China Labour Bulletin supports Guangdong's efforts to establish a collective wage negotiation system

In the two months since the Guangdong government revised draft legislation that would help establish a collective wage negotiation system in the province, Hong Kong business groups have mounted a sustained and increasingly alarmist and vitriolic lobbying campaign against the bill, which eventually succeeded postponing its submission to the upcoming session of the provincial legislature.

China Labour Bulletin believes the legislation will not only be of huge benefit to workers in the province but also to the local government and the Hong Kong businesses that seem resolutely opposed to it. As such, we have decided to take stand against the negative and harmful actions of the Hong Kong business lobby and taken out a half page advertisement in today's Hong Kong Economic Journal (信报), outlining our stance and calling on Hong Kong businesses to show restraint.

The advertisement can be viewed here as a PDF with a full English-language translation below.


Support Guangdong's efforts to establish a collective wage negotiation system
A win for labour, employers and the government



In less than half a year, 13 young workers at Foxconn in Shenzhen attempted suicide; ten died.

Every year, there are 30,000 work-related hand injuries in factories in the Pearl River Delta alone, including those owned by Hong Kong companies, leading to the loss of 40,000 fingers.

There are more than 600,000 people across China suffering from the occupational lung disease pneumoconiosis – more than half the total number of victims worldwide. Most of the employers involved, including Hong Kong businesses, refuse to sign employment contracts with these workers, provide them with work-related injury insurance, or compensate them according to the law.

Around 15,000 people are diagnosed with occupational disease each year, making it one of the most serious problems facing China today.

Local governments across China regularly increase the legal minimum wage, but small and medium-sized enterprises, including Hong Kong enterprises, often respond by increasing work volume, work hours, and subsuming various benefits under wages, in a bid to circumvent the law. As such, the minimum wage has become, in reality, the maximum wage.

In the Pearl River Delta, where Hong Kong enterprises are concentrated, workers earn an average monthly wage of 1,417 yuan. The cost of a subsistence existence in Pearl River Delta cities is on average 1,385 yuan per month. In recent years, the region has experienced numerous labour shortages; and one of the key reasons is precisely because of the low wages and atrocious work conditions in the factories there, including those owned by Hong Kong companies.

In May this year, 2,000 workers at the Honda-Nanhai automotive components plant in Foshan, went on strike. The employer initially refused to negotiate, with the result that Honda's production in southern China came to an almost complete standstill, with daily losses of 2.4 million yuan. After the employer eventually agreed to negotiate, they reached a consensus with the workers, increasing wages by 34 percent, and thereby ending the strike.

From May to August, a massive wave of strikes hit the Dalian Development Zone, in Liaoning. Nearly 70,000 employees at 73 separate enterprises took part in the strike action, all demanding higher pay. After a wage increase of 34.5 percent was finally negotiated, the strikes came to an end.

In June, in response to the negative press which followed the tragic suicides of young workers at Foxconn, the company increased wages by 30 percent.

And in the following month, in a bid to protect workers' rights and to mitigate the increasingly frequent strikes and protests in the province, the Guangdong government drafted two pieces of legislation, the Regulations on the Democratic Management of Enterprises in Guangdong and the Regulations on Collective Consultations.

The Guangdong government asked for opinions from the public on these draft regulations, which could have a tremendous historic impact on China's future economic and social development. Unfortunately, the response of the Hong Kong business community was fierce opposition.

The Hong Kong business community has substantial capital at its disposal, but even more importantly, it has the freedom of speech and association. Hundreds of millions of Chinese workers have no such privileges, and can only give voice to their grievances by committing suicide or taking strike action.

In view of this, China Labour Bulletin, in the statement below, seeks to give voice to China's workers, expressing their pent-up emotions and understanding gleaned from years of painful struggle:

We support: Guangdong's establishment of an enterprise-based system of collective wage negotiations.

We regret: The decision of the Standing Committee of the Guangdong People's Congress not to submit the related draft legislation to the 21st meeting of the Congress, which will take place between the 27th and 29th of September this year.

We are concerned that: Postponing submission of the legislation will not reduce strikes and protests. On the contrary, in a situation where wages remain depressed, the cost of living keeps rising, and there are no legal procedures in place for negotiation between employer and employees, workers will surely continue to use strikes and acts of sabotage to press their wage demands.

We ask that: The Guangdong provincial legislature and local governments conduct a thorough review and revise provincial labour rules and regulations accordingly, while simultaneously strengthening legal enforcement. The system that has sacrificed workers' rights and interests to economic development over the last three decades must be scrapped as quickly and as thoroughly as possible.

We think: The above mentioned model of economic development has had its day. This model, while robbing hundreds of millions of Chinese workers of their right to share in the fruits of economic development, also restricts domestic consumption and holds back economic growth.

We think: China's economic growth depends on increasing domestic consumption and the best way to achieve that goal is to gradually raise workers' wages to a level where they can enjoy a decent life. Establishing a legally binding system of collective negotiation in enterprises will allow workers to make wage demands according to set procedures, and thereby help reduce the incidences of strikes.

We think: The collective negotiation system is a win for labour, for capital and for government. It not only helps to alleviate today's increasingly tense relations between workers and employers, it also allows employer-worker relations to achieve long-term harmony and stability, based upon equality and mutual respect.

We understand: Foreign enterprises, including Hong Kong businesses, after enjoying a free ride for the last 30 years, are feeling threatened both by an increasingly militant workforce, and a government that is beginning to legislate for the protection of workers rights.

We understand: All enterprises in Guangdong, including Hong Kong businesses, are worried about the increased costs that will accrue from fulfilling their legal obligations in the future.

However, we cannot accept that just when the country has decided to acknowledge, and is about to pass legislation to guarantee, international labour standards that should have been applied a long time ago, namely the right to collective negotiation, some Hong Kong businesses, who have benefited enormously from the oppression of workers over the last 30 years, are now howling in protest!

We remind Hong Kong businesses: You should ask yourself honestly, how many among you in the last 30 years have violated workers' rights and interests, by ignoring national labour laws and regulations! These violations have not only robbed workers of their wages and social security benefits, but have threatened their health and even their life!

We appeal to Hong Kong businesses. Stop your irrational actions that are preventing the country from embarking upon the path towards social justice, civilization and the rule of law. Don't continue to accumulate your own wealth at the expense of workers' rights and interests.

We hope: Given that Hong Kong factories in the mainland have already “drained the pond to get all the fish” through their inglorious efforts to keep costs down by robbing Chinese workers of their wages, social security, health, even their right to life; Hong Kong's business associations will now show restraint.

We recommend: Hong Kong's business associations establish an industry-wide lowest competitive price mechanism that includes reasonable wages and the necessary costs to ensure all occupational health and safety standards are met. This will not only curb the violation of workers legal rights and interests by Hong Kong businesses, it will set the basic guidelines for elevating the true competitiveness of Hong Kong-owned factories and firms in the global market.

The Director of China Labour Bulletin, Han Dongfang, sincerely invites the business associations of Hong Kong and their members to a public debate, at a time and venue that they deem suitable.


China Labour Bulletin
22 September 2010
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