ACFTU and Trade Unions

Round up of recent ACFTU activities: March-May 2008

1. Company negotiations

Commit, a Chinese TD-SCDMA chip manufacturer facing bankruptcy has announced plans to stop business operations and pay e defaulted salaries and travel expenses to its employees after meeting with its enterprise level ACFTU branch.
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The board of directors of Commit is said to have held a meeting on 5 May which passed the resolution to stop the company's operations. The board also held another meeting later in the day with representatives of the company's ACFTU branch, but both parties have refused to disclose the details of the meeting.

According to Sohu.com, Commit has defaulted on three months' salary to more than 200 employees. Including the travel expenses it failed to pay them, the company owed up to RMB20 million to its employees.

Established in February 2002, Commit Incorporated consists of 17 industrial enterprises, including China Putian Corporation, China Academy of Telecommunications Technology, Texas Instruments (China), Nokia (China) Investment Co. Limited, LG Electronics, Inc., and Hyper Market International Limited.

Sources: CSRChina, 7 May 2008

2. Wage increases

According to the Shanghai Municipal ACFTU, the average salary in Shanghai increased 11 percent on average annually from 2002 to 2006 after they released a five year study on local wages.

Workers in the service industry saw their wages increase four fold during those five years, while wages in the financial industry increased 65 percent.

In Guangdong in early May it was announced that Guangdong would start a regular salary increase program raising wages by 12 percent this year.  The program follows a similar plan in Shanghai where employers were this year called upon to lift wages between 5% and 16%

According to Xinhua, local authorities plan to create 1.2 million new jobs and improve equality for migrant workers in the face on continuing labour shortages in the region. The provincial government said in an annual labor and security development action plan that half of the jobs will be newly created and it aimed to help 600,000 unemployed people find jobs, offering training to 40,000 people on how to start new businesses. It also stated that it is aiming to extend coverage of social security provisions to migrant workers. Migrants in Guangdong they claimed have the highest number covered by such provisions compared to the rest of the country. In 2007, some 10.55 million resident workers and 13.5 million migrant workers in the province were covered by work and medical insurance. The figure accounted for one-third of the nation's total. As is common in China the report also set out quotas for 2008 – “the number of migrant workers covered by work insurance will be 13.3 million this year, and the number covered by medical insurance will be 13.6 million”.

The goal locally is also to ensure that around 95 percent of all workers in Guangdong sign labor contracts with their employers.

Zhang Mingqi, vice-chairman of the ACFTU stated in March that it has been working with government departments on a “mechanism to ensure stable pay rises for workers so they can benefit from the country's economic boom.”

The Chinese Academy of Social Sciences recently reported  – according to Xinhua - that they had found that “years of paying low wages had helped Chinese firms boost their profits and increase their competitiveness. The report said the ratio of overall labor costs to GDP fell to 41.4 percent in 2005, from 53.4 percent in 1990”

Indeed a survey quoted by the ACFTU reported that over 26 percent of China's workers had not received a pay rise in the past five years, despite the economy growing at an averaged 10.6 percent annually.

"We are trying to bring pay rises in line with economic growth," Zhang told China Daily: "Trade unions should speak up for workers and protect their rights."

China's inflation surged to a 12-year high of 8.7 in April 2008 while food costs rose 22.1% in April from a 2007.

According to official statements, in 2007, half of China's provinces, municipalities and autonomous regions increased their minimum wage levels payments by an average of 10 percent. Li Shouzheng, a department director with the ACFTU, said: "We are pushing the government and employers to introduce regular pay rises, especially for the lowest earners."

 Zhang Mingqi, also said the number of disputes over contract violations, workplace injuries and work-related illness, low pay and long hours, is rising at about 20 percent a year; "As members of trade unions, workers are more aware of their rights."

Sources: HONG KONG (MarketWatch), Xinhua, China Daily, Shanghai Daily 5 May 2008

IHLO
May 2008