White collar workers yearn for a trade union of their own

09 May 2011
The death of Pan Jie, a 25-year-old auditor at the Shanghai branch of PricewaterhouseCoopers, last month ignited a vociferous debate in the Chinese media on the work pressures felt by young urban professionals, particularly those at the offices of the so-called “Big Four” accounting firms; PwC, Deloitte, KPMG, and Ernst & Young.

The Labour Daily (劳动报) took a slightly different approach and published a detailed investigation into the exclusion of trade unions from the Big Four’s Shanghai offices and how that had contributed to the exploitation of young workers. It shows that while many employees did want to create a union, they were reluctant to stick their neck out and take action. Moreover, they received little support from the official trade union federation, which prefers to talk to management rather than workers.

A translated and edited version of the original story “四大长期不建工会成全总钉子户,员工权益如何保障?” follows below.

How can workers’ rights be protected at Shanghai's Big Four
accounting firms without a trade union?

It has never been determined beyond doubt that Pan Jie died of overwork. But it is an indisputable fact - as her case revealed - that employees in her industry work long hours under high pressure and have no means to demand better pay and working conditions and defend their legal rights.

"In our line of business, no work done up to midnight is considered overtime," said PcW employee Shen Limin (a pseudonym). "A colleague of mine puts in overtime by taking phone calls from the firm at four in the morning when she should be fast asleep."

Shen did not know Pan Jie personally, but she empathized with the words Pan posted on her microblog:

During the four years or so I've been working in this firm, I've seen many people beavering away till dawn in front of their computer screens even though they were ill, I've seen people whose mother was ill but would not take sick leave and kept on working with tears streaming down their face, and I've also seen people who can't take it anymore and leave their desk to go cry in a toilet stall - overcome by physical and mental exhaustion.

Shen explained that over the past few months her normal working hours have been from 9.30 a.m. to 9.30 p.m. but she frequently gets off work at 1 or 2 a.m. and also works every Saturday.

This is not only the case at PwC, it is commonplace in all the Big Four firms. People are always working overtime, going on business trips and taking urgent and stressful phone calls from the office.

An attractive five-tier pay scale

Our investigation revealed that although PwC, like the other Big Four firms, is well known for making its employees work very hard, it also pays them high salaries and it has fairly open channels for career advancement.

It is understood that in China, the Big Four all have similar pay scales. Employees are generally divided into five levels: in the first level are ordinary employees, who are sub-divided into two grades; in the second level are senior staff, sub-divided into three grades; in the third level are managers; in the fourth level are senior managers; and in the fifth level are partners. During their first year at Deloitte, employees are usually called A1 or "Kid"; after working in the firm for a year, they are promoted to A2; senior staff members are generally referred to as S1 or S2 or S3. The basic monthly salary of an ordinary employee ranges between 5,000 yuan and 8,000 yuan; a manager's basic monthly salary is about 30,000 yuan; and the basic monthly salary of a senior manager is about 50,000 yuan. Partners earn even more, at least one million yuan a year. In addition to their basic salary, employees are also paid travel allowances, overtime, taxi fares, etc.

Under normal circumstances, Big Four employees have the opportunity to get a promotion every year or two, and some can eventually become partners. Those who underperform, on the other hand, are weeded out.

Many people are attracted to the Big Four because of their high salaries and good career prospects. Every year thousands of applicants compete for jobs at the Big Four, including many applicants from China's top universities.

Although Big Four employees do earn big salaries, they crucially lack any means whereby they can demand better working conditions or defend their legal rights. This was particularly evident in the wake of the financial crisis.

In August 2008, Deloitte announced that it was rescinding its overtime pay policy. Within a few months, PwC, Ernst & Young and KPMG had all followed suit. Prior to 2008, overtime pay accounted for a large proportion of Big Four employees’ earnings; in some cases it was more than their regular salary. That said, the overtime payment received by employees was often usually calculated by project managers or the human resources department on the basis of a project budget, not the actual number of overtime hours worked.

"Voluntarily" signing away their 13th month salary

But cancelling or reducing overtime was just the first step. Thereafter, the Big Four surreptitiously required employees to take paid leave and accept pay cuts. They also quietly laid-off employees.

Right after Li Jiaqi (a pseudonym) changed jobs to move to Deloitte, the financial crisis broke out and the firm announced a series of measures to weather the storm. Soon after Deloitte announced that it was officially eliminating overtime, it entered the busy season. Although there was some grumbling, employees continued to work overtime. But like a bolt from the blue, in early 2009, they received an email encouraging them to take 56 days (at least four days per month) unpaid leave. Li said:

On the one hand we still had to put in unpaid overtime and on the other we were told to take unpaid leave. Fifty-six days of unpaid leave meant that our average annual earnings were reduced by about 20 percent. They used the words "encouraged" and "voluntary" but everyone knew what was really meant.

What depressed Li most however was the loss of his 13th month’s salary:

Deloitte always used to pay a 13th month salary at the end of the year, but then they announced that they were eliminating it and introducing a performance-based pay system. Whether and how much performance-based pay would be paid out depended on the firm's annual performance.

Li said that the employees would of course stand by the firm if it was really experiencing difficulties. However they had no way of knowing how well Deloitte was really doing or whether or not they would get the performance-based pay they were entitled to. As such, a lot of employees initially refused to give up their 13th month salary and move to the new system. Then the firm sent in the heavy artillery:

We held out as long as we could, but when they found themselves face to face with a partner, one employee after another ended up saying, “no problem” and “voluntarily” signing that piece of paper. After all, partners have a big say in whether we're promoted and if we stay in the firm or are fired.

It was at that point that Li started thinking about a trade union and began to hope that Deloitte had a union that could speak for all employees.

No way for employees to defend their rights

PwC reportedly encouraged its employees to take 15 days leave during a specified time period between April and September 2009. Ernst & Young introduced three successive "voluntary" unpaid leave schedules totalling 80 days. In order to avoid legal disputes, Ernst & Young instructed its employees that before going on leave, they had to sign an agreement declaring that they were going on leave voluntarily.

Although the Big Four denied that they laid-off staff after the economic crisis, industry sources say they "streamlined" their operations by not renewing contracts and advising employees to retire. A former Ernst & Young employee explained:

Once they decide to lay you off, they will use any means to talk you into resigning …If you hand in your resignation application of your own accord, you can get pretty good severance pay, but if you put up a fight, you are asking for trouble.

In response to such claims, PwC said: "As part of its management responsibility, the firm may suggest to employees who are unable to meet the job requirements that they leave. Irrespective of whether the economic climate is good or bad, all organizations and enterprises have a similar approach to dealing with such issues." But PwC failed to mention whether its staff evaluation system is fair and open and whether employees have channels and opportunities to appeal or complain.

The Big Four have now reinstated a nominal overtime pay system. However, the way overtime pay is calculated varies at different times and for different projects. For example, employees might only be allowed to take time off in lieu of overtime pay, or might only receive overtime pay for up to 36 hours a month and have to accept comp time for anything beyond that. Several employees said that no matter how overtime was calculated, they always ended up getting short-changed: "We grumbled in private, and we also complained, but that's as far as it went: no one dared openly challenge the way things were done."

Employees have a good understanding of trade unions but no one dares take the lead

Although the Big Four do not have trade unions, their employees' awareness and understanding of trade unions is better than that of most employees in foreign-invested enterprises. As a PwC employee explained:

The projects we work on often involve auditing trade union funds, which is why we have some understanding of the Trade Union Law and regulations and the work trade unions do.

In an online forum for Big Four employees, we came across a large number of posts about trade unions. One Deloitte employee whose user name is "We Need a Union" wrote, "We need to form our own union, our own organization to speak on our behalf!" Another poster suggested, "The Big4 need to unite to establish (a union)."

One employee, with the user name "auditunited", posted three 1,000-character essays on the necessity of forming a trade union. One of the essays said:

I would like to do a little less overtime. I don't expect to work from nine to five, but at least not from 9 a.m. to 9 p.m., and sometimes even from 9 a.m. to 9 a.m. I think our firm could make us feel a little more at home.... Although our demands are very reasonable, I don't dare talk about them with my boss.... so our only option is to get together to form a trade union.... a trade union is a stable and persistent force that can always sit at the negotiating table across from the employer.

Professor Wang Xiansen of the Labour Relations Department in the Shanghai Trade Union Management College thinks that as China’s economy and society develop so are workers' demands. He argues that the power struggles of the past are largely being replaced by the struggle between workers and employers over competing interests. Although the work environment of many white-collar workers is considerably superior to what it was in the past and they are paid relatively high salaries, because they do not have trade unions to represent them, their fate is still in the hands of their employer. And when business suffers, employees are vulnerable. It is therefore inevitable that some white-collar employees demand their own trade union.

Many employees however had misgivings about forming trade unions and few were willing to take the lead. One anonymous online commentator said:

The task of setting up a trade union pretty much has to be carried out by someone who's about to quit. Employees who aren't planning to leave the firm are bound to be pretty apprehensive and don't want to stick their necks out.

The Big Four delay and counter attempts to establish unions

PwC has long claimed that "Our people truly are our most valuable asset" and has also formulated an "employee care plan" that offers employees health checks and the like. KPMG states on its website that; "our main responsibility is to provide good opportunities and a platform for career development and to ensure that our employees receive extensive welfare benefits." However, none of the Big Four has ever fulfilled the most basic right of employees: to form a trade union.

A local trade union official said he and his colleagues had repeatedly gone to PwC to pitch the idea of forming a trade union, but each time the firm has put off doing so on the grounds that "forming a trade union could affect the firm's share price."

It is not just PwC; efforts to form trade unions at Deloitte, Ernst & Young, and KPMG have all met with difficulties. One trade union official said of Deloitte:

Each time we went over there to make the case for forming a union, Deloitte seemed to have a more positive attitude towards the idea. At first, we talked with reception staff, then with middle management, and in the end the director of human resources made an appearance. But the answer was always the same: forming a trade union was not something that he could decide on his own. Such a decision would have to wait until all the partners got together. We repeatedly asked them how many partners there were and when they were all going to meet, but we never got a clear answer… I really don't know how they make their corporate decisions.

Deloitte has politely and courteously stonewalled the establishment of a trade union for several years. The same goes for Ernst & Young and KPMG.

Professor Chang Kai, head of the Department of Economics and Labour Relations at Renmin University, points out that if employees who have signed an employment contract with a company wish to form a trade union, the company may not prevent them from doing so, and must provide, in accordance with law, the necessary conditions for the establishment and activities of such a trade union, otherwise the company is violating the law.

And Professor Hu Shoujun of Fudan University’s Sociology Department argues that trade unions are absolutely indispensable to mature, modern enterprises. Even the best enterprises can have disputes or conflicts, but unions can represent employees and negotiate with the management in accordance with the law and thereby contribute directly to solving such problems. During routine business operations, he said, a union can consult with the enterprise about employee remuneration, the drafting of corporate regulations and other issues to defuse potential conflicts and safeguard the healthy development of the enterprise. Enterprises without a trade union, on the other hand, do not have this safeguard.

Professor Hu points out that as an international metropolis that is making great strides towards globalization, Shanghai needs modern enterprises that observe the relevant codes of conduct and the law, care for their employees and have harmonious labour relations. Accounting firms that provide professional services ought to become exemplary models in this area. But if these firms continue to flout China's laws and regulations on the establishment of trade unions and to ignore the rights and interests of their employees, they will not only fail to be exemplars, they will be excluded from a key role in Shanghai's future development.
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