China can't ignore workers' well-being if it wants to avert strikes

Jonathan Sullivan and Samantha Hoffman say workers' strikes such as the one affecting Yue Yuen will continue to plague China unless officials and business leaders change their attitude of 'growth at any cost'

PUBLISHED : Monday, 28 April, 2014, 8:28pm
UPDATED : Tuesday, 29 April, 2014, 4:15am

One of the world's largest footwear manufacturers, Yue Yuen, is in many ways typical. A Taiwanese firm listed in Hong Kong, it has numerous factories based in the southern China manufacturing belt, making shoes emblazoned with stripes and swooshes for sale around the world. In recent weeks, it has also faced an increasingly typical problem for companies located in China - an aggrieved and angry workforce.

In Yue Yuen's case, demands for proper treatment shut down operations across two provinces.

The first action, on April 14, saw employees at a factory in Dongguan walk out over the non-payment of social insurance, following the discovery of years of missing pension contributions. It escalated into a full-blown strike involving thousands of workers across several factories in Guangdong supplying shoes for Adidas, Nike and Timberland. On April 18, the strike spread to the company's factories in neighbouring Jiangxi .

Similar protests in recent months affecting multinationals like IBM and Walmart demonstrate the fissile atmosphere on the shop floor of the world's factory. China's manufacturing centres have been hard hit by the global economic crisis and continuing malaise. Migrants who flocked to coastal provinces on the promise of improved opportunities are now dealing with the loss of jobs and upward mobility.

Across the country, inequality is spiralling and there is a yawning gap between employment laws and workers' rights and the actual behaviour of the state and businesses. With improved internet accessibility, particularly the mobile internet that allows the poor to get online, and the admirable work of civic groups, rights lawyers and bloggers, there is much greater awareness of workers' rights and the determination to have them recognised.

The ubiquity of popular protest in China, on the ground and in cyberspace, is one of the most remarkable developments of the past decade. Nationwide, there have been clashes over pensions, lay-offs, corruption, land seizures, taxes and pollution. And direct action is no longer merely a last resort for the rural poor: "Not-in-my-backyard" protests over plans to build polluting chemical factories have recently brought the middle classes onto the streets of the bigger cities in huge numbers.

A decade or so ago, the government recorded 87,000 "mass incidents", riots, demonstrations and the like with more than 100 participants. By 2011, researchers estimated that this number had more than doubled. Worried about encouraging further unrest, the government stopped regularly releasing exact figures.

Direct action is an important mode of political participation in China. The legal infrastructure underpinning the rule of law is weak and ordinary people have little faith that officials and businesses will treat them fairly. China lacks a systematic accountability mechanism, and although things are improving, civil society organisations, the media and internet remain closely controlled.

Twenty-five years on from the repression that ended the Tiananmen pro- democracy movement, many of the same causes - corruption, inequality, lack of opportunities for political participation - remain unresolved. Having learned its lessons from Tiananmen, the Communist Party has effectively neutered any potential for protests to "join up" and form a broader movement. As a result, protests invariably focus on specific grievances and abuses of power.

The goal of most acts of protest is to attract the attention of the authorities, whom it is hoped will intervene and redress their complaints. Not in the name of benevolence, but the all-powerful mantra of "stability".

The main causes of labour unrest in China are typically low pay, payments in arrears, benefits and compensation demands when factories suddenly close or relocate. In most cases, protests simply fizzle out when agreements, or repression, are quietly imposed at the local level. But collective action can be successful.

Research shows that the size and scale of the protest is important. The level of buzz generated on social media is a factor, as is the level of violence. The Yue Yuen workers didn't lack numbers, but thankfully it did not escalate beyond scuffles with police.

It appears that most Yue Yuen employees have now returned to work, although the terms of their return are unclear. The company has published pledges on its website in the past two weeks to adjust the employee benefit payments, start a social insurance scheme and issue a monthly living allowance. Sceptical workers initially rejected these promises, but local governments have since exerted pressure on Yue Yuen to resolve the crisis and factory owners and police have increased pressure on the strikers, a combination of which probably accelerated their return to work.

Despite some confusion over the details, we can say with confidence that the Yue Yuen resolution will be a super-ficial fix and the systemic conditions that allowed this incident to occur in the first place will persist unchanged.

As a manufacturing centre serving many multinational corporations, Guangdong has been at the vanguard of experiments with labour legislation. In October last year, a provincial draft regulation on collective negotiation was introduced, theoretically formalising the collective negotiation process. It has not yet been passed into law, and faces strong opposition from business groups interested in maintaining the status quo.

Even if a law is passed to formalise collective bargaining, the legislation is only as effective as local government officials allow it to be. Ominously, there are no mechanisms in place to oversee its enforcement.

Contrary to conventional wisdom, local officials are not inherently corrupt, but they habitually choose economic development at the expense of the well-being of the people who generate it. But as the new leadership under Xi Jinping has emphasised, growth for growth's sake is no longer seen as the way forward for China. The Chinese dream will require quality rather than merely quantity, but it remains to be seen how this will play out in provinces long in thrall to gross domestic product growth.

Jonathan Sullivan is associate professor and deputy director of the China Policy Institute, University of Nottingham. Samantha Hoffman is a PhD student at the China Policy Institute