of winning than does the employer. Among more than 310,000 labour disputes annually in both 2005 and 2006, workers were nearly four times more likely than employers to succeed outright at the arbitration stage, according to the China Labour Statistical Yearbook. In around half of the cases, workers eventually had to proceed to litigation – but again, their success rate was similarly high. Given that China's courts still lack judicial independence, this state of affairs may seem surprising, but there are two main reasons for it. First, the central government, with a view to allowing at least some of the countless workers with labour rights grievances around the country to secure eventual justice, appears to have authorized the courts to handle such cases sympathetically and in accordance with the law, thereby providing a necessary "safety valve" at the grassroots level. And second, whereas local authorities can allow workers' rights violations to proceed unchecked simply by turning a blind eye and failing to take disciplinary action against delinquent employers, judges in any case are required – even in China – to evaluate the evidence and hand down a specific ruling on the matter at hand. When presented with clear evidence of abuse and a law stipulating that the act or treatment in question is unlawful, it is very hard for them to rule in favour of the employer.
In short, litigation can be a very successful tool for workers, often because the violations are so blatant and the cases are so clear cut that they leave the judge with little option but to rule in the plaintiffs' favour. The major problem is workers' continuing lack of access to judicial redress, mainly because they lack the necessary funds. The cost of hiring a lawyer to litigate on a labour dispute case can easily amount to several months' or even half a year's salary for a migrant worker. Another important obstacle is that lawyers and law firms are often unwilling to take on labour rights cases, as – somewhat like criminal defence cases – they are rarely financially rewarding. Lawyers can make far more from corporate law-related and economic dispute cases. Consequently, there are far from enough expert labour lawyers around the country.
CLB has been actively involved in pro bono labour-rights litigation work since 2003 and currently runs probably the largest such program in mainland China. It has close co-operative links with numerous law firms and non-governmental organizations around the country, and also with dozens of individual lawyers. The aim of the program is to provide workers who have legitimate grievances, but who cannot afford to pay lawyer's fees and court charges, with high-quality and effective legal representation, whether in court hearings or in mediation or arbitration proceedings against abusive employers. To this end, CLB collaborates with mainland lawyers who specialize in workplace discrimination and work-related injury cases, and also with lawyers or "citizens' advocates" who help workers in disputes with employers over the non-payment of wages, pension and social security entitlement, redundancy packages and economic compensation cases. CLB plays the role of a third-party facilitator in this public-interest law initiative, by bringing the clients and the law firms together and providing the requisite lawyer's fees.
From July 2007 to June 2008, CLB and its mainland partner organizations adopted close to 600 new labour rights cases, involving around 700 worker plaintiffs, and concluded about half of the cases during the same period. The worker-plaintiffs involved won in more than 95 percent of cases, obtaining often substantial compensation for work-related injury, recovering unpaid wages, getting job reinstatement, or obtaining other benefits such as labour insurance payouts. In total, the workers involved were awarded 9.42 million yuan in compensation and other benefits. Pro bono legal services of this kind are vital in China, since although (as noted earlier) workers stand a high chance of winning their cases in court, the great majority of those with labour rights grievances still cannot afford to hire lawyers and so their cases are never heard.
It is often said that where civil law and labour law cases are concerned, China operates a system of "plaintiffs' courts", wherein the aggrieved party has a disproportionately high chance of winning. But this, in turn, is usually attributed to the fact that most courts reject, at the initial case screening stage, a large proportion of the lawsuits submitted, with only the most strong or "deserving" cases being allowed to go forward to litigation – and with a certain number internally rejected on the grounds that they would have an "adverse impact" on the local economy, and so forth. While this is probably true, CLB itself has not encountered much evidence of such practices in its own case-handling experience to date; indeed, very few of the hundreds of labour rights cases we have supported for litigation have been screened out or rejected for court hearing. The reasons for this apparent anomaly are unclear. CLB's own case screening process certainly helps to ensure that the cases brought are highly deserving ones. But having high quality lawyers, specialized in labour law, prepare the lawsuit filings and represent the clients in court is probably the key factor in this regard.
Public interest litigation involves, however, more than just bringing the cases to court and (where possible) winning them: it also seeks to leverage the case outcomes in such a way as to achieve a wider impact for systemic change, both within the legal system itself and within the popular legal culture. In an important sense, simply having the cases accepted for trial, regardless of the outcome, does advance the public interest goal, since it serves to raise awareness of the issue at hand and place it more firmly on the public agenda. But particularly in a highly controlled society such as China, it is necessary to do more than this, and there are two main methods available. One way is to seek publicity for specific cases in the local or national news media – an extremely effective channel, if one can achieve it, since the resultant coverage will be read not only by senior local officials, who can intervene to affect or change policy, but also by local workers who may then be emboldened to seek legal remedies for their own labour rights grievances.
The other way, specific to common law systems, is to establish a "case precedent" which will then be followed by courts elsewhere hearing similar kinds of cases. Since China operates a continental law system, this mechanism is not available; but a broadly similar effect can nonetheless be achieved – whether via the "judicial interpretations" issued to courts around the country by the Supreme People's Court in landmark or groundbreaking new cases, or through the internal directives of this type issued by the provincial judicial authorities to local city-level courts. Moreover, labour litigation case-reporting on the websites of both individual law firms and individual workers' rights centres are, nowadays, playing an increasingly important role in establishing what might be termed "ex officio case precedence" in China: labour lawyers and others frequently search these websites to find previous cases that resemble or shed light on ones they are currently handling, and they cite them in court in support of the plaintiff's demands. And finally, it is important to bring a sufficient number, or critical mass, of labour rights cases of a certain type in order to help stimulate any wider change in the courts' handling of such cases.
In CLB's view, the ultimate goal of civil society-based public litigation initiatives in the labour rights arena should be to persuade or pressure the authorities, including the ACFTU, to set up an effective network of publicly-funded, pro bono workers' legal services centres around the country, so that the far greater number of workers who currently need to sue employers will be able to do so, regardless of their personal financial limitations. This is vital if the "big stick" of litigation – the weapon of last resort for workers and other citizens in China today – is to be made available to all those in need, rather than to just a small minority.
COLLECTIVE BARGAINING
While pro-worker litigation can alleviate and often resolve the problems caused after a labour dispute or rights violations has occurred, collective bargaining provides a means of obviating that these problems can largely be avoided in the first place. Collective bargaining thus represents the main long-term solution, both to the pervasive range of labour rights violations that afflict Chinese workplaces of all kinds, and also to the concomitant social and political unrest that they engender at local level. The ACFTU and the Ministry of Labour have been promoting the use of collective contracts since the early 1990s, but until recently this policy was applied mainly in the state-owned sector – which, almost by definition, was 100-percent unionized. (Attempts since 2000 to apply collective contracts in the private sector have been heavily impeded by the lack of union branches in this sector, or by the company domination of those that do exist.) Even in the private sector, however, most collective contracts took the form of standardized agreements that were simply imposed on the workforce by ACFTU officials and company management, with little or no genuine negotiations or worker involvement in the process. As noted above, however, recent policy initiatives indicate that a more authentic kind of collective bargaining, in which labour and management negotiate firmly but fairly, and on a broadly equal footing, has been given a tentative green light by the senior authorities. Moreover, the private sector in general – and Fortune 500 companies in particular – now constitute the primary target zone for this major new policy initiative.
The most symbolically significant example was the recent campaign by the ACFTU to conclude collective contracts at all Wal-Mart stores in China, a move that resulted in staff wage rises of 8 percent. Although this process still lacked real worker involvement, the arrival of collective contracts at what may be the world's most union-hostile corporation sent a clear signal that even large multinationals operating in China need to prepare themselves to face the same challenge. During the Wal-Mart campaign, moreover, the ACFTU acknowledged collective bargaining as being the international norm for achieving collective contracts and highlighted its importance in maintaining social stability. Also, to address the problem of weak, non-existent or company-dominated unions at factory level in the private sector, the ACFTU has introduced two additional collective contract methods: first, the negotiation of both locality-based and industry-specific collective contracts; and second, a policy known as "higher-level substitution" (shang dai xia), whereby county, township or street-level unions negotiate the contracts on behalf of the factory union or workforce.
As mentioned, this year has brought the previously unimaginable reality of virtually compulsory collective negotiations between workers and management in Shenyang, Shenzhen and various other parts of the country, and numerous specific examples of the process have been cited in the mainland press lately. For example, after three rounds of intense negotiations, workers at a badge factory in Liaoning Province were able to secure a 19 percent raise in wages through collective bargaining efforts. At another, Japanese-owned factory in Sichuan, annual collective consultation sessions with the enterprise union produced annual raises in workers' salaries of 6-8 percent per year (based on the Sichuan provincial guidelines for wage increases.) And at one of the largest logistics companies in Fujian province, collective contract negotiations produced a 9.1 percent increase in wages. A collective wage-consultation system was likewise implemented in Luoyang, Henan province, in 2006, and while officials there admit that the negotiating process has proven to be difficult, the data indicates that since last year, staff and workers' salaries have risen by an average of 10 percent at the Luoyang YTO Group, by 11 percent at the Zhonglu Group Luoyang Copper Industry Co., Ltd, by 18 percent at the Luoyang Jianyuan Tooling Manufacturing Co., and by 21 percent at the CITIC Heavy Machinery Company Ltd.
The official launch plan for collective bargaining in Shenzhen was especially ambitious and far-reaching. In late September, the municipal trade union office and city government held a meeting to finalize the plan, which was then publicly announced on its website. Characterizing the plan as being a "tripartite" endeavour between workers, employers and the government, the report stated:
At the meeting, Li Shaomei, vice-chairman of the municipal federation of trade unions, introduced to all those present the "Shenzhen City 100 Enterprises Collective Agreements Campaign." Harmonious labour relations are the very foundation of the life and vitality of modern enterprises… In train with the continuous development of the Shenzhen city economy, the contradictions between labour and capital have become ever more pronounced. In seeking to resolve these contradictions, in practice we have found that the system of using collective bargaining to conclude collective contracts is none other than a fundamental means of constructing the Harmonious Society. Using this means, the problems that affect labour relations can be identified and resolved through timely, two-way communication and consultation between labour and capital…
Responding to the ACFTU's and [Guangdong] Provincial FTU's call, the [Shenzhen] City FTU, the Municipal Labour and Social Protection Bureau and the Municipal Enterprise Association decided to jointly release a Notice on the Issuance of a Work Plan for Carrying out a Collective Bargaining and Agreements Campaign in 100 Key Enterprises in Shenzhen Municipality. The 100 primary targets will be drawn from overseas Fortune 500 corporations, other well-known multinationals and China's Top 500 corporations operating in Shenzhen, and from other sizable and influential companies in the municipality. The aim will be to undertake collective bargaining and the signing of collective contracts in these enterprises, and to establish a collective bargaining mechanism operating on a "fixed location, fixed time-frame and fixed content" (dingdian dingshi dingxiang) basis – that is, the creation of a platform for the harmonious development of labour relations whereby negotiations will be held with the enterprise at a set time each year and on a specific set of labour relations issues that directly affect the interests of the workforce.
Significantly, the Shenzhen FTU report also noted that in the case of the Wal-Mart collective contract drive,
After the contract was concluded, the employees showed both a marked increase in their overall "sense of belonging" within the company, and also a clearer sense of awareness and expectation as to their personal rights and interests. A beneficial "win-win" situation was thus engendered.
This touches on a fundamentally important issue: both the workers and the company reportedly benefitted from the exercise. If the current drive to promote collective bargaining more widely in China is to succeed, it is vital that the initial pilot implementations over the coming year or so should clearly demonstrate that genuine worker-management negotiations do, in practice, help to reduce the level of labour unrest and thereby foster a healthier and more normal labour relations environment. Indeed, in order to alleviate the government's longstanding reluctance to grant any form of greater collective autonomy to workers, a "win-win-win" outcome is virtually required: the process must be shown to work not only in the socioeconomic interests of both workers and employers, but also in the larger political interests of the government. Achieving this will call for a high level of responsibility and restraint on the part of all three main actors. However, if collective bargaining breaks down in certain cases, as it can easily do, workers' only real option is to withdraw their labour as a means of bringing the employer back to the negotiating table. Looking a bit deeper, therefore, the question of the legality and political acceptability of strike action is one that can scarcely be avoided in China as the collective bargaining project unfolds.
Promoting more "harmonious" labour relations, and hence ensuring greater social and political stability, is clearly the government's primary motivation for permitting collective bargaining to proceed on a trial basis. But in the case of Shenzhen and Guangdong, such moves may also, on another level, be linked to the provincial government's strategic plan to upgrade the entire local economy – that is, to move away from the Hong Kong-derived cheap labour, heavily-polluting manufacturing model of the past two decades and more, and to progressively introduce higher quality companies and enterprises whose international competitiveness and product appeal will be based on more sophisticated forms of value-added – notably more advanced and environmentally sustainable technology. Collective bargaining could play an important role in this process, by exerting upward pressure on wage and production costs that serves to force more marginal, backward or primitive enterprises to close down or relocate to other parts of the country, while also providing social stability through better working conditions.
The current world financial crisis has thrown something of a spanner in the works on this point, since in recent weeks thousands of the less desirable factories in Guangdong have gone bankrupt, while few if any of the originally envisaged companies of the future have actually materialized. Depending on how deeply the crisis affects China, this may delay the full implementation of the collective bargaining initiative for some time. But as mentioned, for structural economic and social reasons, it is unlikely to do so indefinitely. Moreover, the collective bargaining mechanism is geared not only toward raising workers' salaries and conditions: in times of economic difficulty, it can be equally important as a means of halting or limiting the scale of worker layoffs – a goal that also chimes well with the officially desired "social harmony."
CORPORATE SOCIAL RESPONSIBILITY
While overseas corporations' CSR activities have had, over the past decade and more, a generally positive impact in China, overall the CSR project has been unable to fundamentally address – far less resolve – the core labour problems in China today. This should be neither surprising, nor an occasion for finger-pointing or blame. The notion, advanced by numerous academics and companies, that business corporations could in any real sense "lead the way" in bringing internationally recognized labour rights to a country as large and diverse as China was always both suspect (foreign companies often choose to do business in China precisely because labour costs are low and workplace terms and conditions are less demanding than at home) and also far-fetched (advancing labour rights in any country is, primarily, the job of workers themselves and their trade unions, not that of companies.)
The introduction and subsequent localization of CSR ideas has no doubt raised awareness of pressing social issues in China, both domestically and among Western consumers. It has also improved environmental standards and helped cultivate a new awareness of philanthropy in the country. In practice, however, voluntary codes of conduct have a very limited ability to address the major problems workers throughout China face low wages, excessive overtime, gender discrimination, unsafe working conditions and many other such issues. At bottom, codes of conduct are voluntary, non-binding agreements between buyer companies and their suppliers in China, and as such they have no actual legal standing. Chinese workers certainly cannot invoke them in lawsuits against abusive employers, since legal redress under domestic labour law depends solely upon the "legal labour relationship" – that between employer and the employee, as set forth in the labour contract.
Voluntary codes of conduct also can't fundamentally alter the labour rights situation because very few Chinese companies currently fit the profile of companies that would be likely to rigorously enforce their labour codes. Companies that see CSR as genuinely valuable to their bottom line tend to be large, financially stable, and sensitive to their brand image. Almost all of the anonymous army of Chinese supplier factories found along the southeast coast don't have a brand image to speak of, and most likely do not see themselves as financially stable. A well-known international brand, such as Coca-Cola or Nike, is an intangible but extremely valuable asset for a corporation. Investing in CSR is a proven way for brands to maintain their prestige – in fact, these days, it is vital to defending the brand's basic worth and value. But this self-interested investment rationale simply doesn't exist for the great majority of no-name, small-scale Chinese suppliers.
For multinational brands, the pressure to give factory workers better conditions comes from the fear of being the target of a media or NGO anti-sweatshop campaign. For suppliers, the pressure to give workers better conditions comes from the fear of losing contracts. Therefore, under the code of conduct structure, workers only get good conditions if the multinational companies are serious about the auditing process. This is problematic for two reasons. First, many multinationals aren't serious about enforcing their labour codes, or at least they are not willing to pay for the extra costs. Indeed, for many, it is mainly a cosmetic exercise in the first place. Suppliers often come under pressure from MNCs to produce goods cheaply before an urgent deadline, often guaranteeing that the supplier will have to violate labour laws in order to fill the order. Second, in the code of conduct framework, the main protagonists in the search for better working conditions are the buyer and the supplier, while workers themselves are relegated to the sidelines. In a sense, therefore, the labour-rights effort has been "outsourced" to people in the developed world. While this reliance on non-binding codes of conduct may be partially justified in countries with poor or inadequate labour legislation, the labour laws in China are both voluminous and potentially quite enforceable. In 2006 alone, close to 700,000 workers sought, and mostly won, compensation remedies for labour rights violations through dispute arbitration commissions or subsequent judicial hearings. Company codes of conduct, by contrast, rarely include any provision or mechanism for financial redress.
However, some CSR initiatives and multi-stakeholder initiatives have sought to address these deficiencies in the basic model through various innovations, such as encouraging the establishment of workers' councils or health and safety committees, that attempt to involve the workforce more directly in the process. But overall, the search for truly viable such "parallel means" of advancing freedom of association and other ILO-defined core labour standards in China has proved to be highly elusive. When all is said and done, defending and improving labour rights in China – as elsewhere – must primarily be the job of the workers themselves. And to be able to perform this job, China's workers need the same repertoire of skills and institutions that their counterparts elsewhere enjoy: firstly, access to effective, democratically-run trade unions to represent them collectively; and secondly, the right to engage in collective bargaining.
In short, when they are the buyer rather than the employer, foreign corporations doing business in China are effectively excluded from the orbit of the legal labour relationship, and hence from the scope of any legally binding resolution of labour violations or disputes. In such cases, whatever their code-of-conduct ambitions may be, multinational companies are in practice severely limited in their ability to significantly impact the labour rights situation. On the other hand, where the foreign (or the domestic) corporation is the employer, a legally enforceable mechanism is readily available – in the form of the labour contract – for the protection of workers' rights, and the collective contract is a particularly effective and flexible tool for this purpose. In our view, therefore, the main goal and purpose of corporate codes of conduct should be to achieve, as far as possible, the more limited goal of maintaining a clean ship, ethically speaking, within the company itself. Meanwhile, foreign companies operating in China, whether as buyer or employer, should start preparing themselves for the impending reality of government-sanctioned unions in the workplace, and for demands by an increasingly assertive workforce for collective bargaining to begin.
V. Towards a Coordinated and Integrated Strategy for Change
As we have argued here, Chinese workers nowadays are increasingly setting the pace in advancing the domestic labour rights agenda, and they are winning important concessions from the government. But within this larger context of change, outside actors can still play a major role by assisting and complementing workers' efforts. Here are some of the elements that could make up a potentially powerful and effective coordinated strategy – one involving foreign corporations, overseas trade unions and international NGOs – for promoting a real advance in workers' rights in the Chinese workplace over the next few years. While some of the proposed initiatives below are specific to one set of actors, others offer considerable space for collaboration between the various groups.
1. OVERSEAS CORPORATIONS:
Above and beyond respecting China's current labour laws and standards, multinationals and other foreign buyers could:
- Establish company-supported collective "legal defence funds" in various provinces and cities in China to support labour rights litigation (or dispute arbitration, as appropriate) so that workers can seek legal redress from abusive employers. Such a fund would be made available to workers, on individual or collective application, to enable them to hire lawyers and pay court or arbitration hearing charges, in clearly deserving cases. This would assist China on its path to rule of law while also helping to burnish the company brand.
- Put adequate resources into supporting or creating effective and legitimate internal grievance mechanisms at company and factory level. In particular, multinational buyers should specify in their codes of conduct that Chinese firms must operate effective, worker-participated dispute mediation committees within their factories, in order to obtain supplier status. Multi-stakeholder initiatives should also incorporate this key principle. Assistance from local workers' rights NGOs in resolving labour disputes should also be welcomed and encouraged.
- Take an enlightened and pro-active approach, rather than a hostile or obstructive one, to the ACFTU's drive to establish factory-level unions in their own or their supplier companies' workplaces in China. Moreover, make acceptance of such union-building activities by the ACFTU conditional upon a policy that only genuine workers, or their elected representatives, be allowed to hold senior union office or serve on the union committee.
- Similarly, if the factory union or workers' representatives wish to enter into collective bargaining with management: say "Yes." (Or, if the foreign company is the buyer, urge the domestic supplier firm to do so.)
- Avoid overextending their CSR aims and policies, and keep a clear focus on the labour rights issues that they– as buyers rather than employers, generally speaking – are most likely to be the party responsible for when violations occur, and hence which issues they are really in a position to systematically and effectively address as companies. Wider philanthropy initiatives, such as contributing to hospitals or kindergartens or buying computers for community centres, are laudable in principle, but not necessarily the best use of limited time and resources that could instead be directed towards addressing the labour rights issues affecting their companies.
2. INTERNATIONAL TRADE UNIONS:
Trade union centres from developed countries wishing to engage constructively with Chinese workers and/or the ACFTU could or should:
- Be selective in choosing dialogue partners from within the official trade union. While there is little harm in holding high-level discussions with the top ACFTU leadership, overseas unions should not expect to achieve much of real utility to Chinese workers by doing so. Instead, outreach efforts could more usefully be directed to local, and especially city-level ACFTU offices, since as noted above this is where the real reforms are taking place.
- At home, pressure their countries' multinationals who operate in China, and whose home-country workers they as unions represent, to cooperate and interact constructively with factory-level unions in the Chinese supplier firms, and also to encourage local management to respond positively to Chinese workers' requests for collective bargaining.
- Mobilize their members to support Chinese workers in cases where their labour rights have been violated by home country-based multinationals operating in China. Also, overseas unions should intervene directly with senior executives of the company concerned to seek a fair resolution of the workers' demands or grievances.
- Provide training to Chinese workers and union activists in how to effectively operate a union branch, and also how to conduct effective collective negotiations with management. This could be accomplished either by inviting Chinese workers and their representatives to visit the home-country union training centres, or by sending union training officials to the factories concerned in China.
- Overseas unions could also contribute greatly to the labour rights cause in China by directly supporting mainland workers' rights NGOs, both by partially providing their core operating costs and also by covering lawyers' fees in specific pro-worker litigation cases.
- At some point in the future, it should be possible – and highly desirable – for overseas unions to start interacting collaboratively with factory-level unions set up by workers themselves (as opposed to those created in a pro forma fashion by higher-level union offices.)
3. NGOS
In addition to their existing wide range of initiatives in support of Chinese workers, international NGOs could:
- Provide training to mainland workers' NGOs and others in the key areas of organizational, financial and project management. In addition, overseas NGOs could partner directly with such groups to jointly carry out field research on specific labour rights issues, produce reports on their findings and conduct advocacy efforts with the home-country companies involved in order to secure improvements in company practices and a just outcome for the workers.
- Provide resources and support directly to workers who seek remedies and solutions to their labour rights violations. In the Chinese context, this is particularly important, since the state's labour legislation is generally good, but workers usually lack the necessary resources to seek legal enforcement and effective remedies through judicial mechanisms. Such financial assistance can sometimes be channelled to workers via local labour rights NGOs.
- Work constructively with overseas companies to help them in their efforts to observe Chinese labour law, encourage good labour practices by supplier firms, and set up fair and effective grievance mechanisms. (For more on the latter, see second point under item 1) above.)
- Also, consider expanding existing overseas NGO initiatives in Chinese factories and workplaces – such as the setting up of workers councils or health and safety committees – by educating and encouraging worker activists to explore the collective bargaining route. Since this option usually means involving the local ACFTU authorities, it can also provide an opportunity to strengthen the status of factory-based NGO initiatives in the eyes of management.
- Engage in campaigns that inflict "reputational costs" on companies that fail or refuse to employ due care and diligence with regard to the human rights and labour rights impact of their business activities upon workplaces and local communities, especially when confronted with credible evidence of corporate wrongdoing.
- Recognizing that foreign companies involved in labour abuse cases in China are usually the buyer, and hence have no legal liability or competence in such cases under domestic law, overseas NGOs could also seek ways to diversify their China strategy. While naming and shaming culpable multinationals is often essential, collaboration with mainland NGOs on campaigns targeting bad labour practices by the domestic employers or supplier firms is also vital and can be still more effective.
VI. Conclusion
The rapid changes brought about by globalization and the internationalization of most governance issues certainly provide difficult challenges to anybody concerned with human rights. In China's case, in the past, many of the most egregious labour rights violations were caused by the Chinese government's "governance gap" the inability or unwillingness of the authorities to enforce or enact good labour laws combined with negligence and abuse on the part of the employer. But things are changing rapidly. Fortunately, the "governance gap" is narrowing, in part due to the pressure from a strengthening civil society. This new situation will increasingly allow companies, NGOs, and the government to work together to end labour rights abuses and create workplace solutions that are beneficial to all concerned.
For the past few decades, the main focus of international bodies concerned about the rights situation in China has been, of necessity, to mobilize pressure from outside upon China's rulers to implement the necessary reforms. However, in CLB's view, China is now entering a stage in its socioeconomic development whereby change – in the labour rights field and many others – will come primarily as a result of pressure from within. China's citizens are increasingly campaigning openly, at the community level, on a wide range of local rights' violation issues – ranging from unauthorized and uncompensated land seizures in the countryside, urban evictions to make room for city development projects, serious pollution from local factories, police violence against protestors, and of course collective protests by workers. And more and more nowadays, for the range of reasons indicated above, local authorities are responding constructively.
This is perhaps the single most welcome change for decades, for all those wishing to see progress towards greater civil rights and citizen empowerment in China. What it means for foreign companies, overseas trade unions, international NGOs and others is that we all now have a golden opportunity to contribute constructively – and in ways that the government can mostly accept – by directly supporting Chinese citizens' own efforts to achieve change. Nowhere is this more true, in China today, than in the fast-changing field of labour relations and labour rights.