When Chinese Unions Threaten Global Corporations

In a San Francisco Chronicle article, On the Back of China's Workers, published today, Jehangir S.Pocha gave what has hitherto been a standard portrayal of the country's labor situation:

Although China is ostensibly still a communist country, independent trade unions are banned here and every night 200 million Chinese workers go to bed in overcrowded dormitory rooms after working 15- to 18-hour days in Dickensian factories. And their lot is likely to get worse before it gets any better.

Cheap labor -- along with market reforms, disdain for intellectual rights, disregard for the environment and cheap capital from state-controlled banks -- is what has allowed China to offer global investors a unique combination of 19th-century business practices and 21st-century infrastructure that has attracted more than $800 billion in investment since 1979.

Recent moves to protect workers' rights and empower labor unions may be more window dressing than reality.

The article goes on to say:

If Western diplomats and trade representatives have been disturbingly silent about labor standards in China, which clearly violate norms set by the International Labor Organization, it's partly because they're loath to rock a system that's allowing Western corporations and governments to reap huge profits.

Tragically, it would seem that Mr. Pocha had read neither the Global Labor Strategies report nor articles in The Washington Times and The New York Times published Friday, two days before his own, all of which told a very different story of the nature of Western trade representatives' "disturbing" support for poor labor standards in China.

The report from Global Labor Strategies, a labor rights advocacy group, claims that US-based corporations such as Wal-Mart, Google, Microsoft and Nike are fighting to prevent the introduction of government legislation which would give Chinese workers new rights. The corporations' representatives, The American Chamber of Commerce in China, (AmCham) and The US-China Business Council are actively lobbying against China's draft Labor Contract Law, which could be in effect by next May, and according to Global Labor Strategies:

would provide minimal standards that are commonplace in many other countries, such as enforceable labor contracts, severance pay regulations, and negotiations over workplace policies and procedures.

The not-for-profit organisation accuses these US-based corporations of lobbying to maintain the status quo of low wages, extreme poverty, denial of basic rights and minimum standards, and non-existent health and safety protections, as well as the predominant absence of legal employment contracts. It also claims that they have threatened to withdraw business from China if the law is passed.

AmCham's concern about the likely impact of this legislation was first made apparent when, along with other major US- and European- based global corporations, it took advantage of a thirty-day public comment period this spring to send a letter to the Chinese government expressing its opposition to the new law. According to Global Labor Strategies, however, the majority of the comments, which numbered close to 200,000, were received from Chinese workers in favour of the law.

While Mr. Pocha is correct in his assertion that independent trade unions are banned in China, he fails to mention that the state-sanctioned labor body, the All-China-Federation of Trade Unions (ACFTU) has in fact recently been pulling its weight. After two years of wrangling with ACFTU-affiliates, Wal-Mart finally agreed in August to set up official unions in all sixty-two of its Chinese outlets. The Washington Times reports that Kodak and Dell are next on the ACFTU's list.

Mr. Pocha's article represents a trend in contemporary western thought that demonises China, giving the benefiting foreign corporations only a passive role in the country's widespread violation of International Labor norms. His article even emphasises that the profits enjoyed by the Chinese government from this labor-driven export economy, help "fund the U.S. deficit and [keep] U.S. interest rates down."

This is to fail to recognise that the forces of globalization mean that numerous players have an active influence over Chinese policy. And the Global Labor Strategies report suggests that US-forces play a significant role in maintaining the "19th century business practices" of China.

As Tim Costello, an official of the labor rights group says in the New York Times article:

This flies in the face of the idea that globalization and corporations will raise standards around the world.

(An English translation of the Chinese draft Labor Contract Law and the AmCham letter to the Chinese Government can be obtained by emailing brendan@laborstrategies.org.)