ACFTU in a time of crisis: Back to the old ways?

2009/06/16

Hong Kong Liaison Office (IHLO) of the international trade union movement
April 2009
http://www.ihlo.org/LRC/ACFTU/070509A.html
Last September, the financial crisis spread to China. This had a direct impact on eastern and southern China, especially the export manufacturing areas in the southeast of China. There was a large increase in factory closures and layoffs further exacerbating a general trend of factory closures in the region.

According to government statistics, the global financial crisis has cost the jobs of more than 20 million rural migrants, or 15.3 percent of the 130 million migrants working outside their hometown. This has obviously meant that labour disputes have also increased. [NOTE 1]

In 2008, China reportedly had a 95 percent increase in labour dispute cases compared to 2007. Some areas like the coastal areas of eastern China have even reported a 300 percent increase. [NOTE 2] According to statistics, in 2008, labour mediations in all level of China reported a 42 percent increase in labour disputes. In Beijing in the first nine months of the year, labour dispute arbitration cases increased 103 percent. Disputes in Zhejiang, Guangdong provinces also have high increased up to 246 percent and 73 percent respectively. [NOTE 3]

In order to protect the export sector and the domestic economy the central and local authorities have issued several measures to support enterprises especially in the export sector. For example authorities have announced an increase in the tax rebate for exports, a huge economic stimulus plan and have reduced employers’ statutory labour costs, encouraging companies to avoid layoffs by taking other labour cost cutting measures. In a notice issued on 3 February 2009, the State Council advised local governments to take temporary measures to reduce labour costs, such as suspending social insurance premiums, reducing social insurance rates, and extending tax preferences for certain enterprises in economic distress in order to avoid mass layoffs. [NOTE 4]

The question which needs to be asked at a fundamental level is whether it is worth sacrificing workers rights in order to ensure an enterprise survives.

“If you have a problem: look for the union”
In an unintentional irony the new ACFTU slogan is “if you have problems, look for the union” – for many workers it is almost impossible to find the ACFTU even if they wanted to. The ACFTU ahs in fact notable absent from the main players in the crisis and have been slow to react properly. As of now they have fallen back on the time honoured stance of acting as a government mouthpiece instead of continuing with reforms. As of now the All China Federation of Trade Union (ACFTU) position has pretty much followed government policies in response to the global economic crisis as well as continuing to pursue the 100 percent unionization campaign in 2009. The ACFTU reaction to the crisis has been notably slow off the mark and passive. One of the ACFTU biggest failings is that they are not acting as a proactive organisation – but rather they react instead of acting.

Workers should not need to look for their union. Their union should be there before a problem arises.

From September onwards, many large and medium-sized factories closed down, especially in south and southeast China. Most trade unions at all levels were still busy with their work meeting the quotas set for unionisation in Fortune 500 companies. Initially it had seemed that this unionisation drive would ease up but it has continued as a central part of the local branch work.

Provincial unions conducted various surveys of migrant workers and seminars in support of the local government’s policies. Local unions also stepped up their “heart warming” activities of helping laid-off urban and migrant workers facing difficulties. Many of the unions in the south also felt the impact of the crisis and the emerging large scale unemployment and a large part of their response was to help arrange train tickets for workers who have been forced to return in advance of the Spring Festival and assist others in returning home. At the same time trade unions in inland China were struggling to cope with such large numbers of returning unemployed workers before the Spring Festival. These provincial unions were silent until spring when finally the central government realised the seriousness of the possible problems for poor rural provinces used to sending migrants to the south to work and not used to economically supporting or providing employment for their citizens. In February 2009 the government announced various financial measures to improve job creation in the provinces as well as training in tandem with the ACFTU who also announced schemes to transfer union membership. The transfer of union membership from an urban ACFTU branch such as a city in Guangdong or Zhejiang to a rural ACFTU branch itself raises interesting questions for these rural ACFTU branches. Most of which have far fewer members and are not so used to the type or scale of industrial relations occurring in the prime manufacturing areas.

Shortly before Chinese Lunar New Year there was a second round of "Factory closures". The ACFTU did little to protect the workers involved except to make public statements employers, especially state-owned enterprises, to offer stable jobs and pay full wages to their workers on time," . [NOTE 5] The national ACFTU did however ask unions in 15 provinces to conduct a survey six months after the start of the crisis to assess the financial health of the various provinces and its enterprises business status, bankruptcy and factory closures and related issues. The department of Legal Affairs of the ACFTU set up a labour dispute reporting system, calling for supervision of layoffs from enterprises.

During the Chinese New Year period the ACFTU officially helped claim 1.09 billion Yuan (159.6 million US dollars) of back wages for 430,000 migrant workers. Trade unions at all levels were also charged with ramping up efforts to help return migrant workers to locate new jobs by providing them with training courses, small loans and guidance for job hunting. [NOTE 6]

All the ACFTU’s responses to the crisis and the resulting job losses and bankruptcies followed government policy – which aimed firstly to give incentives and benefits for enterprises in order to survive , secondly to help reduce enterprise costs by legally allowing for the downscaling or posting of various workers benefits and wages and thirdly to help ensure public security and social stability by paying the train fares (and of course providing the ubiquitous blankets) of laid off workers so they could disperse into the countryside and go back to their farms.

For more details of the government responses and factory closures see IHLO: Economic crisis and job losses in China: Blame victims, threaten crackdown

ACFTU and other government agency responses
Many of these responses were issued in tandem with other government agencies including the Ministry of Human Resources and Social Security as well as Chinese Enterprise Association (CEA) for example; all the three agencies urged their local constituents to implement the “Rainbow Plan” . [NOTE 7] The “Rainbow Plan” (彩虹计划) is designed to expand the use of collective contracts and was introduced in April 2008 with the goal of establishing collective contracts in all of Eastern China by 2009, central China by 2010, and the remainder of China by 2012.

At the same time the ACFTU also announced a ‘mutually agreed action plan” for companies, workers and ACFTU branches which states that; ‘For companies under normal business conditions, the collective contracts should focus on wage levels and on wage increase.For enterprises with “operational difficulties,” the collective contracts should focus on adopting measures to cope with the economic difficulties, such as arranging for flexible working hours and related wage reductions. This would entail enterprises recognizing their social responsibilities by not laying off workers, stabilizing employment positions, negotiating and ensuring salaries are paid, increasing worker training, and increasing workers’ technical abilities. On the other hand, it would also entail guiding the vast majority of workers to have faith, stand strong, and work hard for their enterprises in order to get through difficult times.’ In order to encourage the enterprises and workers to build up a sustainable relationship, the ACFTU called for branches to support enterprises to set up collective negotiation mechanisms, to intensively monitor enterprises layoffs, wage arrears and to form a communication and negotiation mechanism to resolve issues arising and where possible to prevent problems.

In February 2009, the ACFTU was planning to extend aid to more than 10 million migrant workers this year, according to a telephone conference in order to help support those affected and their families. This would include the provision of small loan guarantees to encourage farmers to own small businesses. After the announcement, immediately, the trade unions at all levels also started their own assistance activities at local level (see below table for details).

Social Unrest: ACFTU blames ‘Foreign hostile Forces”
With reports of at least 20 million migrant workers being laid off – and some estimates far higher – the government has also responded with increasing shrillness over possible threats to social stability. These pronouncements have been gladly picked up by the media and the foreign media (even though there is perhaps far higher proportions of unemployed taking t the streets in some Western countries). In order to prevent unrest and in order to appease workers whose employers have simply absconded many local governments there have intervened and been forced to pay the wages for workers.

The spread of the Chongqing taxi drivers strike to other cities across China late in 2008 coupled with the general rise in protests and the increased number of labour arbitration cases led to local governments beginning to warn against social unrest on an almost daily basis. On 17 February, the ACFTU Vice-Chair Sun Chunlan went one step further and introduced the threat of ‘foreign’ bogeymen by claiming that foreign forces were aiming to capitalise on the potential for unrest. Sun reportedly said: "We need to keep a close lookout for foreign and domestic hostile forces using the difficulties encountered by some companies to infiltrate and undermine the ranks of migrant workers." [NOTE 8]

Prior to this in November 2008, more than 500 county level party committee secretaries were summoned to Beijing for a special training to deal with mass incidents at the Central Party School. [NOTE 9] In February 2009, more than 3,000 county-level heads of local police departments attended a special training in Beijing. It is the first such intensive training in dealing with social conflicts for Chinese Police officers. According to the words of the head of the training department of the Ministry of Public Security of China [NOTE 10] the aim is to: ‘keep small incidents in the village and major incidents out of the towns; to maintain the grass-roots social stability.’ Meanwhile, national police officials have dispatched dozens of supervisory groups to the various regions of China to investigate the levels of social instability in these places.

”Flexible” employment and reduced burdens of the employers in the provinces
Obviously, stable and healthy enterprises are crucial for the local stability of a province and its workforce. But an enterprise should not be given precedence over its workforce especially when the workers are limited in their ability to influence government policies compared to the enterprise associations who have far greater influence over the local government and bodies like the ACFTU. Some local ACFTU branches have gone so far as to take a leading role in urging the government to allow enterprises more flexibility in the enforcement of the labour contract law during the financial difficulties and encouraging enterprises to be allowed to use loopholes in labour contracts. In November last year, the Guangdong Federation Trade Unions urged the suspension of collective wage negotiations in the enterprises with difficulties . [NOTE 11] At the same time in Hong Kong, a pro-government political party the Democratic Alliance for the Betterment of Hong Kong (DAB) and representatives of Hong Kong’s small and medium enterprises associations urged the Hong Kong SAR government to push for the suspension of certain articles of the Labour Contract Law. [NOTE 12]

Some provinces in China such as Jiangsu Province then began to allow the payment of overtime work compensation in instalments if employer and employees reach agreement. [NOTE 13] In March this year in Fujian, the Fujian Labour and Social Security department, the Fujian Federation of Trade Unions and the Fujian Federation of Enterprises issued a joint guidance to encourage companies and workers to sign flexible labour contracts (fenlei hetong) in order to protect the stability of labour relations by allowing employers to reduce the details of contracts and hence protection for the workers. The Fujian Social Security department urged enterprises to do their best not to layoff workers or to reduce layoffs. They also tried to simplify the approval system for non-standard working hours which means enterprises can choose various working hour systems which suit them. In addition, they have tried to support enterprises with financial difficulties through shortening working hours, rest rotation, the use of annual leave, rotational training and reduced wage negotiations to maintain their workforce. In Jiangsu Province, after Chinese New Year, the Jiangsu Federation of Trade Union also suggested that the wage negotiations should be flexible for enterprises with financial difficulties and the Jiangsu High Court announced a related guidance which encouraged relevant businesses to reduce personnel costs by giving employers the right to change the workers labour conditions and wages according to their own rules or with the agreement of the workers.

Conclusions: Inevitable passivity and pro business stance
The ACFTU’s rather passive and establishment focused responses to the crisis as well as their focus on the survival of enterprises at the expense of worker benefits has done little to change the already poor image of them as a union in the eyes of workers. Indeed it seems that even some of their reforming efforts have been shunted to the back while they concentrate on fulfilling their role as a quasi government body. It is however difficult to blame the ACFTU itself though given their status as an integral part of the ruling hierarchy and the fact that most of their power – or potential power- comes not from grassroots workers but from the legislative powers the government awards them and their legions of civil servant staff which are provided in return for such support to the government. "However the enlargement of the ACFTU’s “heart warming” activities and financial aid may increase workers practical expectations.

The ACFTU’s comments on the "hostile forces" however has done little to improve the reputation of the ACFTU and coupled with the fact that the majority of ACFTU actions were to assist enterprises in difficulty rather than workers in difficulty it is hard to see the union emerging from the crisis with improved relations with workers.

All China Federation of Trade Union responses and statements
(November 2008 – March 2009)

ACFTU National Level

November 2008	ACFTU reported that there were up to 230 million migrant workers in China at the end of 2008.
24Dec 2008	ACFTU announced that it successfully unionized more than 83% of the headquarters, and more than 85% of the subsidiaries of the Fortune Global 500 Companies in China.[NOTE 14]According to data provided by ACFTU, 483 Fortune 500 firms are doing business in China, with 375 setting up headquarters, about 10,000 having subsidiary operations. Less than half of them have established trade unions, compared with more than 73 percent for all foreign-funded firms in China.[NOTE 15]
6th Jan 2009	“Concentrated action” with government departments before the Chinese New Year. With the focus on wages and arrears issues.[NOTE 16]
9th Jan 2009	ACFTU issued a notice on the protection of “migrant worker’s right and interests in the current economic situation” which requested trade unions at all levels to focus their actions on the central government’ judgements and act together with businesses.
Jan 2009	ACFTU issued a notice on the building of a labour dispute notification which calls for supervision of enterprises laying off employees. The labour dispute handling system is designed to be handled by the department of Legal Affairs of the ACFTU.
23rd Jan 2009	The ACFTU, the Ministry of Human Resources and Social Security (MOHRSS), and the China Enterprise Association (CEA) issues a joint opinion which encourages employers to avoid or reduce mass layoffs by adopting alternative cost cutting measures, such as wage reductions, work adjustments, holiday and annual leave rotations, and other flexible working arrangements.[NOTE 17]
Feb 2009	As a result of the global financial crisis, over 20 million migrant workers had lost their jobs and needed to be reemployed after the Chinese Spring Festival.
Feb 2009	ACFTU began a survey in 15 provinces (cities, districts) with a view to gathering data on the status and functioning of enterprises, bankruptcies, factory closures and related issues.
FEB 2009	The ACFTU, enterprises and workers would launch a series “mutually agreed upon actions” (gongtong yueding xingdong).[NOTE 18]“On the one hand, this would entail enterprises recognizing their social responsibility, not laying off workers, stabilizing employment positions, negotiating and ensuring salaries are paid, increasing worker training, and increasing workers’ technical abilities. On the other hand, it would entail guiding the vast amount of workers to firmly believe, stand in their positions, and work hard for their enterprises in order to get through difficult times”
15th Feb 2009	Announced that the transfer of migrant workers' membership back to unions in their home towns needs to be improved, and unions need to provide vocational training, small-business loans, and entrepreneurship programs to boost reemployment, ACFTU also urged unions at all levels to perfect management and attract as many migrant workers as possible, especially those among the 20 million jobless workers who are likely to remain in their home towns after the Spring Festival. The union would strive for a net increase of five million members from migrant workers in 2009. ACFTU also asked for the protection of migrant workers' interests amid the global financial crisis. "China's labour unions will urge employers, especially state-owned enterprises, to offer stable jobs and pay full wages to their workers in time," said Xu Zhenhuan, vice chairman of ACFTU. ACFTU official figures showed that of China's 200 million migrant workers, 66 million had joined the ACFTU.[NOTE 19]
17th Feb 2009	The ACFTU announced that they are planning to extend aid to more than 10 million migrant workers this year, according to a telephone conference. . The effort is meant to ease the plight of more than 20 million migrant workers who have been driven out of employment after the global financial turmoil forced many factories to close. The ACFTU said it aimed to provide about 5 million migrant workers with employment assistance, such as job training and vocational instruction. It would help the other 5 million safeguard their legal rights or offer them living assistance. Sun Chunlan, the ACFTU deputy chair said trade unions in10 big cities would vouch for migrant workers, on a pilot basis, to secure small loans for migrants.[NOTE 20] The ACFTU also stated that "We need to keep a close lookout for foreign and domestic hostile forces using the difficulties encountered by some companies to infiltrate and undermine the ranks of migrant workers."
5th Mar 2009	China announced Thursday a fiscal deficit budget of 950 billion Yuan (139 billion U.S. dollars) for 2009, a record high in six decades, as the country boosts spending to cushion the impact of the global financial crisis
9th Mar 2009	Zhang Mingqi, ACFTU vice-chair states that the labour contract law plays a positive role in China's employment relations and can weather the test of time.
9th Mar 2009	The central government vowed not to amend the Labour Contract Law to appease business leaders who claim the new legislation has increased costs and bankrupted tens of thousands of enterprises. Speaking at a National People’s Congress press conference in Beijing, Xin Chunying, deputy head of the NPC Standing Committee’s Legislative Affairs Commission, said the factory closures over the last year had nothing to do with the Labour Contract Law, which according to a government survey had only increased business costs by two percent
11th Mar 2009	About 1.62 million new urban jobs were reportedly created in the first two months of 2009, said Yin Weimin, minister of Human Resources and Social Security. “Based on early 2009 data, we cannot leap to the conclusion that employment is in recovery,” Yin added. In January, China set a target of 4.6 percent for urban unemployment for 2009, up from the actual [official] rate of 4.2 percent in 2008. Other targets this year include creating 9 million new jobs in cities and helping 5 million laid-off workers find employment.
13 April 2009	The ACFTU held a press conference and stated that as a result of the financial crisis since the third quarter of last year, the employment situation has become more serious with increasing layoffs, reductions in pay, wage arrears, conflicts in labour relations, labour disputes and mass incidents. [NOTE 21]

Guangdong Federation of Trade Union

20th Nov 2008	The global economic crisis has prompted several Chinese officials to make short-sighted and reckless comments. In November 2008, the Guangdong union federation announced it would suspend collective bargaining in enterprises experiencing difficulties.
Nov 2008	The Guangdong FTU asks that enterprises and workers work to get through difficult times. Guangdong unions at all level should help to arrange train tickets and accommodation for returning migrant workers.
Dec 2008	The Guangdong FTU provided 549,000 Yuan special funds to help 316 Wenchuan earthquake area students.
Mar 2009	The Guangdong FTU is planning to extend aid to 1 million migrant workers s. It aims to cover about 300 thousands migrant workers with employment assistance, such as job training, vocational instructions, legal aid and living assistance[NOTE 22]

Shanghai Federation of Trade Unions

12th Jan, 2009	The Shanghai FTU issued guidelines to urge district level unions to pursue collective consultations when they are aware that company management may suspend operations, reduce wages, adjust employee benefits, reduce workforce, etc. Companies should therefore be aware of these national and local requirements before taking any such labour-related actions.
22 Feb 2009	The Shanghai FTU is planning to extend aid to 1 million migrant workers s. They held recruitment activities for migrant workers in 5 areas which reportedly provided 9,000 jobs. [NOTE 23]

Tianjin Federation of Trade Unions

Feb 2009

The Tianjin FTU reported that it is planning organize 20 training programmes and provide aid to 5,000 migrant workers. To provide expert consultation and seminars for them.

Jiangsu Federation of Trade Unions

11th Feb 2009	In Jiangsu Province, after Chinese New Year, the Jiangsu Federation Trade Union suggested that wage negotiations can be flexible for various enterprises in financial difficulty. [NOTE 24]
26th Feb 2009	Jiangsu FTU started a "one million migrant workers aid’ activity to establish 20 provincial-level employment training centres and 5 provincial-level migrant workers training centres. Trade union in Jiangsu level will help to prepare 100 million Yuan special funds for migrant workers assistance.[NOTE 25]
4th Mar 2009	The Jiangsu High Court announced a related guidance to encourage appropriate businesses to reduce personnel costs The employers have right to change the workers labour condition and wage according to their rules or the agreement with workers.[NOTE 26]

Shandong Federation of Trade Unions

FEB 2009

The Shandong Federation of trade unions reported that they have been focusing on promotion of the employment of migrant workers and occupational skills training. The trade union also assisted the guarantee of small loans and labour export and labour agency service collaboration. [NOTE 27]

18th Mar 2009

The Qingdao FTU announced that it has successfully unionized more than 97% of the subsidiaries of the Fortune Global 500 Companies in Qingdao. There are 78 companies listed of the Fortune Global 500 Companies including Kentucky, Maersk & Itochu. In 2008, there were 2,093 new grass-roots trade unions with more than 210,000 members. At present, the Qingdao union’s membership is more than 2.13 million.[NOTE 28]

Fujian Federation of Trade Unions

FEB 2009	The Fujian Federation of Trade Unions is planning to provide employment assistance for 100,000 laid off workers and migrant workers including occupational training and job creation. The FTU also urged enterprises and workers to do their best to stabilise jobs and do everything possible to create jobs.[NOTE 29]
16th Mar 2009	The Labour and Social Security department, the Fujian FTU and the Fujian Federation of Enterprises issued a joint guidance to encourage companies and workers to sign flexible labour contracts in order to protect the stability of labour relations. The Fujian Social Security department urged enterprises to do their best not to lay off or to reduce essential layoffs and announced they would simplify the approval system of non-standard working hours which means the enterprises could choose different working hour systems. They also allowed enterprises with financial difficulties to shorten working hours, use rest day rotation, annual leave, rotational training, and wage negotiations to keep existing contracts. [NOTE 30]
19th Mar 2009	The Fujian Federation of Trade Unions issued a "2009 work plan for protect migrant workers legitimate rights and interests". [NOTE 31]The focus is on achieving employment, paying wages, offering legal aid and assistance for migrants in difficulties. The FTU is also planning to arrange 100 recruitment seminars with the aim of helping 1,000 laid off workers find reemployment.

NOTES
1. http://english.peopledaily.com.cn/90001/90776/90882/6593278.html　16 February, 2009 Source: Xinhua

2. http://news.sina.com 3rd Mar, 2009

3. http://lianghui2009.people.com.cn/BIG5/145755/147616/8908360.html　5 Mar, 2009 Source: 《China Youth Daily》

4. http://www.internationallawoffice.com/Newsletters/detail.aspx?g=4e4ded11...

5. Xu Zhenhuan, vice chairman of ACFTU 15 February, 2009 http://english.peopledaily.com.cn/90001/90776/90882/6593066.html

6. http://english.peopledaily.com.cn/90001/90776/90882/6593278.html

7. http://www.bakernet.com/NR/rdonlyres/D0FA5D9A-8261-4A5E-9663-756EE60F9B0...

8. Http://news.sina.com 17 Feb, 2009

9. http://politics.people.com.cn/GB/1026/8345885.html 15th November 2008

10. http://www.chinareviewnews.com) 27 February, 2009

11. http://www.ihlo.org/LRC/W/271108.html

12. http://www.ihlo.org/HKM/271108.html

13. http://www.jiangsu.gov.cn/shouye/zwgk/jszb/2009/1/sjbmwj/200901/t2009012...

14. This unionization campaign was launched by the ACFTU in June 2008, and specifically targeted Fortune Global 500 Companies in China. http://www.bakernet.com/NR/rdonlyres/D0FA5D9A-8261-4A5E-9663-756EE60F9B0...

15. http://www.ihlo.org/LRC/ACFTU/0010309.html

16. Source：Legal daily

17. http://www.acftu.net/template/10004/file.jsp?cid=104&aid=81316

18. http://libcom.org/news/chinese-unions-plans-2009-union-vigilance-against...

19. http://www.china.org.cn/china/news/2009-02/15/content_17280618.htm

20. http://www.chinadaily.net/china/2009-02/18/content_7488166.htm

21. http://acftu.people.com.cn/BIG5/9117759.html

22. http://acftu.workercn.cn/contentfile/2009/04/07/083042506451538.html

23.http://acftu.workercn.cn/contentfile/2009/04/07/083042506451538.html

24.http://big5.people.com.cn/gate/big5/acftu.people.com.cn/GB/121801/87840… 11 Feb, 2009 Source:《Workers Daily》

25. 《江苏省总工会启动“千万农民工援助行动”》27th February 2009　Source: Jiangsu worker

26.www.jscourt.gov.cn/cps/site/jsfy/meitifangyuan/content1_a2009030946639…