China's trade union has been very quiet

the ACFTU family hotel

Since last year I have been following the developments of China's only allowed trade union, the All-China Federation of Trade Unions (ACFTU) quite closely. Under orders from the central government this collection of tea-drinking government officials were forced out of their offices as a part of the effort to make the society more harmonious.
Well, the migrant workers got some attention and especially the efforts to organize trade union branches at foreign companies in China got a lot of interest. Also internationally foreign trade unions watched breathless as their Chinese brethren organized Wal-Mart. Also were people from the ACFTU very active in organizing the discussion around the new labor contract law.
The question was then and still is whether this is a real change that might push the ACFTU into the direction of a real trade union, or whether it is some window dressing that will disappear when a new show has to take the stage. At least a part of the ACFTU-officials is rather enthusiastic about the new direction their organization has taken.
But since a few months, they seem to have fallen off my online radar screen. Media do not mention the ACFTU anymore and there is certainly a move back to the previous tea-drinking activities.
The question now is whether this is a temporary move ahead of the upcoming party conference in October, or whether the issue of labor issues has definitively fallen off the agenda of the central government.
The overload of priorities has already led to painful choices and for example the environment has drastically dropped on the list of priorities. Labor issues might as well be the next victim in the permanent push-and-pull between the central government and other governmental power brokers.

Outsourcing: the good, the bad and the ugly - the WTO-column

Much has already been said about the lengthy battle surrounding the draft labor contract law in China. A lobby, headed by US labor groups and Chinese academics like professor Liu Cheng, have put especially the American Chamber of Commerce in Shanghai in the position of the villain, accused of trying to to undermine efforts of the Chinese legislators to protect the rights of Chinese workers. By maintaining sweatshop conditions among their suppliers, foreign companies only focus on their own profitability, is the argument.

When you get into such a PR-crisis as Amcham Shanghai did, setting a successful counter-strategy is tough. When Yahoo came under fire because it helped the Chinese authorities to jail the Chinese journalist Shi Tao, they simply kept silence or tried to avoid the issue. The issue is still haunting them. Perhaps, when you action is really indefensible, like in Yahoo's case, shutting up is perhaps the only strategy. But while the way Amcham Shanghai has been dealing with their input for China's labor law certainly does not deserve a prize in a beauty contest, keeping silent only adds to the impression its stance is indefensible. That might be the wrong signal.

An organization like Amcham brings together a great variation of companies, huge, small from almost every conceivable industry. Their opinions on how to deal with labor in China might vary equally, creating a problem whatever position Amcham would take. There would always be a larger portion of the membership disagreeing. Microsoft simply has fewer possibilities to squeeze its suppliers than Wal-Mart.

I think the lobby in favor of a stronger labor law has done itself a disservice by simplifying the debate to a pro-labor and pro-company stance, while ignoring the differences between companies.

Nike is a good example company, despite their dependence on a large number of Chinese suppliers, trying to turn around the current dilemma. Nike has about 800,000 workers in its global supply chain, says this article of the Financial Times, Most of its products come from China.

The company says it will set up an educational programme on workers' rights to freedom of association, to be implemented in all of its contract factories by 2011, the date the company has set for reaching sales of $23bn (€17.1bn, L11.6bn).
Hannah Jones, Nike's vice-president for corporate responsibility, said the brand was now placing a greater effort on promoting "systemic" change in its supply chain, which would include strengthening the ability of factory workers to speak out on their own behalf about problems. "We believe constructive dialogue between workers and factory management leads to better conditions," she said.

Clearly Nike is trying to set a new standard now policing the suppliers failed to work. How that will work out in China, where the government and its only trade union ACFTU has just announced they want collective bargaining for all companies in place in a few years time, is very unclear. For sure we have some interesting developments ahead of us and it would be interesting to see whether Amcham Shanghai would see a role for itself in this new process.

Fons Tuinstra

Making the costs of labor law violations higher - Liu Cheng

The Shanghai Foreign Correspondents Club (SFCC) make tonight its come-back after a long recess with an interesting evening on the draft Chinese labor contract law. Professor Liu Cheng debated with lawyers from Chinese and foreign law firms about the law. His main argument is that enforcing the law by making breaking the labor law more expensive, is the only way the market will listen.
One of the main opponents of the labor law, the American Chamber of Commerce in Shanghai, was absent in the debate, although the organization has been vilified by professor Liu and others in public. Paul French, a former treasurer of the SFCC, called Amcham even a "bunch of wankers" in a recent analysis of the labor law, a qualification Amcham obvious did not wanted to rectify tonight.
Baker & McKenzie lawyer Jeffrey P. Wilson - who spoke neither on behalf of Amcham nor his law firm - pointed at a whole range of lose ends in the law and argued that most of the regulations to protect Chinese workers were already in the current law; he also saw in enforcement the largest problem.
The third panelist, Ma Jianjun, a partner of Jun He Law Office in Shanghai, brought up an interesting point in the relations between the only allowed Chinese trade union, the ACFTU, and the international trade union movement. The ACFTU collected last year four billion US dollar in contribution from employers. The trade union can get according to the law two percent of the payroll. According to Ma that constitutes a conflict of interest, since trade unions are internationally net supposed to be paid by the employers.
Although I know from my previous trade union experience that there are collective labor contracts - no laws - where employers are required to pay part of the trade union budget, most trade unions would be funded for most of their budget by fees of their members, and kicked out if they would not perform.
Professor Liu Cheng acknowledged the problem but said the ACFTU would have at this stage more urgent problems to solve: "maintaining the social stability and a sustainable development".
(A translation of the third draft of the labor contract law will be available here tomorrow.)

Striking crane operators win pay raise and union

Crane operators in the port of Shenzhen went on strike last Friday, AP reports, and resumed work at the beginning of the Sunday after they got a pay raise and were allowed to set up a trade union. Details are still lacking.

Trade Union confirms labor law violations

An investigation has shown that KFC, McDonalds and Pizzahut in Guangdong have indeed violated the labor regulation by not paying their workers the minimum wage, according to a senior ACFTU-leader today in the China Daily.

The fast-food giants must correct their wrongdoings and pay the workers retroactively, said Li Shouzhen, a senior official with the All-China Federation of Trade Unions (ACFTU).
"A joint investigation by the Guangdong provincial trade union and the labor authorities confirmed media reports about the companies' unlawful practice," Li told a news briefing in Beijing. "The federation will uncompromisingly fight any practice that violates workers' rights," he added.

It is another signal the heat will be turned up for the foreign food chains involved.