Wednesday, June 15, 2011

China: Some Trends in Collective Bargaining

By Earl V. Brown Jr.

Introduction: China’s Strikes Are Normal Industrial Relations Events

China’s private sector industrial workers are restive. A second, more assertive generation of migrant workers is pushing for improved wages and conditions. Graduates are also spilling out of China’s technical schools onto factory floors to challenge low wage regimes.[1] In one emblematic industrial action, technical “interns” at the Honda transmission plant at Foshan, Guangdong Province, forced management to engage in direct collective bargaining with grass-roots factory representatives to resolve a sustained strike in May-June 2010.[2] During that summer, strikes spread through the auto sector and all over China.[3] Chinese employers and workers forged their own direct mechanisms—like those fashioned at Foshan—to settle these strikes. This paper seeks to outline the legal and regulatory initiatives that may congeal into law to recognize this de facto collective bargaining.

Some saw in this strike wave a challenge to China’s political arrangements. But The Global Times, a State English language paper editorializing about a May 2011 truckers’ strike in Shanghai, had it mainly right when it concluded that industrial labor conflict in China did not portend imminent revolution:

Such conflicts will essentially become a normal part of China's social make-up. Some Western media outlets have paid close attention to the Shanghai strike, and linked it to the “Jasmine Revolution.” Over the past months, more than a few Westerners have politicized any mass event in China, and interpreted it as a fuse to spark a “revolution.” … Take the Shanghai strike. It was essentially a labor dispute in a market economy, a frequent occurrence in the West.[4]

The Current Strikes: Honda Foshan Bargaining as a Home Grown Chinese Solution

When China restructured its state industrial sector (1985-2005), retrenched state workers mounted large scale industrial actions to protest the end of the “iron rice bowl,” the “life-time employment” bargain between the Party and State Owned Enterprise (SOE) workers. Government at all levels issued a welter of special labor relations regulations to replace the “tenure” system of employment with short term contractual arrangements, and to dismantle the social infrastructure attached to the “danwei.”[5] Displaced state enterprise workers had scant negotiating leverage.

Labor protest also developed in China’s new private sector, markedly in foreign firms.[6] Often these disputes involved significant arrearages in wages due migrant workers. This genre of protest often was designed to secure palliative financial assistance from local authorities, as the owners often were bankrupt or had fled. Like their comrades retrenched from SOEs, these workers had few weapons with which to bargain.[7]

By contrast, today’s workers have bargaining chips. First, they were aware that highly integrated and just-in-time manufacturing systems are vulnerable to short interruptions of production. Equally important is a “non-material” factor—the rights consciousness of younger Chinese workers who wish to partake in the rising Chinese prosperity and the options it provides for a more decent life.[8]

Honda’s Chinese operations are important contributors to Honda’s global profits.[9] The Foshan plant produces transmissions without which cars cannot be assembled. Yet, Foshan workers are paid less than assembly plant workers, and far less than Honda’s Japanese employees working alongside Chinese workers. To add to this combustible mix, around 900 of the 1800 Foshan factory workers are “interns” from technical schools and paid less than standard wages. Honda management announced in May 2010 that it would increase production in China by approximately one third—heaping on work hours.

Shortly after Honda announced its increased production goals, Foshan workers demanded a wage increase and wage equality across groups of workers. They also demanded the right to select their factory-level representatives, seeking a voice to speak directly for them. They circulated their positions internationally, including a disclaimer of any desire to dislodge the official union but with a firm demand for the opportunity to elect their own plant representatives.[10] Honda dismissed these demands, and the workers struck.

They selected strike leaders from among their ranks to speak for them to management.[11] Honda production across China went down, as no transmissions emerged from Foshan to feed the assembly plant. The international and auto press started to cover the strike, pelting Honda with questions about when production would resume. Honda, now under the lens, resorted to firing those it suspected of being strike activists, and made a desultory wage offer. The strikers, undeterred, rejected the low-ball wage offer and kept the transmission plant down. Honda then mounted a widely filmed effort to muscle the strikers back to work, and threatened to replace the strikers. Yet the Foshan plant, and with it all Honda, stayed down.

As the strike stretched on, management began to understand that the Foshan strike required some industrial relations innovation. Over the past decade, China has reformed some of its labor laws with widespread publicity and discussion. Worker centers, groups in the official union, legal aid centers, and other worker rights advocates launched initiatives all over China’s new industrial zones to educate workers about their rights under Chinese law. As a result, China’s young workers are increasingly conscious of their rights and prepared to assert them. To resolve this new era of strikes, Honda finally reached out to the grass-roots strike representatives at Foshan and directly negotiated a wage deal that permitted the resumption of production.[12]

We do not know the exact extent of the 2010 auto strike wave and its ripples in Chinese industry.[13] However, it appears that workers all over pushed their employers to engage in genuine collective bargaining and often attained real improvements in wages, hours, and working conditions.[14] Although these strikes were clearly initiated by the workers on their own, the government did not react punitively. Indeed, there were high-level calls for increasing the purchasing power of Chinese workers, and for some forms of rudimentary collective negotiation.[15] The strikes had the wind of public opinion behind their sails as they forced genuine bargaining in the private economy.

The Collective Bargaining Environment

“Western” laws authorizing industrial relations roughly reflected actual institutional arrangements already fashioned by employers and worker organizations to address work stoppages and other labor disputes. China’s private industrial sector does not yet have such institutions in place. Thus, Chinese labor laws and regulations too often “clone” other systems, and lack a real world referent. [16] Yet, a canvass of these labor statutes and resulting regulations establishes a legal and policy trend favoring bargaining and “democratic management” which is increasingly animated by grass roots pressure.

Article 4 of the 2008 Employee Contract Law (“ECL”) requires that the employer’s work “…rule, regulation or decision be improved by making amendments after consultations…’ if workers object. Defining consultation as “on the basis of equality” and requiring improvements to perceived deficiencies in the employer’s approach, i.e., movement by the employer, surely looks like collective bargaining under the National Labor Relations Act (“NLRA”) 29 USC 151 et seq. [17]

Indeed, Chinese labor law may constrain employer discretion far more than the NLRA. The employer’s obligation to deal with the union or worker representative does not hinge on proving representative status. A small number of workers (25) can install a union, and a workers’ congress must and can be easily established. In short, unionization of a facility is a relatively automatic process, and the union has de jure standing to represent enterprise workers as well as labor in general before employers, mediators and arbitrators, government and the courts. Throughout the laws and regulations one finds the requirement that workers have a voice, that “equal” discussions take place between labor and management and that disputes be harmoniously resolved.[18] This primal social pressure to induce harmony will be felt most acutely by “foreign” employers and renders insistence that the duty to “consult” is not “a duty to bargain in good faith” beside the point.

The two sides—managers and workers—are not yet clearly demarcated, with employers often choosing the nominal union head.[19] The union and other nominal workers’ representatives cannot credibly speak for or to workers with industrial grievances. “Bargains” struck with the employer at such a remove from the rank-and-file may simply have no weight—as was the case initially in Foshan—and be rejected by the workforce. And that is the state of affairs where the union does attempt to intervene in a strike. The more common occurrence is that the union is entirely absent, and there is no workers’ congress. There are also weak employer organizations.
Given these weaknesses, many private employers can act unilaterally in labor relations. Yet, industrial workers are beginning to use legal frameworks for bargaining as “weapons” to pressure private employers for wage and other improvements. In response, the official union is launching its own campaign to compel employers to execute barebones collective agreements. In a private sector as vast as China’s, these trends are profound. The inevitable improvements obtained as a result of this push for higher wages and improvements will generate yet more grass roots and institutional pressure for further improvements. Here are some of the durable elements of this trend:

More Assertive Grass Roots Worker Leaders: The law as it stands suggests that trade union chairs and committees at the grass roots be elected by workers’ assemblies.[20] The All China Federation of Trade Unions (ACFTU) has issued specific Measures for the Election of the Trade Union Chairman of an Enterprise (July 25, 2008) on a trial basis, contemplating that the enterprise union chair will be democratically elected “…in secret ballot…”[21] Under the Measures, the party and the upper level union body have control of the entire process, including the nomination of candidates.[22] Whatever these limitations, though, the measures will surely be applied to more employers and create space for more assertive grass roots leaders. The real issues are two. Will the official union bring in grass roots leaders and deploy them to spread unionization and collective bargaining? Will employers seek to exclude classes of workers, such as interns, so that front line trade union representation in the end will not include the very workers sparking the strikes that local union leadership is tasked with averting?

Shanghai ERCs: The ACFTU and the government at all levels are seeking to bring the workers’ congresses to life in the private sector. In December 2010, the Peoples’ Congress for the Municipality of Shanghai (on par with a province) issued regulations requiring establishment of Employee Representative Congresses (ERCs) in places of work with 100 or more employees. The ERC is to function as a vehicle for employee participation in “democratic management of the enterprise”, and to protect the interests of the employees.[23] Its “jurisdiction” is therefore broad, including the employer’s operations and management, company internal policies, and matters directly affecting employees such as collective bargaining regarding wages, hours, rest and leave, benefits, the protection of female employees, occupational health and safety, as well as employer efforts to implement ERC decisions and recommendations and the employer’s adherence to collective agreements.[24]

The regulations also set forth how ERC membership is to be selected. Individual representatives are to be elected by majority vote of all employees for 3-5 year terms, with a majority of the ERC representatives coming from the ranks of grass roots workers. No more than 20 percent of the ERC may be middle or senior managers and the male to female ratio in the ERC must reflect that of the overall enterprise. Thus, the ERC must have proportional female representation.[25]

In line with the Trade Union Law, the “operating organ” of the ERC is the trade union, and the union is mandated to organize elections to the ERC, train employee representatives, nominate employee candidates for the ERC “presidium”, the enterprise board of directors and the supervisory board[26]. The regulations mirror here the Company Law, which sanctions election of employee representatives to boards of directors and the supervisory boards.[27]

Stalemate in Guangdong: Guangdong is in the process of formulating regulations similar to those in Shanghai. This initiative has been stalled thus far by employer opposition, including from Hong Kong employers.[28] The latest draft of the regulations contemplates that “more than one-third of the employees” in an enterprise may invoke the collective bargaining process, even if the union has not done so or there is no union.[29] The trade union, where present, is the vehicle for employee voice in collective bargaining. Otherwise, democratically elected representatives may speak for the employees.[30] The regulations favor sectoral or regional bargaining where appropriate.[31] The 4th Draft omits the co-determination features of an earlier draft that followed and may have modestly expanded provisions in the Trade Union and Company Laws contemplating employee representation of the boards of directors and supervisory boards of enterprises. This evoked heated opposition from Hong Kong employers.[32]

Unfair Labor Practice Strikes: While strikes are neither affirmatively authorized not expressly forbidden under Chinese law (caveat security laws), the Guangdong proposal would expressly protect employees who cease work in response to an employer’s failure to bargain.[33] Lest alarms be sounded, the remainder of the draft forbids strikes where the process set forth for initiating bargaining and mediation has not been exhausted—a possible express proscription against strikes outside the channels for collective bargaining and mediation.[34]


The ACFTU website set forth a vision of extensive bargaining in enterprises over wages, hours and conditions, and extensive equal consultation.[35] This vision has now come to the private sector. Workers at the grass roots are also using the law as “a weapon” in a parallel fashion and will often push employers into direct bargaining. Thus, the government is negotiating official space for grass roots representation parallel to the union. Will competent organizational forms for employers to bargain with the official union and rank-and-file worker representatives emerge to meet this challenge?

Earl V. Brown Jr. is Labor & Employment Counsel for the American Center for International Labor Solidarity.

[1] The rising power of the Chinese worker, The Economist, July 29, 2010; The next China, id.
[2] Earl V. Brown, Chinese Workers Flex Muscles, Progressive Policy Institute Special Report, July 15 2010,
[3] See, Mapping Labor Unrest across China, China Strikes, (2011), (Showing the extent of industrial unrest 2009-date).
[4] Labor strikes do not herald revolution, Global Times, May 3, 2011,
[5] See, Guthrie, China and Globalization, 223-235, (Routledge, 2006). See also, Mary Elizabeth Gallagher, Contagious Capitalism: Globalization and the Politics of Labor in China, (Princeton University Press, 2005), (a beautifully written review of China’s march to a more private industrial economy.) See also, Luigi Tomba, Remaking China’s Working Class: gongren and nongminggongren in Shelton et al., China’s Changing Workplace, London: Routledge, Chapter 8 (2011), for a wrenching description of this process viewed from the ground in the “rust-belt” industrial town of Shenyang.
[6] Gallagher, supra n. 4, at 121-132.
[7] Ronald C. Brown, Understanding Labor and Employment Law in China, 8-11 (Cambridge University Press, 2009) (describing the colossal amount of unpaid wages due migrants and legal responses to this festering problem.) It is important to remember, however, that while workers were protesting arrearages and SOE restructuring, strikes for better wages and improvements were numerous as well. Chang Hee Lee, Industrial Relations and Collective Bargaining in China, Working paper No. 7, ILO, Geneva, 3-4 (October 2009); Zheng Qinghong, Regulate the right to economic strikes, build harmonious labor relations, proposal submitted to the Fourth Session of the Eleventh National People's Congress and the Fourth Session of the Eleventh National Committee of Chinese People's Political Consultative Conference (CPPCC) in March 2011, available at Although China does not collect statistics on strike, Chang Hee Lee, above at 3, sets out a marked rise in collective protests (quntixing shijian) over labor and other issues, often outside legal procedures. In 2003, 60,000 such protests were logged, in contrast to only 10,000 in 1993. 46.9 percent of the 2003 collective protests were described as labor related. Id.
[8] See supra n. 1.
[9] Honda triples profit forecast on Japan, China sales, Gasgoo, Automotive News, October 27, 2009,
[10] Wildcat Strikes In China, China Study Group, June 17, 2010,
[11] In response to my questions about how the Foshan workers selected their representatives an expert in touch with the plant responded: underground elections are not transparent to the outside!
[12] Strike at Honda in China ends with a 24% wage rise, International Metalworkers Federation, June, 2010,; Honda Offers Strikers in China 24% Pay Boost, Wall Street Journal, June 1 2010, (describing June 3rd settlement at Foshan). The Foshan strike was closely observed internationally and in China, and a definitive account remains to be completed by researchers and historians with more distance. Two websites are an excellent source on grass roots developments inside China—China Labor News Translations, found at, and China Study Group, found at
[13] Supra n. 4.
[14] See as one of the many articles describing auto and other strikes in the summer of 2010, Another Honda parts plant in Foshan on strike,, June 9, 2010,
[15] For example: China’s Government-Controlled Unions Call for Reform Following Labor Unrest, BNA Daily Labor Report, August 9, 2010; Tom Mellen, China Drives to Boost Union Role, Morning Star, September 1, 2010.
[16] Chang Hee Lee, Industrial Relations and Collective Bargaining in China, ILO Working Paper No. 7, 9 (2009) (China has been engaged in “institutional cloning” of other industrial relations models, largely tripartite ILO models).
[17] Law of the People’s Republic of China on Employment Contracts, promulgated June 29, 2007 and effective Jan. 1 2008, Article 4, translation by Baker and McKenzie, http;// (translation by law firm principally representing corporations).
[18] Here is how the ECL puts it: the parties in their contractual relations shall abide by “…the principles of lawfulness, fairness, equality, free will, negotiated consensus and good faith.” ECL, Art. 3.
[19] See, Trade Union Law of the People's Republic of China (1992), as amended, 2001, Art. 9, (stipulating only that “…close relatives…” of the principals in an enterprise may not be elected as members of the grass-roots trade union committee). An unofficial English translation is available at
[20] Articles 9-10, 16-17, 35 of the Trade Union Law of the People’s Republic of China, adopted April 3, 1992, and amended October 27, 2001. The force of these provisions are not entirely clear.
[21] Id, Article 14.
[22] Id., Articles 3-4, 7-10. Reading the Measures, one is left to wonder if their real intent may be to reiterate party and higher-level union control over the grass roots election.
[23] Shanghai Regulations on the Employee Representative Congress, effective May 1, 2011, Arts. 3-4, 8-9.
[24] Id., Articles 8-9.
[25] Id., Articles 15, 21.
[26] Id., Article 34. In this and other respects, the Shanghai ERC scheme follows the script of the Trade Union Law, Articles 9-10; 16; 35-36; 38-39. That model, in turn, owes much to the initial framework for co-determination adumbrated in the German Constitution of 1919, Article 165. Weimar Const. Art. 165.
[27] Articles 18-19; 45; 52; 68; 109; 118 of the Company Law of the People’s Republic of China, promulgated 1992, amended through 2005. It is not clear whether such “co-determination” is compelled by the Company Law in the private sector.
[28] New Chinese law to turn “lose-lose” labor disputes into “win-win” negotiation, Xinhua, (July 23, 2010); Andreas Lauff and Jonathan Isaacs, ACFTU Pushes Forward Collective Bargaining and Democratic Management at Enterprises, Baker and McKenzie,; Anita Chan, A threat on paper, South China Morning Post, (October 9, 2011) (Chan derides the hyperbolic rhetoric about the Guangdong proposals).
[29] Guangdong Province Democratic Management of Enterprises Ordinance, Art. 26, (4th Draft).
[30] Id., Article 29.
[31] Id., Article 34.
[32] Chan, supra, n. 28.:
“Our agitated businesspeople are concerned that the proposed regulation goes further. Under the draft rules, workers can elect representatives to sit in an annual staff and workers' representative congress. They are also entitled to at least a third of the representatives on the board of directors and the supervisory board. Yet the businesspeople have not read closely the wording about these "worker board members and worker supervisors. Article 31 states that such an arrangement "should" be established in state enterprises and in joint ventures with state enterprises as shareholders. The implication is: first, it is not mandatory; second, other than the specified ownership types, factories are not required to have them at all. Hence, Hong Kong-invested firms do not fall under Article 31.”
[33] Guangdong Province Democratic Management of Enterprises Ordinance, Art. 54, (4th Draft).
[34] Id., Articles 34, 40, 42, 51. 53.
[35] Chinese Trade Unions Vigorously Advance the Democratic Management among Enterprises and Institutions with the Workers' Congress System as the Basic Form, ACFTU (Nov 16, 2007),