[Corp. Watch] China allowing labor strikes to re-balance its economy

[Corporation Watch]

China Takes Hands-off Approach to Labor Strikes

 By Tini Tran

(Associated Press, June 25) -- When workers at a Honda transmission plant in China went on strike for higher wages last month, they touched off a domino effect of high-profile labor disputes.

	As the strikes, many of them at foreign-owned plants, rippled through China's southern manufacturing heartland, the government -- usually quick to crush mass protests of any kind -- did not step in, but allowed them to spread.

	That's because it views the strikes less as a political threat these days than as an economic tool -- a way to help restructure China's current export-driven economy to a more self-sustaining one, driven by ordinary people with more cash to spend.

	The demand for higher wages reflects a younger, savvier work force that is better organized and has higher expectations, labor experts say.

	Boosting wages fits in with Beijing's strategy of closing the income gap and promoting more equal growth in coming years, said Liu Shanying, an analyst at the Chinese Academy of Social Sciences' Institute of Political Science in Beijing.

	"If incomes won't go up, how can domestic demand be boosted? Strikes for better pay are very much in line with the big trend of Chinese economic development," he said.

	The authoritarian leadership sees the gulf between rich and poor as a threat to Communist Party rule, and has cited widening income disparities as a factor in the protests. Policies aimed at raising incomes for working-class Chinese and promoting more equitable growth are a priority for the next five-year plan, which the government is drafting now.

	Despite moves by the government to raise wages, they remain strikingly low. Workers' salaries as a share of China's economy have declined for the last two decades, dropping from 57 percent of gross domestic product in 1983 to just 37 percent in 2005.

	The minimum monthly wage in southern Guangdong province was increased in March to between 920 yuan and 1,030 yuan ($135 - $150) in the capital of Guangzhou and cities in the Pearl River Delta manufacturing base. Elsewhere, it is as low as 660 yuan ($95).

	While China has taken a less confrontational approach toward striking workers, the workers have also helped their own cause, by generally keeping their demands limited and not calling for national independent unions, which are banned. Police intervention has been rare unless protests spilled into public roads and areas.

	"For several years now, the central government in Beijing has seen labor disputes to be just that -- disputes between workers and management," said Geoffrey Crothall, spokesman for the Hong Kong-based China Labour Bulletin, a worker advocacy group. "They are not related to culture, religion, or politics. They are pure economic disputes and should be dealt with as such."

	"We're not seeing the systematic repression of organized labor that we saw 10 years ago," Crothall said, noting that labor organizers used to be singled out for lengthy jail terms, but in recent years have been given one or two years.

	Striking workers in the recent unrest have largely remained calm and stayed out of the streets, said Liu. "If the tensions get resolved in a peaceful and reasonable manner, why [shouldn't the government] take a free ride on it?" he said.

	"After a series of mass incidents, the government has learned this the hard way," Lui added. "Now it won't go and confront [striking workers]. If the workers are right [in their disputes with companies], why should the government play the bad guy?"

	China has been wary of the increasing number of "mass incidents" -- large-scale social protests often aimed at government corruption or illegal land confiscation --  in recent years. There were about 127,000 protests in 2008, according to a 2009 China Labour Bulletin report. Roughly one-third are believed to be labor-related, according to Crothall.

	Because China does not release official data on the number of strikes that occur annually, there is no way to say for certain whether the recent rash of labor unrest marks an increase from previous years, said Chang-Hee Lee, a specialist on industrial relations at the International Labour Organization's Beijing office.

	Domestic media are often barred from reporting on labor strikes, so the recent surge in coverage by Chinese media is noteworthy, he said. "We see many more reported cases of strikes in the Chinese media," Lee said. "We don't know if it's increasing, but what we do know is that the nature of the strikes are changing."

	The spiraling labor unrest poses a problem for Japanese companies that shifted production to China in the hopes of taking advantage of lower labor costs. Toyota and Honda have had to repeatedly halt production at their car assembly plants in southern China since mid-May after parts suppliers were hit by strikes.

	The protests have served to highlight a more effective, organized workforce. Unlike past years, when the mostly migrant workforce protested over blatant violations, Chinese laborers now are fighting for things beyond their basic rights, such as improved working conditions and higher pay.

	That change reflects the attitudes of a younger generation who were raised in an era of relative plenty, compared to the poverty and unrest their parents and grandparents knew. "They are negotiating for their interests, not for their rights," said Anita Chan, a labor expert at the University of Technology in Sydney. "It's a very different set of stakes."

	"Normally, all the strikes that happened in this part of China in these foreign-funded factories tended to do with violations of rights -- wages not paid properly or paid at all, or cheating of wages," Chan said.

	Another reason behind the more assertive workforce is a shifting job market. Manufacturing has begun to expand into the Chinese interior, leaving traditional industrial enclaves on the coast competing for labor, and giving workers a stronger bargaining position.

	Workers "have the upper hand, and also sense the government is trying to address inequalities, so they feel more comfortable in pushing for high wages," said Lee.

	He also attributes some of the new worker awareness to the debate that surrounded passage of a 2008 labor law regulating contracts, lay-offs, and other conditions. China sought public input on the drafts before passage.

	"They received [more than] 190,000 public comments, and it created huge debate in the Chinese media," he said. "Though workers didn't know every detail [of the proposed law], they understood that this law provided better protection."

	In the recent string of strikes, workers are seeking salaries more in line with what their overseas counterparts are paid, said Lee. They also demand more vocational training, and reforms so that their salary and status can rise the more years they work, he said.

	"I was surprised to see the degree of sophistication in their demands," he said. "My sense is they are much better organized."