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Education & Employment

The labour relations crisis in China

China Trade UnionAs Chinese labour becomes more expensive and a disaffected migrant workforce increasingly stays home, an increasing share of China’s export manufacturing business is drawn to cheaper venues in Southeast Asia.

But this is only the tip of a very large iceberg.  The rise of labour protest in China and the systemic problems which underlie it are one of the main challenges facing the country as modernisation proceeds.

Labour protest have increased rapidly over the past decade.  Incidents of mass protest in China increased by an average of 20% per year between 1993 and 2005, with an average increase in nationally arbitrated labour disputes of 20.6% per year between 2000 and 2007.

Increasingly, labour protests take the form of chain-reaction strikes, in which a single strike will lead to others throughout an industry or geographic area.  In 2010, a strike at a Honda plant  led to a cascade of strikes throughout the auto industry, and the labour problems at Foxconn, China’s largest electronics manufacturer, continue to make international news.  To quote Tim Pringle and Simon Clarke, scholars of post-communist trade unionism, it is “collective bargaining by riot.”

The System for Managing Protest

The Communist Party, of which the All-China Federation of Trade Unions (ACFTU) is part, has created a labour-relations system that operates on the principle of containing protest.  This can be compared to the multiple redundant safety features of a nuclear reactor.

The first safeguard is the monitoring system provided by the union itself.  The ACFTU enjoys a monopoly on legal collective representation, theoretically exercised by the constituent enterprise unions.  Enterprise-level unions in China, however, depend on funding from the enterprise whose workers they represent.

They are frequently staffed by workers cultivated and given special treatment by the management and put up for election under their sponsorship.  Direct union elections in China, while mandated by labour laws, began to be implemented only after Reebok and other Western companies pressured their suppliers, and still, the process is frequently rigged.  The one function the workplace union actually carries out is early warning of labour disturbances.

On a legislative level, the ACFTU has been somewhat more effective, pushing through labour laws detailing working hours and conditions, minimum wage laws, and a contract law widely opposed by employers.  Many of these successes are dead letters, most notably the collective contract system.  Most migrant workers continue to work without formal contracts, and those that have them cannot enforce them.

The ACFTU remains very cautious about showing any support for strikers, preferring the role of mediator.   In one Dalian company where the union cadre was actually asked by striking workers to represent them, an unusual occurrence, he refused.   The unions in the rentier-government Pearl River Delta are particularly notorious, as the local governments appoint trade union officials with the primary aim of attracting foreign investment, thus increasing the profits of the rentier elite.

At one company, workers announced their intention to strike to their union chairman two hours before the event.  At another, union cadres visited dormitories to persuade workers not to strike, only to find the dormitories emptied due to a text message in anticipation of their visit.

The ACFTU’s function is to monitor labour disputes, and provide the minimum necessary level of pressure release to prevent the spread of unrest, while making things as smooth as possible for entrepreneurs, investors and local government and preventing the organisation of other unions.  Likewise, the state opened legal channels to workers precisely to avoid mass protest or the formation of alternative unions.

From Mediation to Protest

The three avenues for dispute resolution legally open to Chinese workers are, sequentially, mediation with employer and union representatives, arbitration by Ministry of Labour officials, and lawsuits.  This system has several structural advantages for Beijing, as it pits workers against local authorities and their own employers, so that the workers are in the position of trying to compel local actors to enforce the rights benevolently laid out by Beijing.

As Marc Blecher notes, one significant purpose behind the mediation-arbitration-litigation process is to “canalise and individualise disputation,” to divide mass protest into digestible individual grievances.  This is not to say that the state does not recognise that it has a genuine interest in curbing the worst labour practices, but that it is caught between its inborn fear of mass movements, its fear of losing foreign business and its desire to placate the workers.

Mediation rules are often violated, with employers coercing workers to accept unfair settlements.  Thus, mediation often creates more strikes than it contains; sometimes, a mass protest is necessary to get the Labour Bureau to initiate the process, or to force the enterprise to take the issue seriously.  The unintended lesson learned by the workers is that “mass incidents” get results, while individual protests do not.

Due to the influence of the private sector over the local government and poor training of mediators, the same obtains with arbitration.  Local courts remain financially dependent on their own level of government,  which in turn depends on economic growth.  Many aspects of labour law become unenforceable at the local level without central intervention.  Arbitration and litigation each come with logistical costs and paperwork fees, to say nothing of time commitments, which are very steep for workers, allowing employers to wait them out.

While the process tries to isolate the grievances of individuals and then leads them through proceedings that can drag on for years, workers have come to recognise that protest is the only effective option.  The fact that so much of Chinese labour law is honoured in the breach gives workers a powerful argument when taking their case to the government and the public: they are arguing for their legal rights.

Corrupt Local Officials, Benevolent Centre

An early case was that of silicosis-affected workers in the gemstone industry.  When management attempted to evade responsibility through deception and coercion, the workers fruitlessly exhausted every avenue in local government, including the unions, the labour bureau and the courts.

Although the process tried to segregate their individual cases, group dissatisfaction led to escalating demonstrations with support from workers at multiple factories.  They sought and gained international publicity.  Finally, only by travelling to Beijing were they able to have the matter taken out of the corrupt hands of their local government.

This pattern has since been repeated countless times.  The idea is that if all else fails, the higher levels of government can come in and rebuke the unrighteous local officials and make a show of forcing employers to comply with labour laws.  It seldom lasts long, but it lets Beijing maintain an image of benevolent impartiality.

The Chinese government tends to deal with mass protest using a “carrot and stick” strategy, detaining leaders but providing concessions to the majority- killing the movement but vindicating the cause.  Typically, workers’ groups avoid having clear leadership to escape reprisals, and thus cannot put forward representatives to negotiate.

For this reason, one group of strikers in Dalian refused to produce any leaders when the government asked them to negotiate.  The government ultimately had to select some workers and promise not to retaliate against them.

Returning to the nuclear reactor metaphor, we can visualise this system as a series of safety sensors, pressure valves, containment vessels and emergency shutoff equipment.  The radiation, as far as the state is concerned, is the danger presented by a sustained and independent labour protest movement.

The danger the state perceives is not only to the economy, but to public order- the Party has studied the falls of communist and non-communist regimes worldwide, and taken the lesson that sustained, large-scale protest cannot be allowed to persist.

From the workers’ point of view, the system gives no effective recourse other than public protest.  They know that Beijing will concede a great deal to maintain its image as the fair and benevolent arbiter, and above all to get people out of the streets.

While it seems that this state of affairs cannot possibly be sustained, Beijing generally seems to hope that a shift to higher-technology industries, development of the interior and development of domestic markets will transform the economy before labour disturbances become untenable.  The strange thing about China is that you never know when it’s about to hit a wall, and when it’s about to jump it.

About beyonddefence

Tony Rodger is an MA in political science (international relations) and works as a product developer for a consulting and coaching company. His expertise is in analysing defence policy, international relations and political economy. He analyses security through the lens of perception, international relations through culture, and strategy through history. His blog BeyondDefence publishes articles on defence procurement policy, international relations and political economy with a focus on Asia and Canada.


5 thoughts on “The labour relations crisis in China

  1. Reblogged this on CHINDIA ALERT: Hidden Dragon, Crouching Tiger and commented:
    As China matures and its labour policies and pay improves, it will become less competitive for low-cost production. The question is: can China move up the manufacturing value chain fast enough to avoid the predictable problems it will face?


    Posted by keeper @ chindia-alert | February 25, 2013, 8:20 pm
  2. It is quite a sad situation to know what is happening in China with the labour. For past sometimes, the problem of unemployment and unfair labour is getting serious and more serious. To make the work more productive and to have fruitful results, it is highly required to have good communication channel between the employer and employee so that the disputes are solved in its primary level only. It is also highly required that employees are fully aware of all their rights so that in case of requirement, they can make use of law. To know more about labour laws, find more information here.


    Posted by Oak Bridge Consulting | February 26, 2013, 3:58 pm


  1. Pingback: The labour relations crisis in China | BeyondDefence - February 28, 2013

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