China and manufacturing

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China and manufacturing

EUIRD briefing

Saturday 10 December 2005


China is the world's largest economy and society, with over a billion people and hundreds of millions of workers. It is overwhelmingly poor, but its economy is growing by nearly 10% a year, and people are being lifted out of poverty (defined by the UN as living on under $1 a day) at an impressive rate.

What is not so impressive is:

  • the lack of democratic or human rights, including the rights for workers to join a trade union of their choice and take strike action or engage in free collective bargaining;
  • restrictions on migrant workers (those moving from the rural to urban areas), the presence of child labour and forced labour; and
  • workplaces are often characterised by long working hours and poor wages and low levels of health and safety.

The rights of Chinese workers are formally covered by laws which are on paper good - but the authorities rarely enforce them, free trade unions do not exist to insist on them, and lawyers are rarely competent or brave enough to take up individuals' cases.

Nevertheless, strikes and civil unrest (although rarely reported) are common and believed to be growing, especially in former state-owned enterprises which have been privatised (and where corrupt practices are rife - often the industrial unrest is against corruption, failure to pay wages etc).

The TUC believes in constructive but critical engagement with the official Chinese trade union movement (there is of course a free trade union movement in Hong Kong, which is part of the global trade union movement) including high level policy exchanges, a programme of seminars which we hope will start in Beijing in 2006 covering issues like organising in multinationals and labour standards in world trade, and training courses on issues like bargaining and health and safety, as well as assisting Hong Kong-based union/human rights groups to build up the enforcement of individual employment rights and the development of independent trade union organisations in specific workplaces.

China's economy

China's growth is partly internally driven, and western companies (including British companies like Tesco's and B&Q) are seeking to get a piece of the action. The TUC believes that these multinationals need to observe the core labour standards of the ILO (no forced or child labour, no discrimination, and freedom to associate and bargain collectively).

Internationally, China produces large amounts of manufactured goods cheaply (not just textiles and toys, but high value manufactured goods and high technology goods as well - China has a huge and growing university-educated workforce). Since it joined the WTO, these have been penetrating world markets more and more.

But the low prices China's inadequate labour conditions produce are having a serious and destabilising effect.

Western countries are reasonably able to adapt and even benefit - either by driving up the skill and value chain so that they can continue to compete on value rather than on price, or by taking advantage of the cheaper components that China produces which can allow higher profits to be made by assembling or incorporating those components.

Developing countries are much less able to cope. The effect of the ending of the 'Multi-Fibre Agreement' at the beginning of 2005, which removed restrictions on the import of Chinese textiles, has been to create mass unemployment in countries like Lesotho, and drive wages to rock bottom prices in countries like Bangladesh. And all over the developing world, workers' rights to organise have been under attack so that employers can freely exploit labour so that they can compete with the Chinese.

The TUC wants to see the ILO core labour standards implemented in China, so that developing countries can afford to observe them. And we want countries and consumers to use their power to refuse to buy products made in contravention of those standards (although we would prefer to persuade than to boycott).

World trade

The TUC does not support protectionism - we believe that increased trade can benefit everyone.

But we want trade to be fair as well as free and we support trade justice rather than an unregulated free market.

We support the World Trade Organisation (WTO) because we want the world trade system to be run on the basis of multilaterally agreed rules rather than a free-for-all which would benefit the strongest. We also welcome the WTO's one member-one vote principle which is better than the International Finance Institutions which give extra power to the richest nations.

But we believe the WTO has to respect workers' rights and other human rights, national self-determination, and needs to understand the consequences of its actions.

So we believe that:

  • WTO agreements should be preceded by an impact assessment to identify what effect they will have on jobs (just like all UK and EU regulations);
  • WTO agreements should not undermine core labour standards by forcing people to compete in a race to the bottom; and
  • WTO agreements should allow democratic developing countries to determine the pace at which they open up their markets, so that they can meet environmental and social objectives.

There should also be better institutional co-ordination between the WTO and the ILO, and there should be regular tripartite meetings with WTO employment ministers, involving employers and unions.

Our goal is that the developed world should maintain and extend its social model, and the developing countries should increase the skill value of their outputs and raise wages. This may seem utopian, but it is happening in South Korea (where manufacturing workers' wages have grown from 9% of US rates to 42% in a generation) and it arguably has happened in Ireland - now the second richest country in the EU after Luxemburg - since it joined the EU. We would argue that unions play a key role - in South Korea it has been union militancy which has helped raise wages, and in Ireland, a social partnership between the employers, unions and government has produced sustained levels of productivity growth.

World trade unionism

The TUC is part of the International Confederation of Free Trade Unions (ICFTU) which together with the sectoral Global Union Federations, other confederations and independent trade unions represents over 200 million working people in every country of the world.

We have trade unions and trade unionists in all parts of the world including developing countries: they share our concerns - neither trade unionism, nor core labour standards, nor trade justice are protectionist or imperialist, but global standards representing the views of organised workers everywhere.

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