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August 2006

by Noah Tucker / August 14th 2006

China: Wal-Mart agrees to negotiate with trade unions

The world's biggest supermarket chain has been forced to the negotiating table by the world's biggest trade union federation.

In the last three weeks, workers in five of Wal-Mart’s supermarkets in China have formed trade union organisations.  On 9^th August, Guo Wencai, an official of the All-China Federation of Trade Unions (ACFTU), warned the management of Wal-Mart, which is internationally notorious for its anti-union attitude and poor working conditions, that it will face serious consequences if it victimises union members.  The following day, Wal-Mart management, which has for several years resisted negotiating with the ACFTU, stated that it is now in discussions with the federation and will not oppose workers joining affiliated unions.

Three of the Wal-Mart stores which now have union organisations are in Shenzhen in the South of China; the others are in Nanjing in the East and Quanzhou in the South-East.  China’s Xinhua news agency reported sympathetically:

“Forty-two employees of Wal-Mart's Hujing store in Shenzhen, the first outlet set in China, braved the typhoons and elected their first trade union committee, and a 27-year-old employee named ZhouLiang was elected chairman, Saturday's Workers' Daily reported.

“Zhou was quoted as saying that the committee will ‘safeguard the lawful rights and interests of the employees’ and ‘cooperate with the enterprise operators’, in a bid to ‘harmonize’ the relationship between employees and employers, as well as to promote cooperate [sic] development.”

Wal-Mart, which is based in Arkensas, USA, is the world’s largest retail company.  It has 1.6 million employees worldwide, 28,000 of them in its 60 stores in China.  The ACFTU is the world’s biggest national trade union organisation, with 150 million members. 

While Wal-Mart’s main competitor in China, the French-owned supermarket firm Carrefour, agreed at an early stage to allow trade union representation for workers in its Chinese stores, Wal-Mart has maintained that it prefers to deal on an individual basis with its employees, which the company refers to bizarrely as its ‘associates’.

Although the traditional stronghold of the Chinese trade union movement is in the state-owned industries, the ACFTU has been campaigning actively to unionise the foreign-owned sector.  The federation claims to have union branches in 26% of the 150,000 foreign-owned enterprises in China, and aims to increase that figure to 60%. So far, 4.29 million workers in foreign-owned firms have joined ACFTU-affiliated unions.

Trade union meeting in China

For the ACFTU, Wal-Mart is a major target because of its size, its public prominence and its notoriety as an anti-union employer.  Xinhua quoted Guo Wencai’s enthusiastic prediction:

“This is only the beginning. Our goal is to spread trade unions to every Wal-Mart outlet in China.”

Wal-Mart’s UK subsidiary Asda was forced in June 2006 to agree to negotiate nationally with the trade union GMB, averting a nationwide strike by workers in its distribution depots.

Anti-union media lies

The coverage by the supposedly pluralist Western news media, including Reuters and the BBC, of the struggle between Wal-Mart and the Chinese trade union movement has been identical in a major respect: they have all suggested that the ACFTU is merely a tool of the Chinese state which does not act to improve the pay and conditions of the workers it claims to represent.  USA Today asserted blandly:

“Official Chinese unions are largely conduits for official policy and rarely encourage workers to strike. The government opposes labor groups outside its control.” 

CNN’s report on 31^st July referred to the ACFTU as the “state-controlled All-China Federation of Trade Unions” and even insinuated that the federation was responsible for low wages in China:

“Belonging to the trade [union] federation does not necessarily mean higher labor standards in China, which was long been criticized for producing cheap goods at the expense of fair wages and working conditions.”

If these suggestions had any substance, the bitter resistance of Wal-Mart to the ACFTU would have been strange indeed. 

It is indeed true that both the Chinese state and the Chinese trade union movement are led by the same political party, the Chinese Communist Party. But this is a formula which can lead to better, rather than worse, pay and conditions.

In Britain, many of the proudest achievements of the trade union movement in improving workers’ pay and working conditions were made when both the government and the unions were led by the British Labour Party.

Workers' representatives arrive at ACFTU national congress

The success of the ACFTU in China can be gauged by comparing wages in the two big ‘tigers’ of Third World economic growth.  Between 1990 and 1999, the average real wages (ie, after accounting for inflation) of workers in India fell by 31%; in the same period, average real wages in China doubled. 

The BBC reported in November 2005 that average wages in China are now far higher than in India. Although salaries for executives and highly skilled staff are now rising quickly in India, production workers in China earn on average £300 per year more than they do in India.  See http://news.bbc.co.uk/2/hi/business/4436692.stm. 

A study of the ACFTU’s methods of collective bargaining can be found on:
http://www.ilo.org/public/english/region/asro/beijing/download/training/wage_study.pdf. 

The study includes a survey of union-organised enterprises, both foreign-owned and state-owned, in the city of Suzhou.  The average pay rise for production workers over the three years from 2001 to 2003 was 7.73% per year.

Alongside its struggle to organise workers in the foreign-owned sector, the ACFTU is currently campaigning to ensure that highly-exploited migrant labourers receive back-pay which is owed to them by unscrupulous employers, and is pressurising provincial governments to increase regional minimum wage rates to between 40% and 60% of average pay.