Chinese Use Card Check to Unionize Wal-Mart

I've written previously about the card-check union organizing provision in the Employee Free Choice Act (EFCA) now before Congress. It turns out that this is the same method, gathering signatures, that Chinese workers used to set up unions in every Wal-Mart branch in China.

This was fairly revolutionary for the All-China Federation of Trade Unions (ACFTU), which had been accustomed to being co-opted for a price. Generally, the union would approach the management of a company and strike a deal for one of its own to be given a mid-management position to oversee the union branch, and in the bargain would receive two percent of all wages for its operations. That two percent, naturally, would go to the main union, but it would also be used to buy presents for the workers at Chinese New Year's and so on. Workers' rights would hardly be considered.

Wal-Mart, however, balked at this process and wouldn't accede to hiring a union rep or to paying the two percent. It pointed to Chinese law, which said that the workers had to request a union. This was anathema to the ACFTU, which had never had to organize and by law couldn't even strike. ACFTU had no experience in grass-roots mobililzation.

Surprise, surprise, however, came when workers at the Jinjiang Wal-Mart in Quanzhou City, Fujian Province, met in the middle of the night and collected the 25 signatures necessary to form a union. Wal-Mart at first threatened to fire anyone who joined the union, but as branch after branch went through the "card check" process, Wal-Mart accommodated the ACFTU and is now unionized nationwide.

So, you can see why American unions thirst for EFCA and card check.

Somehow, though, I think unionization would cost Wal-Mart U.S.A. more than two percent of its payroll. That's why its opposition to EFCA is so ferocious.

China: Laboratory for EFCA-Style Unionization

Can't blame 'em. Business owners in China's manufacturing belt, their businesses up in smoke in the worldwide recession, are fleeing the country and leaving their workers high and dry--and yuan-less--rather than cope with China's restrictive labor laws.

Of course, you can also call them rats for absconding with their companies' loot while leaving their workforce with no money to survive on. China's recent Labor Contract Law supposedly protects workers from unannounced factory closings and loss of pay, but many owners have been doing an end run and disappearing.

To date, some 20 million migrant workers, who relocate from the provinces to work in factory-rich Guangdong Province and send money home to their families, are now unemployed.

Since all workers are unionized in China (but have no right to strike), the national union is fighting back, and so is the government.

"We will use all labor-related laws to help migrant workers keep their jobs in this difficult time," Zhang Mingqi, vice-chairman of the All-China Federation of Trade Unions said at the start of the National People's Congress (NPC) session.

Some owners were also hopeful that the government would not enforce the Labor Contract Law and other provisions, but that's not going to happen, evidently.

Xin Chunying, the deputy director of the legislative affairs commission of the NPC Standing Committee, said the Labor Contract Law will not be amended because of the current global economic downturn.

"The crisis has nothing to do with the law. We won't amend the law because of the downturn," she told a press conference of the ongoing NPC session Monday.

Anyway, all this looks eerily like what will happen in the United States if the Employee Free Choice Act (EFCA--see yesterday's posting) passes. In a word, chaos. In two words, disappearing companies.

Some New Year's for the People's Republic

China ushered in the Year of the Ox yesterday (today in the U.S.) amid deepening economic and social woes.

It's hard to get the truth out of the People's Republic, which is anything but a republic, but the year just closed saw some 18,000 businesses close, mostly in the southeast, and at least 2 million (some would say 10 million) workers laid off. Economic growth has slowed to about 7 percent or so (again, the truth is hard to ascertain since the government concocts, er, tabulates the growth rate), and all these woes have put the government on edge.

In the U.S., we have the WARN Act (Worker Adjustment and Retraining Act) that applies to businesses with 50 or more employees, requiring them to give 60 days' advance notice of undertaking mass layoffs or ceasing operations. In the PRC, there's the new Labor Contract Law and other initiatives that require businesses to alert the government in advance of any layoffs of 20 employees, or 10 percent of the workforce.

However, the laws are proving hard to enforce as many business owners simply shut down shop and disappear, leaving their workers without jobs or the money owed them. In some cases, local governments have had to move in and pay the workers themselves to quell potential rioting.

Since many of the plant closings involved operations staffed mostly by migrant workers, hundreds of thousands, perhaps millions (again, who knows for sure?), of these roving employees are being forced back to the hinterlands from the industrialized cities, adding to a cadre of malcontented citizens. In addition, there are at least 1.5 million college graduates from summer 2008 who have yet to find jobs, with another few million set to join their ranks this summer. It could portend an explosive mix in a land that touts economic freedom but practices political and civil repression.

We'll just have to wait and see if the Year of the Ox ends up seeing the unelected lords of China--who last year had to suppress an uprising in Lhasa, Tibet--getting themselves gored by an unhappy, suppressed population.

Straight Out of Dickens: Labor Strife in China

You might think it was the early phase of the Industrial Revolution in Great Britain if you visited South China these days.

Guangdong Province is the manufacturing heartland of China, and its factories supply a lot of what we Americans find at Wal-Mart and many other retail stores, especially toys.

But things are getting tough in China, by many standards tougher than we have it here in the U.S.

First, under pressure from Wal-Mart and other large-scale buyers, China officially raised the minimum wage, but that didn't stop Wal-Mart from simultaneously demanding lower costs. Profits, at least for the toymakers, sank immediately.

Then came higher fuel costs and now the recession in the U.S., and factory after factory in Guangdong began shutting down; factory hands were let go en masse, many of them migrant workers whose families back home in distant provinces depend on them for monthly cash infusions--and bare survival.

Since the beginning of 2008, some 3,600 toy factories have gone under, leaving hundreds of thousands without work, yet China still publishes an official unemployment rate of 4 percent.

Now, the workers are fighting back--literally. Dongguan, the city where the toy manufacturers are concentrated, has witnessed several episodes of laid-off workers' occupying and trashing the factories after they're closed. Riot police have been called in. Scenes have gotten ugly. Tensions are understandably high, as is anxiety for the future.

But since the owners of the factories often disappear into the hinterlands after closing shop, local authorities are usually powerless to collect back wages, let alone enforce severance packages. In some cases, the government--hoping to keep face--has itself coughed up the workers' earnings.

As it stands, Chinese factory workers toil up to 80 or more hours a week (when times are good) for the princely sum of 770 yuan a month, about $118. Overtime is almost never paid.

In the States, we just witnessed the employee occupation in Chicago of Republic Windows and Doors, which was abruptly shuttered after Bank of America closed its line of credit to the firm.

The laid-off workers demanded 60 days' wages and benefits under the WARN (Worker Adjustment and Retraining Notification) Act since that law requires firms to give 60 days' advance warning of mass layouts (unless there is an unforeseen emergency, a gray area).

Just last night I heard that BofA was going to advance Republic a $1.2-million loan to remunerate the fired employees.

So, the employees won, evidently, but I have one question:

How is Republic going to repay BofA if it's no longer operating the factory?

(I just learned, but I don't know if it's accurate, that the sum is actually $1.75 million and that it will go into a fund with money from both JPMorgan Chase and Bank of America. This would seem to indicate that it's not a loan, but a publilc relations tactic to counter consumer and public ill will toward the banks.)