SCMP: Hong Kong-owned factories in delta win concessions on labour rules

China Labour Bulletin is quoted in the following article. Copyright remains with the original publisher.

Denise Tsang
30 October 2010

The Shenzhen municipal government has made concessions to Hong Kong factories over proposed rules intended to allow migrant workers to negotiate pay rises and welfare matters. But while discussions about the eventual shape of the labour rules continue, a study has found that the Hong Kong factories need to reinvent themselves to face new challenges.

Federation of Hong Kong Industries chairman Cliff Sun Kai-lit said yesterday that the Shenzhen government had scrapped two key items and revised 11 terms of the so-called "collective wage negotiation" proposal two weeks ago after the trade body complained.

The decision eased mounting pressure from tens of thousands of Hong Kong factories across the border, but could be bad news for millions of migrant workers in the special economic zone.

Earlier, strong opposition from factory owners had prompted lawmakers in Guangdong province not to submit the proposal for legislation last month, which effectively put it on hold indefinitely.

Despite this, the governments and the business sector have since discussed details of the proposal, which is designed as a mechanism for workers and bosses to negotiate pay rises, bonuses, working hours, working conditions and benefits to avoid a recurrence of strikes that hit Guangdong province in the summer.

Sun expected the proposal would eventually come into effect. But he said the scrapping of two key items would lessen the chances of negotiations being held. First, workers and bosses were no longer required to meet at least once a year, and second, workers were no longer able to call for a meeting to negotiate pay rises if 50 per cent of the workforce do not earn the average pay of their factory.

Geoffrey Crothall, spokesman for a pro-worker non-governmental organisation, China Labour Bulletin, was disappointed, and criticised the federation for failing to think about the proposal's benefits. He said he suspected what would result would be "a much watered-down version".

Sun said allowing workers to negotiate wages collectively would mean every worker getting the same pay and benefits, reducing their incentive to work harder. "It would turn off us investors," he said.

He argued that an estimated one in three Hong Kong factories in Guangdong, or 18,000 out of 58,500, had been made idle after the onset of the global financial crisis two years ago, and had ultimately gone bust.

A study commissioned by the federation and conducted by consultants Enright Scott and Associates found Hong Kong factories in Guangdong needed to re-invent themselves.

It said factories were now facing challenges brought about by weaker export markets, the strong bargaining power of importers, labour shortages, higher labour costs, yuan appreciation, competition from domestic factories and the mainland's policy favouring high-technology and high value-added industries.

Michael Enright, director of the consultants, said consolidation was likely. "It is a difficult time, but industries will not go away," he said. "China will continue to be competitive for the years to come despite the challenges."
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