Undue influence: Wal-mart, Google, GE press China to curb workers rights

There is a “tug of war” raging worldwide over reforms in China’s labor law, according to Brendan Smith, Tim Costello and Jerry Brecher, authors of a report released April 5 by Global Labor Strategies (GLS).

On one side of the battle, the report says, is Wal-Mart, Google, General Electric and other transnational corporations that have been lobbying to limit rights for Chinese workers. On the other side are workers’ rights forces in China, including the country’s official laber organization, the All-China Federation of Trade Unions (ACFTU), and labor and human rights groups in the U.S. and around the world.

Chinese scholar and labor lawyer Liu Cheng, a lifelong supporter of the Chinese government who can by no means be classified as a “dissident,” flew to Washington in early April to win support from U.S. congressional representatives and labor leaders for a law that is pending before the National People’s Congress in China. He helped draft the measure.

Essentially, he told everyone he met in Washington that without support from labor backers outside China, some representatives in the National People’s Congress, under the influence of the transnational corporate lobby, might push for concessions in favor of the employers.

Unfortunately, events of the last year show that his fears are based in fact.

Business undermines unions’ role

In March 2006, the Chinese government, with broad popular support, proposed changes in labor law with significant increases in workers’ rights. The American Chamber of Commerce in Shanghai (AmCham), the United States China Business Council, Wal-Mart, General Electric and even Google immediately went on the offensive. There are reports that Wal-Mart and General Electric threatened to pack their bags for Pakistan and Thailand if the proposed reforms became law.

Nine months later the Chinese government put out revisions of its original proposal that reduced some of the contractual, collective bargaining and severance rights that were featured in the first proposal.

The transnational corporate and big business operatives in China openly claimed credit for the changes.

“We have enough investment at stake that we can usually get someone to listen to us if we are passionate about an issue,” Scot Slipy, Microsoft’s director of human resources in China, explained to a reporter from Business Week last year.

The changes made by the Chinese government in its original draft proposals are a “significant improvement,” declared the U.S.-China Business Council last December.

According to the GLS report, a lawyer representing numerous corporations in China recently said, “Comments from the business community appear to have had an impact. Whereas the March 2006 draft offered a substantial increase in the protection for employees and a greater role for unions than existing law, the new draft scaled back protections for employees and sharply curtailed the role of unions.”

Give an inch to corporations …

China is apparently learning that once you make concessions to big business they immediately demand more. The transnational corporations have launched a major new effort to further gut the legislation before it becomes law later this spring.

The U.S.-China Business Council has written to the Chinese government describing parts of the revised draft as “burdensome” and “prohibitively expensive,” saying they will have “an adverse impact on the productivity and economic viability of employers.

“We will have to wait until the final draft is written and see how the law will be implemented,” the council says. “If the law is too negative for employers, then we might see a slowdown of recruitment.”

For every action …

Whenever and wherever big business goes on the attack, however, the working class and its allies can be counted on to fight back. This is no less true in this situation.

The ACFTU has taken a strong stand against the corporate pressure. The Chinese labor federation has been fighting efforts by companies to restrict the role of unions in setting new labor policies. Xie Langmin, vice director of the federation’s law department, publicly criticized both the U.S. and European Union Chambers of Commerce for issuing threats as the draft law moves through the legislative process. He told the South China Morning Post, “It is excessive to intervene in a country’s law making process by threatening to withdraw investment.”

Outside China, international union federations have pressured their employers to reverse course on this issue and human rights groups have mobilized support for the rights of Chinese workers.

On Dec. 8, shortly after the 2006 elections in the U.S., Reps. Lynn Woolsey (D-Calif.), Barbara Lee (D-Calif.), George Miller (D-Calif.), Barney Frank (D-Mass.) and 28 other members of the House introduced legislation calling upon the president to publicly express support for the rights of Chinese workers and the protection provisions of China’s draft labor law and to repudiate efforts by U.S. corporations to limit new rights for Chinese workers. Their move was important because it properly placed emphasis on the role of transnational corporations in China rather than simply bashing the whole idea of trade with China. Their move was important also because it was part of a broader effort to take policy-making initiative away from a notoriously anti-labor administration in Washington.

Fight-back shows results

The fight-back both inside and outside China has begun to show results on several levels.

First, it has begun to fracture the unity of U.S.- and European Union-based corporations in China.

AmCham is meeting resistance to its position now from some of its own most powerful members. Nike has repudiated the American Chamber of Commerce, with Nike Vice President Hannah Jones saying, “Nike has a long history of actively supporting the Chinese government’s efforts to strengthen labor laws and protections of workers’ rights. When AmCham took its position Nike had yet definitely to state a position on the draft labor law.”

The European Union Chamber of Commerce in China had initially warned that the Chinese government’s attempt to reform labor law might cause foreign corporations to disinvest in China, but under pressure from human rights and labor groups it has now issued a stunning “clarification” welcoming the law.

Unions unite vs. ‘global sweatshop lobby’

The fight-back has had a second effect on a potentially even more significant level. It has opened the way for unions in the United States and around the world not simply to oppose trade with China, but to fight in a concrete way what one international labor federation, according to the GLS report, calls the “global sweatshop lobby.”

The report makes some important points in this regard.

The emergence of China as a global economic powerhouse poses challenges for workers everywhere, particularly now that 25 percent of the global workforce is Chinese. This means that the global norm for wages and working standards will be increasingly set by China. Hard-won gains of workers in developed countries are undermined and aspirations of workers in developing countries are dashed as China becomes the wage setting country in many industries.

The report points out that simply attacking China or the idea of trade with China fails to address the role of transnational global corporations in a global economy. Two-thirds of the increase in Chinese exports in the last 12 years are from non-Chinese owned global companies. Foreign-owned global transnationals account for 60 percent of Chinese exports to the United States.

‘China bashing’ leads to dead end

The “Chinese threat,” then, is less about trade with China than it is about trade with Wal-Mart and GE. Global transnationals move to China to lower labor costs and then they use those lower labor costs as a lever to drive down wages and working conditions for workers in other countries. Corporate meddling as China moves to reform its labor law is so dangerous because failure to raise standards in China, the home of 25 percent of the world’s working class, will have a devastating effect worldwide.

The report comes to an impressive conclusion:

“China bashing” does not provide a solution for either workers or governments that are trying to come to terms with the impact of China in the global economy. In contrast, trying to reverse the role of U.S. corporations and their “sweatshop lobby” in perpetuating poverty and poor working conditions in China is providing a straightforward, concrete way that workers and their union and political representatives in the U.S. and around the world can help improve the conditions of workers in China. For that reason it is emerging as a central issue in both the labor and political arenas.

John Wojcik (jwojcik @pww.org) is labor editor at the People’s Weekly World.

“Undue influence: Corporations gain ground in battle over China’s new labor law” was issued recently by Global Labor Strategies (GLS), a resource center on globalization, trade and labor issues. GLS, which has offices in New York, Boston and Montevideo, Uruguay, produced the Emmy-nominated PBS documentary video “Global Village or Global Pillage?”

Fast food … but low pay

American fast food giants including McDonald’s, KFC and Pizza Hut have been accused of underpaying staff at their stores in China.

The accusations against the companies have been made by the Federation of Trade Unions of Shanxi Province, which claims Chinese workers at the company were being paid salaries below the lowest standard set by the government.

Wang Hauping, a reporter for the New Express newspaper in China, received calls from part-time workers at the three companies claiming they were paid wages that were well below the minimums set by the provincial government.

Hauping did an investigative report and found that McDonald’s, KFC and Pizza Hut were paying 4, 4.7 and 5.8 yuan an hour, respectively. The minimum wage set by the government in that province is 7.6 yuan an hour.

Under the law, part-time workers are not allowed to work more than five hours per day or 30 hours per week. In reality, McDonald’s is forcing part-timers to work 13 hours a day, with no additional compensation, according to Hauping’s report.