The reason China’s labour rights situation is going from bad to worse despite more legislation is not hard to find. Put simply, workers in China still do not have the right to collective bargaining.

Although the law stipulates a minimum wage, the only way for an enterprise to determine a reasonable wage, work-hours and working conditions based on the legally mandated minimum wage and the enterprise’s actual business and operational situation would be through genuine negotiations between management and labour. Yet because Chinese workers lack the right to engage in collective bargaining, employers routinely pay the minimum wage mandated by law to all employees as if it were a reasonable wage in all cases. The basic minimum wage mandated by law was originally meant to be a minimum standard, but in the vast majority of enterprises this minimum wage has become the basic flat wage paid by default to all workers. In other words, the minimum wage regulations designed to protect workers’ rights and interests have become the legal foundation of management’s exploitation of labour.

The Labour Law also sets strict limits on work hours and overtime, but the excessively low piece-rate wages paid by employers make it impossible for workers to earn a living wage by working eight hours a day. Because they cannot bargain collectively, individual employees naturally dare not to ask for a piece-rate rise on their own, so their only option is to ask to work longer hours. In most places where employees work excessively long hours, it turns out that they have asked to do so themselves, and as such,the local labour bureaus – who are supposed to monitor and address breaches of work hour regulations - are powerless to intervene in this “reasonable” violation of the law.

An effective collective bargaining system would offer China's workers a quick way out of the dead end of excessively low wages and long hours they currently find themselves in. It would also serve a political and social “fireproofing” function in that it would reduce the risk of labour disputes sparking conflagrations that can only be put out after the damage has already been done. Collective bargaining would be a proactive, preventive rather than a passive after-the-fact method of protecting the rights and interests of workers.

I think that as far as establishing a collective bargaining system is concerned, there is no doubt that the new Labour Contract Law is timely and well positioned within China’s legislative landscape. It is timely because after three decades of growing tension between labour and management, both the Chinese Communist leadership and ordinary people from all walks of life agree that something needs to be done to prevent the situation from escalating into a disaster. The law is well positioned because it effectively builds on the labour rights and labour dispute laws and regulations that have been passed in recent years and provides the necessary legal basis for a genuine collective bargaining system. In particular, the Labour Contract Law stipulates that it is the employer’s responsibility to sign a collective labour contract with the employees’ representative within an enterprise.

For years, tension between labour and management has built up while China’s trade unions have been content to go through the motions of representing the interests of workers. But if the All-China Federation of Trade Unions (ACFTU) and its branch unions grasp the opportunity presented by the Labour Contract Law at this key juncture, I believe that after a couple of years of finding their way and gaining experience, the unions ought to be able to create a genuine and effective collective bargaining system in China.

In addition, a well-designed collective bargaining system would also lay the foundations for grassroots unions. Right now, the vast majority of “trade unions” in enterprises are controlled by the management. They do not speak for workers and, in fact, do not even listen to the higher-level unions that are supposed to supervise them. Thus, by developing collective bargaining at the grassroots level, enterprise-level unions will be transformed into labour organizations that genuinely represent the rights and interests of workers and once again become a functioning part of the ACFTU. In short, a collective bargaining system can fundamentally protect workers’ rights and provide the ACFTU with an excellent opportunity to rebuild itself as a genuinely representative trade union.