Shenzhen workers feel shift in dynamics

January 5 2011

At the end of a year of rising wages and spiralling raw material costs, it was not the kind of festive surprise Hong Kong businessmen with factories in southern China would have wanted.

But just two days before Christmas, a senior government official in Shenzhen, the populous city across the border from Hong Kong, said new guidelines that could allow employees to appoint their own union representatives were “almost approved” and would be launched “as soon as possible”.

The statement was another sign that the balance of power has started to shift away from factory owners in favour of their employees following a spate of suicides at Foxconn, the Taiwanese-owned electronics company that supplies products to Apple and other multinationals, and wild-cat strikes at Japanese car parts companies in Guangdong last year.

The Shenzhen collective bargaining guidelines matter because – according to mainland China academics involved in earlier discussions of the proposals – the final version is likely to allow workers to elect their own union representatives, a significant change that could lead to more labour disputes.

Li Weining, 23, a worker at the Honda parts factory in Foshan where a strike took place in May, is already looking ahead to April when he expects his monthly salary to rise again from Rmb1,600 to about Rmb1,800 ($270). His salary was Rmb1,200 in 2009.

In July and August, in response to a wave of labour unrest, the government of Guangdong, the southern province where many of China’s labour-intensive factories are located, put forward proposals entitled the “Democratic Management Rules of Enterprises”.

That anodyne moniker disguised a radically democratic idea: the government proposed that one-third of a factory’s board should be workers. “We were shocked,” says Stanley Lau, vice-chairman of the Federation of Hong Kong Industries and the owner of a watch manufacturing company.

Responding to pressure from Hong Kong factory owners, the plan to have workers on factory boards was abandoned in November. But the guideline that a third of a factory’s workers can request collective salary negotiations remains.

“If you ask the workers ‘Do you want to raise wages’, of course at least one-third will say yes. You will have to spend all your time dealing with this,” says Mr Lau.

Labour activists see the issue differently. “Although the Hong Kong employers fought back, it’s now a real match between workers and employers,” says Han Dongfang, who runs the Hong Kong-based China Labour Bulletin.

Pun Ngai, a professor at the Hong Kong Polytechnic University, says that, since the labour unrest last year, the Shenzhen government and the All China Federation of Trade Unions are moving more on to the side of workers.

Mr Han believes the strikes last year made the government realise that the anger directed at factory owners could easily be turned against the government. “The government now realises that employers are making money but they pay the bill – the political bill,” he says.

In July, workers in the Honda parts factory, such as Mr Li, elected their own representatives, which Prof Pun says is the first election of this kind that the ACFTU helped organise. The company declined to comment.

Government officials are caught between the realities of labour shortages and higher inflation in the industrial hinterland of Guangdong and threats that employers may move elsewhere. But on November 30, China Daily quoted Ge Guoxing, deputy director- general of Guangdong’s labour department, as saying that the province may have to raise the minimum wage early this year from its current Rmb1,030 a month.

Mr Ge warned that the province was likely to face a labour shortage after the Chinese New Year in early February, when many migrant workers returned home. In December, Beijing’s municipality announced a 21 per cent rise in the minimum wage, effective from January 1.

Regardless of the precise definition of collective bargaining in the labour laws expected soon, a belief in annual wage increases among Guangdong’s millions of migrant workers is likely to become a powerful, self-reinforcing dynamic.

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