China: Workers and Unions – News July to September 2008

1. More MNC workers to get bargaining power
China Daily 18 july 2008

More workers in multinational companies will be able to safeguard their legitimate rights and interests by September, a senior trade union official has said.

Workers have been able to form trade unions in less than 50 percent of the Fortune Global 500 firms doing business in China till now.

But by September that figure will go up to 80 percent, said Guo Wencai, director of the All-China Federation of Trade Unions’ (ACFTU) department of grassroots organization and capacity building.

Workers in most such firms have not been able to form trade unions because of the uncooperative attitude of the employers, he said.

2. Related 15 july 2008:
Wal-Mart signs collective labor contract with employees.

The ACFTU is directly responsible for supervising the formation of trade unions in 10 of the Fortune Global 500 firms, including Sony, Canon, FedEx, IBM, Trust-Mart and Wal-Mart’s purchasing center.

More than 4,000 firms run by 245 of the Fortune Global 500 are doing business in China.

And workers do not need the approval of their employers to form trade unions there because the Trade Union Law, promulgated in 1992, gives them that right, he said.

“Multinationals must abide by the country’s laws if they want to do business in China,” Guo said, and warned that the labor authorities could blacklist or pull up firms for refusing to allow workers to form trade unions.

“Most of the multinationals have shown a positive attitude toward trade unions,” he said. For instance, Tesco Lotus, Thailand’s leading retailer, has conceded that the question is not whether a trade union should be allowed, rather it is how to make it function better.

Maersk Logistics of Denmark, too, supports their workers to form a trade union.

It is a trade union’s duty to negotiate and sign collective contracts with employers on behalf of the workers.

Chen Weiguang, chairman of the trade union federation in Guangzhou, said that by September trade unions would have been formed in 90 percent of the multinationals doing business in the capital of Guangdong province.

At the end of last year, China had 1.52 million grassroots trade unions with 193 million members.

3. Thirty years of market reforms. Socialist project on China.
See Cathy Walker Canadian Unionist on Unions in China.

4. Some links to China’s workers and their working conditions, unions, labour relations, labour law. Please recommend others.

China Labor News in Translation:

All-China Federation of Trade Unions:

Global Labor Strategies:

ILO Office for China and Mongolia:

ACFTU Chinese Workers magazine

Chan, A. “Challenges and Possibilities for Democratic Grassroots Union Elections in China: A Case Study of Two Factory-Level Elections and Their Aftermath,” Labor Studies Journal, June 19, 2008

China’s Official Trade Union: Partner or Problem?

China Labour Bulletin:

5. A Turning Point for China’s Trade Unions

We may have reached a crucial turning point in the history of China’s trade union movement. For the first time since 1949, trade union officials are openly stating that the union should represent the workers and no one else, while new legislation in Shenzhen places collective bargaining – previously a no-go area – at the core of the union’s work.

“The trade union is a matter for the workers themselves,” Chen Weiguang, chairman of the Guangzhou Federation of Trade Unions told a conference on 15 July 2008, adding that the role of enterprise unions must change from “persuading the boss” to “mobilizing the workers.”

Shenzhen’s Implementing Regulations (Shishi Banfa) for the Trade Union Law, enacted on 1 August, further define the union’s new role, creating a “responsible, empowered and battle-ready union” that can protect workers’ rights, according to Zhang Youquan, head of the Shenzhen Federation’s legal department. Zhang told a press conference to announce the new regulations that this was the first time the term “collective bargaining” (jiti tanpan), as opposed to the previously-used but much weaker concept of “collective consultations” (jiti xieshang) had been applied in China’s local legislation.

As the experience of the labour movement in many other countries has shown, collective bargaining is the most effective way to protect workers’ rights and bolster the role of the trade union. Above all, it is a means of resolving labour disputes through peaceful social dialogue. Such an approach is sorely needed in China today, and China Labour Bulletin Director Han Dongfang congratulated the Shenzhen authorities on this important new initiative:

“After three decades of economic reform, we’ve reached the point when something had to be done. Today in Shenzhen we can see the worst excesses of capitalism, but also the desire of the people for social justice and – with these new regulations – the willingness of the government to move towards capitalism with a human face.”

Han pointed out that although the new legislation was “state-directed” reform, it would still have a positive effect if it enabled workers to engage in genuine collective bargaining. “At present, the most pressing need for the official union is independence from the bosses,” he said.

Significantly, the whole of chapter three of the Implementing Regulations (The Rights and Obligations of Trade Unions) does not contain a single reference to the traditional tasks outlined in the 2001 Trade Union Law, such as helping the enterprise to restore normal production in the event of a work stoppage or slowdown. Rather the regulations make it very clear that during a labour dispute the role of the trade union is to represent workers in negotiations with management. Moreover, for the first time in China, the regulations (Article 36) stipulate that grassroots trade union officials should receive a small monthly subsidy from the municipal federation that will go some way toward lessening union officials’ dependence on the enterprise for their operating funds.

Article 18 (Paragraph 3), Articles 27 to 31 inclusive, Article 44 and Article 45 all stress that collective bargaining is the core responsibility of trade unions and provide clear guidelines on how the process should work. These provisions effectively transform collective bargaining in China from a vague concept into, potentially, a genuine right that can be utilized by ordinary workers to improve their terms and conditions of employment.

Of course, the regulations are far from perfect; they still emphasize the supervision or control (jiandu) of grassroots unions by higher-level unions, rather than a system of mutual supervision. Article 11, for example, specifies that workplace union officials will be elected by the union committee only after a list of candidates drawn up by the committee has been approved by the higher-level union. Also, grassroots unions still need the approval of higher-level unions before they can officially register, and there is no mechanism by which lower-level officials can supervise or control irresponsible higher-level union officials.

However, the Implementing Regulations – together with the Shenzhen Labour Relations Regulations, due to go into force at the end of September – have effectively opened the door for the Shenzhen Federation of Trade Unions to transform itself into a much more effective representative of workers’ rights and interests.

Han Dongfang said: “We hope the Shenzhen Federation of Trade Unions can take practical steps to create a successful bargaining model that others can follow, thereby making collective bargaining a key part of China’s emerging civil society.”

Han stressed that change will not happen overnight but, step by step, progress is already being made. And in retrospect, 2008 may well turn out to be one of the most important years in the history of China’s trade union movement.

“Earlier this year, we saw the implementation of three new national labour laws, and now we have the introduction of collective bargaining in Shenzhen. This has all come from two factors: the growing determination of Chinese workers to stand up for their rights, and the government’s willingness to respond in a practical and positive manner,” he said.

6. See also CLB research report: Breaking the Impasse: Promoting Worker Involvement in the Collective Bargaining and Contracts Process. And: Collective Bargaining and the New Labour Contract Law. China Labour Bulletin go to

7. China Pressures Big Companies to Allow Union
By DAVID BARBOZA, NY Times, September 12, 2008

8. New ongoing violations after the implementation of Labour Contract Law in China.

– Calling workers to learn the labour legislations actively

– Calling the society to pay close attention on workers’ rights

– Calling the government to monitor the law implementation and enforce severely

Written by Shenzhen Dagongzhe Migrant Worker Centre

Translated by Workers Empowerment and IHLO

Since 1 January 2008, the PRC’s “Labour Contract Law” has come into effect, which shows the government’s focus on re-adjusting labour relation and its dedication on safeguarding workers’ legal rights and interests.

After several months, it is time to ask, have workers’ legal rights and interests been effectively protected? In order to understand the effect of the law, Shenzhen Dagongzhe Migrant Worker Centre conducted a survey and interview workers in different areas of Shenzhen city, together with several invited civil organizations. In total 320 valid questionnaires, out of 380, were returned. Ten workers were invited for in-depth interviews, as the organization intended to know certain specific phenomena better, and nine valid interviews were done. From the results, we could tell that the unbalanced power relation, sometimes detrimental, between workers and employers still maintained. Even in the wake of the Contract Law, some employers continue to turn a blind eye to the new law, coming up with new “trick”. There is the summary of the major

I. All sorts of peculiar labour contracts

1. English contract

Some employers translate the labour contracts into English, knowing that ordinary workers could not read English. Example, Mr. Yu, works at a foreign-invested toy factory, says “in the process of signing the labour contract, most workers didn’t know the English contents, so at first, we all refused to sign. Later, the management forced us to sign it, they said the contract was for one year (the real term is for two years) and we could quit the jobs whenever we want to. So most of the workers signed it, but I didn’t because I couldn’t read it.”

2. Two contracts at a time

Mr. Pan, a skilled electrician in a Hong Kong-invested enterprise, reveals, “The basic monthly wages at the factory is set at 1,500 Yuan.

However, the factory required me to sign two identical contracts, each of them saying our basic wages is at 750Yuan per month, so in total, it is the same 1,500 Yuan. Other technical workers also had to sign two contracts.” To divide the 1,500 Yuan wages into two separate contracts and using only one of them as an official contract, the factory calculates the overtime wages at a half-rate and saves a significant social security premium. After the launch of Labour Contract Law, enterprises tend to use this “trick” to reduce the overtime payment for workers.

3. 6 six-day a week, each day 6.7 hours

“According to your contract, how many hours do you work per day?”, workers usually answer this question with dissatisfaction, “the legal standard is set at 5 day and 8 hour a day. However, the enterprises divide 40 hours into 6 six days, each day our shift lasts 6.7 hours. In this case, we don’t get overtime payment for the 6.7 hours we work on Saturdays.” Such a practice shows that some enterprises try to interpret the law for their own interest, to avoid paying overtimes wages, which most workers work extremely hard to get it.

4. Incomplete or even blank contracts

From the survey, 3.8% of the contracts do not provide the location of employment, 10.6% do not state a clear job description, some workers report that they were offered to sign a blank paper and 5.9% of the contracts are blank contracts. It is rather risky for workers to sign blank or incomplete contracts.

Some employers even covered the content of the contracts, only showing the signature areas to workers to sign. Mr. Sun from a plastic factory said, “the company covered the contents of the contracts and asked us to just sign. At first, we all refused to sign as we found it unreasonable.

However a week later, the management said those who refused to sign would have an one-month wages deduction, so we were then forced to sign.”

5. Two different stamps on the labour contracts

In our in-depth interview, Mr. Li, 28 years old, said, “since January 2008, our factory gave us contracts to sign, they even agree to give us un-limited timeframe contracts. But we saw the stamps of two different legal entities on the contracts, so we all refused to sign. The factory put out a notice, saying that workers who refused to sign contracts by

31 January would need to take unpaid leave. The factory later threatened the workers that they would be dismissed without compensation if they didn’t sign contracts. At the end, most of the workers other than 23 them signed the contracts”

It is rather common for a company to register several subsidiary-companies under it. When one subsidiary committed any violation and workers take it to court, the parent-company would unregistered the company in questioned and transfer the other workers to another subsidiary. The behaviour of Li’s factory, to have two different stamps on the contracts, may suggest something suspicious.

II. Abuse and manipulate the factory regulations

1. Price hikes on meals and dormitory

The survey shows that 22.2% of workers suffered from an increase in the price for food and accommodation. Ms Yang from a toy factory said angrily, “our food charges have gone up to 250 Yuan a month. We heard that minimum wages has been increased and therefore the employer would charge us more for food and accommodation. But we have less overtime work now but a higher bill on food and penalties. How come our government doesn’t regulate the price on food anymore?”

2. A growing list of penalty items

The survey shows that 22.3% of the workers told that the items of penalty have gone up. 57.2% of the workers said they did not agree with those regulations. Mr. Sun, a some 30-year old puncher at a metal factory said, “our factory regulation says, 50 Yuan fine for a minor mistake, which includes late for work for a minute or verbal argument with supervisors. For major mistakes, like arguing with the manager, the fine goes up to 200 Yuan. The factory often sends us warning letters and each warning letter costs us 50 Yuan. The second warning letter means dismissalK”

III. The Enforcement of the Labour Contract Law is not so Sanguine

1. Many factories still not offer a contract to workers

General lack of contracts amongst local invested, small factories, 73.4% of workers from the survey said they had signed a contract (though they have all sorts of problems as mentioned above), while 26.6% of workers still work without contracts. 41.9% of local-capital factories and among small-scale factories, i.e. less than 1000 workers, 35.8% of them do not offer contracts to their workers. For larger factories, i.e. with more than 1,000 workers, only 6.1% of them do not sign contract with workers.

2. 28% of the contracts with wages lower than legal minimum wages

The survey shows that 28% of the contracts offer monthly wages lower than 750 Yuan, and 51.60% of contracts offer wages between 750 and 1,200 Yuan. Starting from October 2007, the legal minimum wages for outskirt Shenzhen was set at 750 Yuan and it would be increased to 900 Yuan on 1 July 2008.

The legal minimum wages is the bottle line for workers to live and factories fail to live up to that standard, how could they talk about workers’ personal development?

3. Falsehoods between the contracts and reality

When we asked the workers “are there any falsehoods between the contracts and the reality at workplace?”, a majority of them, 63.83% said their work hours are different from the contracts, 4.26% said they work in a different location than stated on the contract, 3.19% revealed there are difference between factory names and other types of differences reach 11.70%.

IV. Calling for better implementation, join hands by all sectors of the society

The survey shows that 79.2% of workers are dissatisfied with the situation in the factories. It shows that the labour contract law needs further and better implementation.

1. Circumvent is never a solution

As a company, deducting workers’ wages and avoiding the overtime payment as a mean to operate, instead of improving their technical level, creativity and management skill, which tends to exploit workers to keep up in competition is not a sustainable move.

They would soon either be punished by government or would lose workers, suffer from the so-called labour shortage. Currently it is established to have 740,000 workers short in Shenzhen, which is a warning to the enterprises, telling them that if they want to develop, they would need to be law-abiding and establish a correct direction of development.

2. Calling the workers to get familiar labour legislations

As a worker, aware of their own rights, methods to safeguard themselves could help themselves to combat with their employers, at labour departments, at courts, by clearly telling their demands. It is the only effective way to get the Labour Contract Law fully implemented.

3. Close attention to workers’ rights from all sectors in the society

Workers are the creator of social wealth, as well as the motivity of social development. As a member of this society, we all have responsibility and obligation to pay close attention to labour right and the workers’ condition.

If most of the workers cannot enjoy a sustainable life, it definitely will impact on the stable and development if the society. Furthermore, if the worker cannot develop and build up their capacity, it will limited the overall development of the society as well.

4. Calling the Government for strengthen on promotion, monitoring and enforcement

In this research, it clearly showed that large scale of illegal practices is still exist in the labour contracts signed. If we ignored the voice of the workers and only concentrate on the rate of contract signed, it will definitely lead to misapprehend. The workers know about the illegal situations in the factories most clearly. Therefore, the Government should pay more attention to the actual situation of workers and listen to their voice; at the same time, encourage the people’s organization such as the trade union, women federation, and civil groups to display their function on promotion, communication, facilitation and monitoring of Labour Contact Law. Meanwhile, the Government could set up clear incentive payment to encourage the social groups and individuals to report the illegal enterprise.

Since the Labour Contract Law came to effective, “tricks” happened frequently in those illegal enterprise, these acts not only undermined the legal right of the workers, but also defied and trampled down the Law.

In front of such a rigorous situation, we are calling the workers to get familiar labour legislations; calling for a close attention to workers’ rights from all sectors in the society; and, calling the Government for strengthen on promotion, monitoring and enforcement

Finally: Update on Wal-Mart


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