Law

Guangzhou Government Passed New Law to Institutionalise Collective Negotiation and Mediate Strikes under the Tripartite Mechanism

A year after the abortion of the legislation on collective wage negotiation in Guangdong province in 2010, the People’s Congress of Guangzhou city, the capital city of Guangdong province passed a new law on tripartite negotiation on 22 September 2011. In reaction to the strike waves triggered by the Honda strike and workers’ demand for wage increase and reform of the trade union, the provincial government had attempted to legislate on shopfloor collective wage negotiation in August last year. Last year’s draft law, called Ordinance on Democratic Management of Enterprises of Guangdong Province included a chapter specifically about collective wage negotiation which was opened for public consultation in August 2010. It was turned down by high profile objection from the international trade associations especially those from Hong Kong. Suspended in 2010 was also the legislation attempt of the Shenzhen government to pass the Ordinance of Collective Wage Negotiation of Shenzhen Municipality. Again due to employers’ objection, the Shenzhen Ordinance was revised after the second reading last year and is now under revision pending the third reading.

The ACFTU has tried to move things forward as the FTU of Guangzhou city submitted a draft law on collective negotiation to the municipal People’s Congress for public consultation in March this year. The draft of the Guangzhou FTU, known as the Ordinance on Collective Negotiation of Labour Relation of Guangzhou City广州市劳动关系集体协商条例草案稿[NOTE1] (referred as Guangzhou FTU’s draft in the below) attempts to “establish a comprehensive mechanism of bilateral collective negotiation” by proposing the operational structures to enterprise, regional and industrial collective negotiation under a regular Tripartite Conference system. The draft ordinance however was revised largely and the name was changed to become Regulation on Tripartite Negotiation of Labour Relation of Guangzhou City广州市劳动关系三方协商规定[NOTE2] (known as Regulation in the below) in the second reading in June. The revised draft on tripartite negotiation was passed by the People’s Congress of Guangzhou city on 22 September 2011. The original proposal of the FTU to legislate on negotiation at both the tripartite level and the shopfloor level (bilateral negotiation as known in the FTU’s draft) was halved as the new Regulation governs only the tripartite mechanisms and not shopfloor collective negotiation. While the tripartite mechanism has been set up already at the city level in Guangdong province, the Regulation seeks to extend the establishment to the district, county and street level. On shopfloor negotiation, the Regulation only encourages not mandating collective negotiations stating that workers and their employer, an industrial, regional trade union and the counterpart trade associations “can” commence collective negotiation (Article 13, Regulation), a mild position compared to that of the FTU in the draft it proposed in March. Legislation on shopfloor negotiation in Guangzhou city is still a blank page.

Guangzhou FTU’s Proposal on Collective Negotiation
The proposal of Guangzhou FTU is ambitious in framing the tripartite mechanism to support the institutionalisation of shopfloor collective negotiation at enterprise, regional and industrial level which up to now took place as ad hoc practices resulted as a consequence from the wild cat strikes, or administrative pressure from top-down dependent largely on the good will of the employers. Although industrial and regional negotiation has been recognized in the debates of the ACFTU as a major vehicle to set the floor of remuneration and productivity standard for enterprise level negotiation, they are under-developed by the absence of trade associations that have a real mandate and representation over the member companies. The FTU’s draft attempts to institutionalize the composition of the employers’ delegation and the procedure in a wage negotiation, attempting to fill in the missing link especially in the industrial and regional negotiation. At the Tripartite Conference, the employers shall be represented by the China Enterprise Confederation or a joint employers’ delegation “elected and nominated democratically” amongst the ACFIC (All China Federation of Industry and Commerce), the trade or employers’ organisations of the same industry (Article 7, Guangzhou FTU’s draft). In industrial and regional wage negotiation, the FTU’s draft seeks to strengthen the mandate of the negotiated agreement under a regulated procedure. Under the proposed structure, the member companies of the employers’ organizations, presumably having a presence in the tripartite conference, can take part in the industrial negotiation related to their business represented by the appointed delegates. In a regional negotiation, companies from the same region can take part in it after seeking the approval of the workers’ (representatives) assembly at their own enterprise (Article 19, Guangzhou FTU’s draft)[NOTE3]. An industrial collective agreement becomes effective with a mandate to cover the member companies of the participating trade and employers’ organisations; whereas a regional collective agreement becomes effective to cover all the participating companies when two-third of them has secured the approval of their workers in the workers’ (representatives) assembly (Article 34, Guangzhou FTU’s draft).

At the enterprise level, the Guangzhou FTU attempts to strengthen the role of the trade union by institutionalising a wage adjustment mechanism mandated to commence collective wage negotiation under two new types of situations: firstly, during the economic upturn or downturn of the company, or when the economy is adversely hit by inflation or a global financial crisis (Article 43); secondly, when a strike or an industrial action breaks out in an enterprise.

The major difference between the Guangzhou FTU’s proposal and the two drafts on collective wage negotiation of last year’s, ie the draft of the Democratic Management Ordinance of Guangdong Province and the Shenzhen Ordinance on Collective Wage Negotiation, lies firstly in the right to initiate a collective negotiation with the employer. It was proposed as a right not exclusive to the trade union but open to workers in the suspended draft of the Shenzhen Ordinance and that of the province of last year which allowed respectively one-fifth and one-third of the workforce of an enterprise to demand the trade union to call the employer for a collective negotiation. Regarded positively in general in the public consultation last year as providing space to bottom up initiation by workers, a similar provision is not found in Guangzhou FTU’s proposal. In the FTU’s draft, the right to initiate collective negotiation with the employer is restored exclusively to the trade union. Where a trade union has not been formed, the supervisory trade union shall step in to facilitate the election of workers’ representatives with the approval of more than half of the workforce to take part in the negotiation (Article 22, Guangzhou FTU’s draft)[NOTE4]

The FTU’s draft is aimed to recuperate workers’ industrial actions and regularize labour relations in a comprehensive structure of collective negotiation under the institutional leadership of the trade union, which serves also the purpose of pressuring the trade union to pursue its internal reform. Despite that, the reality of actual shopfloor negotiations between workers and employers are far from organized, nor are they effectively represented by the official, institutional organizations from both sides. To be more effective in dealing with the outbreak of the informal negotiations and strikes of the wild cats, a tripartite mediation system was passed by the municipal People’s Congress this September, out of the pragmatic and urgent need to cope with the spontaneous conditions on the ground.

The Newly Passed Ordinance on Tripartite Negotiation in Guangzhou City
Building on the municipal tripartite mechanism already, the new Regulation expands its construction and substantiate its work by giving it a role in setting wages at the macro level. The Tripartite Conference is allowed to make recommendations on the wage guidelines to the government, which used to be the sole responsibility of the Ministry of Human Resources and Social Security (Article Twelve, Regulation). The ministry has to take reference of the recommendations of the Tripartite Conference before determining the yearly incremental rate and the wage guidelines, an index which shopfloor negotiation of wages should be based on theoretically.

Secondly, the role of the Tripartite Conference to mediate disputes and industrial actions is substantiated under the new Regulation. A mediator system is established which selects a pool of mediators under the office of the various Tripartite Conferences composing of representatives from the three parties, as well as individual lawyers and academics. Upon receiving requests for mediation by workers or the enterprises in a negotiation stalemate or during a wild cat strike, the local office of the Conference will gather a mediation group from the pool of mediators to send to the workplace and settle the dispute. The establishment of the mediator system could be viewed as an attempt to minimize the irregular practices of the management, as well as the local government and trade union bureaucrats whose primary role in a dispute is to by all means disperse the strikers and demonstrators and restore order rather than redressing the causes of disputes through equal and fair negotiation between workers and employers. Their irregular practices are more often than not, provocative to the workers in strike.

While the official trade union is the party to officially represent workers in the Tripartite Conference, the Regulation recognizes workers as a party in actual shopfloor negotiations and provides a mediation procedure open to both workers and employers to cope with disputes and industrial actions that arise during the negotiation process. Article 13 of the Regulation names a number of situations under which “either the workers or the enterprise can make a request to the Tripartite Conference for mediation”:
 (1) Within fifteen days since the date one party has made a request for collective negotiation, the other party rejects negotiation or does not give a written reply to the requesting party;
(2) When a major difference of opinion emerges to keep the negotiation from proceeding;
(3) When a stoppage of work, go-slow takes place which cannot be resolved through collective negotiation;
(4) When a dispute arises in the process of signing a collective contract;
(5) Other situations where mediation is necessary.
If a collective negotiation has not been commenced and a stoppage of work or go-slow takes place at the enterprise, the enterprise trade union should take the lead to commence collective negotiation with the enterprise. If the negotiation fails to reach an agreement, the office of the district, county Tripartite Conference of where the enterprise is located should delegate mediators to commence mediation. (Article 13, the Regulation)

The broad language used reflects a practical attitude to cope with the reality as un-official negotiations are taking place all the time between workers and employers, usually without the participation of the trade union.More often than not, they take place following a wild cat strike, or a fight with the employer when the latter alters the terms of the employment contract. These wild cat strikes, occurred during the negotiation or not, are not outlawed but practically recognized as a fact of life. Under the above conditions laid down in Article 13, the Tripartite Conference shall step in to mediate: (1) within seven days when a request has made from either the workers or the employers; (2) within three days when the other side has not reacted to the request for collective negotiation; or when a stoppage of work, go-slow has taken place and negotiation comes to a stalemate; and (3) immediately when a wild cat strike has broken out (Article 18, the Regulation).

Compared to the provisions in the draft Ordinance on Democratic Management of Enterprises of Guangdong Province and the draft Ordinance on Collective Wage Negotiation of Shenzhen Municipality proposed in 2010, wild cat strikes are prohibited if workers have not in prior made a formal request to the management for a collective wage negotiation (Article 24, draft Democratic Management Ordinance), and when a collective negotiation is under way (Article 48, draft Shenzhen Ordinance).

A similarly practical attitude towards wild cat strikes is also adopted by the Guangzhou FTU in the draft it proposed in March. More elaborative on shopfloor negotiation, the FTU’s draft limits prohibition during a collective negotiation to acts of bad-faith and un-cooperation namely procrastination, rejection of the proposals of the other party without good reason, dissemination of false information, and other illegal acts (Article 56, Guangzhou FTU’s draft). Should a stoppage of work or go-slow take place when the negotiation comes to a stalemate, the local Tripartite Conference should step in to facilitate a mediation and negotiation (Article 52 and 53, Guangzhou FTU’s draft). In case of a wild cat strike, the FTU asks the enterprise trade union or the supervisory trade union to reflect the demands of the workers, propose resolutions and initiate collective negotiations between the workers and the employer (Article 57, Guangzhou FTU’s draft). These proposed provisions of the FTU reflects pragmatism to workers’ strikes, and a readiness to recuperate the wild cats’ struggles for the construction of itself as a bargaining trade union vis-à-vis the employers.

Representation by the official trade union in the actual negotiation between the wild cats and the employers is not a cure-all formula, as effective collective bargaining cannot be divorced forever from freedom of association. The baseline of the latter under the legal framework of the Chinese Trade Union Law is the right to associate under the only official trade union by democratic election of the trade union officers. A difference between the new Regulation and the Guangzhou FTU’s draft in this question of “representation by” is noticed as the passed Regulation lays down the legal responsibilities for failure of duties of both the labour administrative officers and the trade union officers. Article 20 of the Regulation provides the legal basis that could be used by workers and the supervisory trade union to re-elect the trade union or recall its officers if they fail to perform their roles and duties: “Should a trade union organization and its staff fail to perform the duties, the trade union federation of the same administrative level or the supervisory trade union should order rectification. If the offence is serious, the trade union organization or the staff of the trade union should be re-elected or recalled according to the Constitution of the All China Federation of Trade Unions.” The same provision is not found in the FTU’s draft which focuses and elaborates the legal responsibilities of mainly the employers and protection of the rights of the negotiation delegates.

According to the legislative calendar of the People’s Congress of Shenzhen Municipality and Guangdong province, the legislation on collective wage negotiation for Shenzhen and Guangdong province should be completed in 2011. By now there has been no updated information about the final draft of the two. The positions as reflected in the latest legislation in Guangzhou city on institutionalizing the negotiation structure while allowing space for workers to use industrial action and to initiate re-election of the trade union legally are more pro-active compared to similar legislations on collective negotiation in other provinces and cities in the country. The legislation in Guangzhou city should have an impact on the forthcoming Shenzhen and the provincial legislation on shopfloor negotiation.

(For more information and translation of the regulations named in this article, please contact IHLO for details)

 
IHLO

NOV 2011