CHINA: Grappling With the Dragon of Labour Unrest

By IPS Correspondents Reprint | | Print |

Antoaneta Bezlova

BEIJING , Apr 7 2006 (IPS) - As China is assailed by a surge of protectionist sentiments in the United States and the European Union – its largest trade partners, it is now also facing a multitude of accusations from Western trade union groups about unfair competition and workers’ exploitation.

China was not obliged to undertake any labour reforms under the conditions of its acceptance into the World Trade Organisation (WTO) at the end of 2001, leaving the issue of labour rights to be handled by the International Labour Organisation (ILO).

Aware that it runs the risk of seeing its exported goods embargoed in the West, since its WTO entry China has engaged in discussions on embracing international labour standards and allowed a number of international monitors to operate inside the country. But progress has been slow and the number of industrial disputes has multiplied.

Four years after China joined the global trade body, working conditions for the majority of Chinese labourers are extremely poor and exploitation is rampant, an international union group revealed this week.

The International Confederation of Free Trade Unions (ICFTU) says around 700 million Chinese workers are paid less than two US dollars a day.

“China’s competitiveness is based on the exploitative wages paid to its workers,” the ICFTU said in a report.

“The people have 60-70 hour working weeks, live in dormitories with eight to 16 people in each room, earn less than the minimum wages which go as low as 44 dollars, and often their only prospect if they should get injured at work is unemployment”.

The union confederation released the report on the eve of a WTO meeting in Geneva, this week, to review China’s trade policies.

The document criticises the WTO with overlooking the fundamentals on which China’s economic miracle is based. It demands that the world trading club link the creation of decent working conditions to its agenda for trade liberalisation as to ensure social fairness.

“China’s experience shows that trade liberalisation alone and success in export markets doesn’t ensure social progress and development,” it said.

Two decades of cautious market opening have created “one of the most unequal countries in the world”. “The country has as many newly unemployed people as the rest of the world put together. Three quarters of rural households are experiencing decreases in their living standards,” the ICFTU said.

A key problem is that the communist party continues to ban independent trade unions and Chinese workers have no right to represent themselves, to bargain together or to strike. Nonetheless, the number of industrial disputes has doubled over the last three years.

In 2001, the total number of registered industrial disputes, ranging from a wage conflict to a full strike, was 154,621, according to the ILO. Last year saw some 300,000 labour disputes.

Labour unrest has surged despite the Chinese authorities’ efforts to keep workers quiet. The Communist party has found itself unable to intervene because the proportion of the workforce belonging to the official state-run trade union, the All China Federation of Trade Unions, has declined and now represents a minority of workers.

Most of the industrial workforce no longer works in state factories, but in private enterprises, foreign invested factories and a huge cluster of enterprises run by the local governments. Even in state factories, union enrolment has been falling since the legal union body is run by the communist party.

The result has been a proliferation of underground and illegal trade unions and a dramatic surge in labour disputes.

“The government’s use of anti-union tactics such as crackdowns on industrial actions and imprisonment of those fighting for workers’ rights is simply fanning the flames of what is emerging to be a major threat to their own rule,” says the ICFTU report.

China labour watchers say many of the disputes relate to workers demanding that employers pay them the minimum wage rather than real wages. Many employers have been able to take advantage of the ignorance of their workforce and pay rates half those set by the authorities and to add on unrestricted overtime.

For example, in the export-processing hub of Shenzhen, which offers the highest minimum wage, the rate is set at 690 yuan (85 US dollars) per month. But studies show that average manufacturing wages are only between 38 and 75 percent of this minimum.

However, there is a growing pressure from inside and outside the country to raise labour regulations to international standards.

Multinational companies, whose manufacturing and supplier bases have been shifting to China because of its lower costs , have begun rigorous investigations to ensure their reputations are not tarnished by sweatshop-like conditions.

This week, Ford Motor Co, which has been assessing working conditions at more than 100 supplier plants in China, said it has declined to do business with some vendors.

Without specifying names, the company cited substandard living conditions where dormitories lacked fire escapes or were in proximity to toxic-waste dumps. Among the rejected vendors were also suppliers found violating local labour laws by paying a training wage below minimum wage for long periods of time.

On the domestic front, China’s National People’s Congress began, this spring, deliberations on the draft of a new “Labour Contract Law”, which is expected to elaborate the 1994 Labour Law.

“The need to pass and enforce such a law is pressing,” says Chen Bulei, legal expert on labour issues with the China’s People’s University. “The existing Labour Law doesn’t reflect the realities of working and earning in China any longer because it was drafted during China’s transitional period from a planned to market economy. We only had sketchy understanding of market mechanisms at the time”.

China has already taken the first steps towards tightening and modernising its regulations with new laws on prevention and control of occupational diseases and legislation on safety at work. The slew of new laws however, skirt core conventions of the ILO such as the freedom of association and the right to organise.

Beijing has ratified the International Covenant on Economic, Social and Cultural Rights but entered a reservation by blocking the application of a clause guaranteeing workers the right to form and join trade unions of their choice.