Unions Gain Strength at Wal-Mart China

Could a Chinese made union be the next,newest import in WalMart’s extensive list of offshore products? Wonder if the Chiese union is demanding health insurance for its member workers?

Isn’t this the point where the pro Wal-Mart bunch tells us (again) that Chinese unions aren’t really unions?

– and will make a serious effort to abide by Chinese labor law.

Yeah, right.

Yes, Ken this is that point in time.  Chinese unions have absolutely NO resemblance to Western style unions.  Are you an expert on Chinese labor relations?  If not, I suggest you allow those with some actual experience to weigh in. 

This supposed “unionization” of Walmart as well as other successful Western retail / food companies in China is nothing more and nothing less than a WTO compliant means for the Chinese government to control the growth of those companies in China whose market share has become of concern to the government.  It has absolutely nothing to do with improving the rights / life of the workers though it IS possible that this will be an ancillary and unintended benefit.

...those with some actual experience to weigh in.

Be my guest, ShaMao, I encourage everyone to weigh in. I feel compelled to point out, however, that I only have an “ancillary” interest in “improving the rights / life of the workers”. I’m more interested in controlling the growth of the Beast of Bentonville.

Call Chinese unions what you will. Any outside control of Wal-Mart is OK by me.

Agreed

Ken V in Texas: Here is an article from an earlier WMW thread on new Chinese labor laws-it may be salient to this discussion”:New Chinese labor law gives employers the jitters”
Tue Dec 18, 2007

BEIJING (Reuters) - A new labor contract law will push up business costs in China next year and could force firms that are already struggling with rising expenses to shift production inland or out of China altogether.

The law will increase labor costs markedly and reduce the flexibility that has made China the world’s factory, businessmen and analysts say.

“To be frank, in the processing trade here, the biggest advantage was cheap labor. But now that’s going to change,” said Hsieh Ching-yuan, vice-president of the Taiwan Businessmen’s Association in Dongguan, an industrial hub in the Pearl River Delta in southern China.

Calvin Chang, general manager of Jinghua China Investment Consulting in Shenzhen, said the law could increase labor costs by 8 percent next year. He expects many firms to shift to inland provinces like Jiangxi and Hunan or countries such as Vietnam.

“Hundreds of small-sized Taiwan-invested firms in Dongguan and Shenzhen will be dead next year due to the new law,” he said.

The law requires firms to give open-ended contracts to staff who have worked for 10 years or have completed two fixed-term contracts. These contracts mandate higher company contributions to pension and insurance funds. And firms must pay sacked employees a month’s wages for every year they have worked.

“The labor contract law totally favors labor, which will significantly increase operating costs,” said Tseng Wen-hsiung, an adviser on tax in China with Deloitte & Touche in Taipei.

Karen Lin, a senior fund manager at Paradigm Asset Management Co in Taipei, said the law would add roughly 25 percent to the cost of labor, which typically accounts for 10 percent of total manufacturing costs. Companies that fail to adjust will start to feel major pressure on their profits within 5-6 years, Lin said.

HARDER TO SACK

Jun Ma, chief Deutsche Bank economist for China in Hong Kong, said that, over time, the law would reduce labor disputes and make workers more loyal to good employers.

“In the short term, however, many firms in sectors such as supermarkets, restaurants, construction and low-end manufacturing will be vulnerable due to reduced flexibility to abuse cheap labor and evade social security payments,” he said in a note to clients.

Firms have been scrambling to adapt to—or circumvent—the law, which was passed last June and takes effect on January 1.

Companies from IT equipment makers to liquor producers have been playing a “fire and hire” game, rushing to terminate existing contracts and rehire staff on new contracts to start the clock ticking anew on their length of service.

Huawei Technologies Co Ltd HWT.UL made headlines by requiring some 7,000 employees with more than eight years’ service to “voluntarily resign” and reapply for their jobs.

The Shenzhen-based telecom equipment firm dropped the plan after the government-run All-China Federation of Trade Unions said such practices ran counter to Beijing’s goal of forging a “harmonious society.”

One of the features of China’s rapid growth is that labor’s share of national income has fallen, while returns on capital have risen due to low interest rates and policies to promote investment in productivity-boosting machinery.  Continued..

With China keen to boost domestic consumption, it is now high time for wages to rise, especially on the developed seaboard, said Yuan Yiming, an economics professor at Shenzhen University.

“It’s an inevitable trend for any economy, and China is not an exception,” Yuan said.

SQUAWKING

Many economists see increased labor costs as part of a deliberate strategy to get manufacturers to raise their game. Beijing has also let the yuan rise more quickly and has scrapped some export tax rebates.

“Basically, the central government would like to see a little bit more consolidation in many industries, and so increasing cost pressure on businesses would enhance that,” Arthur Kroeber with the Beijing consultancy Dragonomics said.

The law gave workers basic protection that would not be thought out of place in a rather more developed economy, he said.

“There’s been an awful lot of squawking by employers,” Kroeber said. “But I think at the end of the day it’s not going to make a whole lot of difference as far as the case for investing in China is concerned.”

Chang Kai, a professor at China Renmin University in Beijing and a drafter of the law, agreed. “It may increase business costs, but the rise will be absolutely acceptable.”

(This is an excerpt from Reuters News)

Huawei Technologies Co Ltd HWT.UL made headlines by requiring some 7,000 employees with more than eight years’ service to “voluntarily resign” and reapply for their jobs.

The Shenzhen-based telecom equipment firm dropped the plan after the government-run All-China Federation of Trade Unions said such practices ran counter to Beijing’s goal of forging a “harmonious society.” (Reuters News)

It has absolutely nothing to do with improving the rights / life of the workers though it IS possible that this will be an ancillary and unintended benefit.

(ShaMao in China)

Sham Mao: It seems as though your position that Chinese labor unions improving rights/life workers is only as an incidental,or unintended benefit is very much at odds with the entire content of the Reuters article.

Chinese labor laws are the fulcrum around which the discourse on industrial relations is anchored. The laws are the tools used by all sides to argue their positions. Wal-Mart used the Chinese trade union law to refuse to let the ACFTU set up unions; and the ACFTU in turn used the procedures stated in the law to set up union branches. In recent years, workers too have become accustomed to use the law to fight for rights, demand justice and compensation, as seen in a rapidly mounting number of court cases. According to the clauses of the Chinese labor law, setting up a trade union branch and getting recognition for it is, legally speaking, as easy as ABC (in stark comparison to, say, the procedures set down in the US laws). Given the desire by China’s unions to expand membership, if groups of Chinese workers in the coming years use this method to set up trade unions branches and then affiliate them to the ACFTU, it might well provide the workforce with a voice. Under China’s labor law and the present political situation, they may find this politically feasible and more productive than fighting to set up autonomous trade unions as advocated by China Labor Bulletin and some Western trade unions that call on China to permit autonomous trade unions.(WalMart Watch,Sept.,2006 author Anita Chang.) P.S. There are several excellent sites on Google . Simply type in Chinese Labor Unions.

It is tragic when ANY community or country must endure environmental disiasters such as floods ,snowstorms,avalanches,tornadoes(such as those seen in the U. S. this past week,killing over 50 people),etc.WalMart ,according to walmartfacts.com has donated $1 million this very week to China ,aid for the hardships ivolving their exceedingly harsh winter this year. Certainly this is laudable-but I could not find on the above mentioned website(walmartfacts.com) evidence of ANY financial aid being given to the U.S. tornado victims. Although the reference to the $1 million donation to China is featured in a prominent flashing announcement(under disaster relief),I could find NO mention,flashing or otherwise,to denote $$$ aid to U.S. victims.