Between State-Led Unions and Self-Organization: Chinese Workers in the Global Crisis
By Paolo Rizzi
The aim of this article is to identify patterns of industrial conflict in China in recent years. In particular, I will focus on whether the global crisis, which began in 2007-2008, changed industrial conflict and how industrial conflict influenced the State. In doing so, the article attempts to blend together academic, journalistic, and militant source materials.
The first section of the paper briefly explains contemporary Chinese labour legislation. The second section examines the role of the official state-sponsored trade union, the All China Federations of Trade Unions, (ACFTU). The third and final section discusses changings in social composition of Chinese workers involved in industrial conflict as well as aims and methods of industrial conflict itself.
The Legal Environment of Industrial Conflict
The Trade Union Law (TUL) of the People’s Republic of China (PRC) was adopted in 1950 and amended in 1992 and 2001. The TUL establishes that “[t]he All-China Federation of Trade Unions […] represent the interests of the workers and staff members and safeguard the legitimate rights and interests of the workers and staff members according to law”
(1) Time limit of the labour contract; (2) Content of work; (3) Labour protection and labour conditions; (4) Labour remunerations; (5) Labour disciplines; (6) Conditions for the termination of the labour contract; (7) Liabilities for violations of the labour contract.
Collective contracts are valid within the enterprise in which they were bargained. Chapter X of the Labour Law regulates labour disputes. According to Article 79, the first step is mediation at the level of The Labour Dispute Mediation Committee (LDAC) of the working unit. If mediation fails, or one party is not content with the outcomes of mediation, any party can apply to the LDAC. Additionally, if arbitration is unsuccessful, the dispute can be brought as a lawsuit before the People’s Court.
In 2007, a number of social laws were adopted by the NPC. The Labour Contract Law
Social insurance schemes are regulated by the Social Insurance Law
Minimum wage was first introduced in Chinese legislation by Article 48 of 1994’s Labour Law, which stated that minimums were to be created at the level of provinces, autonomous regions, and municipalities. According to Article 49, the minimum wage must be set in accordance to:
(1) The lowest living expenses of labourers themselves plus that of the average number of family members they support; (2) The average wage level of the society as a whole; (3) The labour productivity; (4) The situation of employment; and (5) The regional differences in economic development.
Minimum Wage Regulations (MWR) were promulgated in 2004 by the Ministry of Labour and Social Security and provide comprehensive schemes for the calculation of the minimum wage. The MWR advise that the calculations should be carried out by local administrations within a province, autonomous region or municipality in consultation with trade union and employers representatives.
The right to strike was guaranteed by the constitutions of the PRC, which were adopted in 1975 and in 1978. In the constitution adopted in 1982 there is no mention of the right to strike. The absence of constitutional protection to the right to strike does not mean that striking in China is illegal, per se. One of the major potential consequences, however, is that legal protection is not explicitly guaranteed for actions committed by labourers during a strike.
The Role of the State-Led Union
The sole legal trade union in China is the All China Federation of Trade Unions (ACFTU). The ACFTU was founded in 1925 and became the official organization of the workers of the People’s Republic of China (PRC) in 1949, incorporating all other unions. In 1959 the major private companies in China were nationalized, and since then the ACFTU has acted as a “transmission belt” of the Communist Party of China (CPC). The ACFTU began changing in the early 1990s when the urban SOEs underwent the process of marketization and privatization. The emergence of a labour market in the urban areas of the PRC confronted the ACFTU with the need to find a new role in the so-called “market socialist economy”.
After a period of decline between 1990 and 2000, the ACFTU’s membership began to grow from 169,942,000 members in 2003 to 287,869,000 in 2013. This growth is due to a change in the official policy toward trade unions. The 14th congress of the ACFTU, which was held in 2003, opened membership to migrant workers, thus allowing them to reach the quota of 70 million unionized migrants in 2007. The other great source of unionizing was the campaign launched by President Hu Jintao in 2006 to unionize the private sector and, most notably, foreign owned companies known for their anti-union policies, such as Walmart and McDonald's. The result of this campaign was a great surge in the establishment of unions representing the workers of private companies with a top-down approach.
2.1 Various Models and Dynamics of Workplace and Upper-Level Trade Unionism
Workplace unions can be established in China in two ways. The first and most common way is the top-down approach in which the upper level of the trade union (meaning city-level and district-level) meets a quota of unionized workers and bargains directly with management for the establishment of a union within each enterprise. In this kind of approach workers are not involved -- in many cases trade union representatives are not elected by labourers but are chosen by the ACFTU and management, and sometimes only by management.
A minimum of 25 employees from within an enterprise can set up a workplace trade union. This kind of bottom-up approach was seen in the unionizing process at Walmart; employees contacted the upper levels of the ACFTU and established a union. However, the subsequent wage bargaining was conducted by the upper levels of the union without consulting the labourers, and the enterprise ignored union representatives elected by the employees, preferring to bargain with the ACFTU officials.
The bottom-up approach in the formation of workplace unions is rare. More commonly, top-down appointed unions face spontaneous worker mobilizations. Take, for example, the famous strike initiated by the workers of the Honda Auto Parts Manufacturing (CHAM) plant in Foshan, Guangdong province, during the summer of 2010. The fundamental demands of the CHAM workers were an increase in wages and a democratization of the trade union. These requests were originally opposed by the workplace union representatives which instead backed management. However, after a few days of the strike, the upper levels of the ACFTU decided to intervene to support worker requests for higher wages and the representatives of the stirking workers secured a pre-meeting with trade unionists before the official meeting with the management. In the end, management agreed to raise wages but refused to discuss the union’s democratization. However, the strike at the CHAM, and the other strikes that followed in 2010, put a considerable amount of pressure on the ACFTU which recognized the necessity of authentic democratic elections for the workers' representatives.
Other forms of assistance to migrant workers were initiated under the so-called “Yiwu model.” This was based on an experiment carried out in Zhejiang province as a reaction to the formation of “self-defense” organization by workers who felt discriminated against and unfairly treated. To prevent the spread of autonomous organizations, the “Yiwu model” provides migrant workers with a series of legal services. The Centre for Legal Protection of the Rights of the Workers was created and put in charge of collective bargaining and settlement of labour disputes. Party-state officials are appointed as Centre's counselors to assure the commitment of the institutions. Direct involvement of government in the “Yiwu model” is considered to be fundamental to overcome limitation of ACTFU.
The case of Wal-Mart and other enterprises where workers unionized through a bottom-up approach show that, even when workers are involved, there are powerful structural obstacles to the development of industrial democracy. The cases of strikes in 2010 and the “Yiwu model” show that workers’ mobilization can force the government and the ACTFU to operate more energetically in favor of labour rights. At the same, actions taken by official institutions in favor of labour rights are planned to prevent the creation of independent organization of the working class.
2.3 Collective Contracts without Collective Action
Official statistics show a rise in the numbers of collective contracts. At the end of 2007, 343,000 collective contracts were signed nation-wide, covering 626,000 enterprises and involving 39.7 million labourers. In October 2014, The People’s Daily (Renmin Ribao) reported that 2.42 million collective contracts were signed, covering 6.33 million enterprises and 287 million labourers. The reason for this dramatic rise in numbers can be easily traced back to the three-year plan imposed by the national government to spread the coverage of the collective contracts.
Even though the number of collective agreements continues to rise to meet quotas? set by the Chinese State, their analyses have found two main problems with the quality of such contracts.
The first problem is that collective agreements are vague or difficult to implement. Many contracts are not detailed; they merely repeat what is already established by laws and do not specify any further obligations for the employer or any further rights for the employee. Moreover, the implementation of collective contracts should be reviewed by the labour administration, which itself is small, weak and underfunded. Lastly, laws on collective contracts do not provide consistent regulations for the process of bargaining working conditions and wages.
The second problem is that workers are not involved in the process of bargaining. The greater part of contracts are negotiated through top-down channels by an upper-level trade union or by local authorities. Apart from experimentation attempted in the province of Guangdong and a few other provinces, there is no direct link between employees and their representatives. The disconnect between workers and unions means industrial actions are almost never called by the trade union. In this sense it is possible to state that even though there is great coverage of labourers with collective contracts, there is no real collective action behind it.
As reported in §2.1, there are signs of a changing role for the ACFTU as result of spontaneous workers’ activism. In these cases there are reports of collective agreements with more favorable outcomes for the employees' side in terms of wage increases and implementation of the contract itself. Nevertheless, interviews with union officials show that these agreements are considered as an exception under extraordinary circumstances, not as an ideal starting point for collective action as the norm of collective bargaining.
It can be concluded that the role of the All-China Federation of Trade Unions is slowly adapting to the new conditions of a market economy. This process of adaptation is aimed at the keeping of social peace and making the ACFTU, effectively, a lobby that works in the interests of the workforce as long as it has the approval of authorities and doesn’t create conflict.
Industrial Conflict in the Global Crisis
The global crisis, begun in 2007-2008, hit China when the country was attempting a cooling down of the economy following a period of high inflation caused by rising labour costs and prices for imported natural resources and foodstuffs.
3.1 How Many Industrial Actions?
However, one question remains: did the impact of the global crisis influence the number of actions of industrial conflict in China? The official data released by the China Statistical Yearbook and by the China Labour Statistical Yearbook
The number of collective labour disputes, with only 2,588 in 1995, peaked with 19,241 cases in 2005, but then slowly declined to 12,784 cases in 2007. The following year, however, labour disputes reached a new peak at 21,880 cases. In the years from 2011 to 2013, the number of collective disputes stabilized around 7,000 cases per year. The number of cases appealed by workers rose slowly from 249,335 in 2004 to 325,590 in 2007, and then peaked at 650,077 in 2008. After years of ups and downs the number in 2013 stabilized around 640,000.
Statistics on total cases settled show a similar pattern to that of collective labour disuptes. From 258,678 settled in 2004, there was a stable growth to 340,030 in 2007, then a peak of 622,719 cases in 2008 and even more, 689,714 cases, in 2009. In the following years, the number ranged from 592,823 to 669,062.
The number of labourers involved in labour disputes presents a wavering trend. Starting from 801,042 labourers involved in 2003, the number declined to 653,472 in 2007 and then dramatically rose to 1,214,328 in 2008. In the following year, 1,016,922 workers were involved in labour disputes, followed by a rapid decrease to 779,490 in 2011 and a stabilization around 880,000 in 2012 and 2013.
All of these numerical indicators show peaks in 2008 and 2009, the years in which the impact of the global crisis was strongest in terms of layoffs of workers and other causes of conflict on workplace.
However, methods provided by the law are not the only expression of industrial conflict owing to a number of reasons. First, the high impact of informal economy: a 2012 World Bank report shows that slightly less than one-third of the workforce in urban areas worked for employees who did not pay social insurance and/or who were without a formal labour contract.
An indirect indicator of strike actions may be statistics about so-called “mass incidents.” Various journalistic sources published pieces about an escalation from a number of 8,700 mass incidents in 1994 to 74,000 in 2004, then from 87,000 incidents in 2005 to over 180,000 in 2010.
The Chinese Academy of Social Sciences published in 2014 a study on “mass incidents.” In this study “a mass incident” is defined as an action involving more than 100 individuals. According to this definition, there were 163 “mass incidents” in 2010, 172 in 2011 and 209 in 2012. Labour disputes were the major catalyst for these “mass incidents,” causing 267 out 871 incidents recorded from January 2000 to September 2013. This indicator, however, is merely indicative, as it is not a precise measure of incidents but, rather, a record of incidents reported by the Chinese state-run media.
A study conducted by sinologists Tong and Lei analyzed large-scale mass incidents, meaning mass incidents involving more than 500 individuals. Because of the scales of these incidents, it is not likely that these incidents could have been hidden by authorities or ignored by the media, so this series of data is likely highly reliable. Tong and Lei found 9 large-scale mass incidents in 2003, 20 in 2004, 9 in 2005, 25 in 2006, 63 in 2007, 76 in 2008, and 46 in 2009. In total, there were 248 incidents between 2003 and 2009, of which 108 were caused by labour disputes. The peak year was 2008 which is also the only year when the number of labour incidents in the private sector were higher than the 12 incidents recorded in state owned enterprises.
In 2011, the Hong Kong based NGO China Labour Bulletin (CLB) started a collaborative mapping of industrial conflicts in the PRC, based on news collected from various media outlets.
Academic, journalistic and military sources find that industrial conflict, and more broadly social conflict, have remained high in China since the beginning of the global financial crisis. While the data are too incomplete and heterogeneous to attempt a precise measure of conflict,, it can be said that, unlike what happened in many western countries, the crisis did not diminish industrial conflict and that there was a clear peak in the years 2008-2009.
3.2 Social Composition and Patterns of Industrial Conflict
A growing number of on-field researches is increasingly focusing on the social composition of the new wave of industrial conflict. In particular, the following section will review the main findings of these studies in terms of differences among labourers, the legacy of the socialist system, and patterns of industrial actions.
3.2.1 From the Iron Bowl to the Market of Means of Production
Since the beginning of economic reforms between the late 70s through the early 80s, China’s working class population underwent a dramatic transformation. During the Maoist era, workers were considered as the leaders of the PRC. Even though this is widely regarded as merely a theoretical proposition, workers still enjoyed some advantages, especially the so-called “iron rice bowl system,” meaning that workers were involved in a system that guaranteed a job “from the cradle to the grave” in a situation where the workforce market was virtually non-existent.
The State Bureaucratic (SP) type can be found in the SOEs in steel and petrochemical sectors, the urban based workforce has a medium to high skill level. After the period of restructuring during the 90s, the working conditions in these big SOEs are stable;
The Corporate Bureaucratic (CP) type can be found in private-public joint ventures in the automotive and petrochemical sectors, working conditions in this type are quite stable but there are, occasionally, processes of restructuring;
The Corporate High Performance (CHP) type can be found in foreign-owned and new Chinese private enterprises in fields such as electronics and components, working conditions are not stable;
The Flexible Mass Production (FMP) type, found mainly in US and Taiwan-owned electronics and subcontracting enterprises, is a more extreme version of the CHP type in which there is a great divide between skilled and unskilled labourers;
The Low Wage Classic (LWC) type can be found in garment and textile sectors and in enterprises subcontracting for automotive and electronic industries and it is the lowest rank of production. In LWC can be found full exploitation of rural migrants and extremely long working hours. In this type, individual and collective conflicts arise for the respect of laws and over the discipline of work.
Lüthje investigated industrial relations on-site in a number of enterprises identifying these different models. In state bureaucratic enterprises, trade unions are widely accepted by the management as entitled to oversee the full implementation of the law.
A similar situation can be found in corporate bureaucratic enterprises, where trade union officers are usually co-opted into management but there are more individual conflicts caused by skilled labourers demanding more opportunity for advancement. The occasional restructuring of CP enterprises may lead to mass protests. In the CHP type there are many conflicts over individual and collective issues and the union is scarcely present or effective. In FMP enterprises there are both individual and collective conflicts in order to meet the dictates of law. In LWC enterprises workers undertake individual and collective industrial action actions to require compliance with the legal guarantees and to question the discipline of the workplace. In both the FMP and LWC, the trade union is not present at all.
3.2.2 A New Generation of the Chinese Working Class
Lüthje’s work provides a picture of how the transition from a planned economy to a market economy differentiated the Chinese production system and the conditions of the country’s working class. The most recent research in the field shows that the patterns of industrial conflict were also changed by the formation of a new generation of workers. Corresponding with the entrance of this new generation into the production system, there has been a change in the aims of industrial actions. While in the lowest ranks of productive regimes conflicts over the application of the law still remain, in medium-to-high end enterprises, strikes took place over wages and, in general, for better conditions than the legal minimums. This new generation of workers is characterized by a higher level of education than the previous generation and by the effects of the one-child policy that posed an end to the surplus of labour.
One of the main features of China is its institutional discrimination organized by the hukou system. This system divides Chinese citizens according to their registration in rural or urban areas. As a result of the hukou, 150 million workers were estimated to have migrated internally in 2009. Internal migrants are defined as people living and working in urban areas but formally resident in rural areas, and, therefore, not enjoying social programs meant only to serve urban residents. A vast literature records the difference between migrant and urban workers in terms of income, of access to legal contracts, and access to non-monetary benefits.
The first generation of migrant workers, having been born during the late 60s and the 70s and entered into the workforce during the 80s and adhered to the official slogan of “working in the city but not staying in the city.” Many wanted to go back to the land after a period of work in the industrial cities. But in addition, lower wages and the lack of access to urban welfare prevented the first generation from settling in cities.
126.96.36.199 Temporary Workers
In past years, the plight of migrant workers often overlapped with, but was not exactly the same, as the category of temporary workers. Until 2008, enterprises in China, especially in the medium-to-low ranks of production discussed in §3.2.1, increasingly employed workers hired by external agencies. These workers were paid less, received little, if any, non-monetary benefits and had short-term labour contracts. Fieldwork conducted by Lu Zhang found that within automotive enterprises, the percentage of temporary agency workers varied from 20% to almost 50% of total employees between 2003 and 2006.
The use of agency workers has been fundamental for the creation in many enterprises of a dual employment system, with one contingent of employees categorized as regular workers and another as temporary, doing the same work for different remuneration. The differentiation between regular and temporary workers permitted enterprises to react flexibly to the highs and lows in the cycle of production hiring more temporary workers only when the orders of production required them.
The Labour Contract Law that came into effect on 1 January 2008 posed limits to the use of agency workers. The LCL established the principle of equal pay for equal work and states that agency workers should be used only for a limited set of temporary jobs and not for regular jobs with short term contracts renewed at the end of each term. At any rate, these new protections concern only agency workers and not the other vast contingent of temporary workers: student interns. The official intent of the policy is to raise the skills of workers coming from vocational schools through mandatory internships. In reality, student interns are used to cover low-skill duties for which enterprises are not willing to hire full-time workers.
While at the end of the 90s temporary workers were mainly migrant workers, beginning in the mid-2000s, the composition of temporary workers has become far more fragmented. The vast majority, about two thirds, of agency workers are still migrant workers, but there is also a significant number of urban workers who cannot find a contract as a regular labourer. Among student interns, there were equal shares of students coming from the cities and students coming from rural areas.
188.8.131.52 The Socialist Legacy
The legacy of the Maoist-Socialist period regarding the attitude of workers in China is ambiguous. There are findings which suggest that workers who were educated during the Maoist period partly accepted the process of restructuring of SOEs because of the promise of economic benefits from this restructuring. In addition, accounts by trade unions and Party officers explained that restructuring was necessary for the good of the national economy.
3.2.3 Aims and Methods
At present a comprehensive review of the aims and methods of industrial conflict is not available. Nevertheless, social? scientific literature detects some of the patterns of industrial conflict as enacted by the new Chinese working class.
Many social scientists analyzed in depth the wave of actions which occurred after the strike at the Honda Auto Parts Manufacturing CHAM plant in 2010. Findings from all of these strikes and actions show there was a breakthrough in the demands of the workers who not only asked for the respect of the law, as was typical in actions taken by workers of the “first generation”, but also demanded wages higher than the legal minimum or higher than the ones paid by the employers. Migrant workers of the second generation and temporary workers are found to have been the core activists in these actions. Actions taken during the summer of 2010 were widespread, and in many cases featured participation by more than half of the workforce. The broad support from workers for these actions made them largely effective as management either agreed in toto to the demands of the workers or agreed to a bargaining process over wages. Self-organized workers conducted all of these actions.
The other common feature revealed by recent studies is that workers are taking advantage of the organization of work and life in the new market economy in order to advance their requests and actions. One of the main changes in the production system was the introduction of the just-in-time (JIT) organizational scheme, mainly in foreign-owned enterprises of joint-ventures that apply models taken from Japanese industries. JIT production enhances what Beverly Silver calls “workplace bargaining power,” meaning the power that results "from the strategic location of a particular group of workers within a key industrial sector.
The last common feature is the use of the structures that organize the life of workers, especially the dormitory system. Dormitories are so widespread in China that recent scholarship has developed the phrases “dormitory labour system” and “dormitory labour regime.” While there is a consensus on the existence of the dormitory system, different scholars provide different accounts of it. Pun Ngai, for example, considers the dormitory labour regime (DLR) as a link between the rural reproduction of work-force and urban exploitation, meaning that all welfare costs of the migrant workers are incurred by the place of origin in rural areas while the work is exploited in urban areas.
Pan and Ren identify the “dormitory labor system” as a distinctive mode of production which resulted from the hybridization of “socialism in one country” and global capitalism, placing an emphasis on the role of the dormitory system in creating an environment attractive for foreign companies delocalizing production in mainland China.
Most case studies on the dormitory system are located in the Pearl River Delta. However, dormitories can be found in all of China’s industrialized provinces that import their workforce from rural areas. In the early 2000s, Chris Smith found the dormitories to be more systematic than contingent, meaning that all companies operating in all sectors are forced to use dormitories in order not to lose comparative advantages over their competitors.
The main benefit for companies, of course, is that they can host migrant workers in dormitories built near the place of production. These workers can be put to work according to the needs of variable rates of production. Originally dormitories were owned by the state and rented to companies. More recently, foreign owned companies began building their own dormitories in order to suit their internal housing needs. As was noted earlier, companies also use dormitories to extend their control into the private lives of workers. Recent research has found a number of ways in which this control manifests. Workers are forbidden to host visitors in the dormitories, to cook or to exchange beds privately. Chris Smith has reported on the separation of people coming from the same town or province in order to break up relationship networks among labourers.
While the dormitory system remains a powerful tool in the hands of employers, it is also an environment that allows labourers to organize various forms of social conflict. The first and most elementary form of resistance to management’s control is disobedience towards the dormitory regulations. In the case study analyzed by Pan and Ren, workers regularly defied the regulations against hosting their families or fellow citizens and exchanged their beds to recreate geographical networks.
A new generation of Chinese workers entered into the production system in the 2000s and changed the methods and objectives of industrial workplace conflict. More and more Chinese workers are now keen to take action in order to demand better wages and working conditions. Well-educated youth, migrants and temporary workers are key to industrial conflict in the form of self-organized strikes and other forms of militant industrial actions. The new generation of labourers demonstrated an ability to take advantage of the introduction of new organizational features in the regimes of production, especially the neo-Taylorist just-in-time system as well as in the organization of non-working life, as in the case of the dormitory labour regime.
After the beginning of the global economic crisis in 2007-2008, Chinese workers became more militant and large waves of industrial actions were recorded during the following two years. It cannot be said that the peak of industrial conflict reached between 2009-2010 completely changed the patterns of industrial conflict; it is far more likely that the global crisis contributed to particularly harsh working conditions leading a new generation of Chinese workers to engage in industrial conflict thus revealing new features of industrial relations in China.
The Party-State apparatus responded with new social laws and by pushing the All-China Federation of Trade Unions to be more responsive to workers’ demands in order to help bring about a better balance between economic growth and social stability. In particular, the ACFTU acted as a lobby of interests inside the Party-State, as an obstacle to industrial conflict and to the formation of self-organized workers’ organizations. The media system responded by providing a greater amount of attention to industrial conflicts, putting it on the agenda in public debate. While journalistic coverage cannot be used as a precise measure of industrial conflict in China due to its political biases; nevertheless, it has become a widely-used indirect measure to understand the changing nature of Chinese industrial conflict in the 21st century.