ACFTU and Trade Unions

Collective Contracts, Consultation and Bargaining

“Imagining what is possible, tempered by what is likely within "Chinese conditions".”

[NOTE 1]

Given the increasing discussion of  and interest in collective bargaining in China, an excellent piece in the Duke Journal of Comparative and International Law  by  Professor Ronald Brown from the University of Hawaii Law School, a former lecturer at Qinghua University in 2006 is well worth revisiting.

Collective bargaining – or consultation – and the possibility for progress for worker and trade union rights is of increasing interest for many trade unions outside China including those who have been developing training materials and seminars on the issue with the ACFTU. The interest also coincides with extensive  ILO training on collective bargaining for the ACFTU as well as various national projects and union sponsored projects.

That there have been some good regulations promoting collective consultation is undeniable. But opinion is divided on several areas including the importance of the new labour contract law to the emergence of real collective negotiations.

Firstly there is disagreement about whether or not the new labour Contract law serves to promote collective contracts or individual contracts instead – thus hindering the emergence of a collective consciousness and bargaining experience.  Some believe the law and other reforms are over-emphasizing individual contracts and individual means of redress and failing to encourage collective action while others see the new law as an opportunity for the ACFTU to push for collective contracts.

Secondly it is generally assumed that the promotion and signing of collective contracts is being used by the authorities, including the ACFTU, simply as a means of resolving workplace issues in an easier and more streamlined way than previously. The ideal result is that once agreed, a collective contract can be used to fit everyone with no emphasis on worker participation or the process itself.  Many regulations stressing the role of the ACFTU further encourage this by reducing still more the involvement of worker representatives.

Thirdly, opinion is divided between those who see real progress in the contract terms and conditions agreed and those who feel that collective contracts remain pieces of paper agreed upon by officials and company managers containing the bare minimum of compliance with labour law and without the knowledge of workers let alone their participation.

Finally a matter of real concern to the genuine development of collective contracts is the fact that while collective contracts are promoted by the authorities worker led negotiations are at the same time suppressed by those same authorities as the government attempts to diffuse and often criminalize the very notion of collective action by workers. For example large collective lawsuits and class action cases are not welcomed by the authorities and evidence suggests that courts and lawyers alike have been warned against accepting mass cases.

Focus on the Role of the ACFTU and barriers to real union representation

The extracts focus on the role of the ACFTU in particular. They discuss the difficulty the ACFTU faces in conducting independent tripartite negotiations given their status as quasi-government officials and the fact that many officials are at the same time also company management despite numerous rules to the contrary. At the very least many officials are also Party officials. The paper also looks at other barriers for current negotiations including the power of factory rules over labour regulations.

The dual nature of the ACFTU is also discussed - this duality is of increasing importance as the government pushes the ACFTU to focus on quelling potential worker unrest in the current economic crisis a trend which may negate many of the limited gains the more progressive worker-focused reforms may have had.

Taking a purposefully optimistic stance, the paper discusses ways the ACFTU could expand the role of genuine negotiations and bargaining and expand the scope of issues covered in negotiations.

The two main studies – both worth reading - the papers refers to are
1. Simon Clarke, Chang-Hee Lee and Qi Li, Collective Consultation and Industrial Relations in China, British Journal of Industrial Relations, June 2004, at 239-40 [hereinafter Clarke] and
2. Taylor et al. , INDUSTRIAL RELATIONS IN CHINA 8 (2004) [hereinafter TAYLOR]

The piece below contains extracts from the paper which is available electronically from http://www.law.duke.edu/shell/cite.pl?16+Duke+J.+Comp.+&+Int'l+L.+35#FA0#FA0 or from the Duke Journal.

CHINA'S COLLECTIVE CONTRACT PROVISIONS: CAN
COLLECTIVE NEGOTIATIONS EMBODY COLLECTIVE BARGAINING?

RONALD C. BROWN* [NOTE 1]

The authors [Clarke et al] feel there will be no change "until the enterprise trade union develops into an organization that, in its structure and practice, disengages from management to represent the interests of its members."120 Another recent study concludes on a similar note:

The system of collective contracts, theoretically designed by the superior authorities as an effective mechanism to help adjust labour relations, has undergone major revision when it comes to be applied in practice. Even though the collective contract could be concluded between the management and the union in many enterprises, the whole process of consultation is little more than administrative compliance with quotas assigned from above.121 [Taylor et al]

Next, with regard to content of the collective contracts, the Clarke study concludes the following:

Employers remain reluctant to incorporate any substantive detail in the collective contract, so that the contract adds little or nothing to the existing legal regulation of the terms and conditions and employment. At best, the collective contract provides a means of reminding employers of their legal obligations and monitoring the implementation of labour legislation in the workplace.122

In its analysis of the content of collective contracts of SOEs, the Chang study observes that there were three categories of contract clauses in the agreements: the first deals with principles and formalities, such as who are the parties, etc.; the second contains the clauses to be implemented by the parties; the third category deals with commitments of the parties and duration.123 The study shows the second category of implementation clauses took up an average of about 70 percent of the total number of clauses. Further examination reveals over 60 percent of these clauses were defined by the labor law (usually a duplication), 20 to 30 percent were made in reference to the law (e.g., time schedule for implementing certain required female medical examinations), and about 10 percent of the clauses, on average, dealt with subjects relating to improvement of the employees' benefits.124

Interestingly, the Clarke study observes that wage negotiations were often conducted separately from the collective contract negotiations, with the negotiated wages reflecting the minimum wages at the enterprise. Likely, this bifurcated approach may be because wages are often revised annually, whereas a collective contract may stay in effect for two or three years.125

Lastly, the controversial role of the trade union has drawn much attention in recent studies. The primary hindrance is continually identified as the employees not having a real advocate for their interests under the current system in China. It appears to some that "the predominant functions of the trade union at the workplace still tend to be management functions."126 Clarke's study concluded that the following was the principal function of the trade union:

[To] "take economic development as its central task," encouraging workers to increase productivity, enforcing labor discipline and conducting extensive propaganda on behalf of management. 'Protecting the rights and interests of employees' is at best interpreted as monitoring managerial practice to ensure that it conforms to all the relevant laws and regulations, and implementing the social and welfare policy of the enterprise -- visiting sick workers, dealing with personal problems, distributing benefits, organizing picnics and arranging celebrations.127

The concept of the trade union being something other than "just a branch of management" and of representing and protecting employee interests "in opposition to those of the employer is something unfamiliar, if not entirely alien, to [the union's] traditional practice and to [its] traditional conception of [that] role."128

Part of the explanation is the identity of the trade union officials. A typical official at the enterprise level has been described as follows:
Trade union officers are drawn largely from the ranks of management. A full-time trade union president is paid by the employer and normally enjoys the status (and salary) of a deputy general director of the company; the personal careers of union leaders revolve around the positions of party cadre, union leader and enterprise manager; they are usually members of the Board of Directors and/or the Supervisory Board of the company; and they (rightly) regard themselves as members of the senior management team. [*pg 56] Whether or not there is a formal election of the trade union chair, the latter is normally appointed by management.129

Clarke's study found many examples where the "real parties" in interest were obfuscated; it illustrated the often lock-step harmony of interests:

In some enterprises senior members of management participated in the negotiations on the trade union side. In one enterprise the finance director was a member of the trade union in the consultation committee; in another a senior financial manager participated on the trade union side in an advisory capacity. At the same time, the trade union president, as a member of the Board of Directors or Supervisory Board, usually participates in the formulation of management's response to the trade union proposals for the collective contract.130

Left out of the equation is whether the employees feel their interests are being properly negotiated and protected; although theoretically, and under the law, they can refuse to ratify the proposed final agreement.131

In prior years, the CCP would have played a more direct and active role to ensure the employer and union worked "harmoniously," but in recent years the CCP works more indirectly, usually through the trade union. In that respect, the above study shows that "at least five of the 12 trade union presidents also held the post of party secretary or deputy party secretary."132

This ambiguity of who is the employer and who is the union (though not necessarily who is the boss) is further complicated by China's legacy of SOE's being units of larger integrated bureaucracies in the planned economy, the periodic use of Workers' Congresses, and the absence of unions in many enterprises across China. The traditional SOEs utilized "employers" and trade unions as agents for controlling bureaucratic entities of an economic plan. With economic reforms and new laws, legal responsibility is increasingly fixed on the "employing unit" -- the employer. However, at the enterprise level, there is little meaningful influence to prevent the union and the employer from "wearing each other's hats" and in the process basically becoming the same voice.

IV. "IMAGINING" CHANGE: POSSIBILITIES FOR LABOR REFORM [conclusions]

An objective examination of the 2004 Provisions may reveal to some the possibility that China's collective negotiations could, with additional labor reforms, take on essential characteristics of collective bargaining, as reflected in ILO standards and U.S. experience. While actual implementation is yet to be seen, one can be hopeful, within reason, that the steady evolvement in recent years' labor legislation can be matched by labor reforms in practice. Imagining what is possible, tempered by what is likely within "Chinese conditions," can move forward the possibilities of real labor reform. It is within that [*pg 70] spirit that the following possibilities for labor reform in China are suggested.

A. Defining the Parties and Adjusting the Role of the Union

Insisting on an "arm's length" relationship between the employer and the union in representing entrepreneurial and employee welfare interests is a beginning and adheres more closely to the ILO labor standards. Presently, the ACFTU is set up in labor relations to be all things to all people. It is possible, without systemic changes in China's political-legal system, to "de-integrate" the employer and union in their "symbiotic" relationship and still allow the union to have a dual purpose, similar perhaps to a Japanese-style, functioning to represent the employees while at the same time protecting the economic best interests of the enterprise. Arguably, it can even indirectly serve a third purpose, the economic development of the country and its social stability. Some years ago, the CCP pulled back from its direct intervention in enterprise management activities and perhaps that policy change could be a model for labor reform in collective negotiations. But clearly under international standards, it should be the business of the employer, not the union, to make the case for its own interests. Details of separating trade union representatives and management could be worked out and consideration might be given to the NLRA's 8(a)(2) unfair labor practice limiting employer domination and interference with the labor union (or in China's case, perhaps also visa-versa).197

The role of the Chinese union can be slightly adjusted under existing policies. Because China primarily uses "enterprise unionism" (bargaining at the employer level), as has been mentioned, it has become enmeshed with the employer and management interests. One way to intervene in this "sweetheart" relationship is to require a regional (or "outside") union to participate or perhaps have a leading role in the local negotiations, as the "professional representative" as is provided for in the 2004 Provisions. Current Chinese law now permits the ACFTU to have national or regional unions and to provide assistance to local unions. This practice is commonplace in the United States, and it allows for more independence in the negotiation. Additionally, this "outside" union representative can bring into the negotiation examples of "real" model contracts that show numerous negotiated contractual supplements to statutory labor rights. Pro-[*pg 71] fessional representatives of the union may also more easily propose limitations on employer rules and regulations, which under the labor contract provisions can be the basis for employee discipline and discharge.198 Finally, perhaps some creatively delegated responsibilities and adherence to established international standards could be devised to guard the respective interests of the parties, especially those of the employees, to provide against mixed loyalties and conflicts of interests by the negotiating parties.

An additional method of achieving increased autonomy of the union during collective negotiations is to place and enforce a stronger "duty of fair representation" on the union, so that the union will have to be accountable to represent its own constituency. Presently, a duty of fair representation by the union already exists to a limited degree, as the union bears the responsibilities to solicit input from employees' proposals, to report on the progress of discussions, and then to seek ratification by the employees of the negotiated contract. But there seems to be no effective consequence for the union's refusing or arbitrarily disregarding employee input on contract provisions or of not fully or fairly representing the employees' interests in labor rights disputes. Moreover, at the present time, without a stronger duty of fair representation, there seems little adverse consequence to the union representatives for exchanging confidential negotiating positions with the employer, unless that will indicate "bad faith" negotiating. Placing an affirmative obligation on the union and creating a legal cause of action by which the union's action or inaction could be challenged by employees (not just through internal union processes) would encourage union responsibility to keep employees' rights and interests in mind. Internal union review presently is a mechanism in Article 55 of the Trade Union Law, which states: "[S]taff members to trade unions who, in violation of this Law, damage employees' or trade union interests, shall be ordered to make corrections or be imposed sanction by trade unions at the same levels or higher trade unions."199

The weakness is the absence of a clear definition of what "damages" employees' interests; nor is there a clear consequence for these types of violations. As a reference, unions' constitutions and internal processes in the United States were determined to be inadequate by themselves to address such employee concerns. As a result, the [*pg 72] NLRB and the courts were made guardians of the employees' treatment by the union in fair representation cases.

Another adjustment that can be made from existing law and practice is for the union to expand its current use of industrial unions. This provides protection to untold numbers of heretofore unrepresented employees in need of protection of their labor rights and the ACFTU has already had successes in its use. And, even where the union is successful, employers can still benefit by avoiding competitive disadvantages from non-covered employers, as all in the industry would be subject to the same labor provisions, though perhaps with some local market variances.

B. Adjusting the Scope and Content of Negotiated Contracts

First, because collective wage negotiations reportedly are often conducted independently from collective negotiations, a natural adjustment would be to combine the negotiations and put into the negotiated agreement a "re-opener" clause on wages after one year, but to keep the remainder of the collective contract in full force for its entire duration. Such a provision is common in the United States. This comprehensive agreement brings economic issues back to the negotiating table where there can be part of a larger discussion on payment of employee welfare and benefit provisions. The past practice in China of artificially removing wages and related items undercuts the emphasis of the new Provisions, which have a very broad scope for economic and non-economic topics for negotiation. But without the subject of wages, the negotiation on economic issues is diminished.

Related to the negotiation process and the statutorily expanded number of negotiation topics, the union must aim to achieve contractual labor rights above and supplementary to statutory labor rights. It would seem that is part of the CCP's interest in having the ACFTU promoting social stability, especially among society's potentially volatile employee force. By the same token, the ACFTU can better serve its role of improving employment rights and benefits and channeling the conflicts into dispute resolution processes as prescribed by the Provisions. The union of course, in its "dual purpose" role, can reasonably take into consideration the market condition of the employer in formulating realistic negotiating proposals.

Lastly and as briefly mentioned earlier, there seems to be, under the labor contract provisions of the Labor Law, an unnoticed and largely unlimited ability for employers in the form of "employer rules" to write into labor contracts innumerable grounds for legal [*pg 73] termination. Employer rules and regulations are authorized by Articles 4 and 19 of the 1994 Labor Law, and they are apparently limited only in that they not be unlawful. Nevertheless, they are rules by which employees can be "lawfully" disciplined or terminated under their labor contracts. Article 25(2) of the Labor Law states that, where employees seriously violate the employer's labor discipline (rules and regulations), they may be terminated.200 There is a legal requirement that these rules be placed in a labor contract; 201 therefore, it is interesting that studies did not find contract clauses in the content of the collective contracts that would place contractual limitations on such seemingly unlimited employer power.

An example of a case involving employer rules was where an employee's termination for quarreling with her supervisor was upheld in arbitration because it violated an employer rule that an employee should never "publicly contradict a supervisor."202 In the United States, while employers may impose certain rules of conduct on employees, the unions always address their concerns over these rules through other provisions in the collective bargaining agreement, such as a "good cause" limitation or a requirement of "progressive discipline."

...

CONCLUSION

In conclusion, there are benefits to an analysis that examines all the pieces of a particular law and practice. Each can be examined piece-meal and/or as a whole. And, one can surely anticipate that explanations and reasons will be forthcoming on each proposal, "why this won't work," "why this is misunderstood," and "why this is impracticable."[*pg 77]

But just imagine if the labor reformers in China can look past "things as they are" and instead focus on "things that never were" and say, "why not?" Perhaps the use of the collective negotiations under the 2004 Provisions can aid in that process and provide the forum that channels the growing collective demands of workers for improved labor rights and benefits.

http://www.law.duke.edu/shell/cite.pl?16+Duke+J.+Comp.+&+Int'l+L.+35

NOTE 1: Director, Center for Chinese Studies, University of Hawaii; 2004-2005 Fulbright Distinguished Lecturer, Peking University Law School and Tsinghua University Law School.by   Cited: 16 Duke J. of Comp. & Int'l L. 35

[*pg 35]