What Impact Will the Revised Trade Union Law of China Have on Foreign Business?

By Bugaighis, Zana Z. | Washington International Law Journal, March 1, 2007 | Go to article overview

What Impact Will the Revised Trade Union Law of China Have on Foreign Business?


Bugaighis, Zana Z., Washington International Law Journal


I. INTRODUCTION

Recently, China's push for unionization of Foreign Investment Enterprises ("FIEs") has become big news due to the country's unionization of mega-store Wal-Mart's Chinese workforce.1 Wal-Mart, staunchly antiunion in the U.S., conceded suddenly to unionization requests by the AllChina Federation of Trade Unions ("ACFTU")2 after a fight lasting more than two years.3 Most interesting in this story, and explored in this comment, are the reasons why Wal-Mart allowed unionization in its Chinese stores and the motivations and legislation behind the Chinese Communist Party's ("CCP") and ACFTU's push to compel Wal-Mart to unionize.

For years, dwindling trade union membership4 has threatened the CCP's control over increasingly agitated Chinese workers,5 allowing for an increasing number of strikes in China.6 FIEs' increasing role in the Chinese economy, and their refusal to unionize, caused the CCP concern over possible westernization of the Chinese workforce inconsistent with socialist ideals.7 With large numbers of workers' protests, widespread labor unrest, and increased independent organization, as well as a real fear of foreign influence, the CCP recognized the ability of the ACFTU to exert control over the troubled Chinese workforce.8

The CCP is attempting to reassert control over Chinese workers by increasing unionization through a grant in the Trade Union Law9 of more enforcement and oversight power to the ACFTU and by creating further legislation10 in order to improve political relations with, and labor conditions for, workers.11 This move is meant to strengthen the power of the CCP through national unionization and to facilitate economic development through social stability in China's new market economy.12 Spurred by the CCP, the ACFTU, China's only legal trade union,13 is attempting to unionize the entire Chinese workforce, with a goal of unionizing eighty percent of FIEs by the end of 2007.14

Although recent legislative changes and proposed legislation show that the CCP is giving the ACFTU oversight over enterprise management and worker relations, as well as more avenues through which to hold employers accountable,15 these changes do not need to cause FIEs to reconsider doing business in China. In re-regulating the ACFTU, the CCP is providing trade unions with multiple masters16-stressing harmony, productivity, and encouraging foreign business. Moreover, the CCP is aligning ACFTU leadership more firmly with its own, indicating that the needs of the CCP, and not those of the worker, will control the actions of the trade unions.17 Finally, the social stability sought by the CCP will benefit enterprise management by providing workers with greater allegiance to CCP mandates-creating fewer strikes and slow downs.18

Part II of this comment looks at the political, economic, and market conditions in modern day China that have caused the CCP to push for greater unionization in the hope of attaining social stability. Factors examined include China's move from a planned economy to a socialist market economy, the effect of unemployment and dissatisfied workers, the rise of FIEs, the decrease in union membership, and the effect of lost union dues on the ACFTU and CCP. Part III discusses what the recent legislative changes made by the CCP reveal about the party's political and economic objectives for China and its workforce, as well as what consequences this might have on foreign business. This section highlights the changes made in both the 1992(19) and 2001(20) amendments to the Trade Union Law of China and the proposed legislation of the (draft) Labor Contract Law,21 detailing the increased worker protection available and the barriers that make it difficult for the ACMU to be an effective advocate for Chinese workers. Part IV looks at what role the CCP has provided for itself in its re-regulation of the ACFTU. Finally, Part V proposes that FIEs do not need to look unfavorably on this new regulatory environment and can continue to engage in profitable business in China. …

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