China : what syndicalist method ?

ACFTU in a time of crisis : Back to the old ways ?

Wed, 13 May 2009.

“For many workers it is almost impossible to find the ACFTU even if they wanted to”

Vikki Chan, IHLO in Hong Kong

[This is a slightly abridged version of an article chinaworker.info is publishing with the kind permission of the author and IHLO]

300% rise in labour disputes

Last September, the financial crisis spread to China. This had a direct impact on eastern and southern China, especially the export manufacturing areas in the southeast of China. There was a large increase in factory closures and layoffs further exacerbating a general trend of factory closures in the region. According to government statistics, the global financial crisis has cost the jobs of more than 20 million rural migrants, or 15.3 percent of the 130 million migrants working outside their hometown. This has obviously meant that labour disputes have also increased.

In 2008, China reportedly had a 95 percent increase in labour dispute cases compared to 2007. Some areas like the coastal areas of eastern China have even reported a 300 percent increase. According to statistics, in 2008, labour mediations in all level of China reported a 42 percent increase in labour disputes. In Beijing in the first nine months of the year, labour dispute arbitration cases increased 103 percent. Disputes in Zhejiang, Guangdong provinces also have high increased up to 246 percent and 73 percent respectively.

In order to protect the export sector and the domestic economy the central and local authorities have issued several measures to support enterprises especially in the export sector. For example authorities have announced an increase in the tax rebate for exports, a huge economic stimulus plan and have reduced employers’ statutory labour costs, encouraging companies to avoid layoffs by taking other labour cost cutting measures. In a notice issued on 3 February 2009, the State Council advised local governments to take temporary measures to reduce labour costs, such as suspending social insurance premiums, reducing social insurance rates, and extending tax preferences for certain enterprises in economic distress in order to avoid mass layoffs.

The question which needs to be asked at a fundamental level is whether it is worth sacrificing workers rights in order to ensure an enterprise survives.

“If you have a problem : look for the union”

In an unintentional irony the new ACFTU slogan is “if you have problems, look for the union” – for many workers it is almost impossible to find the ACFTU even if they wanted to. The ACFTU ahs in fact notable absent from the main players in the crisis and have been slow to react properly. As of now they have fallen back on the time honoured stance of acting as a government mouthpiece instead of continuing with reforms. As of now the All China Federation of Trade Union (ACFTU) position has pretty much followed government policies in response to the global economic crisis as well as continuing to pursue the 100 percent unionization campaign in 2009. The ACFTU reaction to the crisis has been notably slow off the mark and passive. One of the ACFTU biggest failings is that they are not acting as a proactive organisation – but rather they react instead of acting.

Workers should not need to look for their union. Their union should be there before a problem arises. From September onwards, many large and medium-sized factories closed down, especially in south and southeast China. Most trade unions at all levels were still busy with their work meeting the quotas set for unionisation in Fortune 500 companies. Initially it had seemed that this unionisation drive would ease up but it has continued as a central part of the local branch work.

Provincial unions conducted various surveys of migrant workers and seminars in support of the local government’s policies. Local unions also stepped up their “heart warming” activities of helping laid-off urban and migrant workers facing difficulties. Many of the unions in the south also felt the impact of the crisis and the emerging large scale unemployment and a large part of their response was to help arrange train tickets for workers who have been forced to return in advance of the Spring Festival and assist others in returning home. At the same time trade unions in inland China were struggling to cope with such large numbers of returning unemployed workers before the Spring Festival. These provincial unions were silent until spring when finally the central government realised the seriousness of the possible problems for poor rural provinces used to sending migrants to the south to work and not used to economically supporting or providing employment for their citizens.

In February 2009 the government announced various financial measures to improve job creation in the provinces as well as training in tandem with the ACFTU who also announced schemes to transfer union membership. The transfer of union membership from an urban ACFTU branch such as a city in Guangdong or Zhejiang to a rural ACFTU branch itself raises interesting questions for these rural ACFTU branches. Most of which have far fewer members and are not so used to the type or scale of industrial relations occurring in the prime manufacturing areas.

Shortly before Chinese Lunar New Year there was a second round of “Factory closures”. The ACFTU did little to protect the workers involved except to make public statements employers, especially state-owned enterprises, to offer stable jobs and pay full wages to their workers on time.”

The national ACFTU did however ask unions in 15 provinces to conduct a survey six months after the start of the crisis to assess the financial health of the various provinces and its enterprises business status, bankruptcy and factory closures and related issues. The department of Legal Affairs of the ACFTU set up a labour dispute reporting system, calling for supervision of layoffs from enterprises.

During the Chinese New Year period the ACFTU officially helped claim 1.09 billion Yuan (159.6 million US dollars) of back wages for 430,000 migrant workers. Trade unions at all levels were also charged with ramping up efforts to help return migrant workers to locate new jobs by providing them with training courses, small loans and guidance for job hunting.

All the ACFTU’s responses to the crisis and the resulting job losses and bankruptcies followed government policy – which aimed firstly to give incentives and benefits for enterprises in order to survive , secondly to help reduce enterprise costs by legally allowing for the downscaling or posting of various workers benefits and wages and thirdly to help ensure public security and social stability by paying the train fares (and of course providing the ubiquitous blankets) of laid off workers so they could disperse into the countryside and go back to their farms.

For more details of the government responses and factory closures see IHLO : Economic crisis and job losses in China : Blame victims, threaten crackdown

ACFTU and other government agency responses

Many of these responses were issued in tandem with other government agencies including the Ministry of Human Resources and Social Security as well as Chinese Enterprise Association (CEA) for example ; all the three agencies urged their local constituents to implement the “Rainbow Plan” . [NOTE 7] The “Rainbow Plan” (彩虹计划) is designed to expand the use of collective contracts and was introduced in April 2008 with the goal of establishing collective contracts in all of Eastern China by 2009, central China by 2010, and the remainder of China by 2012.

At the same time the ACFTU also announced a “mutually agreed action plan” for companies, workers and ACFTU branches which states that ; “For companies under normal business conditions, the collective contracts should focus on wage levels and on wage increase.For enterprises with “operational difficulties,” the collective contracts should focus on adopting measures to cope with the economic difficulties, such as arranging for flexible working hours and related wage reductions. This would entail enterprises recognizing their social responsibilities by not laying off workers, stabilizing employment positions, negotiating and ensuring salaries are paid, increasing worker training, and increasing workers’ technical abilities.

On the other hand, it would also entail guiding the vast majority of workers to have faith, stand strong, and work hard for their enterprises in order to get through difficult times.’ In order to encourage the enterprises and workers to build up a sustainable relationship, the ACFTU called for branches to support enterprises to set up collective negotiation mechanisms, to intensively monitor enterprises layoffs, wage arrears and to form a communication and negotiation mechanism to resolve issues arising and where possible to prevent problems.

In February 2009, the ACFTU was planning to extend aid to more than 10 million migrant workers this year, according to a telephone conference in order to help support those affected and their families. This would include the provision of small loan guarantees to encourage farmers to own small businesses. After the announcement, immediately, the trade unions at all levels also started their own assistance activities at local level (see below table for details).

Social Unrest : ACFTU blames “Foreign hostile Forces”

With reports of at least 20 million migrant workers being laid off – and some estimates far higher – the government has also responded with increasing shrillness over possible threats to social stability. These pronouncements have been gladly picked up by the media and the foreign media (even though there is perhaps far higher proportions of unemployed taking t the streets in some Western countries). In order to prevent unrest and in order to appease workers whose employers have simply absconded many local governments there have intervened and been forced to pay the wages for workers.

The spread of the Chongqing taxi drivers strike to other cities across China late in 2008 coupled with the general rise in protests and the increased number of labour arbitration cases led to local governments beginning to warn against social unrest on an almost daily basis. On 17 February, the ACFTU Vice-Chair Sun Chunlan went one step further and introduced the threat of ‘foreign’ bogeymen by claiming that foreign forces were aiming to capitalise on the potential for unrest. Sun reportedly said : “We need to keep a close lookout for foreign and domestic hostile forces using the difficulties encountered by some companies to infiltrate and undermine the ranks of migrant workers.”

Prior to this in November 2008, more than 500 county level party committee secretaries were summoned to Beijing for a special training to deal with mass incidents at the Central Party School. In February 2009, more than 3,000 county-level heads of local police departments attended a special training in Beijing. It is the first such intensive training in dealing with social conflicts for Chinese Police officers. According to the words of the head of the training department of the Ministry of Public Security of China the aim is to : “keep small incidents in the village and major incidents out of the towns ; to maintain the grass-roots social stability.’ Meanwhile, national police officials have dispatched dozens of supervisory groups to the various regions of China to investigate the levels of social instability in these places.

“Flexible” employment and reduced burdens of the employers in the provinces

Obviously, stable and healthy enterprises are crucial for the local stability of a province and its workforce. But an enterprise should not be given precedence over its workforce especially when the workers are limited in their ability to influence government policies compared to the enterprise associations who have far greater influence over the local government and bodies like the ACFTU.

Some local ACFTU branches have gone so far as to take a leading role in urging the government to allow enterprises more flexibility in the enforcement of the labour contract law during the financial difficulties and encouraging enterprises to be allowed to use loopholes in labour contracts. In November last year, the Guangdong Federation Trade Unions urged the suspension of collective wage negotiations in the enterprises with difficulties. At the same time in Hong Kong, a pro-government political party the Democratic Alliance for the Betterment of Hong Kong (DAB) and representatives of Hong Kong’s small and medium enterprises associations urged the Hong Kong SAR government to push for the suspension of certain articles of the Labour Contract Law.

Some provinces in China such as Jiangsu Province then began to allow the payment of overtime work compensation in instalments if employer and employees reach agreement. In March this year in Fujian, the Fujian Labour and Social Security department, the Fujian Federation of Trade Unions and the Fujian Federation of Enterprises issued a joint guidance to encourage companies and workers to sign flexible labour contracts (fenlei hetong) in order to protect the stability of labour relations by allowing employers to reduce the details of contracts and hence protection for the workers. The Fujian Social Security department urged enterprises to do their best not to layoff workers or to reduce layoffs. They also tried to simplify the approval system for non-standard working hours which means enterprises can choose various working hour systems which suit them. In addition, they have tried to support enterprises with financial difficulties through shortening working hours, rest rotation, the use of annual leave, rotational training and reduced wage negotiations to maintain their workforce.

In Jiangsu Province, after Chinese New Year, the Jiangsu Federation of Trade Union also suggested that the wage negotiations should be flexible for enterprises with financial difficulties and the Jiangsu High Court announced a related guidance which encouraged relevant businesses to reduce personnel costs by giving employers the right to change the workers labour conditions and wages according to their own rules or with the agreement of the workers.

Conclusions : Inevitable passivity and pro-business stance

The ACFTU’s rather passive and establishment focused responses to the crisis as well as their focus on the survival of enterprises at the expense of worker benefits has done little to change the already poor image of them as a union in the eyes of workers. Indeed it seems that even some of their reforming efforts have been shunted to the back while they concentrate on fulfilling their role as a quasi government body. It is however difficult to blame the ACFTU itself though given their status as an integral part of the ruling hierarchy and the fact that most of their power – or potential power – comes not from grassroots workers but from the legislative powers the government awards them and their legions of civil servant staff which are provided in return for such support to the government. “However the enlargement of the ACFTU’s “heart warming” activities and financial aid may increase workers practical expectations.

The ACFTU’s comments on the “hostile forces” however has done little to improve the reputation of the ACFTU and coupled with the fact that the majority of ACFTU actions were to assist enterprises in difficulty rather than workers in difficulty it is hard to see the union emerging from the crisis with improved relations with workers.