Labour Unions and FIEs

Role of the ACFTU

Establishment of the ACFTU is legislated in the Labour Union Law. This law names the ACFTU as the top level union organization in China, and provides that all other legally recognized union organizations in China must operate under its auspices. The ACFTU is authorized to organize the establishment of a hierarchy of sub-branches extending down to enterprise-specific chapters within individual companies, and to appoint or send representatives to its sub-branches or to enterprises in order to facilitate union organization work.

In its role as a watchdog protecting the legal rights and interests of workers in respect of workers' labour relations with employers, the ACFTU and its sub-branches are authorized by law to exercise certain powers, including the following: (a) investigate infringement of workers' rights and interests by employers; (b) participate in investigations of job-related injury accidents and other dangerous situations, and make recommendations to relevant authorities for dealing with these matters; (c) represent workers in negotiating resolution of work stoppages and labour disputes; (d) help employers perform their duties in respect of workers' salary, welfare and benefits, workplace health and safety, and social insurance; (e) assist and direct employees in signing labour contracts with their employers; (f) seek enforcement of employers' proper performance of labour contracts; and (g) provide legal assistance to workers.

Workers' Point of View

While the ACFTU is legally empowered by the Labour Union Law to organize labour union chapters within private enterprises, to date workers in foreign-invested enterprises have generally shown little interest in joining unions. In fact, when explaining their non-union policies, spokespeople at two multinationals were recently quoted as saying that none of their employees had thus far made any requests to establish unions. Such general lack of interest among workers may be rationalized by arguing that, compared to the relatively high paying jobs and good working conditions provided by many foreign employers, the ACFTU offers only a marginal degree of additional legal protection and other benefits that are overshadowed by the advantages of the job itself, and perhaps also by the fear of being unfairly forced out of the job by an employer displeased about a worker's participation in the union.

Employers' Lawful Obligations

Although the ACFTU has maintained a low profile in its dealings with foreign employers in China to date, there are several obligations that businesses are required to perform with respect to labour unions, as specified in the Labour Union Law.

In particular, companies are required to: (a) consult with the labour union before firing employees; (b) invite union representatives to participate at meetings in which matters directly affecting the personal interests of employees will be discussed; and (c) formally respond to any accusations by the union that the company has failed to provide a safe working environment or otherwise materially infringed on the legal rights or interests of its employees.

Companies must also provide the labour union with the facilities necessary for the union to carry out its business and activities. As no specific guidelines are given to limit the scope and extent of union activities, the obligation to provide commensurate facilities could potentially incur significant costs to the employer if the union becomes active.

Tug-of-War

The fact that the ACFTU has made explicit demands that foreign employers comply with the Labour Union Law subsequent to the August 2004 legal compliance survey indicates that the ACFTU may be serious about its mission to protect workers' rights. And in light of the extensive rights and powers that this law provides to both workers and the ACFTU, it may not be surprising that a number of multinationals, some widely noted for adamant anti-union stances, have seen fit to concede the current round of debate to the ACFTU. However, it is still not clear how the ACFTU will actually fare in its efforts to strengthen its position in FIEs. A lot may depend on how the workers in these enterprises respond to the ACFTU's efforts to organize local chapters, and this response may continue to be heavily influenced by economic factors affecting the general labour market. If workers do not perceive participation in labour unions as being conducive to their best interests, it is unlikely that they will actively participate in such unions. Therefore, the outcome of future parleys between foreign employers and the ACFTU may well turn on how much loyalty and support each side is able to win among workers.