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The Workers’ Olympics?

On the eve of the Beijing Olympics, recognition should certainly go to the scores of workers who toiled to build the stunning spors palaces and who have made China into the economic powerhouse it is today.  Instead, many have received layoff notices and warnings to leave the Chinese capital, as the New York Times reported today. 

A remarkable 4 million of Beijing’s 17 million residents are estimated to be migrant workers. Many of these have been told or forced to leave when their factories or construction sites closed down to purify the air for the Games.

But there’s a more complex and interesting story about the development of workers rights in China in the lead-up to this year.  The Global Labor Strategies group published a recent report on Why China Matters: Labor Rights in the Era of Globalization.  I know very little about China and yet found it to be a fascinating story and well-worth reading.

China’s new Labor Contract law came into effect at the beginning of this year.  Unlike the country’s Olympics effort, this law appears to be more than a showpiece and offers the possibility for some real progress for workers rights in China.  This is increasingly relevant for all of us because of the major and growing role that China plays in the world economy.

By some measures, Chinese workers now represent one in four workers in the global economy.  China has one of the fastest growing economies in the world and has rapidly become the 2nd largest trading partner for both Canada and the United States.

The “China price” increasingly sets the standard for wages and working conditions in global production chains.  Lower wage Chinese production has pushed down prices for consumer goods in Canada and around the world, helping to maintain lower rates of inflation.

Wal-Mart claims (from a Global Insight study) that their operations have cut consumer price inflation by 3.2% and saved the average U.S. family $2,400 a year.  But these everyday low prices haven’t been achieved thanks to the benevolence of the good Burgers of Bentonville, but instead on the backs of workers around the world, including shifting production to low wage and low employment standard countries such as China.  This has also of course helped to push down wages around the world.

China has no right to strike, no freedom of association and no independent trade unions.  The only official trade union, the All China Federation of Trade Unions (ACFTU) has been a lame and compliant bosses union, “generally regarded as ineffective at best and counterproductive at worst” in protecting workers rights and interests.

But pressure has been building from the growing Chinese working class.  There are an estimated 200 million migrant workers within China, mostly women.  Far away from their families and the public social benefits provided that are provided at a local level in China, these workers have been easily exploited by factory owners.  With the ineffectiveness of ACFTU, this has led to the growth of a grassroots legal services sector which has helped to advocate for workers in the 314,000 (everything seems of Olympian proportions) labor disputes registered in China in 2005.

China’s hotly contested and recently introduced new labor contract law may help to change this.  Multinational corporations lobbied very strongly to weaken the law, but pressure from international human rights and labor organizations helped force many of them to backtrack.  The version passed into law at the start of this year substantially strengthens workers rights in a wide range of different areas.

While it can be hard not to be cynical about a government that is the main supporter of highly repressive regimes around the world (Burma, Sudan, Zimbabwe) as well as of internal repression in its own country, there are signs that they are serious about strengthening workers rights and living conditions at home.  The government appears to be pushing ACFTU to be more assertive within limits.  New laws are also being proposed to strengthen arbitration and mediation procedures (as there is still no right to strike) and to allow free election of local trade union officials.

It’s a vast understatement to say that China still has far to go to improve human and workers rights.  And there’s the rest of the world that can be outsourced to as well.   But these developments are relevant for for us in a number of ways.  

It means that we probably can’t expect Chinese workers to continue to subsidize increasingly lower costs for consumer goods worldwide.  This will likely eventually lead to lower profits and higher underlying rates of inflation. In the same way, increasing the “China price” could also help to establish a stronger foundation for workers wages and labour standards worldwide.  It also demonstrates that pressure from human rights and labour organizations can have some real impact pushing for improved rights and living conditions in the developing world.  

At a time of global economic (and sporting) competition, it suggests that it is even more necessary to work together to improve conditions around the world to maintain decent living standards at home (even if it is just so we can just afford the payments for the honking flat screen TV to watch sports on!).

On the shopfloor, there’s been some progress with some of global sports brands to improve conditions and wages at their factories, but the International Olympic Committee continues to be intransigent about ensuring adequate working conditions and wages for Olympic branded merchandise.  Pressure needs to be put on Lausanne, as well as Beijing.

Enjoy and share:


Comment from Toby Sanger
Time: August 21, 2008, 8:03 am

Since writing the above post, I’ve seen a few other commentaries on labour reform in China. The following is from the independent China Labour Bulletin NGO, based in Hong Kong:

We may have reached a crucial turning point in the history of China’s trade union movement. For the first time since 1949, trade union officials are openly stating that the union should represent the workers and no one else, while new legislation in Shenzhen places collective bargaining – previously a no-go area – at the core of the union’s work.

“The trade union is a matter for the workers themselves,” Chen Weiguang, chairman of the Guangzhou Federation of Trade Unions told a conference on 15 July 2008, adding that the role of enterprise unions must change from “persuading the boss” to “mobilizing the workers.”

“After three decades of economic reform, we’ve reached the point when something had to be done. Today in Shenzhen we can see the worst excesses of capitalism, but also the desire of the people for social justice and – with these new regulations – the willingness of the government to move towards capitalism with a human face.”

The Economist also had a recent article about how China has enacted one of the most far-reaching labour laws in the world and they have a goal of having unions in all of China’s non-state owned companies by 2010.

Comment from Rick
Time: August 29, 2008, 1:14 am

China leads the way? And we are all getting hotter as we follow it.

Comment from Peter
Time: October 16, 2009, 3:24 am

China has an enormous amount of unemployed but well-qualified workforce to satisfy Canada’s labour shortage. I would like to urge Canadian government to start negotiating with the Chinese government to import qualified workers from China. This not only strengthens the relationship between Canada and China, but will also brings in more intangible benefits such as more students, more investments, more tourists, more everything good from China while China would welcome Canadian investments. It’s a win-win deal.

Comment from Erin Weir
Time: October 16, 2009, 6:40 am

What labour shortage?

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