Unions in China still feeble, but gaining foothold

– Almost all the Fortune 500 companies in China will allow unions to open in their factories, according to union leaders who are wrapping up this week a 100-day campaign to organize workers in some of the world's largest corporations.

There are holdouts, such as Microsoft and pharmaceutical giant, Wyeth. But even they "don't dare say they will not set up unions," which would be illegal, says Wang Ying, a senior official with the state-backed All-China Federation of Trade Unions (ACFTU). "They are finding all kinds of excuses to put it off."

Many foreign firms see unions as an unnecessary hindrance, but even those that moved to China to escape unions "should not assume that just because unions are coming here, the sky is falling," says Jim Leininger, Beijing head of the US management consulting firm Watson Wyatt.

Though there are signs that some of them might be ready to try the sort of collective bargaining that is standard in Western countries, "they will not necessarily be confrontational as in the West," predicts Constance Thomas, head of the China office of the United Nations International Labor Organization.

Chinese enterprise-level unions, which have traditionally taken their cue from the government-controlled ACFTU, are among the most pliable in the world.

The union drive comes in the wake of pro-labor legislation on contracts and arbitration that the Chinese parliament has passed this year to strengthen employee rights, after decades of laissez faire investor-friendly policies.

The high-profile campaign to set up unions in more than 10,000 workplaces and cover 80 percent of the biggest foreign companies operating in China is "on track" to meet its targets, says Ms. Wang.

Wang is keen to dispel foreign misunderstandings about unions in China and regrets that it has been hard to organize in foreign-owned companies "because they equate their unions at home with unions here and they are very scared of them.

"Our purpose is to guarantee a win-win situation for companies and workers," Wang adds. "We coordinate labor relations, we don't fight against management."

Still there is much apprehension, says Chris Liu, a labor expert here with the US law firm Akin Gump Strauss Hauer & Feld LLP. Many businesses think that if "management can make decisions unilaterally, that is better than having someone slow them down."

But almost all the Fortune 500 companies that have come under ACFTU pressure during the campaign have acceded because "they don't really have a choice," says Mr. Leininger.

The way in which the ACFTU normally sets up unions in enterprises, from the top down, gives management an influential say in who should sit on the union committee. Only the manager and his deputy are banned by law from committee membership, but union chairmen are very often middle managers beholden to their bosses.

Such unions "are no threat to any company," says Jonathan Unger, head of the Contemporary China Centre at the Australian National University in Canberra.

Traditionally, the role of unions in all companies, locally or foreign owned, has been limited to welfare, organizing employee outings, and explaining government policies to members.

There are signs, though, that this might be changing. In the southern province of Guangdong, often in the vanguard of economic and social change, "more progressive unions are now saying that a key role of trade unions is to represent workers and not necessarily to be nice to management," says Geoff Crothall, a researcher with the Hong Kong-based China Labour Bulletin.

"The potential is there" for more representative and more demanding unions, he believes.

"It is great that the union has got in the door of some foreign companies," agrees Ms. Thomas. "But the next step has to be to conclude collective agreements and to defend members' interests. We are starting to see some of that."

It is not an easy transition for Chinese unions to make. Three weeks ago the most combative and best known Wal-Mart union leader, Gao Haitao, resigned his post in frustration at the way the famously antiunion company was refusing to engage in collective bargaining at the store where he worked.

Though the ACFTU supported his stance, the leadership has not so far offered him much backing, says Mr. Crothall. "They have to be much tougher ... get off the fence and say they represent workers' interests," he argues.

That prospect worries some foreign firms, not least because although much of China's labor legislation is often ignored, it is nonetheless on the books and it is increasingly supportive of workers' rights.

"Even window dressing can take on real meaning sometimes," says Prof. Unger. "Who knows what China will be like in a decade? Things could change."

"Nobody knows for sure where this is going to go," says Mr. Leininger. "How much more collective bargaining will there be? How much more independence from the government? The fear is that once you let a mild and harmless union in, what is going to happen next year or the year after?"

Most likely, believes Mr. Liu, Akin Gump's labor law expert, the unions "will act as a social force, pushing society towards more employee rights. It will be entirely different from a few years ago."

But that will happen, he predicts, "always within the constraints of the political system, and the government's priorities have always been stability, stability, and stability."