ACFTU and Trade Unions

Updates to collective bargaining and collective contracts: New laws - same deal?

Over the course of 2008, in the wake of the new Labour Contract law several provincial authorities issued new regulations on collective bargaining and related rights. IHLO outlines some of the most significant reforms below.

The new regulations are notable in several ways, most importantly because they continue to push forward the use and development of collective contracts by detailing and expanding their coverage and providing specified penalties for non compliance. Several also push the term bargaining while the remainder continue to use ‘consultation’.

The other significant issue is the range of ways the different regulations deal with the issue of ACFTU influence. Some rules offer opportunities for elected representatives to play an integral part in the bargaining process while most regulations place control firmly in the hands of the higher level ACFTU officials; effectively the regional or township branches. This removes the potential power and involvement of elected worker representatives and in some ways pushes companies towards establishing a union in order to carry out negotiations simply to comply with the law.

Whether the ACFTU will rise to their new responsibility and carry out effective and meaningful negotiations remains to be seen. As of now most collective contracts are ‘discussed’ in a boardroom by company managers and ACFTU officials both aiming for a ‘win-win’ situation whereby the union gets control of the workforce and the company gets the lowest possible costs. Once agreed most contracts are then applied across the board in all a company’s plants regardless of the situation or the desire from workers to introduce variable clauses. The example of Wal-Mart is a classic example of this attitude towards ‘negotiation’. Quotas must be met and targets ticked off.

But – and this is a big but – in the longer term these reforms could or should raise the standard of the contracts themselves and the process, building up the factors needed for an equal tripartite negotiation. Additionally the regulations for the most part allow for some ‘expert’ involvement and will also help the development of external ‘professional’ negotiators hired by the ACFTU as experts rather than Communist Party cadres. This is a practice increasingly being utilised by ACFTU branches faced with hardened opposition to union establishment. In and of itself it is an interesting development and a potentially crucial step towards separating grassroots unions or forward thinking ACFTU officials from the control of the Communist Party cadres.

The basic regulations

The 1992 Trade Union Law first authorised unions at the enterprise level to conclude collective contracts and the Labour Law (effective 1995) developed the system by adopting collective consultation as a key medium for settling disputes between employers and workers. Article 33 of the Labour Law states that workers have the right to conclude a collective contract "in an enterprise where the trade union has not yet been set up". The amended Trade Union Law of 2001 again strengthened the union's mandate in collective wage negotiations as do regulations issued in 2000 and 2001.

In May 2004, Provisions on Collective came into force which built upon previous regulations and call for more detail in the collective contracts as well as outline the procedures involved and the theoretical equality of both parties. A 2004 government "white paper" on employment further encourages the ACFTU to conclude collective contracts and the labour law permits collective consultation and contracts to be concluded between the ACFTU (or workers representatives) and the management.

The new Labour Contract Law (LCL) builds upon Labour law provisions on collective contracts and gives more details on the contents of labour contracts both individual and collective. It also states that “A collective contract shall be concluded by the labour union, on behalf of the enterprise’s employees, and the Employer. If the Employer does not yet have a labour union, it shall conclude the collective contract with a representative put forward by the workers under the guidance of the labour union at the next higher level.” In the draft law, worker representatives were allowed to negotiate but the final law brings the power to sign collective contracts firmly under the ‘guidance’ of the ACFTU. 

 “Specialised” collective contracts may also be concluded on areas such as OSH, female workers and wage adjustment mechanisms and regional or industrial contracts are also encouraged. As in previous legislation the standards contacted in the collective contract must not be lower than the legal standards. The new law does however state explicitly that if the employer breaches the contract, the union may, in accordance with the law, demand that the Employer assume liability and if a dispute arising from the performance of the collective contract is not resolved following consultations, the labour union may apply for arbitration and institute an action according to law. This goes further in promoting the idea that workplace union exist to serve worker’s interests.

Numbers

According to ACFTU statistics in October 2008, 1.091 million collective contracts were signed nationally involving 1.834 million enterprises and 140 million workers as compared to 862,000 in 2005/6. Regional and sectoral collective contracts had involved 1.053 million enterprises and 48.795 million workers. 376,000 special collective wage contracts had been signed all over the country, with 44.397 million workers involved; 536,000 special collective contracts for protecting women workers’ rights and interests had been concluded, with 33.502 million women workers involved. As of September 2008, 108 Wal-Mart outlets in China had all entered into the collective contracts.

Shortcomings: pieces of paper

The majority of contracts are still essentially formulaic repetitions of articles from the Chinese labour law and to reflect minimum legal requirements, and many cover too few areas of concern to be of much use to workers.  Collective bargaining remains severely handicapped by the non-existence of truly independent organisations on either side. Almost all contracts are drawn up by employers and simply reflect minimum legal requirements. Very often workers are offered no formal contract at all, especially migrants in export processing zones (EPZs). If they do sign a contract, they are rarely given a copy.

ACFTU officials have been quoted as opposing wage increases in order to avoid triggering other demands for similar deals.

Lack of ‘bargaining’ and worker empowerment

The subordinate position of the ACFTU to the government and the Party means that it will often work with the employer in drawing up collective agreements which simply mirror the labour law. There is very little actual bargaining and in fact the Chinese term employed is usually "collective consultation" rather than "collective bargaining" although the new Labour Contract Law appears to favour the term bargaining over consultation.

Despite greater opportunities for collective bargaining and the obvious need for protection for workers - including migrants - there has been little progress towards genuine collective bargaining. Instead the ACFTU continues to "represent" the workers to management and government structures, without seeing the need to discuss, inform, listen to or be guided by the workers who still have little say in policy. In the private sector, workers denied the ability to organise independently where ACFTU branches do not exist, face almost insurmountable obstacles to collective bargaining and representation.

New Developments at the provincial level

However provincial regulations issued in 2008 however should help develop more detailed contracts and a more genuine form of negotiation process. Several cities and provinces issued regulations which deal either with the implementation of existing labour legislation or give more details on collective contract procedures and contents.

Tianjin: Focus on wages
In October new collective bargaining regulations were issued in the Tianjin Municipality which state that companies in Tianjin are required to participate in annual collective wage negotiations with enterprise level unions  or with employee representatives if there is no union. Specific penalties are also given for non compliance. The rate of wage increase agreed must follow local guidelines – not surprisingly. However what is notable is that if a company fails to engage in such wage discussions or fails to follow guidelines then the local labour bureau has the ability to withdraw or call for the withdrawal of preferential tax treatment. Relevant wage information is required to be given to a party within five days should they request it.

Hebei: Allows for democratic election of worker representatives
On 1 January 2008 Hebei province implemented new Regulations on Enterprise Collective Consultations between Labour and Management which state that the consultation process should give equal weight to the interests of the enterprise and the workers. According to one commentary the regulations explicitly state that where there is no trade union in the enterprise, the workers' representatives in the negotiations should be "democratically elected by a majority of employees." Where there is a union, representatives should be recommended (tuijian) by the union, and scrutinised by the workers' congress. The new regulations continue to use somewhat vague language regarding the legal duty to engage in open and equal negotiations.

Shanghai: Allows for higher level ACFTU to guide the process
In a slightly different approach – which stresses the role of the state run union - the Shanghai Collective Contract Rules (the "Shanghai Rules") were adopted in August 2007 and came into effect in January 2008.  The Rules govern three major areas: 1) collective bargaining; 2) collective contracts; and 3) related dispute resolution. They state that collective bargaining shall accomplish the formulation, amendment or adoption of company policies, rules or major decisions directly affecting the following employee interests: (i) salary and wage; (ii) working time; (iii) leave and holidays; (iv) occupational safety and hygiene; (v) social insurance and benefits; (vi) employee training; (vii) labour discipline; (viii) production quotas; and (ix) other matters as required by law. The rules stipulate the composition of bargaining teams and provide for the engagement of third party professionals.

Bargaining is made mandatory in cases where (i) a company must lay off more than 20 employees or more than 10 percent of its employees; (ii) a labour dispute has resulted in a mass strike or petition to the authorities; or (iii) something in the production process that has the potential to cause major accidents or work hazards has been detected. They also set guidelines for regional or industry-specific union organisations to engage in collective bargaining with companies in construction or food-service businesses for the conclusion of regional or industry-specific collective contracts.

In common with current practice they also call for the establishment and involvement of a tripartite system for the coordination and resolution of employment relationships and labour disputes and give the upper-level unions the discretionary power to oversee the collective bargaining activities of companies and the right to intervene in a dispute or bring a lawsuit. While not particularly groundbreaking in its actual content the rules are the first regional piece of legislation dealing specifically with contracts.

Shenzhen: Encouraging harmony and the status of the ACFTU
In 2008 the Shenzhen Special Economic Zone undertook a major updating of its Implementation Regulations for the Trade Union Law. In November 2008, authorities in Shenzhen also issued regulations on the Promotion of Harmonious Labour Relations. These rules are of limited application as they only cover the Shenzhen Special Economic Zone and not the neighbouring areas where the majority of factories are based. However they are significant in that they promote the conclusion of collective contracts in wage issues, working hours etc as well as other areas including “major matters” which could include company decisions such as restructuring.

The rules allow for upper-level trade unions to represent enterprise unions in the negotiations and also state that enterprise level unions can appoint outside parties to act on their behalf thus further strengthening the concept of professional negotiators while at the same time firmly entrenching the influence of the higher levels ACFTU over any grassroots unions. The rules also enforce the coordination and guidance of the upper level unions over the lower enterprise unions.

According to a mainland media analysis the regulations aim to “further balance the interests of both employers and employees and to build harmonious and stable labor relations” and have eight main areas as quoted below. Of these the most notable point is the 30 day cooling of period for negotiations before industrial action can be taken:

“First, they explicitly prescribe the rights and obligations of employers and employees. Next, the calculation base for overtime payment should be at least CNY1, 000, the minimum wage standard that the municipal government has mandated. Third, employees will have at least one day's break in a week.  Fourth, economic punishments by employers are permitted but limited. Fifth, employers who have broken labor laws and regulations will be included in the credit blacklist.  Sixth, in the case of insolvency assets in receivership should be first used for the medical care costs of injured employees.  Seventh, a cooling-off period of 30 days is set — comparable to regulations in the United States and Hong Kong.  Finally, lawyers are not allowed to deputize labor dispute cases via risk agencies”. [ http://www.chinacsr.com/en/2008/09/26/3225-shenzhen-approves-regulations-on-harmonious-labor-relations]

-----

For more details on Shenzhen trade union reforms see Shenzhen's Implementing Regulations for the Trade Union Law and here The Motives behind revising the Implementing Regulations for the Trade Union Law

For a useful discussion of collective bargaining in China see: “Imagining what is possible, tempered by what is likely within "Chinese conditions".” And the original piece at http://www.law.duke.edu/shell/cite.pl?16+Duke+J.+Comp.+&+Int'l+L.+35#FA0#FA0 or from the Duke Journal.

IHLO

February 2009