ACFTU and Trade Unions

Trade Union Direct Elections: A labour rights reform as promoted by foreigners

The well-known Hangzhou shoe manufacturer Yajia Industrial Limited recently installed clocking-in machines at its plant in Hangzhou city, Zhejiang province. The system was introduced following pressure from a major US shoe brand as part of their efforts to ensure that workers’ salaries are not subject to illegal reductions. Since 1999, the American company has been conducting annual audits of Yajia in order to evaluate labour conditions at the factory. Yajia’s management told our reporter that the brand’s conditions regarding salary payment, production environment and workplace safety were basically satisfied, but they had also suggested the introduction of time cards and gave the supplier a deadline for introducing them. The brand made it clear it would take a US$1.3 million order elsewhere if its ‘suggestions’ were not met.

This kind of pressure is not new in Zhejiang as it is a province with a high ratio of private and foreign-invested factories. One byproduct of the pressure has been the rise of trade union direct elections in some enterprises, especially in the Yuhang area of Hangzhou city. The Yuhang Federation of Trade Unions has become a pioneer of direct elections over the past four years. It has encouraged the election of chairpersons and committee members via direct plant-based elections. In fact, direct elections, election speeches, democracy and negotiations have become familiar buzz words to both local workers and employers.

Overseas customers and labour rights

Many major foreign customers, in large part out of a desire to avoid bad publicity, have been demanding that private enterprises in China protect labour rights or face losing purchase orders. According to a senior manager at Yajia Industrial:

"The control that these foreign customers have over us is similar to that of parents over children. Even government officials have found it impossible to conduct such thorough assessments of labour rights and conditions within the plants. It could be argued that these foreign customers force us to obey the laws in China and to be aware of international labour practices… At first we thought this was an internal affair and that there was no need for our customers’ involvement. However, they explained that it was a common international practice. They said that if they marketed any products from enterprises that engaged in labour rights violations, their brand’s image could be damaged."

Beginning in 1999, the number of assessments of labour conditions made by major customers from overseas has gradually increased. Assessments were mainly focused on the employment of illegal workers, compulsory overtime, deduction or denial of salary payments, accident insurance and pension schemes as well as health and safety. Even before China joined the World Trade Organization (WTO) in 2001, Yajia signed agreements allowing their major customers to carry out random assessments of working conditions.

Mr. Wang is a senior manger at Yajia. He described a recent tense episode following a surprise inspection by a major US snow boot retailer during which the inspectors demanded private meetings with 20 randomly selected workers. The inspectors apparently asked detailed questions on salary deductions, hazardous working conditions and even sexual harassment. The team followed up with an examination of over 1,000 employment records to make sure that the company wasn’t employing minors. According to Mr. Wang “the company management was very tense while the evaluation was happening.”

Our reporter has seen signed agreements between Yajia and their customers – the brands – regarding labour rights assessments. There are over 100 clauses in the agreement which cover everything from the age of the workers, working hours, overtime compensation, safety in working areas, personal health care, and even a stipulation that "there must be more than one bottle of liquid soap available in the washroom at all times."

Mr. Mo Bingfa is chairman of the General Trade Union in Yuhang Region. Mo explained that “labour rights audits have contributed to creating an environment for direct election trial runs.” In the new form of trade unions, both chairperson and the committee members are selected by direct election. Senior All China Confederation of Trade Unions (ACFTU) official Cao Songhua, a committee member of the Zhejiang Trade Union Federation and vice secretary-general of Zhejiang Private Enterprise Trade Union Federation agreed:

"The formation of trade unions is not simply required by China’s laws. After China joined the WTO, many far-sighted enterprises sensed the necessity of improving labour rights protection and having a well-established trade union."

Domestic and Foreign Pressure

Mo Bingfo told us that Chinese enterprises were subject to two basic pressures regarding union elections: firstly from foreign companies, especially given new international regulations related to membership of the World Trade Organisation; and secondly from domestic regulations. Once an enterprise has grown to a certain size, it has to meet relevant legal requirements.

Today, there are more than 310 enterprises in the Yuhang Region that have implemented direct elections most of which are in privately-owned enterprises. The General Trade Union of the Yuhang region expects that direct elections will extend to all enterprises in the entire region over the next few years. Given the state of working conditions and labour standards in existence just four to five years ago, these are extraordinary developments.

Four years ago, many enterprises in the region did not have their own trade unions. Even if there were trade unions in some enterprises, many of these were not functional. Some workers complained to the ACFTU regional office that their local trade unions had never effectively represented them in dealings with management. Trade union committee members were either controlled by the employers or friends of the employers. The regional ACFTU concluded that that the problem originated from the election system itself, as the old election system was no longer applicable to the new economic situation in which private enterprises had become a dominant force in the region. In 1999, the General Trade Union of the Yuhang Region carried out a trial election at Tangxi Motor Transportation Company in which the chairman of the trade union was directly elected.

The trial run went reasonably well and many workers reported that the new trade union was more responsible than it had been previously. Yang Mailing owns the Tangxi Motor Transportation Company:

"I had never imagined that the new chairman of the trade union could be so powerful. Today, if employees have any requests for the company, they will first report to the trade union. In fact there are fewer conflicts than before and it has actually made life easier for me.”

Based on the success at Tangxi, a bold plan was initiated. In 2000, the Yuhang Federation of Trade Unions and the Yuhang Organisation Department of the Chinese Communist Party issued a joint document to local government officials in which they argued for more direct elections.

Mr. Ying Zhaoping from the Yuhang Federation of Trade Unions stressed that:

“In order to make it a genuine direct election, it is required that nominees for the positions of chairperson and vice chairperson give speeches and engage in a public debate. Anyone who refuses to make a speech and take part in debate is disqualified from the election.”

Xia Liren from Huixin Metalworks Company was elected chairman of the trade union via a direct election. He recalled:

"I only had a few words in my speech. I told everyone that we were brothers and that I would speak out and solve collective problems if I was elected chairman. I asked people to give me their support if they believed me, and that they could subsequently remove me from office if I did not meet their expectations."

New Responsibilities

Xia Liren’s first task was to persuade the employer of the company to sign up to pension schemes and accident insurance. “I spoke to the general manager Lin Xinxuan and told him that the security provided by accident insurance far outweighed the initial outlay of about 10,000 yuan.” It worked. Next, Xia got the employer to sign contracts with the workers.

Back at Yajia Industrial, fresh criteria for salary increases were agreed to after lengthy negotiations between the newly elected committee and management. The result was a performance-based deal: Once company profits hit an agreed benchmark, every one percent further increase in profits would mean a 15% increase in monthly salary for the workers.

In 2002, the Yuhang Federation of Trade Unions introduced further guidelines governing the performance of individual chairpersons. According to these local guidelines, an elected chairperson must present a working report plus a report of his or her individual performance to a meeting of factory level trade union representatives. Representatives then carry out an appraisal in private. If the majority of the appraisal results are negative, the chairperson can be recalled. Xia Liren has already faced one such appraisal:

"Without giving any prior notice representatives from the [local] trade union federation arrived at the factory to organise an appraisal. I was very surprised. As I had completed several productive tasks for the workers, I thought I’d be ok. "

The result ended with 84% of evaluations being positive, 8% negative, and 8% rating him as average.

Employers get the message

Local employers quickly began to realise that while trade unions protect labour rights, they could also provide a buffer between the two parties when conflicts arose. Lin Xinxuan, General Manager of Huixin Metalworks Company, gave one example from his factory where a worker physically attacked the production supervisor after learning that he was going to be discharged for theft. The worker was also able to use personal connections to get re-hired and continued to steal materials from the factory. Lin brought this up with the union and a representatives’ meeting was called. The representatives voted to discharge the worker. Other managers pointed to reduced labour turnover rates and staff stability as a result of more responsive trade unions.

Direct elections: “the future of Chinese trade unions”

Directly-elected trade union officers can restrict the employers’ ability to abuse power and the progress outlined above is not confined to the district of Yuhang. There are similar reports of at least 16 enterprises in the city of Ningbo – also in Zhejiang – with directly elected trade union officers. Other areas and provinces are launching pilots and according to Guo Wencai from the organising department of the ACFTU in Shenzhen, “direct elections are the future of Chinese trade unions.”

Original article (in Chinese) can be seen at: http://hzrb.hangzhou.com.cn/20030101/ca263446.htm