TUC delegation to China October 2004

Background

1 From 11-16 October 2004 a TUC delegation consisting of Brendan Barber, Marge Carey, Kevin Curran, Lucy Kelly, Tony Woodley and Sam Gurney visited China and Hong Kong. The initial impetus for the trip was an invitation to accompany the Secretary of State for Trade and Industry, Patricia Hewitt, on a social partnership visit to Shanghai together with senior employers’ representatives including CBI Director General Digby Jones. The TUC had also been invited to send a delegation to China when officials of the All China Federation of Trade Unions (ACFTU) visited Britain earlier in the year. The aim of the visit was to look at the nature of Chinese economic expansion and the involvement of UK businesses. Given the TUC’s focus on developing workers’ rights in China it was decided to use the opportunity to also visit Beijing in order to meet with the leadership of the Chinese state trade union, the ACFTU, and Hong Kong where independent trade unions remain legal and a number of NGOs working on labour rights issues are based.

Shanghai: social partnership visit

2 Shanghai is the epicentre of China’s phenomenal economic expansion. Over the past decade, China has demonstrated consistent year on year GDP growth of between 8-10% for the last decade and China is now the fourth largest economy in terms of global trade. UN figures indicate that well over 100 million people have been lifted out of absolute poverty since the start of the 1990s. Shanghai has an official population of 16.5 million of whom 7.5 million are counted as ‘workers’ (a figure which excludes migrants from rural areas). Contrary to some perceptions of Chinese employment patterns, 51% of the workforce in Shanghai is in the service sector with potential implications for the UK workforce. The physical evidence of growth is clear to see in Shanghai where the Pudong area (until a couple of years ago paddy fields) is now home to an ever-increasing number of skyscrapers - traffic gridlocks the city.

3 However, economic growth has not been distributed evenly, geographically or socially. Since the 1949 revolution, China’s welfare system has operated via the workplace with workers receiving benefits, pensions, education and healthcare through their place of work in a state owned enterprise (SOE) with China’s transition from a planned to a market economy these safeguards are disappearing for many millions. In their place China is attempting to develop a social security system based at the provincial level.

Social security and industrial relations

4 The delegation’s first visit was to the Shanghai Municipal and Social Security Bureau, whose Director General outlined their main priorities:

• dealing with employment and job creation as a result of the restructuring of SOEs (some 10 million workers had been helped in the Shanghai region with priority to the most disadvantaged);

• creating new social security systems to deal with the new market economy but with a continuing focus on poverty reduction and social justice; and

• in the long term, securing a fairer pattern of income distribution via both basic pensions, unemployment insurance, healthcare, maternity provision and work related injury compensation alongside the creation of a comprehensive system to cover migrant workers and local peasants.

5 Steps were being taken to ensure workplace protection whilst ensuring the government’s central aim of securing increased investment and economic progress. The key principle was described as ‘citizens rights’ along with ‘self-adjusted and harmonious relationships’ in the workplace. It was said that all enterprises in the Shanghai region had to have ‘collective contracts’ and Shanghai was ahead of the game in introducing provisions to enable more ‘flexible working’ i.e. regulations for part-time workers. It was claimed that much work was being undertaken to increase democratic participation in workplaces with efforts to expand ‘workers congresses’ into joint ventures and foreign owned firms. On labour dispute settlement mechanisms there was a three level system:

• enterprise level via management and unions sitting on a ‘labour dispute panel’;

• regional labour arbitration committees involving government as well; and

• a national court system.

6 In recent years there had been some 10,000 disputes of which 70% had been settled by mediation. No mention was made of the fact that the right to strike was removed in 1982. On migrant workers it was noted that more protection was needed, but stressed that they should not be overprovided for as this would dent Shanghai’s competitive edge nor could all workers’ conditions be lifted to the levels of those formally employed in SOEs. Special measures had been taken to protect women workers. For example, the Bureau continues to pay social security contributions for 100,000 laid off women who have been re-employed. In a rare personal aside the DG said he felt that this was creating unfairness for male workers. In response to questions about how worker representatives were selected it was said that under Chinese law, such representatives were viewed as representing both employees and entrepreneurs. The meeting was followed by a short visit around the Bureau's extremely impressive training facilities which were for the use of groups of retraining workers and colleges and featured state of the art networking systems, printing and typesetting equipment and a sealed area in which chemical or pharmaceutical work was being undertaken.

Workplace visits

7 The rest of the visit in Shanghai comprised trips to a number of factory and office sites. Including both UK companies (the ICI Swire paint production facility and B&Q’s China HQ) and a restructured SOE, Boa Steel Corporation. The visits were of course selected to give the best impression of British involvement in China with an emphasis at B&Q on the impact their corporate social responsibility policies had on suppliers.

8 A very open presentation by two managers from a Taiwanese metal production company (Heng Fa Casting Company) revealed that it had relocated to mainland China in 1991 to take advantage of lower labour costs. They explained how a health and safety audit by B&Q had led to a range of improvements, and they now regularly consulted workers about how they could make improvements. B&Q currently operate 15 stores and plan to have 22 by February 2005 - they were keen to emphasise that just over half of their goods are still sourced in the UK. There was no evidence of a union presence at B&Q.

9 The visit to Boa Steel gave the delegation a taste of the sheer scale of Chinese development. The company workforce totalled some 100,000 people with production last year of 11 million tons planned to rise to 30 million within 5 years. Boa steel is the 6^th largest steel producer. In response to questions the company President Ms Xie Qihua stated that they were fully committed to the government priorities of economic advancement alongside social development. The firm was 100% ‘unionised’ - all members of the board were union members and a number of employee reps with full voting rights sat on the board. Each plant or site had its own union branch and all union reps were elected. We were not able to verify this during our visit. Following the initial meeting with company management the delegation were taken on a tour of the main production site (covering an area larger than Macau) and including its own port facility for the import of iron ore. The economies of scale and size of demand from the domestic market fuelled by the construction boom were plain to see.

10 The British consulate organised a press conference attended by Patricia Hewitt, Brendan Barber and Digby Jones. The Secretary of State noted that the UK did not see China’s growth as a threat but rather celebrated China’s achievements in lifting so many people out of poverty and recognised the challenge it presented to Europe to raise our productivity and knowledge base. The General Secretary emphasised the importance we put on the tripartite visit and stressed the TUC’s particular emphasis on workers’ conditions, improving labour standards and health and safety, stressing that high employment standards can and should go hand in hand with commercial successes. Digby Jones went so far as to credit the UK’s macro economic success to the constructive relationship between unions and business. The consulate in conjunction with the Shanghai British Chamber of Commerce also organised a reception on the Tuesday night, which enabled the delegation to talk to a wide range of representatives from Shanghai businesses and other organisations.

Beijing

11 Following the conclusion of the social partnership section of the visit the TUC group flew to Beijing to meet representatives of the ACFTU leadership. The ACFTU remains the only legal trade union organisation in mainland China with a mixed structure of industrial and regional union organisations and a membership of approximately 126 million in 1.75 million workplaces out of a total labour force of 256 million workers and self-employed (however that doesn’t include 100 million+ rural migrants). Chinese labour law is impressive on paper, with strict limits on working hours and provision for overtime payments, regionally based minimum wages and provision for worker involvement in key management discussions. However freedom of association in the form of the right to set up unions outside of the ACFTU is still illegal and there is still a direct organisational link between the ACFTU and the Chinese Government/Communist Party of China (CPC). The international trade union movement continues to display a variety of attitudes to engagement with the ACFTU from a strict ban on contact through to maintaining offices in Beijing (all confusingly described as critical engagement).

12 The TUC delegation met ACFTU Chairman Wang Zhaoguo (who is also first vice-chair of the National People’s Congress and a member of the Political Bureau of the CPC and who was described informally by a Chinese colleague as ranking at number 13 in the political hierarchy). The ACFTU regretted that the TUC group were unable to stay longer and noted that the relationship between the UK and China was constantly developing with many exchanges. Chinese unions were protecting workers during the process of reform - with widening gaps globally between rich and poor, developed and developing, unions must remember the poorest workers. Whilst differences existed in the global trade union movement ties should be strengthened at all levels at the same time as allowing diversified organisation. Chinese trade unions wished to develop relations on the basis of independence, mutual respect and non-interference in each other’s affairs. In clear reference to China’s opposition to universal implementation of ILO core labour standards it was suggested that not all countries could or should follow the same path of development, but that as all unions are confronted by capital we must work together.

13 The TUC was keen to learn how the ACFTU was dealing with change and globalisation, the need to increase membership and challenge rising inequalities of wealth. The TUC understood that different movements face different choices due to different levels of economic development, but that these were issues where greater understanding would be reached both by contact and discussion at a bilateral and multilateral level, and where the ILO in particular had a key role in identifying core standards. Union experiences of globalisation could be shared - in particular, it was important to recognise that whilst labour was local, capital was global.

14 The TUC group also had detailed discussions with ACFTU First Secretary Zhang Junjiu and Vice Chair Xu Zhenhuan. The ACFTU’s biggest challenges were identified as migrant workers and the more complex industrial relations situation emerging following the transition from a ‘planned economy’ to the ‘socialist market economy’. The ACFTU claimed that their key priority was how best to protect the ‘legitimate rights of workers’ whereas under the old system unions had had a more narrow role - organising trips, cultural events etc. Macro level priorities were summarised as

• preventing cuts in wages;

• taking on employers who fail to recognise the ACFTU;

• ensuring all workers can sign collective agreements;

• prompt payment of union dues by employers; and

• improving occupational health and safety.

At the Micro level the ACFTU wished to learn about more effective means of collective bargaining - 673,000 collective contracts covered 135 million workers, but whilst some were enforced many were not and they needed help in dealing with this. The sheer scale of numbers was emphasised. Each year 10 million workers enter the labour market which, together with increases in unemployment, meant 14 million were looking for work each year. On average 10 million new jobs were being created per annum. This year they were hoping for 9 million jobs for new workers and 5 million being re-employed, but there were also 100 million from rural areas looking for work.

15 The TUC group pointed out that the unions in China will have to be able to convince workers of their value in the new economy. Other topics were discussed such as the Morecombe Bay disaster, the need to increase workers’ skills in both countries and new methods of organising such as ACFTU attempts to set up ‘joint union committees’ to cover clusters of small workplaces, and linking unions in migrant workers’ home and workplace provinces to ensure continuity of protection. More contentious issues were raised such as absence of the right to strike (the ACFTU insisted strikes were not illegal) and the need to have elected representatives (the ACFTU stated that they mainly were). The First Secretary suggested four ways to move forward:

• a further high level delegation;

• links between unions on a sectoral basis;

• more work on support in the field of collective bargaining and collective agreements; and

• further detailed discussion on our positions at the ILO.

16 Finally, the TUC delegation met Vice Minister Zhang Zhijun and Deputy Director Liao Dong of the International Department of the CPC. The Minister stressed the scale of change being faced in China and asked how workers could best be protected, particularly in new sectors which presented them with their ‘greatest challenge.’ The TUC responded that it was important to demonstrate that better standards and better growth go hand in hand and are not in competition. The Minister said that this was theoretically true, but most European governments were now moving to a more liberal approach and cited Chancellor Schroeder. It was pointed out that these battles were still being fought in Europe against the pull of the American model. The same companies were arguing for reductions in standards and deregulation in China and the UK, but the Minister said that the scale was much larger in China and that the goal was unequivocally a market economy, but their trade unionists were not so experienced.

17 The British Ambassador, Sir Christopher Hum, hosted an event for the group one evening with a group of Beijing academics, business leaders and government officials. The event also provided a useful opportunity to discuss TUC priorities and planned future work on issues such as core labour standards and the Ethical Trading Initiative China Project Group with a number of embassy staff and others present. The British Embassy was particularly helpful to the TUC delegation (in preparing for the visit as well as during the week), and might provide a way of visiting China for further discussions in the future without necessarily engaging direct with the ACFTU.

Hong Kong

18 In Hong Kong, a series of meetings had been organised by Tim Pringle of the Global Unions International Hong Kong Liaison Office (IHLO). Having met with the ACFTU in Beijing it was important to also meet representatives of the independent unions and some of the groups working at a grassroots level in mainland China. Independent trade unions are still legal in Hong Kong and there are currently three national centres: the Hong Kong Federation of Trade Unions (Beijing aligned), the Hong Kong Trade Union Council (Taiwan aligned and now very small) and the Hong Kong Confederation of Trade Unions (independent, pro-democracy and affiliated to the ICFTU).

19 The delegation met the HKCTU’s General Secretary and Chairperson, Lee Cheuk Yan and Cheng Ching Fat and were updated by them and colleagues from the IHLO. Unemployment stands at 6.8% (it rose to 8.2% during the SARS outbreak). The industrial base has largely been replaced by logistics and service industry (the service sector now accounts for 80% of GDP). Off-shoring is a major issue as costs on mainland are one tenth of those in Hong Kong and Hong Kong has no independent trade policy or tariff protection. Unlike the mainland Hong Kong has no minimum wage or working hours legislation (currently over at least 20% work more than 60 hours), nor collective bargaining or recognition legislation. In terms of the political structure of the Hong Kong Legislative Council and political groupings, the HKCTU is firmly of the view that democratic rights and workers’ rights are intrinsically linked. Their strategy for building independent trade unionism is to improve organisational strength, membership etc and increase political strength.. The TUC was cautioned to look at the possible differences between laws and statements and the reality of practice on the ground in China, where the HKCTU pointed out that official mainland statistics reveal there were 12 billion Rmb (the Chinese currency) in wage arrears, 100,000 industrial injuries a year, labour law ignored in 60% of workplaces and many examples of mass unofficial organisation on the ground with around 300 major strikes last year. The normal response to such strikes is to imprison some leaders and deal with some of the issues on a piece meal basis. The view was expressed that as they keep occurring, it is no wonder that the ACFTU are under pressure from the government to be more effective and are asking for help from outside. The ACFTU received around 400 foreign delegations last year alone.

20 The group met with representatives from labour education NGO’s based in Hong Kong who focus on programmes in mainland China they have been working to establish centres and to provide labour rights training over a number of years one group reported that it trains 200-300 workers in each of their two centres every year and then around 20,000 a year in factories, funded through some expenses from multi-nationals when working on specific factories but mainly from international unions e.g. FNV or development agencies e.g. Oxfam. There are a range of organisations working on labour rights in China, such as:

• those organised by universities providing legal clinics and legal aid centres;

• groups affiliated to the women’s federations (and some other branches of government) providing various support services and counselling;

• groups of academics (who have high social status and reputation) mainly looking at women workers and legal services;

• four or five Hong Kong groups working on the ground in southern China offering labour law advice, organising workers networks in community service centres, in-factory training often in partnership with MNE’s who pressure suppliers into letting them in, and use of media to highlight abuses (particularly effective with foreign owned companies).

All groups are closely monitored by the police and could not take part in any collective action, strikes etc nor would they wish to as this would be dangerous to all involved. Rather their key role is to provide information and support to allow the workers to organise themselves. They expressed the same view as HKCTU leaders on how strikes were dealt with. They estimated that over 50% of factories in Southern China would have been subject to strikes over the last five years, but a key problem is lack of continuity and continuous organisation.

21 The final meeting was with Han Dongfang, a former Tiananmen Square activist and organiser of independent unions in China in the late 1980s and now director of the China Labour Bulletin, and Robin Munro, director of research and communications at the CLB. The CLB was established in 1994 in Hong Kong following Han’s exile from China, and started by trying to collect and disseminate information from the mainland, but by 1997 contacts were drying up. It then began broadcasts on Radio Free Asia and started to receive calls from workers, local union officials, farmers and even some employers. Now, following increased use of legal defences, an a shift in the government’s response to labour protests , so CLB has shifted to a ‘case intervention’ approach where they actively get involved with support on the ground often following calls to their free helpline and increased use of mainland lawyers to take cases such as defending strikers accused of violence or subversion. Han reported how useful he had found a TGWU organising course that he had attended at Eastbourne and how the techniques of mapping and issuing union cards were ones he was now putting into practice. A central point of CLB work is try to move away from the attitude prevalent in some CSR and NGO approaches where workers are seen as victims rather than people who need support to organise themselves. In concluding Han and Robin stated that priority must be for education work aimed at establishing an organising culture. Chinese workers are more than capable of doing it themselves with a little support and assistance. In addition where factories are being organised, if there are crackdowns it is the duty of the international movement to speak out and draw attention to what is happening.

Recommendations for future TUC strategy on China

22 The following tentative recommendations attempt to distil past TUC and Global Union experience on China, and the findings of the TUC delegation. These ideas need to be refined, and the views and experiences of other trade union movements, international trade union bodies, the ILO and trade unionists in Britain more generally will be helpful in doing that.

Information

23 Solid information is key and we should continue to maintain contact with the widest range of people and groups available to us both in the UK, China and Hong Kong, as follows:

• the Global Unions International Hong Kong Liaison office is a valuable resource and a visible sign of international concern on labour rights in mainland China and we should continue to support it (and seek sources of funding for its activities). We should also continue to play an active part in the ICFTU China Working Party which is currently in the process of producing a guide to contact with the ACFTU which we will circulate to all affiliates;

• similarly, the China Labour Bulletin www.clb.org.uk is a vital source of information and intervention, and the TUC should seek funds for its continued existence;

• the Great Britain China Centre provides useful contacts and information and has worked on a number of exchange programmes in recent years including helping to facilitate joint workshops on collective bargaining in 2001 - we should continue to press for union involvement in it (Rodney Bickerstaffe and Ian Stewart MP are board members), and FCO funding;

• the FCO and embassy links should be built on and it should be made clear to HMG that China is a major issue for us in terms of workers rights and delocalisation. This dialogue is now developing and we were able to make a successful input into this month’s regular UK-China Human Rights dialogue - the FCO-TUC advisory council provides a vehicle for co-ordinating such contacts; and

• there is no substitute for direct links with China, both with the ACFTU as the ‘official’ voice of Chinese trade unionism and with Hong Kong trade unions and others with first hand experience of the situation on the ground in mainland China. Hong Kong based groups have an important role in helping to provide an independent analysis of the information we receive from other sources and should be involved in any UK union contacts with China. The TUC delegation extended an invitation to the ACFTU for a high level delegation to visit the UK. Other delegations from China should be welcomed and a co-ordinated approach to them developed so that unions and the TUC present the same face to them.

Practical support

24 It is clear that many of the traditional Global Unions criticisms of the ACFTU are well founded. It is not a free and independent union organisation in the way that we understand. However it is also clear that many inside its structures recognise this fact and that the move to an open market economy is changing the rules of the game. The request for support and training particularly in the field of collective bargaining and health and safety to help with the influx of foreign capital and companies should be made use of. The ACFTU through its presence at the ILO and China’s expanding role at a global level e.g. WTO membership mean that as a political force it is sensible to develop contacts as long as we are not constrained in our ability to continue highlighting areas of difference such as treatment of prisoners and the need for universal core labour standards including freedom of association, which is a direct challenge to the ACFTU. We should look, building on our previous experience and in conjunction with the GBCC at how a training programme could be put together involving TUC education and affiliate unions to provide training for ACFTU reps in the UK and China.

25 This should not exclude work with those groups trying to revitalise Chinese unions from the grassroots up and here we are in the strongest position to help with organisational training for those based in Hong Kong. One of the key issues in working with all organisations in China is to help ensure that workers are actually aware of their legal entitlements. Affiliates may wish to consider if spaces can be provided on existing courses for reps or if we should look at providing bespoke training. There is also the possibility of securing financial assistance for Hong Kong unions and NGOs working on labour rights.

26 Also in regard to practical support for Chinese workers we should play to our strengths on health and safety expertise. There are a number of avenues for this work - the Ethical Trading Initiative China Project is attempting to set up a pilot project based on creating elected health and safety committees in five factories in the Guangzhou area in Southern China and the TUC has been actively involved in the preparation work. There is also the possibility of securing European funding for work on mine safety (over half of the reported industrial accident deaths in China last year were miners, a figure running into many thousands).

Political agenda

27 China is in transition. Its economy is marching inexorably towards the free market, and political change will follow eventually (although hopes that the two would proceed together have not been borne out by events). The Chinese trade union movement, for both economic and political reasons, needs to change too. Our long term aim remains ensuring that the Chinese trade union movement is able to fully represent and protect workers within its more open market economy. Whilst in the short term we seek to ensure the fair treatment of workers who do protest against conditions and to defend human rights in general (with particular attention to Hong Kong) this requires active lobbying of both the UK and Chinese governments in response to specific situations and an engagement with the EU on its China policies.

28 In particular, the TUC and other trade union movements around the world should promote the European social model (as opposed to the American business model) as the way in which China will be able to match economic development with social justice. In particular, the European social model offers the Chinese elite the opportunity of managing change without major social dislocation or upheaval (trends they are genuinely and sometimes openly concerned about). The European Union might provide resources for spreading awareness in China about the European social model which the TUC could look to for support.

Multinationals and CSR

29 UK business is a major and ever increasing player in the Chinese economy - the UK is the second largest investor in China (after the USA). The corporate social responsibility (CSR) agenda is problematic, but there is much we can do to pressure companies to adopt progressive policies that focus on labour issues as well as corporate governance and environmental considerations. And as the TUC delegation saw with the B&Q example, CSR polices implemented properly and with worker involvement can make a real difference. British businesses should be pressured to conform with the law in China where this is advantageous to workers and to apply international standards in their operations throughout the country. In addition to this we have a role to play highlighting conditions and securing agreements on terms and conditions where we are unable to stop delocalisation of jobs. We will continue to work within the ETI with the more responsible corporates to try to ensure that their supply chain practices help to develop and improve conditions and through campaigns like Play Fair at the Olympics raise public awareness of conditions when companies refuse to listen. To assist this work we will undertake a mapping exercise to identify which UK based companies are now operating in China.