Recruiting in China

Proposed revisions to China's labor laws, presented for discussion at this December's 19th Conference of the 10th Standing Committee of the National People's Congress, are stirring controversy among labor and business groups in the US.

The AFL-CIO described as "duplicitous" a campaign led by US corporations to convince the Chinese government to block the labor reform measures. The labor federation argued that the reforms are needed to protect workers' rights, and submitted a supporting petition to the Office of the US Trade Representative, a Bush-administration-appointed agency.

Meanwhile, a report published by the think tank Global Labor Strategies points out that US-based corporations and their lobbying arms are opposing the law and even threatening to pull their investments out of China.

The corporations involved include Wal-Mart, which incidentally conceded just recently to Chinese trade union organizing efforts, Nike, Microsoft, AT&T, the American Chamber of Commerce in Shanghai, the US-China Business Council, and others. European-based business associations have lodged similar complaints as well.

Because the reforms would force foreign employers in China to recognize the legal rights of their employees, these corporate interests have viewed the proposals negatively and even actively engaged in China's national dialog on the matter.

What's in the New Labor Law?

The proposed reforms would provide a means to regulate and standardize industrial relations across different sectors in the Chinese economy. While China adopted a contract labor law in 1994 to protect workers, tens of millions continue to be employed without such protections.

During a recent visit to Washington, China's Social Security Minister, Tian Chengping, said the reforms are needed "to improve the dispute-resolution system and supervision mechanism for labor relations."

The reforms would codify the rights and obligations of employers and workers, and are generally seen as having the potential to strengthen the rights of workers and protect their interests.

The proposed reforms were presented to the Chinese public earlier this year for discussion and response. According to Chinese media reports, almost 200,000 workers and other interested parties provided their opinions on the proposals. The All-China Federation of Trade Unions (ACFTU), China's central labor federation, has participated in the process by exchanging recommendations with the government body that authored the proposals. Many ACFTU ideas were included in this draft of the reforms.

The key elements of the reforms focus on contract labor and include, among others, the following regulations. One measure would impose a limitation on the probationary period for contract workers and would prevent employers from hiring workers for only short periods, and releasing them before the terms of their contract had been fully met. It is a regulation that would reduce abuse and ensure greater job security.

A second proposal would require employers to provide severance pay after the termination of a contract. This reform would protect workers by ensuring economic stability between jobs and also would encourage employers to provide longer-term contracts.

In the event of a large-scale termination of more than 50 contracts, the employer would have to meet with the trade union, explain its reasons for terminating the contracts, and negotiate over compensation and other conditions.

Where contracts with employees do not exist, the proposal would create legal provisions that would actively encourage employers to provide them and thus extend rights and benefits to workers. Indeed, if employers do not do so, the law would recognize the employer-employee relationship as a de facto long-term contract.

The reforms also give the ACFTU and workers' representatives the authority to participate in the creation of new work conditions put forward by employers. Additionally, the unions would be authorized to collectively bargain and sign contracts for larger groups of contract workers.

For example, in some sections of China's construction industry, large numbers of workers are employed in the contract labor system. Contract labor forces them to deal with the employer on a one-on-one basis and increases the likelihood of their being exploited. This reform proposal would make contracts fairer and increase workers' bargaining power to improve wages, benefits, and working conditions.

The reforms would also restrict the common practice of turning a company's own contracted labor over to third party employers. Currently, an employer can force a contracted employee to work for another employer. The new law would limit this practice to certain sectors, limit the time frame, or require that a new contract be drawn up between the new employer and the employee.

The proposed reforms also provide a more even playing field for workers when they disagree on the meaning of the terms of a contract. In fact, in most cases, the law would require arbitrators to side with workers in these disputes, encouraging an employer to make the terms of the contract as clear as possible and preventing an employer from arbitrarily changing the terms.

The net result of the proposed labor law reforms is that millions of new workers would be added to the rolls of Chinese workers who have collective bargaining rights, job security, legally mandated benefits such as severance pay, access to grievance procedures, paid training programs, and freedom to change jobs.

US corporate interests oppose the laws because they prefer unregulated labor markets in which they can arbitrarily hire and fire workers and change the conditions of work in order to maximize profits. Many corporations look to the millions of people in China's workforce who aren't currently protected as a source of super profits.

Labor movement critics of corporate interests see such practices as a means to drive wages down and propel workers on a "race to the bottom" all over the world.

Room for Solidarity

Meanwhile, the labor movement in the US is also campaigning diligently for passage of reforms here. Labor wants the new Democratic Congress to pass the Employee Free Choice Act, which would guarantee the basic right of workers to organize and join unions. Business interests are greeting this reform measure with hostility similar to what they are showing in China.

The proposed new laws in China and the US, along with the current alignment of attitudes regarding them, suggest that the labor movement in the US and China have a strategic interest forging new alliances.

Setting aside differences for the sake of achieving the basic goal of workers' rights would be a significant step toward real solidarity. Global solidarity, this case shows, is the only avenue for stopping the "race to the bottom" and protecting the rights of all workers, in China, the US and the rest of the world.