China Labour Bulletin issued a statement [2] on 16 May 2014 in support of the Guangdong provincial government’s Draft Regulations on Enterprise Collective Consultations and Collective Contracts (广东省企业集体协商和集体合同条例 [3]).

The statement, published as an advertisement in the Hong Kong Economic Journal (信报), was a direct response to the continuing efforts of the Hong Kong business community to derail the legislation. It follows our earlier declaration of support [4] for the Guangdong legislature’s attempts to set up a collective wage negotiation system in the province, also published in the Hong Kong Economic Journal, on 22 September 2010. The 16 May statement is translated below.

Support the Guangdong government’s efforts to overcome resistance and legislate for the establishment an enterprise-based collective bargaining system

On 15 April 2014, six chambers of commerce in Hong Kong asked the Guangdong provincial government to delay passage of the Draft Regulations on Enterprise Collective Consultations and Collective Contracts. China Labour Bulletin firmly opposes these delaying tactics and calls on the Guangdong Provincial People's Congress to promulgate and implement these much needed regulations as soon as possible.

The Hong Kong business community has, since 2008, continually opposed and blocked all attempts by the Guangdong legislature to pass regulations giving workers the right to engage in collective bargaining.  During this period, we have seen how labour disputes, strikes and worker protests have increased in both number and scale due to the lack of an effective mechanism for resolving disputes through collective bargaining and negotiations. Without any bargaining and negotiation, labour and management cannot develop the culture and habit of bargaining based on the principles of equality and mutual respect, making it more likely that disputes will intensify and become more entrenched. As a result both the workers and the employers lose out. The obstruction and delaying tactics of the Hong Kong chambers not only hurts the rights and interests of workers in Guangdong; it damages social stability, and even goes against the basic interests of the Hong Kong business community.

Looking back over the past century, especially the seven decades since the end of World War Two, we can see how, through legislation and practice, Europe and America gradually built up and perfected their own systems of collective bargaining in enterprises, industrial sectors and nationally, and how these systems restored the balance of power between labour and management and ensured a more equitable distribution of wealth. Compared to the situation before the war, workers were better off and business leaders were made to see their companies not just as units of profit but as an integrated part of the community with social and environmental responsibilities. In other words, business leaders were encouraged to resolve disputes through negotiations and consultation rather than through threats and violence. The statement by the Hong Kong chambers of commerce shows that the Hong Kong business leaders are still in a state of denial about collective bargaining. They refuse to accept any civic or social responsibilities and maintain a slavish devotion to the old traditions of the absolute power of the boss.

It is important also to note that the development of collective bargaining, together with solid labour legislation and strong trade unions in many European countries, Japan, Korea etc., has prevented businesses in those countries from suppressing wages, extending working hours and overtime, and arbitrarily laying-off workers. These restrictions forced businesses to gain their competitive advantage through innovation and creativity, improving management, reducing energy and raw material consumption, updating products and processes, and enhancing product and service quality. Businesses in Hong Kong and mainland China however are conspicuously lacking in innovation and creativity, and only know how to improve competitiveness by continually cutting labour costs. They singularly fail to see how the establishment of labour laws and a system of collective bargaining can enhance their business practices and make them more competitive.

One of the basic policies of the Chinese government is to develop a more stable and sustainable system of economic growth based on greater domestic consumption. However, this fundamental policy goal has been stymied by the lack of any real wage growth for China’s hundreds of millions of workers. China's economic structure has undergone radical change over the last two decades to the point where the private, market driven economy is now well in the ascendance. The government has the power to raise wages for civil servants etc. but can no longer directly intervene in the management of private businesses. It is up to businesses themselves to raise wages and improve benefits for their employees, but it is hard to imagine they will do so without pressure from the workers. That pressure is already there but currently it is only intermittently effective. For China to achieve real growth in domestic consumption, pressure from the workers needs to be bolstered and enhanced by a stable and legally-regulated system of wage negotiations.

We all understand that the business environment for Hong Kong manufacturers in China is extremely tight and that costs are going up all the time. But rather than continuing to squeeze the workers as they do now, a far more effective approach, we would suggest, is for the Hong Kong chambers of commerce to jointly-negotiate with the multinational companies they supply to get a much better purchase price, while at the same time negotiating with the Guangdong government to reduce taxes and unreasonable charges and appropriations. With higher profit margins and lower costs, businesses will be in a much better position to meet the wage demands of their employees and thereby reduce the number of disputes in the workplace, boost productivity and help maintain a stable workforce.

China Labour Bulletin
16 May 2014