Wal-Mart Signs First Collective Contract in China: What Does it Mean?

By Manfred Elfstrom, ILRF Program Officer

Wal-Mart has finally signed a collective contract with its employees—not in the United States, but in Northeast China. 

According to Xinhua Net (in English here and, in somewhat more detail, in Chinese here), the retail giant’s outlet in Shenyang City agreed “to raise employees’ salary by an annual rate of 8 percent in 2008 and 2009.”  This news highlights recent trends in Chinese labor relations. 

Most immediately, the contract is a victory for an ongoing Wal-Mart organizing effort that has seen the All China Federation of Trade Unions  adopt daring, grassroots techniques.  China Labor News Translations has done an excellent job of documenting this campaign, its successes and challenges. 

With the passage of the Labor Contract Law last December, collective contracts have received new attention across the country.  Shenzhen City in China’s Southeast has taken the lead with its “Draft Regulations on the Growth and Development of Harmonious Labor Relations in the Shenzhen Special Economic Zone”. 

These regulations include the following provisions:

• Under Article 4, Shenzhen’s trade union is made responsible for “actively protecting and developing workers’ legal rights.”  More specifically, if a labor dispute occurs, under Article 48, “the union must actively represent workers.”  In the case of work stoppages, rather than demanding that the union pacify frustrated employees in the interests of production, Article 47 calls for the union to “represent the workers in bargaining with their employer, relay the workers’ opinions and demands, and put forward suggestions for resolving” any problems (my translation).  The article also calls for a cooling off period during which neither side—neither workers nor employers—may take further actions.

• Articles 24-30 all deal with “collective consultation and collective contracts.”  The articles urge enterprises to set up collective consultation systems and discuss wages, work safety, and social benefits with their unions and workers.  According to Article 25, enterprises must provide not only the proper conditions for consultation, but also documents with the information necessary for making decisions (workers in turn must keep company secrets). 

Shenzhen’s innovation may be an outgrowth of Guangong Provincial Party Secretary Wang Yang’s call for “thought liberation.”  This call, reminiscent of similar language used by Deng Xiaoping decades earlier, has excited commentators in China, but has led to some confusion.  The magazine China Newsweek bluntly asked “Liberate what?” (jiefang shenme) in a cover article in April. 

One answer to the magazine’s question, touched on by Edward Cody in a Washington Post article, is reforming local elections in Shenzhen, the province’s young metropolis.  Another answer is reforming Shenzhen’s labor relations. The latter task is no easier than the former, but may yield more immediate results.

More broadly, the Wal-Mart contract highlights the push and pull of a renewed emphasis by the Chinese government on those left behind by market reforms and on social stability, evolving legal standards (labor contracts, whether collective or individual, have a relatively short history in China), and the demands of businesses, including foreign corporations. 

Guaranteed pay raises aside, the other points in Wal-Mart’s agreement appear to restate guarantees already in the law—guarantees to overtime pay, social security payments, etc.  This is a defect shared by other collective contracts in China.  Xinhua’s choice in its Chinese-language article to highlight that the Shenyang Wal-Mart outlet’s wage is above the local legal minimum (that’s an accomplishment?) shows the challenges that remain to truly equal bargaining between employees and management.

Yet the fact that China has persisted in pushing forward collective bargaining and legislation like Shenzhen’s in the face of troubling economic news (such as reduced American purchasing) is very encouraging.  It highlights a final trend: the country’s growing conviction that it must move up the production ladder, focusing on higher-skilled industries—or be stuck forever competing with its poorest neighbors for the cheapest manufacturing orders.

Comments

[Manfred Elfstrom]

Michael,

Those are good questions.

I honestly do not know how Wal-Mart employees in general or employees of the specific branch in question measure up against the workers at similar retail stores in China (Carrefour, Meitehao, etc.).

That would definitely be worth investigating. I would be particularly interested in knowing whether Wal-Mart employees at branches without collective contracts are still doing better than their peers at, say Carrefor, just by virtue of the Wal-Mart employees having a union (as I believe they all do now)--or not.

As to the motivations behind the contract, I suspect the purpose of signing it was to advance the ACFTU's experimentation with collective bargaining. Of the possibilities you give, this comes closest to "codification of social reform that the Chinese government wants to pursue"--a good thing, as far as I'm concerned.

I do not, though, know how much this was a grassroots, worker-driven effort. If anyone has more information on this, I'd be very interested in reading it!

But I doubt that the contract was something Wal-Mart wanted. Other employers in China (as in the United States) certainly do not want collective contracts, even if the contracts are toothless, because they know that collective contracts create precedents for more collective contracts.

So, I would say this is an important step forward for workers, though there is a lot that still needs to be done and a lot we still need to know.

Best,

Manfred

[Michael Balk]

Does the collective bargining agreement create a condition of parity for Wal-Mart workers compared to comparable jobs at other retail firms? Is the agreement an improvement, codification of standard market practice or the codification of social reform that the Chinese government wants to pursue. I struggle whether this is a victory for the workers or simply an agreement that everyone (including Wal-Mart) wanted in the first place.