Hong Kong Business Federations Derail Labor Law Reforms in Guangdong, China

By Paul Garver

The Pearl River Delta of southern China is the world’s most massive industrial complex.  Tens of millions of industrial workers, mainly internal migrants from inland China, labor long hours in vast factory complexes that churn out all kinds of industrial products for export and for domestic markets.  A previous article on Talking Union provides background on the pivotal role that Guangdong Province plays in the global economy.

A wave of successful wildcat strikes in the Chinese auto parts industry in the summer of 2010, along with public sympathy for the numerous young workers who committed suicide at Foxconn’s massive electronics factories in Shenzhen, focused attention on the desperate need to provide mechanisms for meeting the expectations of young migrant workers in Guangdong Province. The provincial government dusted off draft legislation (shelved during the 2009 economic scare) that would establish procedures for collective wage negotiations. New articles were crafted by trade union reformers from the Guangzhou municipal trade union federation and the Guangdong provincial trade unions together with their academic advisors. These new clauses provide workers with mechanisms to elect their own bargaining representatives, allow them to choose their own advisors and enterprise union officials, and encourage annual negotiations to raise wage levels that no longer met the aspirations of the workers and failed to keep up with the soaring cost of living.

These reforming union officials realized the need to reposition the unions as advocates of workers’ interests rather than as mere instruments of the government and management. The regulations would reduce managerial and government domination of the trade unions, and allow some space for actual workers to participate in making decisions at the enterprise level. However they were also initially supported by Communist Party officials and local government leaders that recognized that an orderly negotiations procedure to provide for badly overdue wage increases would reduce the growing incidence of wildcat strikes.

Not only in Guangdong province, but in Beijing and other cities, officials of the All-China Federation of Trade Unions (ACFTU) have begun experimenting with proposals to strengthen the role of enterprise union leaders (for instance, by having their salaries paid by the trade union rather than by management). These tentative reform proposals are prompted by the growing realization that, although the ACFTU had some ability to influence government policies, it had no means to influence, represent or mobilize workers at the enterprise level. While claiming over 200 million members, the ACFTU is a bureaucratic shell (at best something like a Department of Labor). Even the Communist Party had become frustrated with the ACFTU’s ineffectiveness. The trade unions it keeps tightly controlled have been rejected by most workers as useless and irrelevant (and hence worthless in promoting the Communist Party’s institutional interests in the working class).

However frenzied lobbying by nearly 60 Hong Kong employer organizations, led by the Federation of Hong Kong Industries and the Hong Kong Chamber of Commerce), led to a decision by the Standing Committee of the Guangdong People’s Congress not to submit the draft legislation to the meeting of the Congress on 27-29 September. The Hong Kong employer groups objected in particular to a provision that would put worker representatives on company boards and to allow them access to corporate economic information necessary for collective bargaining. They threatened to relocate from coastal Guangdong province to inland areas with lower wages and fewer worker rights.

It is not clear at this time whether this represents a temporary setback for the badly needed labor reforms, or if it indicates that Party hardliners are making common cause with Hong Kong capitalist interests to block badly needed reforms in the Pearl River Delta.

Hong Kong factory owners employ some 10 million migrant workers in Guangdong Province, while millions of others are employed by Taiwanese-based companies (such as Foxconn, which operates two giant electronics factory complexes in Shenzhen with 400,000 workers). Foxconn has already announced plans to relocate much of its assembly work to inland rural provinces.

China Labour Bulletin, a pro-worker labor rights NGO in Hong Kong, which has reported favorably and extensively on the details of the Guangdong draft legislation, publicly challenged the Hong Kong employers to a debate over the draft legislation. According to an article in Hong Kong’s South China Morning Post, the deputy chairman of the Federation of Hong Kong Industries motivated their refusal to debate:
“As employers, we look at the long-term interests and investment desires of Hong Kong investors across the border whereas the Chinese Labour Bulletin looks from the workers’ perspective and fights for the bargaining power of migrant workers.”

It may seem ironic that many feared that China would restrict democratic freedoms in Hong Kong after it took over the territory from the British. It seems rather that it is Hong Kong capital that is blocking the extension of democratic rights to workers in China.

Even if the legislation remains bottled up, reformers in the municipal and provincial trade union federations could go ahead with facilitating the democratic enterprise union elections they promised to the auto parts strikers. Such elections are not prohibited by the current legal framework(though in practice they never occur). What will be decisive in the short run is the position of the Communist Party. Will it permit trade unions to position themselves as advocates for the interests of workers, and allow the tasks of mediation and conciliation to be relegated to government agencies? Will the Party overcome its fear of losing control enough to trust ordinary workers to participate in decision-making? Or will it stick to its decades-long policy of alliance with foreign and domestic capitalists that will perpetuate a low-wage, low-road strategy for China’s economic and social development?

The Guangdong labor reform legislation could have eased the way for the Chinese economy and society to meet the rising expectations of the workers, while providing a school for the democratic development of workers now alienated from the bureaucratic trade unions. At the same time it would have provided a mechanism for addressing the most flagrant inequities against the migrant industrial working class that had developed in China’s booming export-oriented economy. Higher wages could have also increased domestic demand and thereby aided the transition to a higher road economic model not so highly dependent on exports. Evidently foreign business interests threatened by better organized workers and fearing the need to pay higher wages are pushing back against the badly needed reforms of the Chinese industrial relations system. Of course it is Chinese society bears the risk of a future explosion of pent-up worker frustrations!

None of this should sound too strange to American trade unionists, ourselves frustrated by the most recent failure for labor law reform legislation to even reach the floor of the U.S. Senate!