Effective trade unionism is a cornerstone of social and economic stability in China: implication from workers’ strikes

Since May 2010 Mainland China has witnessed a new wave of strikes. Strikes are not strange to Chinese workers anymore. Between 2004 and 2007, an upsurge in strikes hit the Pearl River Delta hard. In early 2004, labour shortage reared its head in the Pearl River Delta. When the media started to cover the news, some labour scholars found it unbelievable. Before academia was able to investigate the emergence of the labour shortage seriously, workers’ strikes and the subsequent labour legislation had already stolen the academic limelight. 


It was against this socio-economic background that I commenced my research into the migrant workers’ strike in 2004. Here I used the words “migrant workers”, which are different from the common coinage of “peasant workers”, as the former describes the origin of workers more precisely. As a matter of fact, most of the young workers working in the factories nowadays have no agricultural experiences at all. Their parents’ generation, except for a handful of skilled workers, has mostly been left out of the factory regime, and has instead gone back home to farm, work part-time or start some small businesses. The book, The Challenge of Labour in China: Strikes and the Changing Labour Regime in Global Factories, based on my fieldwork from 2005 to 2007, is to be released by Routledge. Although workers’ experiences are currently insufficient, I remain optimistic about migrant workers’ activism as a whole since their sense of collectivity is speedily on the hike. In the last chapter of my book, I mentioned some forward-looking opinions, including firstly how effective workplace trade unionism would be beneficial to the three parties of employees, employers and the government and would be the key element of the Chinese labour problems at a later stage. The aforesaid “effective unionism” refers to the workplace union’s capacity to negotiate with the management under the state regulatory framework. Secondly, economic crisis and new institutional frameworks (including new labour regulations, trade union reform and large-scale upward adjustments of the minimum wage rate and so forth) might bring about a new context to workers’ activism. Thirdly, the divergence between urban workers and migrant workers will potentially become narrower and their appeals will become more unified.


I analyzed the strikes of Chinese workers in the context of the changing global political economy. There was a causal link between a series of strikes in the Pearl River Delta from 2004 to 2007 and the global economic crisis that finally broke out in 2008. 2001 saw China’s accession to WTO. In the following years, the influx of foreign investment turned China further into a “paradise” for transnational corporations. On the other hand, competition in western consumer markets escalated, rolling back the prices of production orders further and further. For the foreign-invested factories in the Pearl River Delta, there are only two strategies to fight for orders requesting large amounts of production at very low unit prices: expansion, including enlargement of the scale of factories and opening of more factories; and relocation, meaning removal of the production base to areas with the lowest wages and land costs, and tax concessions, or outsourcing parts of the production to tiny and unsupervised factories or household workshops. Indeed, the successful factories have adopted both strategies. Labour shortage was brought into existence under these conditions. The phenomenon has undoubtedly raised the market bargaining power of workers, and thus boosted their confidence in striving for workplace bargaining powers through collective actions such as strikes.     


Workers’ strikes in the Pearl River Delta from 2004 to 2007, albeit semi-organized or unorganized, have already posed a tremendous challenge to the policies of the Chinese Government and accumulation of global capital. Met with the shortage of labour and a succession of strikes, the Government responded by lifting the minimum wage and modifying the labour regulations. Take Shenzhen special economic zone as an example of the former: from 2004 (610 RMB) to 2007 (850 RMB), the minimum wage surged by 40%, compared with 6% from 2001 (574 RMB) to 2004 (610 RMB). The latter included new legislation and better implementation of existing regulations, exemplified by the campaign to establish workplace trade unions from 2006 and the legislation of the Employment Promotion Law, the Labour Contract Law and The Labour Dispute Mediation and Arbitration Law between 2007 and 2008.


In the face of global economic recession in 2008, the Government spent an astronomical amount of 4,000 billion RMB in an effort to achieve the goals of “Keeping Growth, Keeping Livelihood, Keeping Stability”. Now the growth has been preserved. Nevertheless, a question mark hangs over the maintenance of livelihood and stability, as the problem hinges on the incapability of the 4,000 billion RMB to alleviate the structural wealth gap. The property and vehicle markets were thriving most in 2009, yet were unrelated to the migrant labour force, the major creator of labour value, occupying nearly one-sixth of the population. 


The nationwide occurrence of workers’ strikes has proven that increasing public expenditure, raising minimum wages, simplifying procedures for handling labour disputes and strengthening rights protection of individual workers are insufficient to regulate employment relationships and safeguard social harmony. Since strikes are collective in nature, only the protection of collective labour rights can pave the way for stabilizing employment relationships and implementing effective governance. What is worth recognition is that the status of grassroots unions has been further acknowledged amid legislation. For example, according to the Labour Contract Law, enterprise unions possess the right to be consulted about layoffs. Enterprises have to solicit unions’ opinions on worker-related matters such as wages, fringe benefits, working safety and so on. And the factory regulatory system has to be passed and approved by the trade union or staff representative congress, and made public to all workers. The Labour Dispute Mediation and Arbitration Law stipulates the formation of an arbitration committee on labour disputes at the enterprise level, consisting of both worker and management representatives. Despite the superficial fact that more and more enterprises are setting up unions (grassroots unions jumped from 1,324,000 in 2006 to 1,845,000 in 2009), these unions are technically ineffective, as has been evident in the recent Honda and Foxconn incidents. The reason why the Honda workers’ request to reform the union has drawn overwhelming responses from society is exactly because the incident has spelled out the most critical problem in China today.     


The rise in Foxconn workers’ wages from 900 RMB to 2000 RMB has attracted much attention. Many critics have indicated the passage of the era of low labour costs in China. However, enterprises solely raising the wages on one side cannot sustainably maintain harmonious employment relationships and relieve economic crises. In 1920, the US Ford Motor Company drastically hiked workers’ wages. In this way, the automobile workers would be financially empowered to purchase cars, helping to prevent the over-supply of vehicles and the consequent economic crisis similar to the one before World War I. Unfortunately, Ford’s self-invented plan was not matched by the state policy. Not long after, the financial meltdown on Wall Street brought along a more severe economic and social predicament. Only with the introduction of Roosevelt’s New Deal policies were the US and European countries successful in detonating the crisis. What were the cornerstones of the new policies? They were consolidation of workers’ right to organization, unions’ right to collective negotiation and provision of social welfare for workers. At present, China is in a similar situation. In employment relationship, representative workers should be able to claim back enterprise trade unions which are capable of negotiating with the management as a basic function; on social security reforms, welfare should be provided to allow migrant rural workers to live in the cities where they work. Only through these measures can new social stability and economic balance be realized in China. 


(This is an article originally published in the Hong Kong Chinese newspaper Mingpao on 16th June 2010 and translated into English by the China Labour Net. The author Chris Chan is an assistance professor in the Department of Applied Social Studies, City University of Hong Kong, and the author of The Challenge of Labour in China: strike and the changing labour regime in global factories, London/New York: Routledge, 2010)