CB-China-FV_190Report on the Survey on Industrial Relations in East Asia
COLLECTIVE BARGAINING IN CHINA
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Report on the Survey on Industrial Relations in East Asia
COLLECTIVE BARGAINING IN CHINA
Prepared by QIAO Jian, ZHENG Qiao, JIANG Ying Written by ZHENG Qiao
Translated by WANG Jia-qiang
ILO-Japan Multi-Lateral Project, 2006
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COLLECTIVE BARGAINING IN CHINA Research Team: QIAO Jian, ZHENG Qiao, JIANG Ying Written by: ZHENG Qiao Translated by: WANG Jia-qiang © ILO- Japan Multi-Lateral Project, 2006 International Labour Organization Subregional Office for East Asia United Nations Building Rajdamnern Nok Avenue P.O. Box 2-349 Rajdamnern Bangkok 10200, Thailand
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B. Freedom of Association
C. Employees
Definition of a Trade Union Trade Union Organizational Structure Legal personality of trade unions Trade Union Funds Trade Union Membership Trade Unions and Collective Bargaining
Part 3: Legal and Institutional Framework and Practice of Collective Bargaining A. Rights of Bargaining
Legal Sources and Relevant Legislative Provisions B. Duty to bargain C. Procedure of Collective Bargaining D. Bargaining Agents/Parties to Collective Contracts
Employees Employers Role of Organizations at Higher Levels
E. Contents of a Collective Contract F. Levels of Collective Bargaining G. Procedural Requirement for Concluding H. Deadlocks in Collective Bargaining and the Amendment and Suspension of a Collective Contract I. Implementation of Collective Contract J. Collective Bargaining in State-Owned Enterprises (SOEs)
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K. Workers’ Congress and Collective Bargaining
Part 4: Trends, Issues and Debates: Social partners’ and Political Actors’ Views and Proposals for Future development of national Bargaining Systems A. Major Issues and Trends in Collective Bargaining
Appendix 1: Basic Economic Statistics
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Introduction Collective bargaining in China has undergone a series of changes and ups-and-downs since the early part of the 20th century, reflecting the historical upheavals of the last century. After the foundation of the People’s Republic of China in 1949, a collective bargaining system was put into practice for a short period of time. However, after the socialist transformation had been completed in the mid 1950s, the system had virtually disappeared. Afterwards, China’s economy was transformed into a socialist planned economic system up until Deng Xiaoping’s reforms and the open door policy in the late 1970s. Industrial relations under the planned economy were basically incorporated into the overall labour administration system under the direct supervision of the government. Since there was supposed to be no separation of interests between the employer (in the form of ‘employing work units’) and employees, both sides had no need to bargain collectively and conclude collective contracts. When there were occasional conflicts, the conflicts were adjusted and resolved through administrative intervention. It was only since the open door policy and economic reforms in the late 1970s that a need for modern industrial relations resurfaced. In particular, the restructuring of state-owned enterprises (hereafter SOEs) resulted in mass lay-offs and significant changes to employment relations in that sector. Additionally, the rapid growth of the non-state or private sector has changed the nature of employment relations in a new market environment. While collective bargaining practices were introduced on an experimental basis in the 1980s, it was only after the adoption of the new Labour Law in 1995 when collective bargaining began to spread across workplaces in China. Particularly since 2000, collective bargaining appears to have become an important channel for the regulation of industrial relations. It has also emerged in a variety of innovative forms, though there are still shortcomings in terms of the quality of collective contracts and process of bargaining.
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Part 1: Legislative and Institutional Framework for Industrial Relations
A. Legislations on labour standards Major Legislations Stipulating Working Conditions and Employment Relations More than any other countries, China has multiple layers of laws and regulations governing employment and labour issues. These include the Constitution of the People’s Republic of China, laws adopted by the National People’s Congress (hereafter NPC), legal documents adopted by the standing committee of the People’s Congress, various statutory regulations by the State Council, local statutory regulations adopted by the people’s congress and standing committee of each province, autonomous region and municipality, administrative regulations and statutory interpretations formulated by ministries and commissions under the State Council and provincial governments. Also, as a signatory of various international labour conventions, China is bound by those conventions. Among others, the Labour Law of the People’s Republic of China (“the Labour Law”) is the key legislation governing employment and industrial relations, which was passed in 1994 and came into effect in January 1995. Also of significance is the new Labour Contract Law, which was passed by the NPC in June 2007 with an effective date of January 2008. The new legislation aims to strengthen protection measures for employees and introduce new rules regarding labour contracts and collective contracts. The Labour Law deals with a range of issues concerning employment, labour contracts and collective contracts, wages, working hours and holidays, occupational safety, health and hygiene, special protection for female and juvenile employees, vocation training, social welfare, management of labour disputes, labour supervision and other regulations on labour standards. With 13 chapters and 107 provisions, the Labour Law offers basic principles and rules on employment relations, which sometimes require more detailed regulations to be put into practice. This is why the Labour Law is supplemented by a series of other regulations such as the Temporary Regulations on Payment of Wages, Regulations on Minimum Wage in Enterprises, Provisions on Collective Contract and Regulations on Labour Protection of Female Employees, among others. Adopted by the Ministry of Labour and Social Security (hereafter MOLSS), these mandatory regulations support various provisions and principles of the Labour Law by providing detailed guidelines for its implementation and interpretation. Due to the vast scale of regional diversity across China, each local legislature and government also develop and adopt their own regulatory rules within the parameter set by national laws and regulations, so that national legislation can be implemented while considering the local context. Scope of Application The Labour Law in China applies to all enterprises, undertakings and their employees who have formal labour contracts within the territory of the People’s Republic of China. It is to be noted that state organs, public and social institutions and their employees with contractual employment relations are also covered by the Law. However, the Labour Law does not directly apply to certain categories of employees, such as civil servants in state ministries, employees of public institutions and social associations, labourers in rural areas, employees in township enterprises (‘Xiangzhenqiye’), migrant workers and peasants running their own business in cities, active army personnel, family nurses and other similar categories of employees. At present, the Civil Servant Law is applied to the civil servants.
B. Freedom of Association At present, China has not ratified ILO Convention No. 87 on Freedom of Association and Protection of the Right to Organize Convention or No. 98 on the Right to Organize and
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Collective Bargaining Convention. In October 1997, the Chinese government signed the International Covenant on Economic, Social and Cultural Rights, which was approved by the Standing Committee of the NPC in February 2002. While ratifying the Covenant, the government held a view on Item 1 (A) of Article. 8, which stipulates, “The right of everyone to form trade unions and join the trade union of his choice, subject only to the rules of the organization concerned, for the promotion and protection of his economic and social interests. No restrictions may be placed on the exercise of this right other than those prescribed by law and which are necessary in a democratic society in the interests of national security or public order or for the protection of the rights and freedoms of others”. The Chinese government stated that China would deal with this issue pursuant to its own Constitution, the Trade Union Law, Labour Law and other related regulations: “This item concerns workers’ right to organize and participate in trade unions. Our Constitution, Trade Union Law and Labour Law have effectively protected Chinese workers’ rights to participate in political, economic, social and cultural activities in a comprehensive way including organizing and joining a trade union. Since the foundation of the People’s Republic of China, by observing these laws, Chinese workers have organized and joined trade unions.”
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There are various laws designed to protect workers’ right to form and join trade unions in China. First of all, the Constitution of People’s Republic of China stipulates that “Citizens of the People’s Republic of China enjoy freedom of speech, of publication, of assembly, of association, of procession and of demonstration”. Article 7 of the Labour Law also states that “Workers enjoy right to join and form trade union pursuant to laws. The trade union represents and protects workers’ legal interests and operates independently pursuant to laws”. Article 3 of the Trade Union Law provides that “All workers engaged in physical or mental work in enterprises, public institutions and government organs within the Chinese territory who earn their living primarily from wages shall have the right to participate in and form trade union organizations pursuant to the law, regardless of their nationalities, races, sexes, occupations, religious beliefs or educations. No organization or individual may hinder them from doing so or restrict them”. Accordingly, civil servants also have the right to join and set up trade unions, though the Civil Servant Law prohibits the right to strike for civil servants. Article 8 of the Labour Law stipulates, “Pursuant to laws, workers take part in democratic administration through the Workers’ Congress or other forms, or engage in negotiation on an equal footing with the employer to protect workers’ legal rights and interests”. Article 33 stipulates, “Employees at an enterprise can sign collective contracts with the employer on wages, working hours, rests and holidays, occupational safety and hygiene, insurance and welfare, etc. A draft of the collective contract should be submitted to the Workers’ Congress for discussion and collective approval. The collective contract is signed between a trade union representative and the enterprise. In enterprises without a trade union, the contract should be signed between a representative elected by employees and the enterprise”. Article 6 of general provisions in the Trade Union Law stipulates, “Trade unions shall coordinate the industrial relations and safeguard the rights and interests of employees at the enterprise through negotiation on an equal footing and the collective contract system”. In the chapter concerning trade union rights and duties, Article 20 stipulates, “A trade union shall represent employees in negotiation on an equal footing and the signing of a collective contract with an enterprise or a public institution managed as an enterprise”. Further guarantees on employees’ right to join and form a trade union and trade union’s right of collective bargaining are found in Article 50 of the Trade Union Law, which stipulates, “Any organization or individual that, in violation of the provisions of Articles 3 and 11 of this Law, obstructs employees' and staff members' from joining or organizing of trade unions in accordance with law or the effort made by trade unions at higher levels to assist and guide the employees and staff members in establishing trade unions shall be ordered to by the administrative department for labour to make rectification; if it refuses to do so, the said department may apply to the people's government at or above the county level for solution”; and Article 53 which stipulates, “Those refusing negotiation on an equal footing without
1 Shen Lutao, “Protecting Chinese workers’ right of trade union pursuant to the law”, People’s Daily,
2001-3-5
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justifiable reasons…shall be ordered to make rectification and be dealt with by the people’s governments at or above the country in accordance with the law”. Those hindering employees from participating in or organizing trade unions and refusing negotiation on an equal footing shall be punished accordingly or provide an appropriate compensation. The above examples of legislative provisions demonstrate that China’s labour laws are aimed at guaranteeing employees’ rights to join and participate in trade unions and to bargain collectively with employers.
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Part 2: Industrial Relations Actors
A. Government Under the previous centrally planned economy, the government administered a whole range of labour and employment issues, from allocation of the workforce to determination of wages and other working conditions, and to the regulation of industrial relations. In a market economy, the government’s role has changed from one of direct intervention and administration to one of regulating industrial relations on a macro level through legal and policy instruments while delegating the management of industrial relations to the social actors at the enterprise level. The Ministry of Labour and Social Security (MOLSS) is the central government agency in charge of labour and social policy development, while the NPC and its Standing Committee is responsible for law making. In 2001, a national tripartite system (‘sanfangjizhi’) for regulating industrial relations was formally established. One of its responsibilities is to research and analyze the impact of economic and social policies and development plans on industrial relations, thus to bring forward strategic ideas and provide advice on the formulation, supervision and implementation of laws, regulations and policies concerning industrial relations. After the tripartite system had been established, the formulation of important industrial relations regulations and policies are now coordinated among the tripartite partners, i.e. MOLSS, ACFTU and the China Enterprise Confederation (hereafter CEC). MOLSS has a number of departments with different functions, including: legal, planning and finance, training and employment, labour and wage, endowment insurance, unemployment insurance, medical treatment insurance, work injury insurance, rural social insurance, supervision of social insurance funds and international cooperation. The legal department of MOLSS is responsible for administering laws regarding the labour and social security system of the country. Its responsibilities include:
• Formulating legislative planning on labour and social insurance; and
• Drafting and amending laws, statutes and administrative regulations concerning labour and social insurance.
In addition, the legal department also takes responsibility in supervising and examining the implementation of laws and statutes on labour and social insurance, and exercises the right of supervision and examination pursuant to law. At the same time, the law department bears responsibility in formulating work criterion on labour supervision and examination, directing and supervising work of local governmental organs for labour and social insurance supervision and examination. The department of labour and wage of MOLSS is responsible for the coordination of industrial relations and macro-level control over wage distribution across enterprises. Its major responsibilities are as follows:
• Formulating general principles for industrial relations coordination;
• Reviewing the situation of labour contracts and collective contracts;
• Formulating policies on working hours, rests and holidays of employees and special protection for female and juvenile employees;
• Coordinating labour and wage policies in foreign owned enterprises;
• Formulating macro-policies and measures on wages at the enterprise level and bringing forward strategic advice on adjusting income distribution;
• Examining related policies on enterprise pay guidelines;
• Examining policies on the adjustment of industry income and policies on the income of managers in state-owned enterprises (‘Guoyouqiye’); and
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• Inspecting the total income of enterprises under direct administration of the central government and income criterion for key managers at those enterprises.
As such, the department of labour and wage has a crucial role in the development of collective bargaining and collective agreements – particularly wage negotiation. The Ministry of Labour and Social Security collects and publishes statistical data every year on labour market conditions such as employment, unemployment, wage, workplace accidents and collective contracts, etc, which is released in the annual Labour and Social Security Development and Statistical Communiqué, quarterly Analysis of Supply and Demand in Urban Labour Market and annual comprehensive statistical yearbooks that contain complete statistics on employment and unemployment, wage payments at enterprises, occupational training and skill tests, industrial relations, labour protection supervision, social security and trade union activities, among others.
B. Employers Types of Employer Organizations There is no specific law on employer organizations in China, as the concept of an ‘employer’ did not even exist under the planned economic system. With the transition towards a market economy, employers’ organizations have slowly emerged. In China, employers’ organizations are required to register with the Administration on Registration of Social Groups of the State Council. In China, there are a number of different types of ‘employers’ and/or business organizations. First, there is a national employers’ organization – China Enterprise Confederation (hereafter CEC), which is the only organization recognized by both the government and ILO as a representative of China’s employers. CEC has obtained the national status of a legal person as a social group, approved by the Ministry of Civil Affairs. Its predecessor organization was established in 1984, which was primarily a socializing space for managers of SOEs. As China’s transition towards a market economy required collective representation of more diverse types of employers, the CEC began to assume the role of an employers’ organization. At present, it strives to represent all types of enterprises, protect their rights and interests and participate in tripartite consultation processes at various levels to present the views of employers regarding social and labour policy making. It has independent financial sources – mainly from membership fees. It also represents China’s employers at the ILO by participating in the ILO’s decision-making process and other activities. In 2003, CEC amended its constitution to provide more prominence to its role in the tripartite consultation process as a representative of employers. For the first time, it added the appellation of “employers” after “entrepreneurs”. Its new constitution emphasizes its role in participating in industrial relations coordination on behalf of employers, and providing guidance to enterprises associations and entrepreneurs’ associations at the lower levels and in different industries to establish a complete tripartite system. In addition, the CEC also offers various services for its member enterprises such as training, consultation, research, information exchange, publications, promotion of international exchanges between enterprises, providing legal advice and network services for enterprises, etc. Various activities have been organized to share the successful experiences of enterprises, providing a forum for exchanging knowledge and expertise on improving management skills. Membership of the CEC is composed of group (unit) members, individual members and honorary members. There are around 545,000 member enterprises and more than 300 member groups in the CEC. Member groups comprise of individual enterprises and enterprises groups, with the latter consisting of regional enterprises groups in provinces, 44 autonomous regions and municipalities, 220 enterprises groups in major industrial cities, 30 national enterprises groups and 5400 member enterprises directly under (the leadership of) CEC. Membership of CEC is voluntary and therefore CEC membership is a not a precondition for business registration. Among direct member enterprises of CEC, the state-owned
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enterprises ('Guoyouqiye') account for 51.47%, township enterprises ('Xiangzhenqiye') 15.41%, private enterprises ('Siyingqiye') 5.45%, joint ventures 3.7%, corporate enterprises 22.75%, solely funded enterprises 0.56% and others 0.66%. The second type of organization consists of enterprise groups that are not classified under the present ownership system, such as the general chamber of commerce. In recent years, the general chamber of commerce has experienced rapid developments. These chambers are civil business associations organized voluntarily by enterprises, groups and individuals to consolidate industry and commerce interests, protect the legal rights and interests of members and offer a range of services to enterprises. Some chambers have been involved in the field of industrial relations, such as the General Chamber of Commerce in Hainan which was founded in the process of establishing a tripartite system (‘sanfangjizhi’) to represent employers’ interests in Hainan. Regional entrepreneurs’ associations under the CEC have begun to associate with these chambers of commerce in coordinating industrial relations. The third type of organization is industry associations of different types, which have formed a relatively comprehensive network in China. Responsibilities of these associations are to safeguard the interests of industry, cooperate with governmental macro-level regulation and assist industry to compete in international environment. Some of the industry associations also participate in the tripartite system of industrial relations. The fourth type of organization encompasses all types of employer organizations in non-state enterprises, such as the All-China Association of Industry and Commerce, China Association of Foreign Invested Enterprises, China Private Business Entrepreneurs’ Association and China Individual Labourers’ Association, etc. These associations have their own underling organizations and institutions at local levels. In recent years, they have played an active role in the development of economic and social policies. The fifth type consists of informal networks or groups of employers. In localities where non- state enterprises have gained a strong influence, individual employers tend to form informal networks or groups to maximize their influence over government decision-making and to coordinate their approach to industrial relations. Often these groups are in the form of social clubs of industry and commerce. Many of them represent foreign enterprises at district or town level. Examples include Japanese-funded enterprises in Dalian, Taiwanese-funded enterprises in Fujian and Hong Kong entrepreneurs-funded enterprises in Guangdong. Employer Organizations and Collective Bargaining The Labour Law seems to assume that collective bargaining would be carried out only at the enterprise level. However, the revised Trade Union Law (2001) and particularly the new Labour Contract Law (2007) have created a legal foundation for collective bargaining beyond the enterprise level. Until very recently, employers’ organizations did not play any significant, direct role in the collective bargaining process at or above the enterprise level. However, there are emerging practices of regional and sectoral bargaining in a number of provinces in China. This practice of regional and sectoral bargaining is usually found in localities where private sector enterprises of small and medium sizes are clustered around the same sector of businesses. Faced with the difficulty of organizing employees and bargaining collectively with individual employers, trade union organizations at the regional level tend to take a strategy of conducting collective bargaining at the regional and/or sectoral level. In some localities, regional and sectoral business associations – such as the hotel and restaurants business association – represent employers in regional/sectoral bargaining. However, employers usually do not have their own organization at regional and sectoral levels. In this case, an alternative was found in which chief employer bargaining representatives were elected among employers in a locality so that they can negotiate and sign a regional/sectoral agreement with local trade union organizations. In general, employers’ organizations are in their early stages of development. The establishment of a tripartite consultation mechanism has created some pressure on
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employers to develop and strengthen their organizational capacity as a responsible industrial relations actor at various levels. As China’s industrial relations issues become more complex, there will be natural pressures and incentives for employers to strengthen their collective voices.
C. Employees Definition of a Trade Union According to the Trade Union Law, trade unions are defined as “mass organizations formed by the working class of their own free will. The ACFTU and all of its trade union organizations shall represent the interests of employees and protect the legal rights and interests of employees”. It implies, in effect, all employees whom are members of the working class, regardless of their nationality, race, sex, religious beliefs or political status, have the right to participate in and form trade unions. It also declares that the basic role of a trade union is to represent employee’s interests and guarantee their legal rights and interests - the most important feature which distinguishes itself from other organizations and institutions. In China, the various labour laws have strived to promote universal union membership of all employees who earn their living primarily from wages. Trade union membership and union establishment should not be restricted by the nature of enterprise or undertaking, as stated in the Constitution of the All China Federation of Trade Unions (hereafter ACFTU) - “All enterprises with different systems of ownership, public institutions and state organs and other units at the basic level shall organize trade union organizations pursuant to laws and establish basic-level trade union committees.” Trade Union Organizational Structure In China, the ACFTU is the single national peak confederation of trade unions which all trade unions at the lower levels are affiliated to. In other words, there cannot be trade unions at any level that are unaffiliated to the ACFTU - “The All-China Federation of Trade Unions and all of its trade union organizations shall represent the interests of employees and protect the legal rights and interests of employees.” Under the ACFTU, there is a dual structure of union organization based on geographical and industry divisions. In this structure, there are four key levels of hierarchy: basic-level trade union (‘jicenggonghui’), local trade union federation (‘difanggonghui’), industry trade union federation (‘teshuchanyegonghui’) and the ACFTU at national level. Local trade unions are established at the provincial (‘shengjigonghui’), district, city, county, township, village and neighbourhood levels. Local trade union federations can be set up at and above the county level. Industrial unions are established at the national, provincial, city and township levels. Industrial trade union federations can be set up at and above the county level. According to Article 10 of the ACFTU Constitution, “Trade unions in China adopt the principle of organizing and leading a combination of industrial and local unions. Members in the same enterprise, public institution and state organ shall be organized in one trade union organization at the basic level. In a single industry or industries with similar features, a national and local specific industrial union organization should be established as circumstances require. Except for some industries under direct state administration where the industrial unions implement a system of dual leadership of both industrial trade union and local trade union giving priority to the former, all other industrial unions adopt a system in which the local trade unions play a leading role while higher-level industrial unions provide guidance.” The most basic unit in the overall structure is the basic-level trade union (‘jicenggonghui’). According to Article 10 of the Trade Union Law, there are three scenarios in which a trade union committee (‘gonghuiweiyuanhui’) can be set up at the enterprise level - “the trade union of an enterprise, public institution or state organ with 25 or more members shall establish a basic-level trade union committee; if there are less than 25 members, a basic-level trade
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union committee may be established separately, or a basic-level trade union committee may be set up jointly by members of two work units or more; or an organizer may be elected to organize various activities for members”. It is interesting to note that the revised Trade Union Law in 2001 (Article 10) opened a way for employees in township enterprises (‘Xiangzhenqiye’) and neighbourhood enterprises (‘Jiedaoqiye’), whose small sizes generally posed difficulties in organizing employees at individual enterprises, to organize an association of basic-level trade unions. In effect, there is no legislative requirement at a national level for a minimum number of employees to set up a trade union. However it is true that there are a number of localities where local regulations have set some minimum requirements. For instance, the Implementation of the Trade Union Law in Guangdong Province stipulates, “As for enterprises, public institutions and state organs with no trade unions, more than 10 members (who work in the present unit and are administrated by the trade union that keeps their member records) are needed to collectively petition the trade union at the next higher level to declare the establishment of a new trade union.” Once established, the basic-level trade union must be approved by the trade union organization at the next higher level. Article 11 of the Trade Union Law states, “The establishment of a basic-level trade union, local trade union federation, national or local industrial trade union organization shall be submitted to the trade union organization at the next higher level for approval. The trade union at the higher level may assign personnel to assist and guide the enterprises to establish their trade unions. ” While employees’ right to set up and participate in trade unions is guaranteed by various laws, it is not unusual that they encounter difficulties when employers in non-state enterprises obstruct their efforts. This is why Article 11 further stipulates that “no units or individuals may obstruct the effort”. If there is any difficulty or trouble encountered in the set up of a trade union at an enterprise, the trade union at the higher level is entitled to offer assistance and guidance. The basic-level trade union committee at the enterprise level is expected to be the all encompassing organization for employees, which leaves no room for separate unions representing different occupations or posts within one enterprise. It is confirmed in the law that “members in the same enterprise, public institution and state organ shall be organized in one trade union organization at basic level”. A basic-level trade union committee is supervised by a trade union organization at a higher level – usually the district level. If the trade union also belongs to an industry trade union federation, it shall be supervised by both the local trade union federation and the industry trade union federation. At present, there are about 1,020,000 basic-level trade union organizations nationwide. Table 2.1: Organization structure of Chinese trade unions National Trade Union
Specific Industry Trade Unions Local Trade Unions
Statistics
All-China Federation of Trade Unions
- Trade union of agriculture, forestry and irrigation; - Trade union of finance and trade, light textile and tobacco; - Trade union of national defence and post; - Trade union of smelt metal and building materials; - Trade union of energy resource and chemistry; - Trade union of maritime and construction; - Trade union of education, science, culture, health and physical education; - Railway federation of trade
Provincial federations of trade unions; Municipal/city level federations of trade unions; Federation of trade unions at township level.
There are about 136.949 million members in All- China Federation of Trade Unions; 1.02 million basic-level organizations; 1.935 million units with legal person status.
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unions; - Trade union of civil aviation; - Trade union of finance.
Source: 2004 Blue Book of Trade Union: Protecting Legal Rights and Interests of the Employees, China Worker's Publishing House, November 2005. Legal personality of trade unions Pursuant to Article 14 of the Trade Union Law, the ACFTU, a local trade union federation or industrial trade union enjoys the status of a legal person in the capacity of a social group, which does not require approval from state agencies. However, different rules apply to basic- level trade union organization. Article 14 states that “A basic-level trade union organization meeting the legal person requirements as stipulated by the General Principles of the Civil Law shall be granted the status of a legal person as a social group pursuant to the law.” The basic- level trade union needs to go through procedures of registration in order to obtain a legal person status. The general procedure is as follows: first the trade union organization applies and organizes; then the trade union organization at the higher level supervises, examines, approves, registers and issues the certificates. No. 24 of 1997 Announcement of ACFTU on Printing and Distributing ‘Registration Procedures of Legal Person Status for Basic-level Trade Unions’ regulates this process. A trade union organization, which has obtained the legal person status of a social group, shall apply for a code certificate at the National Administration for Code Allocation to Organizations of the State Bureau of Quality and Technical Supervision. If a basic-level trade union does not meet the above requirements, the trade union at the higher level is entitled to decide whether a legal person status should be awarded based on further examination. Trade Union Funds Trade unions in China have a number of different funding sources through: 1. Membership fees (0.5% of the basic income of a member); 2. Appropriated fund of 2% (‘baifenzhier’) of the total income of all employees, contributed by employers;
3. Financial gains generated by business and public institutions set up by trade union organizations at various levels;
4. Allowance from the central government; and 5. Allowances and grants from others.
There is a trade union fund distribution scheme under a management system known as the “Uniform Guidance and Classified Administration”. Under this scheme, the portion of funds retained by basic-level trade unions shall be more than 60% of the appropriated fund (‘baifenzhier’). The ACFTU retains 5% of the appropriated fund. The distribution of the remaining 35% of the fund shall be decided by the provincial federation of trade unions and national industry trade unions. Trade Union Membership According to the ACFTU, it has a total membership of 136.949 million, which indicates a unionization rate of approximately 63%.
2 Declining trade union membership was observed
during the mid 1990s, as trade unions faced a variety of difficulties in different types of enterprises. The restructuring of SOEs led to mass lay-offs of employees who were mostly union members. In addition, organizing the newly emerging non-state enterprises proved to be a challenge as private sector employers refused to recognize trade unions and the growth of small and medium sized enterprises made organizing even more difficult.
2 2004 Blue Book of Trade Union: Protecting Legal Rights and Interests of the Employees, China Worker's Publishing House, November 2005
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In recent years, however, trade union organizers have made impressive gains in organizing employees in different types of enterprises. Since 2000, Chinese trade unions have gained considerable number of new members. One of the success stories includes the unionization of Wal-Mart malls across the country after a strategic mobilization of union resources against the famous non-unionised multinational company. Also there has been innovative experimentation with different forms of trade unions – such as unions based at the street level and even in an office building - to organize employees in small size enterprises and the informal economy. Another breakthrough came when the ACFTU changed its policy towards migrant workers – as previously they were excluded from trade union membership. In 2003, the ACFTU made a decision to accept and organize migrant workers. Although it is difficult to obtain a precise figure for the number of migrant workers who are union members, it is reported that about 35 million workers joined trade unions across the country as of October 2004. The ACFTU and its affiliates have a system of ‘democratic centralism’ to govern the democratic election procedures of trade unions. According to the ACFTU Constitution, “Trade union committees at all levels shall bear liability and report to the general assembly at the same level or representative assembly and be supervised by trade union members. Elected representatives and members of the trade union committee (‘gonghuiweiyuanhui’) can be dismissed or replaced by the general assembly and representative assembly”. Trade union committees at all levels adopt a system which combines collective leadership with the division of labour among its leadership. According to this system, all major issues will be discussed and decided by the committee in a democratic process. Members of the committee shall perform their own responsibilities according to collective decision and division of labour. The peak bodies and departments at all levels shall give briefings to the organizations at the lower levels regularly, heed the opinions and ideas of members and organizations at lower level, and discuss and solve any problems they raise. Organizations at the lower level shall report to and ask for instructions from the higher level organizations. Representatives and committee members of the general assembly of trade unions shall be elected anonymously, by secret ballot. The election may be carried out directly by the method of multi-candidate election, in which the number of candidates exceeds the number required, or a preliminary election may be held first by the method of multi-candidate election to produce a list of candidates and then a formal election will be held. No organization or individual shall in any way compel voters to elect or not elect a candidate. Trade Unions and Collective Bargaining According to the Labour Law, Trade Union Law and Provisions on Collective Contracts (‘jitihetongguiding’), collective bargaining in China is presently conducted at the enterprise level. Thus, the basic-level trade union organizations directly take on the responsibility for collective bargaining and the signing of collective contracts at the enterprise level. Trade union organizations at the higher level may assist and guide basic-level trade unions in the process, including offering training courses, providing legal and political consultation and assisting to coordinate and deal with disputes. Article 20 of the Trade Union Law stipulates, “A trade union shall represent employees in negotiation at an equal footing and signing of a collective contract with an enterprise or a public institution managed as an enterprise… The trade union at the next level shall support and assist the trade union in signing the collective contract”. In practice, a considerable number of regional and industrial collective bargaining (‘quyuxinghehangyexingjititanpan’) and negotiations have emerged. In general, these have been organized and performed through the assistance of the higher-level trade union. At present, this new method has gained some achievements, though it is still at an experimental stage. To fully develop a multi-level collective bargaining system, related laws and statutes need to be formulated in the first place to regulate such a system. Furthermore, organizations for multi-level bargaining need to be optimized on both sides- unions and employers. Corresponding structures have been established; however the employer side has generally assumed a more passive position. In many places, a tripartite negotiating system has been
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used to facilitate a more active response on the part of employers in relation to collective bargaining when requested by trade unions.
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Part 3: Legal and Institutional Framework and Practice of Collective Bargaining
A. Rights of Bargaining Legal Sources and Relevant Legislative Provisions As stated earlier, collective bargaining is a fairly recent phenomenon in China. The legal framework for collective bargaining has been gradually developed since that early 1990s. The main legal sources for collective bargaining are provisions in the Labour Law, Trade Union Law and the recently adopted Labour Contract Law. Another important regulatory document is the 2004 Provisions on Collective Contract (the “Provisions”), adopted by the MOLSS. The Provisions provide detailed rules and procedures for collective bargaining and collective agreements. According to the Article 33 of the Labour Law, “Employees can sign a collective contract with the employer on wage, working hours, rests and holidays, occupational health and hygiene, insurance and welfare, etc. Draft of the collective contract should be submitted to the Workers’ Congress or be discussed and passed collectively. The collective contract is signed between the trade union representative and the enterprise. In enterprises without a trade union, the contract should be signed between the enterprise and the representative elected by employees”. Similarly, the Trade Union Law states, “A trade union shall represent employees in equal negotiation and signing of a collective contract with an enterprise or a public institution managed as an enterprise. The draft of a collective contract shall be submitted to the Workers’ Congress or plenary body of employees for discussion and adoption. The trade union at the next higher level shall support and assist the trade union in signing the collective contract”. In summary, the relevant laws and statutes provide that: 1. Each employee, regardless of the types of enterprises they work for, has the right to bargain with the management at the enterprise on a collective basis and sign a collective contract;
2. Representatives elected by the trade union or employees shall represent employees in collective bargaining and signing of a collective contract;
3. The trade union at the next higher level shall support and assist the trade union in signing the collective contract;
4. Collective bargaining is mostly conducted at the enterprise level, that is, in an enterprise or a public institution managed as an enterprise.
5. Theoretically speaking, civil servants and professionals do not have rights of collective bargaining.
B. Duty to bargain Collective bargaining and the signing of collective contracts are legal rights for Chinese workers. As collective labour rights, they are protected and guaranteed by national laws. However, these laws lack detailed rules governing the collective bargaining process and the rights and obligations of both parties. This weakness is addressed to an extent in the Provisions on Collective Contract, though the Provisions have a lower level of authority compared to the national legislation adopted by the NPC. Article 32 of the Provisions stipulates, “If one party has a request for collective bargaining, the other party shall respond in writing within 20 days of when the request had been served. This request for collective bargaining shall not be refused without justified reasons”. Article 56 further states that, “If an employer refuses the trade union or employee representative’s
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request for collective bargaining without offering justified reasons, it shall be subjected to related laws and regulations”. The Trade Union Law further stipulates that “the employer… refusing to make equal negotiation without justified reasons…shall be ordered to make rectifications and be dealt with by the people’s government at the county level or above in accordance with the law”. Though the Provisions certainly impose obligations on employers to engaging in collective bargaining upon receiving their employees’ request, the Provisions do not specify what constitute “justifiable reasons” for refusing collective bargaining and what measures should be taken against employers who refuse collective bargaining without justifiable reasons. Therefore it will be difficult to find an effective solution when employers continue to refuse collective bargaining. In practice, some regions have established “records of bad performance” for enterprises refusing to sign or implement collective contracts, as a way of putting pressure on them and facilitate collective bargaining in good faith.
C. Procedure of Collective Bargaining Rules and regulations on collective bargaining and collective contracts constitute an inseparable part of the labour law framework in China. Collective bargaining is a process involving bi-partite negotiation where the desired outcome is the successful conclusion of a collective contract with the approval of employees. Though collective contracts will usually be signed between representatives of a trade union and the enterprise, it can be signed between elected employees’ representatives and the employer in non-union enterprises. The first step of collective bargaining at the enterprise level is the election of representatives to form a negotiation group. Either party may then submit a written request for collective bargaining to the other side. The other party shall respond in writing within 20 days of receiving the request. The negotiating representatives shall make a series of preparations before the formal bargaining process, such as acquainting themselves with the relevant laws, statutes and related information, heeding the different opinions of those they represent, drafting the negotiation agenda and making arrangements for the time and venue of negotiation, among other things. A non-negotiating representative shall be appointed collectively as the note-taker. After preparations, the formal negotiation process shall begin. The negotiation conference shall be held in turn by chief representatives of the two sides. In the process of negotiation, the chief representative of one party brings forward specific requests and demands and the other party’s chief representative responds correspondingly. Both parties present their own opinions on negotiated issues and a comprehensive discussion is held. Then the chief representatives on both sides will begin to arrive at conclusions. If an agreement has been reached, a draft of the collective contract or special collective contract shall be formulated and signed by the chief representatives. If an agreement has not been reached or something unexpected has occurred, the negotiation may be suspended with the consent of both parties. Issues concerning the term of suspension, time and place for the next negotiation conference shall be negotiated between the two parties. The draft collective contract or special collective contract as agreed by both parties shall be submitted to the Workers’ Congress or be discussed by the whole body of employees. For the discussion on the draft contract, two thirds or more of employees’ representatives or employees are required to attend the meeting. The draft shall be approved with the consent of more than 50% of employee representatives or employees. After approval by the Workers’ Congress, the collective contract or special contract will be signed by the chief representatives of both parties. Higher-level trade union organizations and employer organizations can offer advice, guidance, services, training and coordination to facilitate collective bargaining at the enterprise level. They can also help their members to become acquainted with related laws and statutes, offer background information on negotiations and provide training courses for negotiating representatives. They can act as a mediator if a significant dispute or conflict arises. Generally, organizations at the next higher level shall not participate in the process of negotiation directly unless they are requested by their members at the enterprise.
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D. Bargaining Agents/Parties to Collective Contracts Employees According to Article 20 of the Provisions on Collective Contract, “Employees representatives shall be elected and sent by the corresponding trade union. In enterprise without trade union, representatives may be recommended by the employees in a democratic way and be approved with the consent of more than 50% of the employees”. That is, the negotiating employees’ representative may be the trade union or representatives elected by the employees. In addition, professional personnel (‘zhuanye renyuan’) outside the enterprise may also be entrusted as negotiating representatives. However the number of entrusted representatives shall not be more than one third of the total representatives on one side. As for regional and sector/industrial collective bargaining ('quyuxinghehangyexingjititanpan'), the negotiating employees’ representatives are generally the presidents of the branch trade union at the regional or sectoral/industrial level. Employers Article 11 of the Provisions on Collective Contract stipulates, “The negotiating representatives of the enterprise shall be assigned by the legal representatives of the enterprise. The post of chief representative shall be assumed by the enterprise’s legal representative or other administration staff with entrusted authority in writing.” In the process of regional and sectoral collective bargaining, a representative of the organization with the status of a legal person may represent the enterprise in negotiation, or a representative of the enterprise with the status of a legal person grants the power of attorney in writing to an entrusted person in charge of the local economy as a chief representative of the enterprise. Role of Organizations at Higher Levels Organizations of trade unions at higher levels offer guidance, assistance and training to its members on wage negotiations, such as introducing the pay guidelines issued by labour administrations, offering information on the economic and social contexts of collective bargaining, consultation on policies and laws and training for negotiating representatives, among other services. Also, some local trade union organizations adopt a practice where the higher level trade union organizations represent enterprise unions in their negotiations with employers. This approach is often taken in order to protect the enterprise union leaders who can be unfairly treated by their employers. The higher level trade union is independent from the enterprise management and therefore has more autonomy and power to negotiate with the employer. In recent years, some local trade unions have established wage negotiation councils which compose of experts, scholars and lawyers well-versed with labour policies and statutes as well as other staff working in the fields of labour, capital and financing. Responsibilities of these groups include offering guidance to trade unions at all levels in the process of collective bargaining, meeting needs of basic-level trade unions and participating in enterprise wage negotiation as representatives of the trade union. Ultimately it is the parties themselves who should reach the final decisions and outcomes in collective bargaining. While the wage negotiation council offers guidance to the parties, they are not expected to impose their decisions on the parties. Wage negotiation councils have been introduced primarily for two reasons: first and most important, trade union representatives had neither knowledge nor experience in wage negotiation, and second, the government and trade unions want to ensure that wage negotiation is being conducted in an orderly manner in line with the macro-level parameters as set by the government.
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E. Contents of a Collective Contract Article 33 of the Labour Law spells out the negotiable subjects, which include wages, working hours, rests and holidays, work safety and hygiene, insurance and welfare, among others. However, the Provisions on Collective Contract broadens the content of the bargaining agenda: “In signing a collective contract or special collective contract, parties may negotiate on the following issues: 1. labour payment; 2. working hours; 3. rests and holidays; 4. labour security and hygiene; 5. complementary insurance and welfare; 6. special protection for female and juvenile employees; 7. skill training; 8. management of labour contract; 9. rewards and discipline; 10. staff reduction, etc”. It is not clear whether the above regulations mean that only those issues referred to in the provisions can be negotiated, or the parties are free to negotiate whatever issues they like. What is clear is that collective contracts should address the issues listed above. However, this does not necessarily mean that all of these issues should be included in each and every collective contract. It is up to the parties to decide whether they want to conclude a comprehensive contract on all issues (including the ones listed above), or sign separate collective contracts on specific issues. In the early period of promoting the collective contract system, more comprehensive contracts were signed. Nowadays, more and more enterprises have begun to conclude separate collective contracts on specific issues. As both parties gain more experience in collective bargaining, collective contracts are becoming more specific to the circumstances of individual enterprises. In China, wage agreement is often concluded separately from the general collective contract. Once wage negotiation reaches agreement, the wage agreement may be appended to the general collective contract. According to the Provisional Methods on Collective Wage Negotiation (issued by Ministry of Labour and Social Security in 2000), the wage agreement and general collective contract have the same legally binding effect. In recent years, there has been also a tendency of concluding separate, specialized collective contracts on protection of female employees’ rights, specifying measures for maternity protection and other measures of protection for female employees. The labour legislation stipulates that the terms and conditions of employment in a collective contract should not be lower than the minimum standards set out in relevant laws. However, it has been reported that it is not unusual for both parties to simply copy or reiterate existing legal minima in their collective contracts with a few marginal modifications, reflecting their inexperience in and misunderstanding of collective bargaining. As the collective contract system further develops and progresses, the quality of collective agreements will gradually improve.
F. Levels of Collective Bargaining Collective bargaining takes place predominantly at the enterprise level, and the Labour Law regards the enterprise level as the only level of collective bargaining in China. But in recent years, there have been significant changes both in terms of regulatory framework and actual practices. The revised Trade Union Law introduced the possibility of organizing different forms of trade unions other than the enterprise union. Further, the 2007 Labour Contract Law officially introduces the possibility of having collective agreements at regional and sectoral levels. Also noticeable is the existence of local (provincial and municipal) regulations which encourage collective bargaining at the regional and sectoral levels in some 20 provinces of China. For instance, on 1 June 1996, the 22
nd Session of the Standing Committee of the
Eighth People's Congress in Guangdong passed the Provisions on Collective Contract in Guangdong Enterprises. Article 33 of the provisions stipulates, “This provision shall be referred to in the signing of industrial and regional collective contracts”. As mentioned earlier, this practice of regional/sectoral bargaining is usually found in localities where private sector enterprises of small and medium size are clustered around the same sectors of business. A review of this type of regional/sectoral agreement shows that some agreements include negotiated regional/sectoral minimum wages which are higher than
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mandatory local minimum wage. One advantage of this type of collective bargaining is that union representatives tend to be more independent from individual employers’ influence, compared to enterprise union representatives. In a situation where an enterprise is covered by both regional/sectoral agreement and an enterprise agreement, the general rule is that the enterprise agreement should not contain conditions that are inferior to those in the regional/sectoral agreement. At the end of 2004, around 143,000 collective contracts at regional and industrial levels have been signed, covering 856,000 enterprises and 42.893 million employees.
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At present, one of the main problems with regional/sectoral bargaining is the difficulty in finding employers’ organizations or representatives as a bargaining partner. Another associated problem is how to strengthen the democratic linkage between trade union representatives and rank-and-file members in the bargaining process, as there can be quite a distance between them.
G. Procedural Requirement for Concluding a Collective Contract After an agreement has been reached, the parties would draft a collective contract which is signed by the chief representatives on both sides. According to laws and regulations, the draft of the collective contract shall be submitted to the Workers’ Congress or be discussed by the whole body of employees. As mentioned previously, in the discussion on the draft contract, two thirds or more of the employee representatives or employees are required to attend the meeting. The draft contract shall get approved with the consent of 50% or more of the attendees. After being approved in the Workers’ Congress, the collective contract or special contract will be signed by the chief representatives of both parties. Article 42 of the Provisions on Collective Contract (‘jitihetongguiding’) stipulates, “Having been signed or amended, three copies of the collective contract or special collective contract shall be submitted to the labour administration within 10 days of the contract being signed. The submitted collective contract or special collective contract shall be registered with the labour administration”. According to Article 44 of the Provisions on Collective Contract, the labour administration will conduct an administrative review of the submitted contract, and examine the following issues: 1. Whether the entity of the two parties in collective bargaining meets the requirements of relevant laws, statutes and regulations;
2. Whether the procedure of collective bargaining observes the relevant laws, statutes and regulations; and
3. Whether the contents of the collective contract or special collective contract violate any national laws and/or regulations.
In relation to the first issue on the entity of collective bargaining agents, the enterprise must obtain legal person status while the trade union must obtain legal person status of a social group. In enterprises with no trade union organization, representatives in the negotiation may be elected by employees. The process must be based on the legal procedures which state that the representatives shall be recommended in a democratic way and approved with the consent of more than 50% of employees. If the local labour administration identifies a problem in the contract with respect to any of the three abovementioned issues, an Examiner’s Amendment shall be sent to the negotiating representatives of both parties within 15 days of receiving the contract. Afterwards, both parties shall negotiate on the amendments raised by the local labour administration and a new collective contract or special contract shall be signed. It shall be submitted to the local labour administration for another review. However, the local labour administration does not have the authority to amend the original text of the collective contract. If there are no legal
3 “2004 Blue Book of Trade Union Protecting Legal Rights and Interests of Employees”, China Worker's Publishing House, 2005
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problems with the contract during the labour administration’s review, the collective contract will then come into effect with legally binding force. According to the Provisions on Collective Contract, a collective contract has a term of one to three years, while a wage agreement has invariably a one year term. Once its term expires, the validity of a collective contract will be suspended in accordance with arrangements agreed to by both parties. Three months prior to the expiration date of the existing contract, either one of the parties may request to renegotiate a new contract or continue to keep the current contract. At present there is no statute stipulating that the expiration date may be extended automatically after the term expires.
H. Deadlocks in Collective Bargaining and the Amendment and Suspension of a Collective Contract In the absence of a right to strike, different solutions to resolving deadlocks in collective bargaining have been introduced in China. According to the Article 35 of the Provisions on Collective Contract, “If an agreement has not been reached or something unexpected happens, negotiation may be suspended with the consent of the two parties. Issues concerning term of suspension, time and place for the next negotiation shall be negotiated by the two parties.” If a dispute emerges in the process of collective bargaining that cannot be solved by the two parties, an application for mediation shall be brought to the local labour administration which will deal with the dispute in conjunction with the trade union and employers’ organization at the corresponding level. Essentially, there are two options for the negotiating parties in the case of a deadlock or dispute in the collective bargaining process: one is temporarily suspending the bargaining based upon both parties’ consensus and arranging a subsequent round of negotiation; another is applying for mediation through the labour administration. In cases where no application for mediation is submitted by both parties, the local labour administration may coordinate with the trade union and employers’ organization at the higher level if it is deemed necessary. After term of the contract expires, either of the two parties may request to renegotiate or decide to keep the current collective contract as a valid contract based on consent of the two sides. If an agreement is reached between representatives of the two parties, the collective contract or special collective contract may be altered or terminated. Article 40 stipulates that the collective contract or special collective contract may be altered or terminated under following circumstances: 1. The collective contract or special collective contract cannot be implemented because the enterprise has been acquired, written off or bankrupted;
2. Conditions for altering or terminating the collective contract or special collective contract have emerged; or
3. Other circumstances as stipulated by law, statutes and regulations. In short, this implies that there can be three circumstances in which a signed collective contract may be suspended or amended: first, the term of the contract expires; second, the two parties agreed to the alteration or termination of the collective contract; third, conditions for altering or terminating the collective contract or special collective contract have surfaced.
I. Implementation of Collective Contract In the introductory years of the collective contract system in the 1990s, official industrial relations actors focused on increasing the number of signed collective contracts. However,
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soon they began to discover a number of problems with the prevailing methods of collective bargaining and the quality and effectiveness of the contracts. First of all, it turned out that many collective contracts simply had general provisions, which were more or less a carbon copy of legal minimum standards, without detailed negotiation of enterprise-specific issues and working conditions. This has led to a situation where collective bargaining and signing of collective contracts did not generate the desired effects of enhanced working conditions and industrial harmony, and employees and employers alike did not take collective bargaining and collective contracts seriously. The industrial relations actors are now aware of these problems and have begun to take actions to improve the quality of collective contracts and the bargaining process. Article 35 of the Labour Law stipulates, “Legal collective contracts have binding effect over enterprises and the whole body of employees. The standard of labour conditions and payment in the labour contract signed between individual employees and the enterprise shall not be lower than that stipulated in the collective contract”. Article 6 of the Provisions on Collective Contract stipulates, “Collective contracts or special collective contracts in accordance with this article have binding effect over enterprises and the whole body of employees”. This has been further elaborated in the 2007 Labour Contract Law. In China, there are no legal procedures or rules that provide for the extension of a collective contract to enterprises which are not a signatory to the contract. In principle, a collective contract only binds the employer and employees of an enterprise where the collective agreement was signed. However, this may change as China experiments further with regional and sectoral collective agreements which would invariably require some arrangements for the extension of collective contracts beyond the signatories. Like elsewhere, there are two different types of disputes associated with collective bargaining: one arising from the failure of reaching an agreement (collective interest dispute) and another arising from the implementation or interpretation of a collective agreement (collective right dispute). The procedures designed to resolve collective interest disputes have been mentioned in the previous section. In the case of collective right disputes, both parties are obliged to submit their cases to the Labour Dispute Arbitration Council in accordance with Chinese law if they fail to resolve their disputes through bi-partite process. The Provisions on Collective Contract stipulates that negotiating parties can agree upon the procedures and process to resolve their disputes through collective bargaining. However, there have been few, if any, disputes arising from the collective bargaining process and implementation of the collective agreement. This suggests that collective bargaining in China may have not reached a mature stage to date. As of September 2005, 754,000 collective contracts have been signed, covering 103.84 million employees in 1.378 million enterprises. Among them, 84,000 collective contracts were regional level contracts and 29,000 were industrial/sectoral level contracts.
J. Collective Bargaining in State-Owned Enterprises (SOEs) In the legal framework and theory, there is little difference between SOEs and non-state enterprise in the realm of collective bargaining. In practice, there are a number of significant differences between the two sectors of the economy. In state-owned enterprises, the unionization rate is generally very high, with a well entrenched system of Workers’ (Representative) Congress which is supposed to be a key institution for the democratic management of those enterprises. Traditionally, industrial relations in SOEs tend to be relatively harmonious as the Party committee, management and trade union worked very closely with each other to coordinate industrial relations at the workplace. However, employees and employers in SOEs may face very specific constraints on their bargaining autonomy, because there is still the strong influence of government administration over the operation of SOEs, including the determination and allocation of total wage bills. This leaves little room for both parties to carry out wage negotiation, except for the negotiation of marginal benefits and bonuses. At the same time, trade unions in SOE tend to be very closely
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associated with management, creating another barrier to the independent operation of trade unions. This situation can have a negative impact on trade union development and collective bargaining. During the critical period of SOEs’ restructuring, trade unions in SOEs were tested on whether they could effectively protect employees’ legal rights and interests in the context of large scale layoffs resulting from the rapid changes of the SOE sector. There have been many reported cases where employees’ legitimate rights were seriously infringed during the SOEs’ restructuring. It appears that some unions in SOEs were much more successful than others in protecting employees’ legitimate rights through collective bargaining. For example, some local trade unions (‘difanggonghui’) formulated Collective Contracts on Settlement Allowance and Property Preservation for Employees in Restructured Enterprises and Contracts on Property Mortgage in Restructured Enterprises to solve problems concerning the preservation of creditors’ rights of employees in the process of SOE reform and restructuring.
K. Workers’ Congress and Collective Bargaining Workers’ (representative) Congress is one of most important industrial relations institutions at the enterprise level in China, which is designed to ensure the democratic management of the enterprise by ensuring participation of all employees in corporate decision making. Workers’ Congress was introduced in the early days of economic reform as a check-and-balance mechanism in the process of decentralizing SOE management from direct state intervention. It allowed all employees to have their voices heard through participation in the Workers’ Congress. The Workers’ Congress finds its legal foundations in various laws and regulations such as the Constitution, Law on Enterprises, Law on Corporation, Trade Union Law, Labour Law, Labour Contract Law and Provisions on Workers’ Congress in State-Owned Enterprises. Workers’ Congress is defined as “the basic mechanism for workers in executing democratic rights and a basic form of democratic management and democratic supervision”. With its origins in the early days of reform of a socialist planned economy, the Workers’ Congress is based on a fundamental assumption that enterprises belong to all the people of China and workers should be able to exercise their democratic rights. As such, the Workers’ Congress is an all encompassing organization which includes virtually everyone in the enterprise. Under this arrangement, the enterprise union committee is defined as a ‘working secretariat organization’ of the Workers’ Congress, which carries out the tasks and duties as decided by the Workers’ Congress. Also, the Workers’ Congress may have a number of working committees to deal with specific issues. In SOEs, the responsibilities of the Workers’ Congress are defined as follow:
• Heeding, examining and discussing reports of future development plans and important decisions brought forward by the enterprise director (including enterprise management principles, future and annual business plans, important technology innovation and proposals for enterprise restructuring/reform, etc), and providing feedback, suggestions and advice;
• Approving or disapproving plans, through examination and discussion, on wage adjustment and bonus distribution, schemes concerning work safety and labour protection and important regulations and rules on enterprise management;
• Discussing drafts of collective contracts signed by employees’ representatives and making decisions to approve or disprove;
• Examining and fixing distribution plans on housing deposit funds, housing distribution and other important issues concerning employees’ welfare;
• Evaluating senior staff such as the board director and general manager, and bringing forth suggestions on regulating the appointment and “easing out” of senior positions, rewards and disciplinary issues, etc; and
• Electing and replacing employee representatives on the board of directors and board of supervisors.
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The list of mandates and responsibilities indicates that the Workers’ Congress could be a powerful workplace institution – at least on theoretical and legal basis. This relatively old workplace institution is now joined by a relatively new practice of collective bargaining. Workers’ Congress and collective bargaining are seen as two key pillars of industrial relations at the workplace, serving to protect employees’ rights. According to the Trade Union Law, “Trade unions shall coordinate industrial relations and safeguard the labour rights and interests of the employees at an enterprise through equal negotiation and the collective contract system”. Further, it states that “Pursuant to laws and regulations, trade unions shall organize employees to participate in democratic decision-making, democratic management and democratic supervision through the Workers’ Congress or other forms”. There is an organic link between the Workers’ Congress and collective bargaining process. Business plans and principles concerning employees’ interests adopted through the Workers’ Congress set a foundation and parameter for collective bargaining. Contents of the collective agreement should be in conformity with the decisions made through the Workers’ Congress process regarding enterprise development objectives, operational performance and measurement, innovation plans and wage and welfare objectives. More importantly, the draft collective contract agreed between representatives of trade union and management should be submitted to the Workers’ Congress for approval through democratic discussion. However, Workers’ Congress faces some challenges in the modern environment of industrial relations. While the influence of Workers’ Congress is strongly felt in state-owned enterprises, the number of SOEs has shrunken considerably as a consequence of reform and restructuring in this sector. It is reported that the influence of Workers’ Congress tend to become weak in restructured SOEs. At the same time, despite trade unions’ efforts to spread the Workers’ Congress system to the non-state sector, the result has not been satisfactory. Considering the organic link between the Workers’ Congress and collective bargaining as established by various laws, the weakening of Workers’ Congress poses a challenge to industrial relations actors at the workplace, particularly since it is seen as a main institutional channel for employees’ democratic participation.
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Part 4: Trends, Issues and Debates: Social partners’ and Political Actors’ Views and Proposals for Future development of national Bargaining Systems
A. Major Issues and Trends in Collective Bargaining Introduced in the 1990s, collective bargaining is relatively new to China. Given its relatively short history, collective bargaining has spread across many Chinese workplaces at an extraordinary pace, largely thanks to the concerted efforts of both the government and trade unions at all levels of the economy. In these circumstances, it was inevitable that the official industrial relations actors have tried to institutionalize the new system of collective bargaining in a top-down manner, and that there have been problems with collective bargaining processes and the quality of collective agreements which were often little more than replication of legal minimum standards. However, the initial learning process seems to be coming to an end, and industrial relations actors have begun to move towards building a genuine system of collective bargaining with a variety of experiments in different localities. Concerted efforts of the tripartite actors at various levels, often through newly established tripartite consultation mechanism, are beginning to bear fruit in institutionalizing collective bargaining practices and also improving the quality of outcomes. It is also noteworthy that the collective bargaining agenda has gradually been broadened, partly thanks to the Provisions on Collective Contract which added more negotiable items. The Provisions on Collective Contract, in addition to the items stipulated in the Labour Law, added new issues such as special protection for female and juvenile employees, vocational skill training, labour contract management, award and discipline and staff reduction onto the bargaining agenda. In addition to general collective agreements, both parties have begun to conclude specialized collective agreements focusing on particular issues such as wages and female employees’ protection. In particular, the progress of wage negotiation has been impressive. At many workplaces, collective bargaining has achieved gain sharing among employees in well- performing enterprises as well as ensured that the basic living requirements of workers at struggling enterprises were guaranteed. Another new trend is that collective bargaining has begun to take place at various levels – not just at the enterprise level – and in a variety of forms. As described earlier, collective bargaining has taken place at the regional and sectoral levels in many localities, producing regional/sectoral agreements covering large number of employees in small and medium sized enterprises in similar industries. This form of collective bargaining brings several benefits for employees and trade unions. Trade unions find it easier to organize workers and bargain collectively with employers at the regional/sectoral level; otherwise it would be extremely difficult to do so with hundreds of individual small-sized enterprises. Also, it often brings quite tangible outcomes of better working conditions, as these agreements frequently produce a regional/sectoral minimum wage which is higher than the local mandatory minimum wage. Finally, trade union representatives are much more independent from any undue influence of employers in this form of regional/sectoral bargaining than in enterprise bargaining. Therefore, we can conclude that this type of regional/sectoral bargaining has great advantages in China, particularly considering the fact that enterprise union leadership is often under the influence of management. This type of collective bargaining also delivers desirable outcomes for employers as well. Regional/sectoral agreements can help employers avoid the trouble of unusually high turnovers, reduce competition among employers in the recruitment and retention of employees, as well as reduce other conflicts.
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The above changes are taking place alongside with the changing roles of the tripartite industrial relations actors. For example, the labour administration has adjusted its role in wage determination, switching from direct intervention and administration to indirect control at a macro-level. Now the government hopes that employees and employers would negotiate wages, hopefully, in line with the macro parameters set by the government. For this purpose, the government provides timely information about wage trends and issues wage guidelines. It clearly shows that the government has redefined its role in the labour market, as a modern industrial relations system – particularly the areas of collective bargaining and wage negotiation – has begun to take roots in Chinese society. Establishment of a tripartite consultation system at various levels seem to have facilitated these changes as it allows regular communication and consultation among the industrial relations actors to bring forward innovations in a much more coordinated manner. Also, it is important to note that trade unions have played a crucial role in the transformation of industrial relations in China. Trade unions, previously defined as a “transmission belt”, have transformed themselves gradually so that they can explore and experiment with more effective practices for protecting employees’ rights in a new market environment. In turn, collective bargaining practices that are maturing will also facilitate the reform of trade unions at the workplace. Employers’ organizations are still weak in China due to its socialist planned economy legacy. However, it also seems that employers are beginning to understand the importance of harmonious industrial relations through sound practices of collective bargaining. Particularly after the establishment of a tripartite consultation system, employers have begun to strengthen their organizational capacity to deal collectively with emerging industrial relations issues in conjunction with the government and trade union organizations. We note that there are increasingly diverse employers’ organizations, some of which have begun their involvement in industrial relations processes. As with any other country, there are of course many problems and shortcomings with the current industrial relations system in China. Trade union governance at the workplace level may need to become more independent from management’s influence and the process of collective bargaining may need further improvement. Other countries’ experiences show that the right to bargain collectively is inextricably linked to the right to strike, which is absent in China at this moment. However, the gradual strengthening of industrial relations actors’ capacity to carry out collective bargaining, the redefinition of the roles of social actors in a new market environment and the gradual institutionalization of industrial relations practices such as tripartite consultation and collective bargaining will all contribute to building a “harmonious society and industrial relations” in China. In the relatively short time frame, China has successfully institutionalized the modern practices of collective bargaining and it continues to improve and develop a more innovative industrial relations system. It may be soon that we observe an emerging “Chinese model” of industrial relations.
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Industrial Structure Year Economically Active Population (Million)
Total Employed Persons (Million)
1994 681.35 674.55 2.8 12.6 124.1 20.2 47.9 31.9
1995 688.55 680.65 2.9 10.5 117.1 20.5 48.8 30.7
1996 697.65 689.50 3.0 9.6 108.3 20.4 49.5 30.1
1997 708.00 698.20 3.1 8.8 102.8 19.1 50.0 30.9
1998 720.87 706.37 3.1 7.8 99.2 18.6 49.3 32.1
1999 727.91 713.94 3.1 7.1 98.6 17.6 49.4 33.0
2000 739.92 720.85 3.1 8.0 100.4 16.4 50.2 33.4
2001 744.32 730.25 3.6 7.5 100.7 15.8 50.1 34.1 2002 753.60 737.40 4.0 8.3 99.2 15.3 50.4 34.3
2003 760.75 744.32 4.3 9.5 101.2 14.4 52.2 33.4
2004 768.23 752.00 4.2 9.5 103.9 15.2 52.9 31.9
Note 1: Source of data is from the China Statistical Yearbook of the National Bureau of Statistics and China Labour statistical Yearbook of the Chinese Statistic Press. Note 2: Consumer Press Index is calculated on the base of 100 in the previous year. Note 3: Industrial structure refers to the proportion of primary industry, secondary industry and tertiary industry in the annual GDP (Gross Domestic Product).
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