2008 China labor laws – part two the union ACFTU

The All China Federation of Trade Unions ACFTUReport july 2008
The enhanced role for China’s union the ACFTU with new legal powers is important. The ACFTU is the one union allowed by law, organised nationally and in industry unions and hierachically in each region, local area and city.

Article 11 of the Trade Union Law states: ‘the establishment of any branch whether local, national or industrial, shall be submitted to the trade union organisation at the next higher level for approval.’

http://www.acftu.org.cn/template/10002/file.jsp?cid=47&aid=398

The ACFTU supports and is politically dependent on the CCP.

New legal union powers

Major opposition to the greater role for the union came from the China employer lobby groups and western corporations.

This was against the draft bill requiring the employer to gain the ‘consent’ of the employees’ representative works congress and the union to the changed company work rules. As we saw above, the law refers to ‘negotiations’ rather than ‘consent’. But, companies still have to respect this form of workplace democracy.

In 2008, I advise companies to support the unions’ stronger legal role.

Article 78 says:

Trade unions shall safeguard the lawful rights and interests of workers in accordance with the law and oversee the execution of labor contracts and collective contracts by employer units. If an employer unit violates labor laws or regulations or a labor contract or collective contract, a trade union has the right to raise its opinions or demand corrective action. If a worker applies for arbitration or institutes legal proceedings, the trade union shall provide support and assistance in accordance with the law.

Unions are directed to protect workers’ rights.

Whether the ACFTU can better the bureaucratic labor regulatory agencies or whether worker activism over grievances will push the ACFTU in directions more independent of management and the state are hotly debated.

The ACFTU is not the same as Western unions.

The ACFTU is a large service organisation. It assists workers in health insurance and social security benefits in state-owned enterprises, senior citizen homes, housing, canteens, medical centres, kindergartens and public baths. 80% of union members in a poll in private companies on what it did well put cultural events, cinema tickets at the top and only 8% that the union fights for workers’ wages and conditions. I stayed next to its Beijing multi-storied headquarters at ‘The People’s Palace’ one of a number of its hotels.

It is the largest union in the world, with ‘193m members, aims for 10m more’ South China Morning Post 15/3/2008, with more than 70% density, over one and half million enterprises. Union finance is guaranteed, as the enterprise is required by the Trade Union Law to submit 2% of monthly pay-roll. Membership went down with state owned enterprises shut or privatised and with anti-unionism in the large private sector, but back on the increase with organising drives.

Political force

The ACFTU leadership is a political force who lobbied for these labor laws. They organised submissions from workers with grievances, contested the debates, with information on the internet and in the public media and negotiated with the government on the details. Chan (2008):

Getting the new law passed involved a long struggle between the ACFTU on the one side, and pro-capital Chinese bureaucracies, powerful domestic and international capital on the other. The union leadership stood firm, and the new law has re-introduced some job security for the workers.

The ACFTU lines up with Communist Party policy as in the Trade Union Law 2001 and ACFTU Charter 2003. ACFTU officials are employed as civil servants and appointed not elected.

The ACFTU’s responsibility is for economic development. In enterprises, the union supports production and efficiency. Indeed, in many enterprises the union head is often at the top of management. Top union participation is stronger in state owned enterprises, but is more in the private sector still aligned with corporate management. It is a concern that the union leaders are not just for the workers’ interests, so workers lack autonomy.

This past ACFTU practice has been long observed. Ross (2006:70;128) is one example.

In the event of disputes, union stewards invariably took the side of managers. And for many unions, established simply to comply with the national labor laws, the firm’s manager or deputy manager acted as the director of the union. Indeed, the tendency for employees to retain their compliant relationship with managerial authority was one aspect of the Maoist workunit (danwei) mentailty that foreign companies were more than happy to inherit. Yet for many multitnationals, even a compliant ‘yellow union’ of this sort was too much to contemplate.

Only a fifth of 400,000 companies had unions. ‘Unions Fight for more recognition,’ China Daily 14/9/2004. ‘Some Transnationals Go Seriously Against Trade Union Law,’ People’s Daily 27/10/2004.

Chan (2000a) reported the experiences of many Chinese employees with workplace grievances of the ACFTU’s inadequate resolution of their dispute. But Chan (2008):

The image painted of the ACFTU as a useless trade union is generally true. It often acts as if it is no more than a government bureaucracy, and in many places across China the local union officials too often side with capital and management. But this is not the full picture. After the turn to a competitive market economy began, some of its officials have tried to do union work using whatever space they can find. This, too, is the space that Chinese workers are using right now. And this is the space that we have to utilize.

Workers said to me the ACFTU was ‘useless as a union’. When I put this to ACFTU officials they insist they do fight for workers. I received their priorities in ‘The Blue Paper on the Role of Chinese Trade Unions in Safeguarding the Legitimate Rights and Interests of Workers (2005)’. I inteviewed the ACFTU on their Wal-Mart success.

China Wal-Mart unionised first in the world

By 2004, the ACFTU was threatening to blacklist foreign firms that refused to allow unions in their Chinese plants. The list included names like Wal-Mart, Kodak, Dell, Samsung, McDonalds, and KFC. These companies, and many others were in clear violation of national labor law, which stipulated that any enterprise with more than 25 workers were required to establish a union. The notoroiusly anti-union Wal-Mart, with 190,000 employees directly on its mainland payroll (and untold others in sub-contracted companies prodcing for the retail giant) had been an ACFTU target since 2000. The retail giant held out in the face of widespread bad publicity for fear of settinjg a precedent that would encourage its 1.3 million workers in nine other countries. (Ross (2006).

In their suppliers it was worse, where the foreign corporates had 80% of their contractors flouting labor laws, not paying minimums and Wal-Mart was one.

The ACFTU’s ‘Grass Roots Organising Department’ became active in recruiting and with strategies to empower local union delegates to be active in bargaining. There are debates working through changes to these contradictions between servicing and organising. The necessity to organise workers first is pressing.

Normally the ACFTU does not organise from the bottom up, as happens where unions face hostile management, but from the top – with management – down. Due to the hostile private sector responses, new organising practices developed in 2005-2006.

In a world first, the ACFTU unionised Wal-Mart with a bottom-up campaign. The virulently anti-union Wal-Mart had to obey the Trade Union Law. I reported ‘How the Chinese unionised Wal-Mart’ in International Union Rights for the International Committee for Trade Union Rights ICTUR. Then in July 2008 Wal-Mart accepted collective union contracts .

The ACFTU unionised Wal-Mart first, then onto other foreign enterprises. Workers have been able to form trade unions in less than 50 percent of the Fortune Global 500, now it will go up to 80 percent, China Daily 18/7/2008 Guo Wencai, director of the ACFTU department of grassroots organization and capacity building.

Top down management enrolling of employees in unions still occurs. More foreign companies approach the ACFTU for a unionised workforce whether at the national, regional, industry and city level. It is advisable for foreign corporations to reverse their anti-unionism.

Overseas unions and NGOs can pressure companies for compliance. The ACFTU now invites international cooperation.

Unionising migrant workers

The ACFTU in 2008 lifts its organising to enrol migrant workers. They were erroneously not regarded as ‘part of the working class’. In 2003 they were able to join the union.

The ACFTU now links rural workers from the province they leave to the union in the coastal cities. It aims for 10 million new migrant members. A major injustice is that rural workers coming to factories on the outskirts of cities are not registered for city benefits. The ACFTU wants this long-standing disadvantage against rural workers removed, so all have the same health entitlements as city citizens.

Organising migrant workers is more important than unionising Wal-Mart.

The enhanced union role to enforce work laws is significant. The ACFTU is pressed to improve litigation rights and are establishing 900 legal centres to assist grievances and disputes and resources to participate in the mediation and arbitration commission. Employees are complaining if the new work rules are inappropriate. The employer is to respond to the complaint to make ameliorating amendments after consultation with their workforce and the union.

If management ignores the local union, a higher-level trade union authority is involved. Employers can be punished if there is no consultation on new company work rules. Employees know if they are not being consulted. These rules may be later found to be invalid and not varied. The employer may not enforce the work rules if challenged in any arbitral proceeding. There are reports that these laws are being ignored, but it is too early to say they are a failure.

Collective bargaining increasing

Union rights for collective agreements that previously were not extensive in the private sector are growing, as the skilled and professional workforce organises for their rights and seek higher wages in the cities with consumer led demands.

The collective contracts signed reached 862,000 in 2006, an increase of 14.3% over 2005. These contracts involved 112,455 million workers, some 58.6% of workers in all enterprises. Many collective contracts however reflect the minimum requirements.

In 2008, the ACFTU works for more collective contracts above the minimums. The law urges union collective consultation rights for collective contracts higher than the minimum wages and conditions. Pattern or industry bargaining is encouraged.

Industry-specific or area-specific collective contracts may be concluded between representatives of trade unions on the one hand and of enterprises on the other hand in such industries as construction, mining, and catering services in areas below the county level. Article 53

Greater consultation is required with the elected Staff and Workers Representative Congresses (SWRC), where they exist, Chan (2008).

Overseas unions are able to assist with empowering union representatives and how to bargain collectively. Verite 2007, an NGO auditing body has expressed past frustration in CSR monitoring and in favour of union monitoring.

The Hong Kong based China Labor Bulletin (critic of the ACFTU) now urges co-operation.

… with the implementation of the Labour Contract Law we….believe multinationals will be best served working directly with local branches of the ACFTU. Factory-level unions are legally empowered and encouraged by the government to negotiate collective contracts and we believe the time is right for the union to engage in genuine collective bargaining rather than the largely pro forma “collective consultations”.

While acknowledging the importance of codes of conduct and social accountability standards, we believe the collective contract has the three advantages over them:

• Since the collective contract is legally enforceable, Chinese supplier firms are obliged to adhere to its provisions, and this gives multinational buyers a more effective guarantee that they can fulfill their social accountability goals.
• Being formulated on the basis both of Chinese law and of the specific circumstances of individual Chinese enterprises, the collective contract better reflects the wishes and aspirations of both workers and management in the supplier factories, and is therefore a more targeted and effective tool.
• Since the workers’ own elected representatives participate in the design and drafting of the collective contract and directly supervise its implementation, the contract can be more readily and fully implemented. From the corporate social accountability perspective, the collective contract system serves the following three functions:
• It converts the code of conduct from being a moral or ethical standard into a legal standard, and thus transforms the employer’s moral responsibility into a legal obligation.
• It turns the code of conduct – a “foreign imported” standard – into a set of rules that is based on Chinese law and takes into account the specific circumstances of Chinese supplier firms.
• It changes the status of workers from that of observers or onlookers into being direct participants in, and supervisors of, the labour standards process.

China Labour Bulletin director, Han Dongfang, has not done an about-face on the question of engaging with the ACFTU.

Indeed, with the implementation of the Labour Contract Law we believe the prospects for the development of collective contracts in China are greatly enhanced. …we are encouraging multinationals to put pressure on the ACFTU branch unions at their supplier factories to negotiate a collective labour contract on behalf of the employees. This will then put the onus on the ACFTU to show whether or not it is really committed to promoting collective contracts to defend workers’ rights. Transforming the ACFTU into an effective bargaining agent for workers will not be easy.

The ACFTU wants in 2009 in a separate Chapter on Collective Bargaining, with democratically elected workplace union committees with collective bargaining rights.

The practice of successful collective bargaining comes first. Liu Cheng:

Progress is step by step. Change is over many years. Same with the unions. They have to change in practice. Union work has to change in practice and then the laws will develop.

On collective bargaining, there are more collective agreements, but too often only copies of minimums and not improvements. This is the next step. Workers have to learn in practice better collective agreement making. There is the issue of better rules for the method of election of candidates in the enterprise, so reform of the process is fairer.

GLS argues for rights for collective bargaining at a local level.

The right to elect union officials and representatives nominated by workers themselves.
… this has happened with the acquiescence of the ACFTU in a few supplier plants of foreign companies. Elections do not guarantee good unions but they are a fundamental prerequisite to legitimacy. Managers must be barred from holding union office.

Protection from reprisals by management or union officials for carrying out legitimate union activities such as collective bargaining or grievance handling. Union activists should not be threatened for carrying out their duties.

The right to ratify contracts. Workers should have the right to examine, debate, and vote on any collective contracts.

Resources to maintain a functioning union at the local and industry level. No union can survive without resources needed for grievance handling, court challenges, collective bargaining, and staff and member education programs. Stewards and local union officials need training and reasonable time-off to conduct union business. The ACFTU receives 2% of the payroll. This should be distributed fairly at the local level.

No firings for strikes or protests.
There is no right to strike in China, but tens of thousands of strikes occur each year. Foreign firms and their suppliers should pledge to bargain in good faith, respect the right of workers to refuse to work when bargaining breaks down, and to not call the cops to end stoppages.

Unions and other supporters of international labor rights can play an important role in persuading foreign corporations to protect workers in their own and their subcontractors’ facilities in China. Without demonstrating that they are insisting on such protections, all their claims of corporate responsibility will be dubious at best.

Union workplace delegates

Chan (2008) reportrs on more grass roots union activities:

…(from the blogs) In one Wal-Mart store, the elected union chairman has been fighting and bargaining with Wal-Mart management over a number of issues for the past one and a half years. Each time he ran into difficulty, he got support from the ACFTU in Beijing to override the decisions of the pro-business city level union. Most of the 140 blog entries from Wal-Mart workers all over China hail this Wal-Mart branch chair as their hero and their trade union leader! Perhaps this kind of blog is nothing new in America, but for China this kind of spontaneous trade union activism is unprecedented.

Through China’s mass media, including the union newspaper Workers Daily, Chinese workers are very much aware of the struggles in setting up these Wal-Mart trade union branches. The precedent can become infectious. There are some known cases of workers making applications to set up workplace union branches, and to recall union executive committees that are under the thumb of management.

Chan (2007) recounts progressive HR in Reebok encouraging workers’ empowerment through elected union representatives. Essentially this was to replace company nominated union chairs of workplace committees with democratically elected representatives trained and confident to play a role in workers’ rights. Chan (2008) sees limited sucesses but ultimate failures as eventually the enterprise union committees were under management control.

Many in the ACFTU argue to train delegates in workplace rights and support for trade union democracy (Wang 2003). There is union push for amendments to the Trade Union law to ensure enterprise union committees are elected by the employees without management involvement.

In Guangzhou, at the urging of local ACFTU officials, an ordinance became effective on January 1, 2008, banning managers from holding union office. And in Hebei a new rule promoted by the regional government to promote collective bargaining will require democratic elections for worker representatives to bargain in workplaces without a union and more input by workers in the selection of union representatives in workplaces with a union.

Union engagement

Chan (2008) says the ACFTU leadership has little experience with hostile capitalist management.

Foreign trade unions have a wealth of experience that could help the ACFTU organize real union branches in such factories. …the ACFTU is now much more willing to reach out to foreign trade unions, and the unions of various European countries have been increasingly active in China. The Beijing Municipal Trade Union has received collective bargaining training sessions in Canada from Canadian unions.

Contacts with foreign unions can change the Chinese union federation’s ideas about trade unionism and collective bargaining, as has been the case with the Vietnam General Confederation of Labor…So what should we do regarding China? We can either work from the top with the ACFTU, or from the bottom with the grass-roots worker groups that are emerging in China. It is your choice or the choice of your organization.

What are the limitations? The ACFTU is the union monopoly. New trade union branches in enterprises are part of the ACFTU. No independent unions are allowed.

The ITUC (2008:7) reports Chinese labor activists being imprisoned for ‘obstructing public officers’ during strike protests and for trying to have independent unions. The ITUC argues China breaches ILO Conventions no 87 Freedom of Association and Protection of the Right to Organise Convention and no 98 Right to Organise and Collective Bargaining Convention. The report Play Fair 2008 found companies producing goods for the Olympic games had serious violations of labour laws.

These breaches of ILO labour rights are debated. The ACFTU’s participation in the ILO is under review. Resolution of such issues for China cooperating with international unionism proceeds as it did in the corporate world.

Even with China not allowing ‘free unions’, their 2008 labour reforms opens up room for change. We are unlikely to see a conference on workers’ rights cancelled on the eve of AFL-CIO President Sweeney’s visit, as happened in December 2004. The AFL-CIO in 2007 charged China under the WTO for protectionism due to the low wages and violation of labour rights and argues for ‘free unions.’ The AFL-CIO deals informally with the ACFTU, but some are still in the ‘cold-war anti-communist’ era. Foreign unions engage with the ACFTU, e.g. the US ‘Change to Win’ unions (split from the AFL-CIO), the SEIU and Teamsters.

The ITUC is yet to accept affiliation of the ACFTU, but long before time, formal engagement opens up in 2008.

International co-operation builds strategies for workers’ interests under globalisation. The ACFTU hosts conferences with the World Federation of Trade Unions WFTU. They gave me papers from the ‘International Union Forum on Economic Globalization and Trade Unions’ in Beijing 2006, with John Sutton CFMEU Secretary speaking.

See further post on employer compliance? and the new mediation and arbitration system.

Footnotes
www.acftu.org

See http://www.china.org.cn/english/2002/Nov/48588.htm

See Bill Taylor and Qi Li ‘Is the ACFTU a Union and Does it Matter?’ JIR volume 49, no 5, November 2007, 701 who argue it is not a union but a state organ, a view held by western unions in the ICFTU, the International Confederation of Free Trade Unions, now the ITUC.

See ‘China’s Official Trade Union: Partner or Problem?’
http://tpmcafe.talkingpointsmemo.com/2008/07/17/chinas_official_trade_union_pa/

Chan (2000a) ‘Chinese Trade Unions and Workplace Relations in State-Owned and Joint Venture Enterprises’ in Warner M ed., Changing Workplace Relations in the Chinese Economy (New York St Martin’s) 2000 34-56.

White C (2007) International Committee on Trade Union Rights ICTUR journal volume 14 issue 1 p17
www.ictur.org

White C (2007). ‘Organising China’s Wal-Mart’ http://evatt.labor.net.au/publications/papers/194.html
Chan A (2007), ‘Organizing Wal-Mart in China: Two Steps Forward, One Step Back for China’s Unions’, New Labor Forum 16 (2): 87–96.
ACFTU, http://www.acftu.org/template/10004/file.jsp?cid=222&aid=41801.
An English translation at Chinese Labor News Translations http://www.clntranslations.org/article/4/wal-mart.
Also, Geffken R, 21/9/2006 ‘Chinese unions and the limits of Wal-Mart’s anti-unionism’ Institute for Comparison of Labour and Industrial Relations, www.Geffken-Law.de.

ITUC (2008:7) report. Charles Fishman (2006) ‘The Wal-Mart Effect How an Out-of-Town Superstore Became a Superpower’ (Allen Lane).
Verité (2007), http://verite.org/2007%20Verite%20China%20Symposium
I am on a China listing from Cathy Walker OHS specialist with the Canadian Auto-Workers and China expert.
GLS ‘Beyond China’s New Labor Contract Law’
http://laborstrategies.blogs.com/global_labor_strategies/2008/01/beyond-chinas-n.html#more
Also: China Labour Bulletin http://www.china-labour.org.hk/iso
http://laborstrategies.blogs.com/global_labor_strategies/china/index.html

GLS produced reports on labor law reform, the role of global corporations in China’s development and why the outcome of this battle matters to workers everywhere. Why China Matters: Labor Rights in the Age of Globalization Also http://laborstrategies.blogs.com/global_labor_strategies/2008/04/when-chinese-an.html

When Global Labor and China’s Union Talk. Also, March 2008, Labor’s Opening to China.

Chan (2008) ‘Address to US Labor Notes’. The many responses in the China Wal-Mart blog are instructive of organising in a new way.
Chan A (2008) ‘Challenges and Possibilities for Democratic Grassroots Union Elections in China: A Case Study of Two Factory-Level Elections and Their Aftermath,’ Labor Studies Journal, published June 19, 2008; http://lsj.sagepub.com/pap.dtl
Lee P (2007), ‘Democratic Trade union election at Shunda Factory: Five years on’,
China Labor News Translations http://www.clntranslations.org/?q=Peter+Lee

Play Fair 2008 ‘No Medal for the Olympics on Labour Rights’, 2007.

ILO Committee on Freedom of Association Reports 2003 www.ilo.org

ITUC (2008). www.ituc-csi.org Annual Survey on Violations of Trade Union Rights. ICFTU, Internationally recognised core labour standards in China, 2006. Asia Monitor Resource Centre, Report on Industrial Relations and Working Conditions in IMF-related TNCs in China, report for the International Metalworkers’ Federation, 2007.
Reports in China Labour Bulletin http://www.china-labour.org.hk/iso
Asian Labour News
http://asianlabour.org
China Labor Watch http://www.chinalabourwatch.org
I discussed China with the AFL-CIO, the SEIU and the Teamsters in Washington March 2008.

Also, Howell J (2006), ‘New Democratic Trends in China? Reforming the All-China Federation of Trade Unions’, Institute of Development Studies, Working Paper 263.

The Australian debate, see JIR vol 49: Nyland, Maharaj and O’Rourke ‘Australia/US/China Preferential Trade Negotiations: Building Alliances and Realizing Workers’ Rights to a ‘Voice at the Table’ 647.
S. Burrow ACTU ‘Australia’s Social and Commercial Engagement with China: What Direction for the Relationship?’ p.615.
Vandaele J Jan 22 (2008), ‘The International Trade Union Confederation (ITUC) has decided to start a dialogue with the ACFTU
’ http://ipsnews.net/news.asp?idnews=40871

Also, UNI report on contacts:
http://www.unionnetwork.org/uniflashes.nsf/c4bdf194bc536c81c12567bb0057c767/
e49b5f1284c14aadc125747b002dc05b?OpenDocument

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One Response to 2008 China labor laws – part two the union ACFTU

  1. Paul Garver October 8, 2008 at 11:47 am #

    Chris,

    Thanks for doing such a thorough report on the ACFTU with so many diverse sources cited. I was not aware of your very useful blog until Cathy Walker cited it. I may have a few minor disagreements, though maybe not with your interpretation but with an opinion cited in a source (It is not always obvious where you are making your own comment as opposed to reporting another’s opinion). I will read your other articles on China and email you a general comment.