Under the agreement, Wal-Mart will raise store employee’s salaries by eight percent this year and by a further eight percent in 2009. Moreover, all employees’ wages will be higher than the minimum wage set by the municipal government of Shenyang, currently 700 yuan a month.
The trade union first proposed collective consultations with management on 28 May this year and management, after receiving authorization from headquarters, agreed on 4 July. The negotiations took place on 14 July but lasted only five hours suggesting it was a largely pro-forma exercise.
However, Ju Xiuli, chairman of the Shenyang Federation of Trade Union, praised the contract, saying it represented a breakthrough in labour relations and a “win-win” situation for both parties. The All China Federation of Trade Unions (ACFTU) adopted a high-profile campaign in 2006 to unionize Wal-Mart, and Ju claimed the Shenyang agreement was a validation of the union’s efforts to establish a consultation and dispute resolution mechanism within Wal-Mart’s more than 100 Chinese outlets.
It is perhaps not surprising that Shenyang’s was first Wal-Mart store to sign a collective labour agreement in China. Shenyang has long been a testing ground for new economic and policy initiatives, and the city’s recent Collective Contract Regulations, published on 1 August, 2007, contain specific provisions compelling management to agree to engage in collective consultations with the union or workers’ representatives. The company can be fined up to 20,000 yuan if it rejects a request for negotiations, fails to provide any documentation relevant or pertinent to the negotiations, or in any way hampers the negotiation process or the subsequent implementation of the agreement. However, it could be argued that a penalty of just 20,000 yuan is an insufficient deterrent to major or even medium-sized companies that do not wish to sign a collective labour agreement with their employees.
The Shenyang regulations make specific reference to the Liaoning United Migrant Workers’ Union, established in 2006 to bring migrant workers, especially construction workers, into the ACFTU. Article Five of the regulations states: “The United Migrant Workers’ Union shall conduct collective consultations and conclude collective contracts on remuneration, work safety and health issues with the public service institutions and enterprises where migrant workers are employed.”
However, up to this point, the Migrant Workers’ Union's main role has been in providing legal aid and social welfare services rather than in negotiating collective agreements with management. For truly effective contract negations to take place, the union should be based in the factory and represent just the factory workers. In that way it can better understand the needs of the workers and the actual conditions on the factory floor.