Executive Briefings

Will You Have to Go Union in China?

Wal-mart recently signed collective-bargaining agreements with workers in two provinces, but further agreements covering all 50,000 of its local employees in China are a foregone conclusion. The financial terms of the contract are of only minor importance. Far more important are the other implications of Wal-mart's new ties to the All-China Federation of Trade Unions (ACFTU), a monopoly that claims 193 million members and is deeply intertwined with China's government and Communist Party. Like it or not, Wal-mart now has a business partner, and if it wants to close stores, lay off employees, or change other aspects of its business such as operating hours and work quotas (what employees are expected to accomplish), that partner must be consulted.
In January, China imposed one of the most far-reaching labor laws in the world. It included provisions requiring firms to consult employees on "material" work-related issues. Some companies responded by forming in-house workers' groups, but the ACFTU objected, claiming that this amounted to the creation of an alternative labor union, and was thus illegal. Instead, it has used the new law as the basis for a huge registration drive by the ACFTU that began in June and is intended to sign up 80 percent of the largest foreign companies by the end of September. And that, in turn, is a prelude to the stated goal of having trade unions in all of China's non-state-owned companies by 2010. Moreover, unrelenting pressure is applied to convince companies to sign up.
Source: The Economist, http://www.economist.com

Wal-mart recently signed collective-bargaining agreements with workers in two provinces, but further agreements covering all 50,000 of its local employees in China are a foregone conclusion. The financial terms of the contract are of only minor importance. Far more important are the other implications of Wal-mart's new ties to the All-China Federation of Trade Unions (ACFTU), a monopoly that claims 193 million members and is deeply intertwined with China's government and Communist Party. Like it or not, Wal-mart now has a business partner, and if it wants to close stores, lay off employees, or change other aspects of its business such as operating hours and work quotas (what employees are expected to accomplish), that partner must be consulted.
In January, China imposed one of the most far-reaching labor laws in the world. It included provisions requiring firms to consult employees on "material" work-related issues. Some companies responded by forming in-house workers' groups, but the ACFTU objected, claiming that this amounted to the creation of an alternative labor union, and was thus illegal. Instead, it has used the new law as the basis for a huge registration drive by the ACFTU that began in June and is intended to sign up 80 percent of the largest foreign companies by the end of September. And that, in turn, is a prelude to the stated goal of having trade unions in all of China's non-state-owned companies by 2010. Moreover, unrelenting pressure is applied to convince companies to sign up.
Source: The Economist, http://www.economist.com