China: social unrest in a blocked society. IAES Brussels 9 December 2010.

1. China: social unrest in a blocked society. IAES Brussels 9 December 2010.

2. Overview • Context • Social unrest • Workers’ movement • Foxconn • Honda • Lewis turning point • Institutional reform: • Collective Bargaining reform • ACFTU reform • Hukou reform • TUL reform Polenus Carlos

3. The context of social unrest • Trade union law: • workplace representatives • workers’ congress & trade union chair • no formal right to strike • ACFTU: • state monopoly, no free market for trade unions • No role for striking, nor striking fund • Strong in (former) SOE’s & on national level • Floating population • Farmers-turned-workers • 145 million migrants • Underclass in urban areas • Concentrated in coastal provinces Polenus Carlos

4. The economic context • Upgrading the Pearl River Delta • relocations • Go West policy • Element of stimulus plan • Next growth phase • Regional labour markets competing • Rising inflation • Coastal CPI , food prices • Easy credit partly due to stock and property markets • National plan 2011-2016 • Preparations • Inequality as a priority • Fiscal and primary redistribution? Polenus Carlos

5. Indications of social unrest. Statistics 1999-2009 Increase in so-called social incidents Farmers against landgrasps, Workers: work-stoppages, demonstrations, road blocks, marches, strikes, walk outs, sit ins, …. Labour arbitration & settlement law (2008) Huge amount of individual complaints (called labour disputes) Cost complaining is low now

6. Extremely negative “work incidents”. • Spate of suicides Foxconn factory-town in Shenzhen (2010) • Strike at HONDA Nanhai gearbox plant (2010) • TonghuaIron & Steel Group (2008) • LinzhouIron & Steel group (2008)  +30 mln. of unemployed migrants Polenus Carlos

7. Hot summer of 2010 The spate of suicides at Foxconn Shenzhen, unveiled the harsh working and living conditions in the supply chain production model The Honda Nanhai strike triggered several strikes in Honda factories and neighbouring suppliers >1000 strikes in Guangdong province: non violent, soft policing, wage demands, of which > 100 in Guangzhou city Polenus Carlos

8. Where and who? • In all types of enterprises: private, state, and foreign owned. • Mainly in Asian owned enterprises: Hong Kong, Taiwan, Japan. • Enterprises with high integration in the supply chain and subcontracting. • Strong labour regimes. Polenus Carlos

9. The spate of suicides at FOXCONN’s Shenzhen plant. A worker’s blog: « the use of death is simply to testify that we were ever alive at all »

10. Taiwanese owned 1 million workers in China Shenzhen 300,000 workers fast growth in China « king of outsourcing » Sub-contractor to international brands like; iPhone, iPad, Nokia, Dell, HP, Sony, Samsung 2008: 61 billion USD, included 56 to USA. 85% are very young rural female workers Factory-town model Dormitories or shared rooms Assembly work Worldwide launch of new products => mandatory overtime work in Foxconn Foxconn (1) the global workplace Polenus Carlos

11. FOXCONN (2) 17 suicides; the most desperate form of protest • 17 suicides by young migrant workers jumping from the 11th floor. • The only way to voice their concerns? Suicide as the only form of protest against a labour regime. • Or copy-cat suicides…? • Forensic results? • Shame for the world brands • No family claims possible • Joint investigation (SS, ACFTU, MOLHR) • 20 Academics started a study • Apple sent their « Social Audit Team », they were denied free access to the plant. Polenus Carlos

12. Taiwanese management Semi-military style Fordist production system No freedom Non existent role of ACFTU No District Labour Inspection Team. Overtime 100 h /month No legal compliance Fake wage increase of 30% Only 10% increase CSR >< Turnover 50% Labour shortages: schools provided pools of students (for factory work 6m-12m) Foxconn management(3) Polenus Carlos

13. Green nets against jumpers Buddhist monks were called in A suicide is a :”girl-boy thing” Announced a double basic pay. A wage increase of 30% which made all the Western newspapers. A study in October 2010 unveiled that it was only 10% on average. Moving inland with the Foxconn production Less developed areas Lower wages Lower awareness Tapping into local labour supply “Stopping” own dormitories but dormitories will survive Foxconn (4)Strange reactions Polenus Carlos

14. FOXCONN (5)abuse, poverty, stress and social isolation • Profiling of an average young worker coming from a backward rural area. • Dreams of a better life, belief in cities publicity • No arranged marriage • Confronted with a low basic wage • Buys sportswear, cell phone, jeans • Confucian duties: sent remittances to family • Mandatory overtime • Illegal overtime: 100 h /month • Trapped day and night in regime • Stressed by increasing production quota Polenus Carlos

15. FOXCONN (6) wages • No community or family support • Breaking up ethnic and social relations • +1000 security guards in Langhua plant • 24/24 hr controls in dormitories • Evolution basic wage plus OT pay: • May 900 RMB • June 1200 RMB • Few workers got 2000 RMB in Oct. • A living wage in Shenzhen is 1350 RMB (=ACFTU) Polenus Carlos

16. FOXCONN (7) perverse ending Extensive interviews with workers in October 2010 revealed that: after the wage increase, workers got less money. Why? • An interplay between some factors such as • Overtime was reduced to the legal level. • The increase was on a low basic wage. • The daily production quota went up by 10 %. • The Foxconn case ended badly for the workers. It was an «eye-opener » to the real life of the urban underclass. Polenus Carlos

17. The strike at HONDA Nanhai gearbox factory triggered a wave of workers’ unrest in Southern China.

18. HONDA Nanhaiin Foshan city next to Guangzhou city. The Nanhai area is remote. Internal subcontractor in Honda network Subcontracting gearboxes for 4 Honda factories in China Male staff, born after 1990, few women ¼ are skilled workers (engineers, white collar) other are “deskilling” workers Noisy dorms, work shifts Management Wage= basic pay + overtime rising production quota on the assembly line J.I.T. and quality concerns Japanese management, no promotion for Chinese All college or university graduates (no promotion of common workers) Many students >30 % from technical middle schools, cheaper no SS dues Seemed to be a clean air conditioned factory HONDA (1) Polenus Carlos

19. Workers-students Young male & rural 1/3 are students in a « work-study » programme to cover the labour shortage. These internships got 1/3 less pay Living together in hotels, shared rooms and dormitories Benchmarking students pay with fixed workers, with the Honda factories in China and HK and with the local minimum wage. Used cell phones, QQ, SMS, internet, « social network », blogging,… to discuss and prepare workers actions Know how of Chinese classics HONDA (2) Polenus Carlos

20. Wildcat strike. More than 2,000 young workers, mostly out of technical schools, walked out, in spite of the union presence. Organised a strike, marched to the slogan ”strike to the end” and negotiated an agreement with HONDA The union had to move to assist. Results: pay increase, reinstatement of strike leaders and union democracy. They got more by organised militant action and a collective bargaining settlement. Strike updates were posted on blogs, internet etc.. Open letters published. HONDA (3) Polenus Carlos

21. Very tactical workers approach Coordinated action set up by two exiting students 2 students took the lead Pushed the safety button Careful to insert floaters and supervisors All departments joined Workers marched around the building Non violent, no damages No political demands workers assembly They set out clear demands in an open letter. A fake ACFTU group with yellow ACFTU caps, hampered strikers Local ACFTU excuses for that Trade union chair watched but did not interact Used fully new media & internet HONDA (4) Polenus Carlos

22. Voiced demands to the local press & authorities Provincial and national press took it over in a supportive way. Soft policing. Just surrounding the remote factory. Their teachers were called in to convince them to stop. A fake group with ACFTU caps aggressed the strikers. Local ACFTU denied and made excuses. After an encounter with Prof. Chang Kai Renmin Beijing, they elected their own workers representatives (TUL) to negotiate. HONDA (5) Polenus Carlos

23. Continue negotiating+ tactical support. Strikers stayed in the compound. And left with company buses. Chain reaction kicks in: other Honda factories, suppliers to Honda, neighbouring factories from other sectors etc…etc.. The international press took over the national coverage Foxconn case and Honda melted together in media. International fears of a rising « Made in China » labour costs. HONDA (6) Polenus Carlos

24. No official comments on the Honda strike Later Premier WEN publicly askedthe Japanese Chamber of Commerce to respect Chinese workers rights and to behave in a humanitarian way to create social harmony at company level. The wildcat young strikers won. 10 and 25 % in wage increases. Difficult to survey now. ACFTU campaign « to promote collective wage negotiating and set up a workplace mechanism of co-deciding the wage level ». HONDA (7) Polenus Carlos

25. Before: Basic wage : 500-600 RMB Students between 900 and 1200 RMB Regular workers 1600-1800 RMB Minimum wage : 910 RMB After: Salary rise of 400-500 RMB for students Some students got a little more than regular workers due to the deduction of social security iPhone series 2 cost break down: Labour : 3 USD Parts : 33 USD Rack price : 350 USD A 10% pay increase on 3 USD Productivity on the rise HONDA (8) Student Wages Polenus Carlos

26. China: Lewis turning point reached? • One-child-policy • Lowering fertility trend • couple + 1 child = 12 mouths • little emperors • Prof. Cai Fang, CASS • Farmer turned workers • Now 145 million of internal migrants • Floating population • Shortage of workers, a demographic trend • Smaller workers’ surplus • Willingness to come to coastal plants • Lack of Decent Work • Huhou discriminations in cities • New jobs and wages in rural areas • Internships Polenus Carlos

27. Mega-trends. Disappearing demographic dividend No longer unlimited labour supply Growth of wages in formal sectors Migrant workers’ wages catch up Wage increase for hired farm workers Changing conditions in rural areas Go West policy Labour questions on the rise. More strikes New generation of young migrant workers Awareness of labour law provisions Rise of labour claims & complaints New institutional drafts etc... Lewis turning point in China? Polenus Carlos

28. Exit or voice? • NO EXIT OPTION: before LTP, too much supply gave workers no choice. • VOICING: low power for voicing like complaining, bargaining or striking • LOYALTY: when supply is short workers are free to leave or voice an opinion; but remain loyal Polenus Carlos

29. Winners Minimum wages increased Preferred firms have more disputes Rising and dynamic provinces tend to have higher incidence rate. Local ACFTU empathy for workers’ problems Local authorities looking for HR instead of new investments Losers Remote areas, SME’s Minimum wage = max. Low basic wage: pro-OT Vulnerable group Wage arrears 25% of workers never got a wage hike during the last 5 years Internships, students Workers’ options Polenus Carlos

30. Rising Gini • The Gini Coefficient in China is rising, indicating an increasing inequality between the rich and the poor Polenus Carlos

31. Pushing up wages is easier than addressing structural barriers. HUKOU access public services Cash payment of own pension payments Family rights COLLECTIVE BARGAINING. Drafts per province/city Per company Mediation before striking INDUSTRIAL RELATIONS Scandinavian model of co-management Labour director FACTORS Wage index CPI Benchmark Labour productivity Min. wage, extras Polenus Carlos

32. ACFTU policy Hired experts Train staff for wage deals Teams of instructors to train workers representatives Local ACFTU level negotiates if no TU Regional or sectoral CB done by union Role of chair Role of workers’ congress Collective bargaining (1) Polenus Carlos

33. CONTENT In group/out group Period Basic wage formulas Extras: bonus, subsidies, allowances Mediation from Labour bureau Signing, accepting Terminating Open questions: Free unions? Free candidates? Free elections? Secret ballots? Freeze period? Social peace? Ratification? Implementation? Collective bargaining (2) Polenus Carlos

34. CONTENT In group/out group Period Basic wage formulas Extras: bonuses, subsidies, allowances Mediation from Labour Bureau Signing, accepting Terminating Action option? Collective bargaining (3) Polenus Carlos

35. Existing CB regulations that state that employers will be fined if they refuse negotiations. Anhui, Fujian, Hubei CB DRAFTS: Guangdong province Guangzhou city Sichuan province Independent ACFTU chairs reform Beijing Tianjin Guangzhou HK factory owners stifle labour reforms in Guangdong Collective bargaining (4) Polenus Carlos

36. Continuous ACFTU reform • The window of opportunity is open • Enhancing CB. • Old CB law: already in 14 areas • Many drafting CB processes • ACFTU chair reform: leaving the company’s pay-roll • ACFTU campaign: « Rainbow » • Scandinavian model? Co-management • Follow up: local CPI, wage index: • Productivity: loyalty, training, huhou reform • New role of local authorities: • low profile on policing conflicts • from investment oriented to HR shortage focus Polenus Carlos

37. Hukou reform & Decent Jobs • Free movement for all workers to Decent Jobs • End discrimination (access to cheap housing, education, healthcare, work opportunities) • End dual labour market, harmonise benefits • Costly for cities Polenus Carlos

38. Hukou reform roadblocks • Chongqing survey • Wish to return if unemployed • Hold a safety net of a rural plot • Wish to keep valuable land • 2 children quota • basic rural cooperative medical system Polenus Carlos

39. Hukou reform and Decent Life • Difficult, patchwork, cross-border problems • Fake huhou testing ground: Chongqing • Full coverage in social protection, social security rights • Access to public services (employment services, schools, kindergarden, medical care, training • Housing, property • Citizenship, unite family Polenus Carlos

40. Will an institutional reform of the ACFTU take workers interests to heart? How to address workers’ expectations? What kind of organisations might represent workers in the future struggles? Who likes a working District Labour Inspection Team? Global domestic consumption conflicts with local investment drives. Inflation & bubbles? Is a hukou reform to costly for cities? The « ants tribe » lacks urban guanxi. Towards a dynamic but blocked society? Polenus Carlos