Chinese Labor Rights Debated
By Tim Costello, Brendan Smith, Jeremy Brecher, and Catherine Gelb
A recent report by Global Movement Strategies asserts that U.S.-based global corporations—including Wal-Mart, Google, UPS, Microsoft, Nike, AT&T, and Intel—have been acting through U.S. business organizations, including the American Chamber of Commerce in Shanghai and the U.S.-China Business Council, to oppose legislation that would grant new rights to Chinese workers.
Three authors of the report recently presented its contents in a commentary at Foreign Policy in Focus, drawing a response from a representative of the U.S.-China Business Council. The authors then followed up on the response.
Japan Focus presents the commentary, the response from the U.S.-China Business Council spokesperson, and the authors’ follow-up. The report on which the debate is based can be found here. Links given in the text are as they appeared in the original.
Commentary: Labor Rights in
By Tim Costello, Brendan Smith, and Jeremy Brecher
A major debate is underway in
Wal-Mart’s recent agreement to recognize unions in
Walmart Superstore in Tianjin
This corporate campaign contradicts the justifications that have been given for public policies that encourage corporations to invest in
Cartoon lampoons Wal-Mart labor policies
At a time when
Corporate Campaign
The Chinese government released its Draft Labor Contract Law, whose proclaimed purpose is to protect workers’ rights and interests, in April. The corporate campaign against the law began soon after, spearheaded by three major organizations representing foreign corporations operating in China: the American Chamber of Commerce in Shanghai (representing over 1,300 corporations, including 150 Fortune 500 companies), the U.S.-China Business Council (representing 250 U.S. companies doing business across all sectors in China), and the European Union Chamber of Commerce in China (representing more than 860 members). All three have sent the Chinese government extensive attacks on the proposed law. The statement of AmCham in
Briefing at the American Chamber of Commerce, Shanghai
These organizations have also issued barely veiled threats that foreign companies will leave
“Business is attracted to
American corporations have so much affection for the status quo in
Why the Opposition?
The extraordinarily rapid growth of the Chinese economy has depended a great deal on foreign corporations. According to Morgan Stanley’s chief economist Stephen Roach, 65% of the tripling of Chinese exports—from $121 billion in 1994 to $365 billion in mid-2003—is “traceable to outsourcing by Chinese subsidiaries of multinational corporations and joint ventures.” [1] The export surge blamed on
Foreign corporations have another, less obvious, motive for opposing protections for Chinese workers. The ability to hire cheap labor in
Morgan Stanley Chief Economist, Stephen Roach
Andrew Ross of New York University, who recently spent a year in China studying how workers are coping with the rapid changes of the last decade, notes that foreign corporations can use the wages and working conditions in their Chinese operations to drive down labor conditions for workers at all levels worldwide:
No industrializing country has been able to compete for the top-end slot at the same time as it absorbs jobs lower down the production chain … To command this spread—from the lowest assembly platform work to the upper reaches of industry and services—is to be in a position to set the global norm for employee standards as never before. Given the chronic disregard for job security and workplace rights in
’s foreign-invested private sector, such a norm is a clear threat to the stability of livelihoods everywhere. [4] China
U.S. Responses
The exposure of the role of U.S.-based businesses in trying to block new rights for Chinese workers—in a report by Global Labor Strategies—has struck a responsive chord. A front-page article in The New York Times, drawing largely on the report, triggered a widespread discussion in the media, on blogs, and throughout the labor movement.
Members of the U.S. Congress quickly stepped forward to address the concerns raised by the report.
According to Lynn Woolsey, “We are appalled that the American Chamber of Commerce in China and some of America’s most-prestigious, brand-name corporations are leading efforts inside China to weaken, if not block altogether, significant worker rights and protection provisions in the proposed Chinese labor law. This shameful lobbying campaign is totally inconsistent with our country’s long-standing commitment to promote respect for fundamental worker rights in law and practice everywhere. It is challenging enough for hard-working Americans to compete in the new global economy without having
Specifically, the congressional letter calls upon President Bush to instruct the U.S. ambassador in China and the U.S. Trade Representative to deliver letters to Chinese government officials in support of worker rights and protection provisions in the Draft Labor Contract Law; repudiate the efforts of any U.S.-based corporations and their representatives doing business in China to weaken such provisions; and urge pertinent U.S.-based corporations and their representatives doing business in China to reverse their opposition and make clear their commitment to the universal rights of all Chinese workers and to improve their working conditions and living standards.
Both major
Linking Workers
The spread of globalization brought
Public policy in the
But these corporations have not raised the standards. And it is, ironically, the Chinese government that now wants to improve the situation, albeit in incremental ways. By opposing a labor contract reform law that would elevate labor and human rights standards, American and other foreign corporations are aggravating the very conditions they claimed they would ameliorate. Their campaign against the law blocks protections for Chinese workers and continues protections for corporations that would exploit them.
Chinese textile workers
Corporations and business organizations in
Here is an issue that links the interests of workers not only in the
There is no need to travel to
Notes
[1] Stephen Roach, “How Global Labor Arbitrage Will Shape the World Economy,” Global Agenda, 2005 Edition.
[2] Stephen Roach, “False Recovery,” Global Economic Forum, Morgan Stanley, January 1, 2004.
[3]
[4] Andrew Ross, “A Fast Boat to
Tim Costello, Brendan Smith, and Jeremy Brecher wrote the report Behind the
By Catherine Gelb
The FPIF commentary (“Labor Rights in China” by Tim Costello, Brendan Smith, and Jeremy Brecher) mistakenly asserts that
The U.S.-China Business Council and its members share the goal of creating a Chinese work environment that is safe, fair, and stable. The overwhelming number of labor abuses occur in locally owned companies that do not share the more advanced labor relations standards that American corporations bring with them when they come to
U.S.-China Business Council Blueprint for China
The Chinese government’s request for comments on the draft law was a significant step forward for increased regulatory transparency in
Catherine Gelb is the director of communications and publications at the U.S.-China Business Council.
By Tim Costello, Brendan Smith, and Jeremy Brecher
Our recent FPIF article was based on our Global Labor Strategies report Behind the Great Wall of China, which documented the opposition of
In the article, we identified the U.S.-China Business Council (USCBC) as one of the lobbying groups that submitted comments to the Chinese government opposing the new law. The U.S.-China Business Council is a Washington-based group that includes many of the biggest companies doing business in
The USCBC took issue with our article. Of course, we welcome this comment by the U.S.-China Business Council. Debate over the proper role of U.S.-based businesses abroad is essential. Indeed, we wrote the article and the report upon which it is based to stimulate a debate and reappraisal of the political and business activities of U.S.-based firms around the world.
But we stand completely by what we wrote. In fact, our reporting on the position of USCBC on the new law was based entirely on comments submitted by the organization to the Chinese government. Those comments mirrored comments made by other corporate lobbying organizations like the American Chamber of Commerce and the EU Chamber of Commerce. As the law has worked its way through the Chinese legislative process, lobbying organizations have made additional comments and they continue to apply pressure to change the proposed law before it is adopted.
First, a little background. When the draft law was made public in the spring of 2005 the Chinese government invited comments from interested parties. They received nearly 200,000 comments. Most were from ordinary people in
The law itself was prompted by a massive wave of strikes and civil disturbances. Its aim seems to be to respond to the threat of social instability by setting some basic labor standards and regulations in
The USCBC argues that “[t]he overwhelming number of labor abuses occur in locally owned companies that do not share the more advanced labor relations standards that American corporations bring with them when they come to
The draft labor law runs about 23 pages in English and contains 65 articles. The comments of the USCBC identified half a dozen or so key areas to which it took exception. But these areas represent the heart of the law.
Here are some of the provisions that they objected to. For a complete text of the comments submitted by the USCBC, click here.
Non-compete Agreements and the Freedom to Change Jobs
Non-compete agreements are a regressive feature of
Limited Probationary Periods
Currently corporations can set probationary periods unilaterally, often for an entire year, keeping people in a highly precarious employment status. This is a major problem for workers since it leaves them with little or no protections. The new law sets standard probationary periods of from one to six months depending on the type of job. The USCBC argues against limiting the probationary period from one to six months because it “[will make] it more difficult for employees and employers to properly evaluate the work relationship.” Instead, it should therefore be left to the sole discretion of employers to set probationary periods for all employees—including the most unskilled—for up to six months.
Payment for Training
Under current practice employees sign a separate contract that allows companies to recover any training costs if a worker terminates his/her employment. Under current law almost anything that management considers “training”—including many of the kinds of on-the-job training that are standard for any new job—can be subject to re-payment, leaving a departing worker either in debt or, if unable to repay the training expenses, bonded to his/her current employer. The new law limits costs employers can recover by, for instance, defining “training” as instruction that takes place “off-the-job,” on a full-time basis, and lasting for at least six months. The USCBC opposes the new law because “the employer would not be entitled to claim compensation from the departing employee for [on-the-job and other types] of training experiences.”
Severance Payments
There is theoretically no at-will employment in
Limits on Temporary Work
Chinese companies employ a large number of temporary workers hired through temp agencies. Temporary work encourages management to avoid the protections and commitment that come with standard employment. Under the new law, temp agency workers would become permanent employees after one year of employment at a client firm, thus reducing the number of insecure, contingent jobs. According to the USCBC, “This stipulation impedes the right of the employer to find the best person for the job and will reduce the flexibility of human resource allocation.”
Negotiations on Lay-offs
In practice corporations frequently lay off workers at their own discretion. Under the new proposals, corporations would have to negotiate the terms of any lay-off of more than 50 people with the union or representatives of the workers. The USCBC opposes this provision.
Expanded Collective Bargaining
The new law provides for negotiations over workplace policies and procedures, lay-offs, health and safety, and firings with a union or an “employee representative.” Foreign corporations demand unilateral authority, not negotiation. The USCBC writes, “It is not feasible to state that an employer’s regulations and policies shall be void if they are not adopted through negotiation with the trade union…. Requiring the consent of the trade union before such changes can be made is overly burdensome and may prevent important company policies from being implemented in a timely manner…. Final authority and responsibility for company policies should rest in the hands of the employer.”
If the USCBC and other organizations representing global companies really wanted “to make the new law more effective and balanced” there are plenty of suggestions they could have made. For instance, the law says nothing about expanding the rights of workers to organize and bargain with employers through representatives of their own choosing—rights guaranteed under
Tim Costello, Brendan Smith, and Jeremy Brecher wrote the report Behind the
The commentary “Labor Rights in
var footnotes_data = []; jQuery('.article_description sup').each(function(ind,el){ var number = jQuery(el).text().trim(); if(number){ number = number.replace(/[^0-9]/gi,''); } //console.log(number); if(footnotes_data[number]){ jQuery(el).css({cursor:'pointer'}).addClass('ftnt'); jQuery(el).bind('click',{number:number},function(ev){ var html = jQuery('span.footnote_text_'+number).html(); jQuery('.floating_footnote').remove(); var f = jQuery('
jQuery(window).scroll(function(){ jQuery('.floating_footnote').slideUp(1000); });
Share with a colleague: