China's emerging collective bargaining - 22 Oct. 2009

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China's only allowed trade union, the communist-led All China Federation of Trade Union (ACFTU), has been lying down in the media over the past year, as the central government was eager not to make foreign investors even more weary after the global downturn hit China's export industry. 

But times are changing again as economic speed is picking up and behind the scenes a new system of collective bargaining is emerging, reports China Labor News Translations.  A model, called the Wenling model, is emerging, the website reports.

Before we turn to that model, as short assessment of the economic situation as far as it might influence labor relations. First, if we look at the growth of the GDP in China, the economic crisis seems to be definitely over.  Growth has been hovering around eight percent over the last two quarters, removing the need perceived by different government layers to keep the struggle for labor rights at a back burner. After years of major breakthrough laws on labor contracts and labor arbitration, much of the public fanfare has died out over the past year, and in quite some cases earlier achievements were silently shelved. Those days might be over, illustrated for example by the McKinsey, Rio Tinto and Coca-Cola cases, where foreign companies came recently under fire for corruption. 

Second, as already noted in 2007 by the Chinese Academy of Social Sciences (CASS), China is heading very fast toward a shortage of labor. That was illustrated last year as the export industry collapsed because of the global financial crisis and many Western media wrongly predicted mayhem as hundreds of thousands of migrant workers were sent home. 

Against all expectation (and we imagine that also at government level some people kept their fingers crossed) the sudden labor surplus was taken up with relative minor hiccups and now, as the export industry is picking up, employers in Southern China have serious problems in getting enough workers to deal with their orders. That does not mean there are no labor problems, for example the lack of labor for China's large number of university graduates is a problem because they are not educated for the jobs that exist. But since qualified labor is getting short, both employees and employers might actually have an economic interest in getting a system for collective bargaining in place. 

Now, the Wenling model, called after a small county in Zhejiang province, might work as an example in a country where managing labor relations is most absent or based on practices from the planned economy. As CLNT points out, the model seems mostly to have been initiated by the local government and - although it is a point of debate - most of the representatives of the workers have been appointed rather than elected. Still, the emerging system of collective bargaining in China is developing and that is worth to note. Both government and employers have a key interest in pacifying labor relations. Employees are in a good position to gain from this situation. 

You can find China's WageIndicator here.

This story was earlier published at the China Herald.

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