A changing arena of industrial relations in China
What is happening after 1978
The Authors
Kan Wang, Renmin (People's) University of China, Beijing, China
Acknowledgements
The author appreciates the support of the union Amicus and the Department of Human Resource Management at the Business School of Strathclyde University, which led to the idea for and composition of this article.
Abstract
Purpose – The purpose of this paper is to study the evolution of Chinese industrial relations after the market reform of 1978, while basing its arguments and conclusion on analysis of the interactions of key actors in the labour arena in China. The significant phenomena in the evolution of industrial relations are the coming of transnational capital and the emergence of self-organising protests by migrant workers.
Design/methodology/approach – The paper uses a case study approach.
Findings – The Labour Contract Law and the local political economy experience strong effects from TNCs and other business players. Meanwhile, globalisation has introduced the civil society movement to China, which has given rise to an increasing number of NGOs working for labour rights. Tight financial and technical connections between grassroots NGOs and international donor organisations make it possible for bottom-up labour activities to counteract the unilateral influence of the state and market over the Chinese workforce. Since the ACFTU, the official trade union umbrella, has many institutional constraints to undertake a thorough transition towards labour in the near future, workers' representation is diversified.
Originality/value – One implication for further theoretical studies is that tripartism cannot fully disclose the reality of Chinese labour, and that labour representation derives from both unions and self-organisation of workers, such as NGOs, which opens more room for the entrenchment of the grassroots labour movement to sustain the balance of power among the state, ACFTU, firms, international market forces and individual workers in the long term.
Article Type:
General review
Keyword(s):
Industrial relations; Transnational companies; Trade unions; China.
Journal:
Employee Relations
Volume:
30
Number:
2
Year:
2008
pp:
190-216
Copyright ©
Emerald Group Publishing Limited
ISSN:
0142-5455
Introduction
Market reform has brought changes to the Chinese political economy, including the retrenchment of the state and the creation of more room for development of the market and civil actors. While withdrawal of the state is not without conditions, since the Chinese Communist Party (CCP), along with its subordinate government, still has the power of intervention, the state apparatus can no longer enjoy its previous unilateral actions under a restructuring relationship involving the state, market, individuals and their collectives, as well as the international community. Chinese industrial relations are thus evolving a new political economic platform that is shifting away from a rigid state-controlled environment to a flexible actor-negotiated arena, where tripartism emerges but is developing with different aspects as compared to the visions of the International Labour Organisation (ILO) and Western democratic nations.
As global integration and domestic marketisation introduce new players to transitional China, significant changes are taking place in industrial relations. It is that believed Chinese society is under cleavage, due to the lack of an effective coordinating mechanism for social elements, whose demands vary fundamentally and make social management difficult (Sun, 2003, pp. 13-14). Moreover, diversification of interests leads to conflicts among actors, which redefine their relationships with others and make clearer boundaries around their territories. The boundary among classes is becoming rigid, because of a renewed social monopoly and unbalanced welfare redistribution (Sun, 2006, p. 23); an elite alliance at the top level is formed against the fragmentation or atomisation of disadvantaged individuals at the bottom level (Sun, 2006, pp. 19-20).
Resistance at the bottom escalates as the transition deepens and deprivation occurs. Although the Confucian culture means the notion of rights in China mainly stems from “membership”, instead of humanity (Nathan, 1986, p. 125), it is argued that rights consciousness is not a “static” object but one that develops dynamically, following the change in society (Pei, 2003, p. 26) as well as the rising burden of exploitation.
Being a disadvantaged group of industrial relations, workers, especially rural migrant workers, are active in conducting resistant activities, ranging from legal grievance complaints to class actions like wildcat strikes and street protests, so as to claim their rights and interests. Since the Chinese social security system grants few immediate material benefits or long-term livelihood guarantees for ordinary citizens, labourers always have to save for themselves and there is less hesitation for workers to pursue their interests, since they do not have to fear losing prospective gains from the state welfare system.
The traditional labour movement in China was designed and guided under the strict control of the ruling CCP, and the All China Federation of Trade Unions (ACFTU), the official union, only acts as a part of the labour administration to coordinate with the state in supervising the workforce. Workers are thus excluded in the tripartite system without real representation from ACFTU and end up in an atomised situation under industrial relations (Taylor et al., 2003, p. 122). However, the traditional role of the union is challenged by instability in the workplace and entrenchment of the civil society movement in the labour field. As workers' uprisings increase, Chinese labour organisations are also under reconstruction, while ACFTU and emerging non-governmental organisations (NGOs) related to labour both try to expand their influence towards rural migrant workers and workers in foreign-invested as well as privately owned enterprises.
Moreover, decentralisation during reform has strengthened the decision-making power of local government and complicated the arena of industrial relations in China, because there is sometimes a difference in interests between the central and local administrations. ACFTU and its union branches are also affected, thanks to the dual supervisory arrangement for regional trade unions, which receive direct work guidance from ACFTU, but have their cadres' performance assessment evaluated and organisational incomes collected by local government.
There are different viewpoints in analysis of the circumstances. Based on the authoritarian nature of the Chinese state, some scholars believe that a decentralised state preserves its reign by allowing the local agents to predate local societies and destablise the whole system as a result of over-exploitation and conflicts of interests among agents (Pei, 2006, pp. 39-40, 44, 208). In the field of industrial relations, disorganised despotism is experienced when the deprivation of workers transforms from the central state to local actors, such as local governments and firms, and Chinese labour still lacks of the rights of redistribution and participation, so that resistance will continue to rise (Lee, 1999, pp. 48, 57, 60).
In contrast, others argue that decentralisation and market reform have given rise to a weakened control of CCP authoritarianism and are about to drive the country to corporatism, which encourages the participation and involvement of workers, their unions and other social players, although this can happen in gradual ways (Unger and Chan, 1995: pp. 46-7, 49-52). Under this tendency, the official trade unions are also changing and some union agents are becoming active in representing workers, while external pressures and internal demands will finally prompt the unions to serve the requirements of their members (Taylor et al., 2003, pp. 127-8).
This article thus provides analysis on the merits and drawbacks of such predictions by drawing its arguments from studies on the nature and relationship of different elements of Chinese industrial relations, which are embedded in the changing social and political economic arena. The first part of the paper gives a general description of Chinese economic reform and internal labour migration, which is historically unprecedented and likely to affect social relationships deeply. Then, labour dispute practices and the rule of law are discussed to show the tendency for the escalation of labour disputes after the enactment of the Labour Law in China. The third part of the paper concentrates on the interaction between foreign investments and labour, with the purpose of illustrating the integration of Chinese industrial relations with global economy, while the fourth part talks about ACFTU, a key player in the tripartite system. But, freedom of association is not solely reserved for official unions in practice, and the fifth part discusses the entrenchment of the civil society movement in labour fields, before the sixth part analyses the question of whether the official Chinese trade union is under transition for labour rights due to both outside and inside pressures. The counteraction of labour strategies by TNCs will also be studied to observe the mutual influence between domestic changes and international actors. The eighth part of the paper draws a picture of lobby games during the making of the Labour Contract Law, which is a typical example within which to review the different visions and codes of conduct of elements of industrial relations.
Finally, the article concludes by arguing that the Chinese industrial relations environment is changing and no actors can exert unilateral actions without affecting or being influenced by those of others. As internal labour migration and the global integration of the economy undermine the control of the state in the labour field, a renewed model of control has been introduced through ACFTU reforms that make the ACFTU take a more assertive role in organising the workforce. However, this state-guided initiative allows no bottom-up accountability from the workers, and ACFTU is more willing to join the state in suppression of the civil society movement, as shown in several cases in the article. Therefore, Chinese industrial relations illustrate the reality of Chinese reform, which opens new channels for social economic progresses on the one hand and endeavours to retain political control on the other.
Meanwhile, it is necessary to point out that the data in this article can only show a trend rather than give an exact picture of the situation, because official Chinese statistics do not disclose the data collection methodologies and the primary figures are always revised for various political reasons.
Economic reform and internal labour migration in China
Since 1978, China has undertaken serious transition under the label “socialism with Chinese characteristics”, presented by the successive Chinese regimes (Jiang, 2002; Hu, 2007), which aimed to shift the Chinese economy away from a central planning command economy to a market-oriented one, and at the same time maintain the monopolistic reign of the CCP in the political and social arenas. The political economy of China has changed accordingly. On the one hand, market-oriented economic reforms means that the Chinese economy is de facto heading towards capitalism (O'Leary, 1998, p. xiii), so that fewer political barriers against factor allocation should be introduced. Economic liberalisation and deregulation are carried on through the state's development strategy. On the other hand, however, the CCP's ambition of preserving its authoritarian rule can be achieved more easily provided that both effective controls over resources and the achievement of continuous economic growth can be maintained.
As a result, there seems to be a trade-off between the requirements of the economy and those of politics. This poses an immediate need for negotiation among different actors in Chinese society to restructure Chinese industrial relations. Internal rural labour migration is one of the most important factors affecting the process of negotiation because it brings newcomers to the labour market, and the previous urban proletariat in state-owned enterprises (SOEs) is being replaced in its dominant position in labour fields and is becoming a shrinking group under market reforms.
Rural labour migration first began in the late 1980s, when economic growth required a cheap workforce to join newly developed labour-intensive industries. Rural China is host to large amounts of redundant labour, so that rural dwellers are willing to leave for cities and other places where employment is available and a better livelihood is believed to be reachable. Moreover, the state development strategy has acted as another push factor that relies on administrative forces to drive the productive rural population away from the countryside and join in the industrialisation of the country. Here, labour migrants in China are defined as “all those who leave their areas of origin to live elsewhere, for whatever reason” (Davin, 1999, p. 23).
However, the early relationship between the Chinese state, the market and migrant individuals was not constructed smoothly, since the state became alert to unplanned population mobilisation and its potential effect on the stability of society. Several policies were implemented to prevent labour migration from connecting rural and urban China on an unplanned basis. Throughout the 1980s and 1990s, those who did not hold local hukou (household registration) or a zanzhizheng (temporary resident permission certificate) would be detained and expelled to their place of origin by force. Employers were also required to hire people with proper documents, or a fine could be imposed.
Then, characterised by different working conditions under hukou, the Chinese urban labour market was dualised, with urban hukou dwellers enjoying official protection in the formal urban labour market, and rural labour migrants entrapped in the informal market, which could hardly offer the basic rights at work (Solinger, 1995, p. 129; Li, 2004, pp. 82-3). A systematic exploitation of rural migrant workers was thus developed.
Labour laws and regulations protected people with proper work and living permissions, while migrant workers, who usually did not have these official documents and found their jobs in the informal labour market, were excluded from the benefits of economic redistribution and legal assistance. Under the existing system, employers also needed to bribe local government representatives when they wanted to hire migrant workers to cut their labour costs, or the enterprise would risk being punished under the employment regulations. Therefore, both migrant individuals and employers held negative attitudes towards the institutional arrangements against free labour migration, and the state was facing increased criticism, not only from the market, but also from society.
In 2003, the Chinese state announced its abandoning of the tight urban employment system, and offered every citizen the right to enter the formal urban labour market, regardless of their hukou status. The State Council of China issued its “Notification about Management and Service for Rural Migrants to Cities” (General Office of the State Council of China, 2003), which formalised the state's encouragement and support for rural labour migration under free mobilisation.
Later, the Central Committee of the CCP and the State Council jointly publicised Document No. 1 of 2004 (Central Committee of the Communist Party of China and the State Council of China, 2003), emphasising the benefits of labour migration to economic growth and urging local governments to encourage productive rural labour to migrate. In Document No. 1's from the years 2005-2007 continuously (Central Committee of the Communist Party of China and the State Council of China, 2004, 2005, 2006), the state repeatedly guaranteed its support of the policy of free labour movement. In the mean time, the Eleventh Five-Year Plan (2006-2010) of China based its rural development strategies largely on an increase of labour migration to industrial areas, and linked the rural labour supply with the growth of industrialisation and urbanisation.
A transition in the relationship among the state, market and migrants is being experienced, with the state becoming active in pushing people away from agriculture to urban employment, even though some rural dwellers may not be willing to leave their place of origin. But, the state believes that migrant rural workers play an important part in the industrialisation and development of China, and will continue to rely on policy effectiveness to get rural dwellers to migrate in the near future.
There has a big rise of the number of rural labour migrants, from 80 million in 1995 (Gu and Li, 2006, p. 17) to 150 million in 2006 ( Evening News, 2006) – over 30 per cent of the whole rural population in 2006. Moreover, the evolution of the rule of law means that the Labour Law and other labour regulations apply to every worker in the country, including migrant workers, who have accounted for more than half of the industrial and service labourers in China (Research Office of the State Council of China, 2006, p. 20).
Labour disputes: affecting both migrant and urban workers
However, migrant workers are still living under a marginalised, disadvantageous situation. Although the state has offered more space for population migration, localism, urban xenophobia and an imbalance between labour and capital are preventing migrant workers from enjoying fair treatment, in both their destination areas and their workplaces.
On the one hand, localism has deep roots in the Chinese culture, despite the Chinese population being dominated by the Han race. Difference in language dialects makes it identical among people from different places of origin. When migration crosses the border of ethnicity (Guibernau and Rex, 1997, pp. 7-9) it arouses localism, characterised by discrimination against migrants, and challenges the viewpoint that asserts the underlying solidarity of a new working class in China containing not only urban industrial workers but also migrant ones (Taylor et al., 2003, pp. 225, 227). This makes it difficult for migrants and urban dwellers to work in respectful coexistence, so that there is a difference in group consciousness between migrant workers and their urban counterparts.
On the other hand, the natural imbalance between labour and capital worsens the bargaining position of migrant workers in the workplace, as both employers and urban workers stand in opposition. As a result, the influence of migrants over employment conditions are severely undermined, as is also the case for their urban counterparts, who face a worsening bargaining environment, since employers can threaten to replace them with migrant labourers. Collectively speaking, labour in China does not have an advantageous power in reshaping the triangle relationship among the state, the market and individual workers.
However, Chinese labour is active in taking industrial actions to claim rights and interests. Despite the Chinese law failing to legalise strikes, workers are using both legal and outlawed activities to pursue their influence over the evolution of Chinese industrial relations.
As shown in Table I, after the enactment of the Labour Law of China in 1995, the annual increase in the number of labour disputes is 29.6 percent, as collective or class labour disputes (jiti laodong zhengyi) jumped six-fold in 2006. During that time, workers involved in collective disputes accounted for over half of the numbers of workers involved in labour disputes. Moreover, the labour disputes per million workers in 2006 rocketed 12 times compared to the figure for 1995.
On the positive side, the figures in Table I show the tendency that an increasing number of workers have realised their legal rights and are likely to practise these rights through legal channels, while collectivisation of the disputes points to a steady enhancement in group awareness among labourers. However, pessimistically, the 12 years of continuous increase in the number of labour disputes per million workers may also be interpreted as a prolonged deterioration in labour conditions, along with the handicap of the labour law system in China. Economic growth has not provided an environment for sound development of Chinese industrial relations.
Meanwhile, lots of industrial action is taken through unofficial resolution channels, when workers conduct wildcat strikes, along with other activities. It is argued that popular protesters are willing to risk their livelihoods under reprisals from the authoritarian state (Perry, 2002, p. xxi), and are ready to rely on their visions of justice to take action in the face of an ineffective legal system (Yu, 2006, pp. 465-6) as the market and law reforms exert “unintended effects” on the legitimacy of the discontent of the weak (Gallagher, 2005, p. 158).
As migrant labourers are complaining of unfair treatment, urban SOE workers are airing their discontent with SOE reform, which aims to raise corporate productivity by laying off the redundant workforce. The previous social contract among workers, management and the state under the danwei (work unit) system, which successfully sustained the organised dependence structure among the actors in the workplace (Walder, 1986), is then removed. SOE workers are losing their privileged position under the market reform. The shared treatment at work and relevant geographical concentration of SOE workers' dormitories provide a “social and ecological unity” (Lee, 2003, p. 83) for mass disputes, although there has been no sign of a joint labour action between urban and migrant workers.
Thus, the real number of total labour disputes in China could be much higher than the official statistics show, because unofficial labour dispute activities are always regarded as crimes by the Chinese government. However, a lack of coalition and mutual recognition between the urban proletariat and rural migrant workers separates the Chinese workforce, while undermining the influence of industrial action, in spite of the rapidly increasing number of labour disputes.
Globalisation and change in industrial relations
The evolution of Chinese industrial relations depends heavily on the trend of globalisation, which is reshaping the economic relationship between the Chinese state and the international community. One of the important purposes of the market reform is to earn economic benefits from trade and investment in order to sustain the reign of the CCP.
The transnational mobilisation of capital has become the most significant tendency in current world development. Fierce competition in home markets, as well as the escalating cost of research and development (R&D) for transnational corporations (TNCs), act as the driving force for firms to undertake global strategies, so as to not only cut total expenses but also to raise competitiveness among other firms (Dunning, 2002, p. 225). By mobilising capital across jurisdictions, TNCs are able to increase their bargaining power over national governments (Perraton et al., 1997, p. 273) and reach locations that best serve their global strategies. Thus, the deep integration of international production networks is strengthened, with TNCs as the driving player of economic globalisation (Dicken, 2004, pp. 12, 198).
China's huge low-cost labour supply and large underdeveloped domestic market make the country attractive to TNCs. Moreover, the chances for TNCs to gain advantages from operating in China are large, thanks to the lack of strong competition from domestic economic actors, when previously dominant SOEs are under insolvency, and the Chinese domestic market requires more capital to exploit, due to fragmentation caused by local protectionism (Huang, 2003, pp. 312-3). Local capital then fails to take the lead in global production integration.
In this case, TNCs and international investors can operate with more efficiency in penetrating the Chinese market. Foreign direct investment (FDI) and TNC operations always go to places where market access and supply clusters are easily reached, and there is a geographical concentration of foreign capital and local supply manufacturing bases, concentrated in the Pearl River Delta, Yangtze River Delta and Beijing Municipality. These regions are seeing a fast growth in the development of labour-intensive export-oriented and service industries, such as toys, garments/textiles, machinery and electronics, because of the comparative advantage of Chinese labour.
Policy incentives, such as tax breaks, are also in place to attract inward foreign investment. At the same time, the government is investing handsomely in building infrastructure to reduce regional transportation and other operating costs. Bank loans and official guarantees to respect private property rights are offered to assure investors' confidence in the Communist regime. As a result, several colossal manufacturing clusters and urban cosmopolitan business centres have been constructed around coastal areas, where quick access to both the domestic and international markets can be gained.
The large supply of rural migrant workers acts to reduce labour costs in these areas. The Pearl River Delta and Yangtze River Delta, along with the Beijing Municipality, have become the three biggest destinations for migrant workers, whose number is thought to be easily sufficient for the needs of factory recruitment.
In the field of labour standards, it is wrong to believe that all TNCs provide better than average conditions. Actually, there is a big difference in the way that Western and Asian firms in China treat their employees, with Asian enterprises often giving average or even worse than average treatment to their workers, while their Western counterparts are doing well (Chan, 2001, p. 10).
Generally speaking, Asian enterprises still do not have much difficulty in recruiting workers, although strict labour control by coercion (Kwan and Frost, 2002, p. 133) and longer working hours without overtime payments (Wang and Zuo, 1999, p. 277) are two common phenomena in these firms. The reason that workers still go to these factories is the extremely high pressure for Chinese labourers to gain employment following the increasing volume of rural labour migrants, who receive little education about their legal or human rights.
As the Chinese cadre evaluation system ties the cadre's promotion tightly with local economic growth (Yin and Cai, 2001, pp. 6-7), interdependence between the local governments and business is developed, with the latter requiring political protection and the former asking for economic support and the creation of employment.
Furthermore, there is a tendency towards associations of TNCs and other domestic firms that often serve as suppliers for international corporations. Overseas chambers of commerce have been active in China, as their members start investing heavily in constructing the local production chain and demand more assistance from collective efforts in negotiation with the government.
Also, official Chinese business associations are trying to expand their memberships to prosperous private enterprises, although official chambers of commerce have to operate under strict state controls and private entrepreneurs are inclined to join organisations with real independence in representation. Town-fellow associations (tong xiang hui) are thus emerging on the social basis that Chinese investors cherish connections from the same places of origin, and the local government in the sending area usually depends on the town-fellow associations to reach the migrant population, whose hukou is still in the sending places. Sometimes, town-fellow associations can cooperate with more effectively the expatriate offices of the government from the sending area in achieving their agenda as compared to the official business chambers, as these civil associations are able to work without many administrative restrictions in the destination area, thanks to the inward investment they bring.
As a result, there is a concern that globalisation brings new modes of labour management and managerial control of the workplace (Gallagher, 2005, p. 61) and is likely to enhance a further imbalance between Chinese labour and capital in industrial relations, especially for rural migrant workers (Chang, 2002, p. 127; Zheng, 2006, p. 347), since local governments often become the allies of capital and tend to forget their duties in safeguarding labour laws (Taylor et al., 2003, pp. 45-6).
Ironically, in 2004, there was a shortage of migrant workers in several cities of the Pearl River Delta, the first such occurrence since 1978 ( Southern Weekend, 2004), and it is believed that the migrant workers are learning to “vote by foot” (Cai, 2006) against bad labour conditions. There is a view that the phenomenon may force employers to improve their treatment towards labour, while also making government enforce its labour laws and labour inspection activities more effectively than before (Liu, 2006, p. 6; Wang and Wang, 2005, p. 127).
However, this labour shortage has been felt in neither the Beijing Municipality nor Yangtze River Delta, the other two largest destinations of rural migrant labour. Moreover, the shortage is mainly of female workers aged between the ages of 18 and 25 for the shoemaking and textile industries (Institute of Labour Studies of the Ministry of Labour and Social Security of China, 2004b, p. 11), and skilled workers are in the shortest supply in the places reported (Liu, 2006, p. 5).
Therefore, the shortage of labour merely reflects a cyclical local phenomenon in the labour market, due to the rapid industrialisation of China and the excessive demand for skilled workers as well as female workers, who are usually considered to be more obedient than males. In the long run, there will be an over-supply of labour in China, and there is no sign that the shortage of migrants has caused a structural improvement in labour standards and labour laws throughout the country.
Trade unions: institutional constraints
During the Communist revolutionary era, Chinese trade unions were established to organise and lead labour actions against the then ruling regime, under the supervision of the CCP. Once socialist China was founded in 1949, ACTFU began to serve as an umbrella organisation for all trade unions in China. Regional, industrial and enterprise union branches were set up with the political assistance of the CCP and the government.
ACFTU is the self-proclaimed largest trade union in the world, with a membership of 150,293,965 in 2005 ( China Trade Union Statistics Yearbook, 2005); more than 6.5 million migrant workers joined the union in 2006 ( People's Daily, 2006b).
However, ACFTU has worked as a subordinate body of the CCP since its establishment. Being a union with strong historical links with the CCP, ACFTU functions solely under the supervision and guidance of the party-state, and works as an element of CCP labour administration, without independence in decision-making on strategic issues such as means of representation for its members.
CCP and ACFTU documents repeatedly stress the importance of the CCP's leadership over the trade union, and insist on CCP doctrines as a “fundamental guarantee” (Wang, 2003, p. 4) of union work to maximise workers' energy in contributing to the building of the economy (All China Federation of Trade Unions, 2006a, p. 2; Wang, 2006, p. 2), and that the union cooperates “obediently” under the CCP and the government to handle industrial action on the part of workers (Wang, 2006, p. 21), so that there is a shared mission and common codes of conduct between the CCP and ACFTU, with the latter as an inferior actor in this political hierarchy.
Meantime, the leadership structure of ACFTU assures CCP presence and domination in every union branch. CCP representative committees enjoy decision-making power over union activities at every level of the ACFTU. On the one hand, senior CCP officials usually take the chairmanship of the ACFTU. From 1989, members of the Politburo of the CCP have been named as chairmen of the union, whose entire leadership is nominated and approved by the CCP, as per the Constitution of the Trade Unions in China. On the other hand, enterprise unions are also required to follow the lead and guidance of enterprise CCP branches, according to Article Five of the Regulation for the Work of Enterprise Trade Unions.
Also, a dual leadership is exerted upon the regional trade unions, where the local CCP branches, along with government, take care of union cadre performance assessment. Theoretically, upper level trade unions can guide the direction of local union work, but institutional arrangements at the local level undermine the effectiveness of the ACFTU in controlling its branches, and diffuse union power by enhancing the influence of the local CCP and government in the union structure, so that local union officials often share the same interests as the local administration rather than the ACFTU leadership.
Moreover, industrial unions are in an even more confusing situation, as they have to rely on enterprise unions as their grassroots branches, while those enterprise unions are under the direct supervision of regional trade unions instead of industrial trade unions. The enterprise trade unions do not have to respond the requests of industrial unions if the regional trade union does not issue its approval for cooperation. So, the industrial trade unions are merely nominal organisations and do not have any material influence on daily workplace business. This arrangement prevents large-scale labour action from happening in the same industry and narrows the territory of solidarity in China.
Also, union cadres have the status of civil servants, and do not need to be accountable to the union members. Union elections are carried out with planning, preparation, candidate nomination, vote counting, supervision and monitoring by the upper-level union. The ACFTU is not obliged to release its election practices to other parties, including its members. The top-down leadership of ACFTU means that the bottom-up recall of union bosses is extremely difficult to achieve, if not impossible. Members are unable to decide the union agenda, and neither can they participate in the formulation of union strategies without interference from the CCP and upper-level union officials.
From the aspect of finance, the government is responsible for collecting legal union incomes. As per the Trade Union Law, there are five sources of union incomes, ranging from membership dues, transfer payment of 2 percent of the aggregate monthly salary of the whole workforce from unionised enterprises, corporate profits submitted by unionised enterprises and subsidies from the government to other, unspecified incomes. These sources all require collection by the taxation department of the government, which then transfers the amounts to the relevant union apparatus. Furthermore, the ACFTU does not have to report its annual financial situation under independent auditing. There is no regulation or law demanding that ACFTU releases its financial balance or introduces independent auditors to monitor accounting documents. Although grassroots enterprise unions are asked to disclose financial reports periodically to their members, members do not have the right to check the accuracy of the reports, and neither can they consult a third party for assistance, other than the upper-level trade unions.
Without financial transparency, the ACFTU and its lower unions run their commercial activities and usually have common interests with local business. Hotels and training schools are the two traditional sources for extra income, while labour dispatch offers another income generation activity for unions. However, union-involved dispatch companies do not have to provide education or training for workers, and neither do they follow up the problems their dispatched workers encounter in the workplace. The loopholes in Chinese labour laws mean that dispatched workers are often excluded from labour protection. Dispatched workers' user companies and dispatch firms can always choose to pay a smaller social security contribution for the workers because of the lack of legal definitions about social security for dispatched labourers. Thus, unions are likely to violate the interests of labour as they seek economic benefits through egoistical activities.
Lastly, the legal system grants the unitary position of the ACFTU in organising and representing workers in China. Relevant laws, such as the Trade Union Law, the Labour Law, the Company Law, etc., all make it clear that workers can only go to ACFTU branches for union membership. The ACFTU is highly alert to the possible emergence of any self-organising action on the part of workers, along with independent labour organisations out of the ACFTU's control, considering these activities to be hostile to union work and the political stability of China (All China Federation of Trade Unions, 2005; Workers' Daily, 2007). Any attempt at organising and representing workers on the part of organisations other than the ACFTU is highly likely to result in joint suppression from both the Chinese state and the ACFTU.
Therefore, Chinese trade unions have some fundamental institutional constraints in practising solidarity for Chinese workers, since the ACFTU is more willing to join the state's efforts in preventing independent social actors from organising workers because the unions' influence over industrial relations mainly depends on the sustainability of the ACFTU's monopoly over the rights of association. Any assertion of the ACFTU's transformation towards labour interests should be taken with a pinch of salt.
The civil society movement: organising labour
The entrenchment of the civil society movement in the labour field brings more actors to the arena of Chinese industrial relations, in spite of hostility from the ACFTU and the worries of the state. Meanwhile, the emergence of workers' leaders during class labour actions makes the issue more complicated in China, as the unions, civil organisations and labour leaders can all claim some representation within their domains.
The concept of non-government organisations (NGOs
After the Conference, funding from the US Ford Foundation sponsored the establishment of some of the first NGOs in China, and Oxfam, another international development organisation, opened four field offices and launched specific programmes on NGO development and labour.
In the late 1990s, domestic NGOs arrived on the stage. Labour has become an important component of their work for two reasons:
- unsolved bad treatment of workers; and
- the geographical concentration of residence of migrant labour (Sun, 2006, p. 23), which means that grassroots organisations are able to reach large numbers of workers with limited resources.
While there is a belief that migrant workers do not have strong community or class commitment (Lee, 2006, p. 87; Li et al., 2005, p. 262; Li, 2004, p. 65), so migrants always endure bad labour conditions, the community work of labour NGOs shows a different tendency towards group awareness and confidence in pursuing human rights.
Small Grass, an NGO established in 2003, operates in Henggang County, which is one of the main industrial areas in the Pearl River Delta. The organisation has opened a workers' library and an assistance centre in No. 189 Factory Zone of the county, providing education, culture entertainment, networking for women, legal aid, etc., for people working in the factories in the Zone. In three years, Small Grass has provided services for about 40,000 migrant workers and had a core workers' volunteer team to encourage mutual assistance consciousness among migrant labourers. Meanwhile, the South China Labour Law Service Centre, another NGO in the Pearl River Delta, works in the law field and has represented workers in nearly 900 labour dispute cases in the last four years, with more than 4,500 beneficiaries – the local union legal aid service accepted less than 80 cases during that time.
If the establishment of NGOs requires careful planning and long-term organisational strategies, the emergence of workers' leaders is always a reactive choice in the face of some of the worst labour rights violations, which range from mass lay-offs for SOE employees to deferred wages for migrant workers.
Usually, workers' leaders emerge during militant industrial actions like wildcat strikes and protests. They always work under great risk of being arrested by the government for illegal organising and threatening social stability. At the Sixth Plenary of the Sixteenth Central Committee of the CCP in October 2006, the CCP and central government decided to pay more attention to class actions and be more active in restoring stability under urgent circumstances (Xinhua News Agency, 2006b).
Indeed, both labour NGOs and workers' leaders face serious challenges in their work. As labour leaders organise workers by hiding from government watchdogs, labour NGOs operate in an environment that grants little legitimacy to the grassroots civil society movement.
It is almost impossible for grassroots NGOs to register as non-profit organisations. The Regulation on Registration and Management of Social Organisation, along with the Regulation on Registration and Management of Non-governmental and Non-commercial Enterprises, requires civil organisations to find a supervising body within the government, which has the power of veto over organisational decisions and has the authority to close down the NGO at any time. Grassroots NGOs interpret the regulations as legal deprivation against their autonomy, since the regulations grant the state with the power to intervene heavily in the non-government sector. Thus, many NGOs are registered as commercial companies in order to bypass legal barriers and maintain independent decision-making.
This registration status creates an embarrassing legal circumstance for labour organisations, which have NGO structures for non-profit work but cannot legally seek public fundraising or exemption from state taxation. External financial support becomes vital for the survival of such organisations. The author estimates that there were around 71 grassroots labour organisations
The Trade Union Law of China materially reserves the rights of organising workers to the ACFTU, which shows no interest in sharing this privilege with other social actors. Indeed, the ACFTU leadership pointed out during an executive meeting in March 2006 that hostile forces were targeting union work to “split” the Chinese trade union as well as the country ( Dalian Daily, 2007). Senior union officials began to criticise labour NGOs and labour leaders for being the “puppies” of Western enemy forces (Chen, 2006, p. 2; Zhongguo Wang, 2007). Negative attitudes from government and the ACFTU also mean that NGOs, along with workers' leaders, have to manoeuvre in a less friendly industrial relations arena.
Furthermore, lack of secure domestic funding sources severely weakens the sustainability of the NGO sector in China. Although the coalition between grassroots NGOs and their international donor or cooperative organisations can help to disseminate the mission of international solidarity and strengthen effective advocacy at the international level, such arrangements tend to increase the dependency of grassroots NGOs and reduce organisational innovation for prospective labour work. Labour leaders are in a worse position, since they cannot receive any explicit assistance from social actors and even have to struggle with criminal charges for their activities. Also, without a supportive organisation, workers' leaders may soon lose their networking influence among labourers once industrial actions are over.
To some extent, the institutional space for labour NGOs is quite limited and their role in affecting industrial relations at the macro level is small. Workers' leaders emerging during class actions encounter more difficulties in retaining their influence on local industrial relations in the mid-term, but their endeavours can result in some immediate changes at the local level. So far, there have not been reports or observations of alliances between labour NGOs and workers' leaders, who always disappear from public view after labour actions. But such coalitions may be undertaken implicitly in order to avoid greater suppression from the state and the ACFTU.
ACFTU in transition?
As labour NGOs are becoming successful in practising solidarity at the grassroots level and labour leaders emerging from class labour actions are gathering large numbers of workers in a short time, the ACFTU is feeling a great deal of stress. Some unprecedented union work is currently taking place, raising the question as to whether the ACFTU is in transition to becoming a real representative organisation for workers.
Here, significant pressure comes from the CCP, which urges unions to be more effective in organising labourers in the workplace and protecting the legal rights of workers to prevent people from initiating self-organised and self-controlled actions that challenge the status quo. Due to the escalation of labour disputes and class actions through official and unofficial grievance channels, the CCP and central government have demanded that the ACFTU expands its membership to migrant workers and becomes more active in providing services for workers (Central Committee of the Communist Party of China and the State Council of China, 2006).
One of the eye-catching cases is Wal-Mart unionisation. Wal-Mart, which is notoriously famous for resisting unionisation, has agreed to allow unions to operate within its shops all over China, after several negotiations between the ACFTU and Wal-Mart management, which initially denied unionisation when the ACFTU tried to convince Wal-Mart to organise an enterprise trade union voluntarily. Within one month of the agreement, it was reported that 19 unions had been established by employees of Wal-Mart hypermarkets, without the involvement and control of the firm's managers (All China Federation of Trade Unions, 2006b).
As people tend to conclude that the Wal-Mart case has shown a bottom-up unionisation, there is a belief that the ACFTU is probably changing towards more representation for workers, although the Wal-Mart unionisation is a result of the enforcement of the relevant clauses of labour and trade union laws through the power of the Chinese party-state, rather than a rising capacity of the trade unions (Chan, 2006).
Actually, the Wal-Mart unionisation is a case that illustrates the expanding power of the state at the enterprise level. The ACFTU merely followed the order from the CCP to conduct talks and negotiations with Wal-Mart; the party was concerned at the rise in labour disputes and the lack of an official watchdog in workplaces in foreign-invested companies, and pushed the unions to enter enterprises and prevent any possible labour actions from harming local stability. Also, a government-controlled workplace organisation may provide more bargaining power for the state during trade and investment negotiations with firms.
In this case, large international corporations become obvious targets. On the one hand, employers like Wal-Mart employ large numbers of workers, and their enterprise labour relations are likely to turn aggressively towards corporate and social management structures. On the other hand, TNCs usually enjoy advantages in talking with the government, as countries around the world are competing for inward investment. A subservient enterprise union under state supervision can then open a channel for the government to influence corporate governance at the grassroots level of the firm, and gain credit in the changing relationship between the companies and state, since the Chinese market is too big for every company to withdraw.
Another example of unionisation with Chinese characteristics is Foxconn, a Taiwanese invested corporation, which employs around 200,000 workers in Shenzhen, Guangdong Province ( Business Week, 2007) and was the world's second largest IT company in 2006 ( Business Week, 2006). Several media reports revealed bad labour treatment within Foxconn factories, where workers laboured over 12 hours per day, including weekends, and received payment below the minimum wage ( Mail on Sunday, 2006; China Business News, 2006). No union branches existed in Foxconn at that time.
Thanks to the media disclosures, labour relations in Foxconn attracted significant public attention. However, neither local government nor trade unions openly expressed their concerns at the issue. Even China Business News, the newspaper that first reported the case domestically, withdrew its criticism after Foxconn brought a criminal lawsuit on false information manipulation against the journalists who wrote the stories (Xinhua News Agency, 2006a). The newspaper's representatives said that there had been no assistance or clear statements from the trade unions during the whole event. Moreover, the NGO legal aid lawyers for Foxconn workers felt a negative pressure against their activities from local government, along with the local union headquarters.
Half a year after the event, the Shenzhen Municipal Federation of Trade Unions, the local hierarchy of the ACFTU, finally organised a “bottom-up elected” enterprise union in Foxconn ( Shenzhen Special Zone Daily, 2007), under the guidance of the CCP representative branch of Foxconn, which was established in 2001 ( Global Times, 2001) and gave no opinion or comment about the media reports. It seems that unionisation is a show for critics of Foxconn to keep silence about labour relations there, as the unions take care of workers' issues.
More recently, a third example through which to analyse the Chinese union movement became public, as a local newspaper showed evidence that McDonald's and KFC were violating labour regulations regarding minimum wages and maximum working hours ( News Express, 2007a). Then, a national media campaign about local employment conditions at McDonald's and KFC was conducted, and the ACFTU expressed their concerns and ordered local unions to negotiate with the two TNCs, which have no union branches ( News Express, 2007b).
The issue became complicated when the local labour bureaus of several Chinese administrative regions stepped in to investigate. Different investigation results were released. As the Guangdong Bureau of Labour and Social Security urged the two TNCs to correct their activities that were in violation of the law ( Southern Daily, 2007), its counterpart in Shanghai confessed that there were no violations in the area ( Liberation Daily, 2007).
After the statements from the two local government departments, there was a difference in union follow-up in the two localities. Guangdong Provincial Federation of Trade Unions assured that it would follow up the case decisively and McDonald's unions would be established in May 2007 ( Guangzhou Daily, 2007), while the Shanghai Municipal Federation of Trade Unions remained silent after the Shanghai Labour Bureau denied the charge against McDonald's and KFC.
This case shows the dilemma for regional trade unions, which on the one hand need to follow the footsteps of local administrations that directly control their personnel's performance evaluation, along with financial collection, and on the other hand have to show respect to the ACFTU. So, union actions and their effects are diversified at the local level.
Provided Wal-Mart unionisation draws an optimistic picture of the ACFTU's transition towards labour rights, the Foxconn and McDonald's/KFC cases tell different stories. The ACFTU and its lower-level union apparatus are still playing a subordinate role under the state hierarchy. As the ACFTU follows orders from the central party and the government, its regional branches repeat the lines on local governments' statements. So-called union initiatives for labour rights are only a renewed way of top-down control over the workforce, and the ACFTU has not changed its role as a labour agent for the state.
There is a point of view that this “intermediate” role of trade unions links the interests of the state, enterprises and individual workers together, and contributes to social stability as well as harmonious employee participation thanks to the institutional arrangement that unions do not “independently” represent labourers (Zhang, 2001, pp. 8, 11). The combination of different interest groups of industrial relations then offers a “diversified” representation of the ACFTU (Zhang, 1998, p. 185) and makes it easier for the union to act as an effective mechanism at the enterprise level for grievance mediation and the restoration of stability, and thus sustain the “multiple winning” situation for all stakeholders (Feng, 2005, p. 12).
Meanwhile, others raise the issue of union transformation, by arguing that when class consciousness among Chinese workers is still under construction and collective labour relations are legally under the unitary control of the ACFTU, trade unions have to respond to the demands of workers for real representation, and interference from the state in industrial relations should be enhanced to establish an improved legal system for workers to balance their asymmetric power in the face of capital and the market (Chang, 2004, pp. 27, 124, 149).
However, the two mainstream schools both base their arguments and conclusions upon the allocation of power within the state apparatus, the former trying to add merit to the current union arrangements and the latter asking for revised state control to ride unions on the track of labour protection. They neglect the importance of developing an equal negotiation system for every stakeholder. Instead, the two groups focus on the reform of state intervention and control over the process of industrial relations, but the Chinese state has its self-interests and cannot always be neutral for either workers or firms, especially when the CCP does not have to renew its social contract with the public through periodic popular elections.
Therefore, the transition of the ACFTU is not an assertive step towards strengthening union representation for workers and building bottom-up accountability. It is a political attempt to secure the submissive role of workers, along with restoring advantages over TNCs, in the changing relationship among the state, the market and individual workers. As long as the institutional barriers to union independence exist, there can hardly be a material transformation of the ACFTU.
Counteractions from TNCs
While the ACFTU and civil society actors conduct different strategies to associate Chinese workers, TNCs are also developing methods of maintaining enterprise decision-making autonomy in this changing arena.
At the firm level, there is a de facto merger of the enterprise trade union with the human resource management (HRM) department. The Trade Union Law of China and The Regulation for the Work of Enterprise Trade Unions of the ACFTU both prevent corporate executives from being the head of the trade union. However, HRM managers are not affected by these restrictions, and neither are other personnel with strong connections with the firm's boss.
Under an environment that gives little participation to workers, it is relatively easy for corporate management to dominate the enterprise union through the merger. In private enterprises, relatives of the enterprise owners usually take the chairmanship of unions (Xu, 2004, pp. 243-6), while HRM managers act as union leaders in TNCs. Enterprise unions operate under the watch of management, though there is theoretically a nominal division between HRM and the trade union in the company. Only when the ACFTU and the state draw upon direct intervention can enterprise unions be exempted from corporate influence, as shown in the Wal-Mart case, while workers may still be excluded from participation by rearranged workplace control from the state.
Meanwhile, corporate social responsibility (CSR), which can be expected to be a tool to improve labour standards, acts as a public relations campaign for TNCs in China. CSR is an external, imported concept, brought to China by TNCs in the mid-1990s instead of being the result of a Chinese consumer movement, which has yet to emerge (Tan and Liu, 2003, pp. 22, 71).
So far, philanthropy has been the main focus of Chinese CSR, which is believed to contribute to the Chinese social security system (Zheng, 2006, pp. 297-301). Also, there is a viewpoint that even this philanthropy can become a big burden for enterprises, which are obliged to shift away from shareholder responsibilities to a “public good” offering, reducing social efficiency (Dong, 2006a, pp. 47-8). The government is concerned that CSR could be used as a trade barrier against cheap Chinese products and increase manufacturing costs through various CSR verifications (Institute of Labour Studies of the Ministry of Labour and Social Security of China, 2004a, pp. 10-11).
Thus, labour rights are not at the centre of the Chinese CSR movement, so TNCs and domestic companies can dominate the campaign and use CSR as a public relations platform to improve their image without any necessary internal change in corporate governance or treatment of workers. There has not been an organised balancing force from society to influence the norms of TNCs, who may merely worry about the joint actions of both the government and the ACFTU.
The relationship with the state and its local agents may be the most important external linkage for TNCs and their Chinese business partners to take care of. At the regional level, there are shared interests between TNCs, their suppliers and local government, since government officials desire to receive performance merits through local economic growth and the business requires political protection to operate in an authoritarian environment. Thus, the influence of business associations has a strong effect over local issues in the field of labour. In Dongguan, Guangdong Province, the local government made an implicit agreement with the Taiwanese Association, which collects and represents the interests of Taiwanese investors. A local alliance was formed to discourage the operation of labour NGOs in the area, so as to maximise management controls in the workplace and stabilise local conditions. Although this agreement did not exist for long, as a result of several wildcat strikes as well as pressures from upper levels of government, it offered the possibility that the government-business complex at the local level may seek secret deals to counteract solidarity.
At the national level, this is extremely difficult to achieve, since the Chinese state endeavours to be regarded as a responsible actor leading an equal environment. A coalition that may threaten this image domestically and internationally does not serve the interests of the state. Meanwhile, such a government-business complex will alienate other players in industrial relations and harm state efforts to reform the ACFTU by taking a renewed control model towards workers. Furthermore, a tight agreement could cause the deterioration of state bargaining power over TNCs and other business elements, since globalisation offers asymmetric forces between the state and transnational capital (Dicken, 2004, p. 312).
Game of influence on legislation: the making of the Labour Contract Law
The enactment of the Labour Law of China in 1995 established a rule of law system for industrial relations. In 2005, several pieces of labour legislation were put on the agenda of the National People's Congress of China (NPC), including the plan to introduce the Labour Contract Law, which was the most important piece of legislation among all, since the ten-year enforcement review of the Labour Law found that the issue of labour contracts had become the largest source of labour disputes and there had been a trend of short-term contracting, so that employment instability was the theme of labour relations in China ( China Youth Daily, 2005). Moreover, the percentage of contract coverage was less than 20 percent in small and medium-sized firms ( China Youth Daily, 2005). This makes implementation of the law difficult, as workers first have to make great efforts to prove the existence of their employment relations.
Currently, Chinese industrial relations are based on the atomisation of labour and ignore collective labour relations, as the ACFTU cannot be qualified as a real representative body for workers and NGOs are still small in their scale. Although there are official collective labour contracts signed by the ACFTU, these contracts are composed without real collective bargaining processes, and even the nominal contract negotiations are conducted under the administrative supervision of the government or enterprise CCP branches, so the contracts are unable to represent the collective will of the workers.
When the individualisation of labour contracts became widely accepted as an employment code, the making of the Labour Contract Law promoted great attention from society, and industrial relations actors considered the potential effects of this law on labour relations in China.
Actually, the Chinese rule of law is constructed and enforced solely by the party-state, which allows no independent judicial system. This is also the case for the labour law system. It is believed that the Chinese state turns to the establishment of the system as a result of instrumentalist and pragmatic choice (Gallagher, 2005, p. 102) rather than willingly withdrawing from civil affairs.
In the labour law arena, the rights to collective bargaining and strike action are excluded. Several Chinese scholars have realised the importance of integrating real collective bargaining as the centre of labour contract legislation (Cheng, 2005, p. 106), and asked the state to legalise union-led strikes (Chang, 1995, p. 454) so as to expand the official channels available for labourers to raise grievances and reduce the social cost of workers' protests.
However, confrontational labour relations are out of the question for both the Chinese government and the ACFTU, which regard the uncontrolled collectivisation of labour and strikes as threats to the status quo. Thus, the labour laws are expected to provide protection for workers on an individual basis, while reinsuring the unitary position of the ACFTU in representing collective labour relations. The Labour Contract Law is a statute that offers clear definitions and explanations for relevant articles on the Labour Law of China, and will not exceed existing judicial and legislative borders to create room for collective labour actions.
Another concern regards labour standards on the Labour Contract Law. Since the Chinese Labour Law makes vague expressions on the field and new employment models such as labour dispatch are not covered by the Labour Law, the Labour Contract Law is anticipated to clear these issues up by setting clear measurements of labour standards.
There is great debate within China on whether Chinese labour standards are too high to be affordable. While one group maintains that the state should enhance its role in safeguarding labour rights by intervening in industrial relations processes and that this legislation needs to offer a rising standard for labour (Wang, 2005, pp. 12-14; Chang, 2006, 32), the other argues that over-protection of workers and further state intervention can result in an unproductive workforce and an overwhelmingly powerful state over social autonomy (Dong, 2006b, pp. 9, 16).
In March 2006, the NPC released the draft Labour Contract Law for public comment. This was the first time that a labour legislation draft had been publicised for suggestions, as Chinese lawmaking usually follows administrative legislation procedures, which exclude participation from other parties outside the government apparatus. During the one-month public consultation period, 191,849 comments and pieces of advice were received, with 65 percent coming from the grassroots level ( People's Daily, 2006a).
There are three main sources of these public comments – business associations, NGOs and individual citizens – while the ACFTU can use governmental channels to raise its opinions and academics are consulted directly by the government or media, so that the two social actors do not need to hurry to seizing the chance to submit their comments.
Among the comments received, individual views were fragmented and lacked a systematic affirmation towards the law. In contrast, the opinions from the business associations, especially international business chambers, drew great attention from both the state and society. Two international associations – the American Chamber of Commerce in Shanghai and the US-China Business Council, which represent US business interests – submitted written public proposals to the NPC and lobbied the lawmakers to amend the draft Labour Contract Law in favour of business, requiring stricter non-competition clauses and less probationary protection as well as corporate autonomy of deciding employment codes (US-China Business Council, 2006, pp. 1-2; American Chamber of Commerce in Shanghai, 2006, pp. 3-4). Meanwhile, the European Chamber of Commerce in China followed suit and warned that a rigid labour contract law could drive away foreign investment ( 21st Century Business Herald, 2006).
Domestic business representatives also raised similar concerns, and worried about the potential effect of the law on rigidity of employment, in that it would reduce the competitive advantages of the Chinese economy by increasing labour costs (National People's Congress of China, 2006). Significant pressure formed from the business community towards the state, which only wanted to use the law as an instrument to appease debates and disputes in industrial relations.
Meanwhile, NGOs used the public consultation period to maximise their advocacy work. “In the Hepatitis B Camp”, an online network of Chinese hepatitis B carriers, submitted a letter to the NPC, arguing that some articles on the draft law could lead to structural employment discrimination against hepatitis B carriers. NGOs also tried to work with third-party organisations to give their comments on the legislation. Oxfam supported several study tours of the Renmin (People's) University to explore labour contract issues, for the purpose of using the close connection between the University and government to exert their influence indirectly.
Calls from labour NGOs concentrated on increased protection and rising labour standards for workers, which are in conflict with the standpoints of business. An advocacy alliance among NGOs is not in place, however, since NGOs are cautious in showing their collective strength as this could bring about a tougher institutional environment for their work. In the summer of 2006, several labour NGOs in the Pearl River Delta signed a public letter to the local administration and asked the government to reduce the labour dispute arbitration fee for migrant workers. This collective action alerted the local government, which found various legal excuses to shut down all the organisations that joined the campaign. At the national level, one wonders about the consequences of counteraction from the state if NGOs form a frontline to raise their voices against this legislation.
Despite the fact that there could be many things in common between labour NGOs and the ACFTU in promoting labour standards, the latter is very reluctant to work with NGOs to produce a joint advocacy on the issue of Labour Contract Law. The ACFTU reported its opinions through the administrative mechanism of the government and did not want to share them with other social organisations. Moreover, the ACFTU's efforts include endeavouring to make sure that the law excludes pluralistic unions or independent labour associations. This fundamentally separates labour NGOs from the ACFTU.
Therefore, the making of the Labour Contract Law has acted as a platform for interactions among social players in China. In spite of the great differences in opinion on the part of commentators, the public discussion on legislation meant that stakeholders realised the importance of raising their opinions, while direct legislative negotiation with the government is still impossible in the labour arena. A clearer distinction on different interest groups is forming and will exert effects on the evolution of the prospective relationship between the state, the market and society.
Thanks to the unprecedented legislative debate about the Labour Contract Law, the NPC is determined to conduct future discussions behind closed doors and will not release revised versions of the law to the public. In a word, the state is frustrated under a legislative mechanism that allows all stakeholders to participate, and is ready to withdraw from the public view in order to reduce the heat of debates, although the effectiveness of this withdrawal is seriously under threat when social actors have already learned their power for change.
Conclusion and discussion
This article studies the changing arena of industrial relations in China through an analysis of the key players in Chinese industrial relations, along with their interactions. Chinese market reform has opened up space for the entrenchment of not only the market but also civil society, both of which are globally connected and bring changes to the grassroots level of industrial relations. As the labour market evolves, in the face of large-scale internal rural labour migration, the rule of law in labour areas is also developed to provide expanded protection to every worker, and workers are becoming confident in claiming their rights and interests.
Labour resistance seeks for complaint channels on an official and unofficial basis. Class actions like wildcat strikes are beginning to be seen, while there has been a dramatic increase in official labour dispute cases in the last 12 years, since the enactment of the Chinese Labour Law. Solidarity is practised with the involvement of official trade unions, NGOs and workers' leaders during industrial action. There is a diversity of representation, although Chinese laws and the ACFTU firmly reject the possibility of legitimising this trend.
Fundamental institutional constraints mean that the ACFTU cannot escape from its role as a subordinate body to the CCP in monitoring the Chinese workforce. The Foxconn and McDonald's/KFC cases illustrate that any change in the ACFTU is handicapped and half-hearted, while the question of whether a real transition is taking place is raised through Wal-Mart unionisation.
Counteractions from TNCs and business associations have the aim of dismantling real representative mechanisms of labour, and a local coalition between the government and business introduces the administrative power to interfere and drive labour NGOs away from local areas, although this would be impossible to conduct at the national level because the state is reluctant to be regarded as suppressive or to worsen its international image, which would be damaging for attracting prospective inward investment and trade.
The current legislation of the Labour Contract Law offers an opportunity for stakeholders to enter the stage of advocacy to express their interests, which usually are in contrast with each other. A heated public debate on labour standards and employment codes worries the state, and has convinced the NPC to withdrawing future discussions from the public arena. However, the effectiveness of this effort must be questioned, since actors have already learned the importance of and methods in advocacy. A changing arena of industrial relations is thus constructed.
Traditional tripartism shows its limits in exploring the Chinese reality, as it offers a narrow definition of labour representation, which only enables the ACFTU, a top-controlled state agent, to represent Chinese labour. At the practical level, workers' re-collectivisation happens under the development of NGOs and other forms of self-organisation during workers' uprisings. Diversified labour representation revises traditional tripartism in China by introducing unofficial labour organisations into the arena. In consequence, Chinese industrial relations are established upon a structure where a tripartite system plus self-organised workers is embedded.
Despite the fact that the state and the official ACFTU have affirmed their discontent with this tendency, it is impossible for them to unilaterally change the relationships among the state, the market, the workers and their organisations, as well as the international community. Domestic social transition and globalisation are exerting a joint influence over the evolution of labour in China, and in the mid-term, the revised tripartite structure of industrial relations is likely to remain, due to active participation from the grassroots levels, although some counteractions from privileged political actors can still be felt.
In these terms, the corporatism assertion (Unger and Chan, 1995) is flawed in that it underestimates the grassroots endeavour and state repression, and risks being over-optimistic in anticipating Chinese development. Meanwhile, it is also wrong to point out that the atomisation of workers will bring a natural evolution of the ACFTU towards labour rights (Taylor et al., 2003; Chang, 2004, pp. 133-5), as is discussed in previous parts of this paper.
However, the studies here confirm some of the arguments about the increased deprivation of grassroots labourers (Lee, 1999; Pei, 2006). This deprivation does not necessarily cause regime changes, since the new structure of industrial relations has shown no sign of being unstable, unless the state were to take some unscrupulous unilateral action against all the other actors, whose collective efforts could then lead to a fundamental restructuring of the current balance of the power system of Chinese industrial relations as well as society.
Table IAnnual increase in labour disputes in China, 1995-2006
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About the author
Kan Wang is a PhD Candidate at the School of Labour Relations and Human Resources of the Renmin (People's) University of China, majoring in labour relations and labour law. He received his MA in Development Studies in 2004 from the University of Leeds, UK. Kan is Editor of Labour Relations Journal (Laodong Guanxi), Beijing, China, and Editor of New Man Power (Xin Ren Li), a journal for human resource managers in China. Kan is currently assisting with the research and drafting of the Labour Contract Law of China, entrusted by the Legislative Office of the State Council of China. He is also working on a number of other national projects, including: the Department for Occupational Safety and Health, Oxfam Hong Kong, Legal Aid and Rights Awareness Actions on Labour Relations, Ford Foundation, the Chinese Labour Policy Review and the Chinese National Natural Science Foundation. Kan's professional interests include industrial relations, NGOs and the international political economy. Kan Wang can be contacted at: cnwgkn@yahoo.com.cn