China union report

Chinese Trade Union under Pressure to Guarantee Labour Rights
by Dr Kan Wang, Lecturer, China Institute of Industrial Relations, Beijing.
(See also in vol 16 issue 4 International Union Rights, ICTUR.)

The global economic crisis brings further uncertainty for labour rights protection and labour interest representation. Official statistics estimated that more than 20 million migrant workers became jobless during the crisis.

Actually, long before the global economic crisis in 2008, the official Chinese trade union, which operates under the national umbrella of All China Federation of Trade Union (ACFTU), is under pressure for change, and the union is seeking initiatives for improving its capacity of labour representation and labour rights safeguarding.

The institutional arrangement in China requires the trade union to represent the interests and demands of both the ruling Communist Party of China (CPC) and the workers.

In this context, Chinese trade unions always need to play the role as a bridging actor conciliating the interest difference and strengthening the common ground between the state and labour.

Before the start of the economic crisis in the late of 2008, continuous economic growth did not bring much difficulty to the union, since economic development created steadily increase of jobs for workers, along with taxation revenues for the state.

However, the global economic crisis pressed down the Chinese economy with unemployment rate rise and taxation revenue shrink, so as to expose the Chinese labour and union to a different environment. Some serious challenges emerge and the union has to respond quickly.

Pressure on the Implementation of Chinese Labour Laws and Regulations

Just before the happening of the global economic crisis, several labour laws and labour regulations were enacted and the labour standards are increased accordingly.

For example, the Labour Contract Law restricts the flexibility of corporate human resource management and aims at establishing long-term employment relations between the employers and workers.

Meanwhile, the Regulation of Staffs and Workers Paid Annual Vacation expands the duration of paid leave for labour and requires the employers to pay high compensation if the workers fail to take the leaves.

A psychological impact is then created among employers, who complain on the increase of labour costs and are lobbying heavily for deregulation.

Within ten months of the implementation of the labour acts, a financial crisis happened in the US, which is the largest buyer of the Chinese products.

Weak demand of global and domestic markets lowers the profits of most companies in China. The companies introduce large lay-off and redundancy plans.

China Academic of Social Sciences, the government think-tank, did a national survey and found the urban unemployment rate in 2008 had reached to 9.4%, twice more than the official number.

Thanks to the shrink of overseas orders and the cut of jobs, rural migrant workers, who usually work in labour-intensive export sectors, lost their incomes and had to either return to their hometowns, or wander around big cities and manufacturing centres for new opportunities.

Official statistics from the Ministry of Human Resources and Social Security of China estimated over 20 million migrant workers became jobless during the crisis, while the real situation can be more serious.

Local governments are then under great pressure.

In order to encourage employment and reduce redundancy, some local governments issued their interpretations about the national laws and regulations, since the national laws are always quite general and require local governments to write operatable local implementation guidelines to enforce the laws and regulations.

In the Pearl and Yangtze River Deltas, which are two largest manufacturing hubs in China, the local governments negotiate with the local and international chambers of commerce for stabilising the labour market. Companies agree to suspend layoff and redundancy plan, in return for deferred payment of social security for the workers.

Moreover, in some regions, local governments permit large local companies to negotiate minimum wage rates with the authority, so that unprofitable firms will not cut jobs, although the workers may receive discounted salaries compared to the normal time.

In Guangdong Province, the Provincial People’s High Court issued a notice and asked the police to be cautious in arresting the owners of firms hiring more than one thousand workers, for the fear of interrupting factory operation and causing unemployment.

The court notice says that if the owner does not violate the criminal act, then this person does not need to be arrested, so that the business operation can go as usual.

ACFTU and its lower unions have paid attention to the situation and reactions from the business and local governments.

The union issues several documents to express its concern about a possible deregulation in the field of labour relations.

The union emphasises that labour standards cannot be compromised under any circumstances.

ACFTU is against the idea of lowering labour protection for keeping jobs.

Instead, ACFTU proposes to conduct collective negotiation and dialogue with the employers to solve the current corporate difficulty.

In several industrial provinces like Zhejiang Province, local trade unions have successfully reached deals with local employers, when the unions promising to mobilise workers for higher productivity and temporarily freezing wage increase. In return, employers agreed to keep the jobs and did not lower the existing benefits for workers.

Escalation of Labour Disputes and Union’s Role in Representing Labour

Although the union tries its best to maintain employment stability, expansion of the global economic crisis leads to closure and bankruptcy of many companies, whose bosses usually flee and leave the workers uncompensated. Riots can happen if a factory closes and workers are unable to find the employer for clearing their unpaid wages and overtime compensations.

Actually, the number of labour dispute has been escalating since the late of 2008.

In the first half of 2009, labour dispute in the Yangtze River Delta increased about 4 folds compared to the same period last year.

The labour dispute resolution team is seriously shorthanded with one labour dispute arbitration or judge having to handle over 200 cases in a year.

Lack of capacity to solve labour dispute cases further contributes to the rise of unofficial labour actions.

Local trade unions in the industrial areas have realised this challenge and are doing their best to provide legal aid for workers.

The local unions also use their positions to lobby the local governments for offering fast track service for rural migrant workers under labour disputes.

Mediation is always emphasised by the trade union as a way to assist labour rights and interests. Unions have established mediation services at the factory and community levels.

Community mediation service is more effective, since the community legal aid centres of the trade union stay away from the intervention and harassment of the employers.

In Hubei Province, one of the largest automobile manufacturing centres in China, the provincial trade union publishes law education booklets for workers and actively represents workers to mediate with the employers.

Sometimes, union legal officers also bring local media reporters to mediation, in order to add pressures on the employers to satisfy labour demands.

In one case, the union officers relied on reporter-involved mediation to get back around GBP 100,000 for workers within one month, while the formal labour dispute resolution procedure may take as long as one year.

However, the union services face to challenges in the localities. Chinese workers, especially young and educated ones, have been aware of their rights, but still lack of legal knowledge on safeguarding their rights. This makes them vulnerable in front of irresponsible lawyers and unprofessional legal consultants.

The Chinese laws allow every citizen to represent parties on court under the title of citizen surrogate.

As a consequence, many people become professional citizen surrogates and take labour cases, though they receive no legal education or training.

This group of people are usually called ‘black lawyers’ or ‘grassroots lawyers’. In the Pearl River Delta, it is estimated that around 10,000 ‘black lawyers’ are in practice, due to the loophole on the Chinese laws. The quality of their works is not satisfying.

Moreover, workers usually have to accept ‘risk agent’ for representation during the labour dispute resolution. Commercial lawyers and ‘black lawyers’ always tell the workers that the objects of labour cases are too small for them to proceed. As a result, workers are required to sign risk agent contracts and give 60% of the amount of the objects as legal representation fee for the lawyers or ‘black lawyers’, while the laws only permit lawyers to charge maximum 30%.

Labour interests are exploited.

Although Chinese workers have shown high rights protection consciousness, their law awareness and legal knowledge are still quite limited, so that their rights and interests are often violated by both the employers and lawyers.

When realising this situation, workers often lose everything and can only choose to take extreme actions for expressing their discontents.

This also makes it difficult to launch coordinated or union-led collective labour action, as the organisers and followers of most current labour actions do not trust the legal system, based on their unfavourable experiences with risk agent lawyers.

Meanwhile, the risk agent lawyers and ‘black lawyers’ often hijack labour actions and encourage workers to take on illegal activities like smashing machines to add pressure on employers for increasing the compensation, which then raises the share of legal representation fee for the lawyers.

ACFTU and local trade unions are endeavouring to expand their legal aid facilities and guide workers away from the exploitation of risk agents.

The union legal aid centres have established collaborative relations with the lawyers association and ask the latter to monitor the behaviours of its members.

Also, the unions hire retired judges, law professors from universities and other legal practitioners as part-time legal aid workers to increase the capacity of helping workers. ACFTU is preparing new law education and dissemination plans to empower workers, especially rural migrant workers and increase their law awareness.

Furthermore, ACFTU is advocating the CPC and central government to introduce the collective contract law and invest on the improvement of infrastructure for grassroots union legal aid centres.

These initiatives are expected to raise the union capacity and provide a long-term solution for labour rights and interests protection through the enhancement of collective labour relations.

Conclusion

The global economic crisis brings not only hardships but also opportunities for Chinese workers and their unions.

On the one hand, labour is under difficulty, as cuts of jobs and benefits harm the livelihoods of many workers.

On the other hand, this pressure prompts the trade union to strengthen its ties with the workers and issue new initiatives to represent the rights and interests of labour.

In the future, the Chinese trade union is likely to be more active domestically and internationally.

The union is trying to expand its international relations with unions in developed countries, on account that every global economic and financial crisis or prosperity starts from the developed countries.

The Chinese trade union needs to be sensitive about any fluctuation in the developed consumer markets to change its own strategies within China.

A strengthened connection between Chinese union and international trade unions can be made, as a result of the current crisis, which hits workers around the world and requires global solidarity as a therapy to cure the malfunction of the global market.

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