Magazine article Multinational Monitor

Multinationals to China: No New Labor Rights

Magazine article Multinational Monitor

Multinationals to China: No New Labor Rights

Article excerpt

A MAJOR DEBATE IS UNDERWAY in China on a proposed Draft Labor Contract Law that would grant new rights to Chinese workers.

When the Chinese government opened a 30-day public comment period on the draft proposal in spring 2006, nearly 200,000 comments were received. A majority of these came from ordinary workers. But some of the comments were from big U.S.- and European-based global corporations and their lobbying groups that came out squarely against the new law.

Wal-Mart's recent agreement to recognize unions in China has made headlines worldwide. But Wal-Mart and other corporations, including Google, UPS, Microsoft, Nike, AT&T and Intel, acting through the American Chamber of Commerce in Shanghai (AmCham) and other industry associations, are trying to block legislation that would increase the power and protection of workers.

This corporate campaign contradicts the justifications corporations have given for public policies that encourage them to invest in China. U.S.-based corporations have repeatedly argued that they are raising human and labor rights standards abroad. For example, the American Chamber of Commerce in Hong Kong asserts among its "universal principles" that "American business plays an important role as a catalyst for positive social change by promoting human welfare and guaranteeing to uphold the dignity of the worker and set positive examples for their remuneration, treatment, health and safety."

The proposed legislation will not eliminate Chinese labor problems. It will not provide Chinese workers with the right to independent trade unions with leaders of their own choosing and the right to strike. But foreign corporations are attacking the legislation not because it provides workers too little protection, but because it provides them too much. Indeed, the proposed law may well encourage workers to organize to demand the enforcement of the rights it offers.


Despite Chinese extraordinary economic growth, most Chinese workers live on the edge of poverty. They earn little and often work under abysmal conditions. Most lack basic rights or access to those rights. About 150 million Chinese urban and rural workers are unemployed--more than the entire workforce of the United States.

China abandoned its so-call "iron rice bowl" cradle-to-grave social security system in the 1980s, when it ended traditional central planning and embarked on its wide-open, laissez-faire, development model. During the 1990s, state enterprises closed, private enterprises mushroomed, foreign investment skyrocketed and workers were left to fend for themselves.

In 1994, China adopted a labor law that mandated individual contracts between workers and companies. Soon after, it also adopted a law allowing collective contracts negotiated by trade unions in some industries.

Labor contracts are supposed to stipulate wages, basic terms of employment, and the duration of employment. The reality is that many workers lack contracts and basic protections. Seventy percent of all rural workers and about 15 percent of urban workers do not have a contract, which means they cannot access even minimal rights or benefits. In China's booming construction industry, 40 percent of all workers have no contract. Even those with contracts lack real security: countrywide, 60 percent of all the contracts are for three years or less.

To address some of these problems, the People's Republic of China in April released a Draft Labor Contract Law whose proclaimed purpose is to protect workers' rights and interests. The protections it offers are modest. Most importantly, it does not provide for independent unions with leaders chosen by their members and the right to strike.

Yet U.S. and other foreign corporations indicate that they are engaged in a concerted campaign to prevent improvement of the notoriously low wages and conditions of Chinese workers by blocking the proposed reforms. …

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