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TRADE UNIONS IN CHINA’S LABOR MARKET: Confrontational or Cooperative

TRADE UNIONS IN CHINA’S LABOR MARKET: Confrontational or Cooperative. Cheng Wang Institute of Economics Chinese Academy of Social Sciences. ROLES OF TRADE UNIONS IN TRADITIONAL MARKETS-1.

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TRADE UNIONS IN CHINA’S LABOR MARKET: Confrontational or Cooperative

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  1. TRADE UNIONS IN CHINA’S LABOR MARKET: Confrontational or Cooperative Cheng Wang Institute of Economics Chinese Academy of Social Sciences

  2. ROLES OF TRADE UNIONS IN TRADITIONAL MARKETS-1 • Trade union (TU) is an important element in altering free competition and acts as a force of monopsony in the traditional labor market • TU shifts the equilibrium and create more unemployment for the economy and higher labor costs for the firms

  3. ROLES OF TRADE UNIONS IN TRADITIONAL MARKETS-2 W Ls (TU) Ls W (TU) W0 Ld L

  4. Traditional Employment or Labor Market • Early history of the market economy • Transition from an agricultural society • An under-developed capital market • Slow advances in science & technology • Very limited social education • Long-term cycle for firm innovation • Low rate of transmitting information • Conflicts in: property rights, knowledge, communication, social status and unbalanced legislation

  5. Labor Supply-side Theories • reasonable rebellion • violent revolution • confrontational & active trade unions: -striking -production halts -collective demonstrations -pickets

  6. Core Employment Market • new relationship between an employer and employees • modem entrepreneurial innovation • information and communications technology (ICT) • human resources (HR) management • team production • concern of stake-holders

  7. Innovation • introduction of new technology • finding of new sources of raw materials • new adjustment of business organization • manufacture of new products • expansion of new markets

  8. Comparisons between Core and Traditional Employment Markets-1 • standards of labor type, grade, position, working-condition, and compensation vs. subjective judgments of a boss • rule-of-law: legislations, laws, regulations and decrees vs. official arbitrary manner • modernization of managerial ideology in production standard of SA-8000 vs. unique interest of stockholders • HR: designing of the employee's career vs. cares only for firm's profitability standards of labor type, grade, position, working-condition, and compensation vs. subjective judgments of a boss rule-of-law: legislations, laws, regulations and decrees vs. official arbitrary manner modernization of managerial ideology in production standard of SA-8000 vs. unique interest of stockholders HR: designing of the employee's career vs. cares only for firm's profitability

  9. Comparison between Core and Traditional Employment Markets-2 • widely spread of basic and higher educations vs. poor education • gap of knowledge between managers and lower-tiered employees has greatly narrowed • ICT technology: employees can get access to firm messages and contact the top management • potential contradictions in management and labor relations can usually be resolved before exposed

  10. Trade-Union Attitude More Cooperative D2 TU D1 E2 E1 More Confront- ational Gov. & Firms Preferences More Rule-of-Governors Non-core Employment More Rule-of-Law Core Employment Figure 1. Trade Unions Attitude vs. Government and Firm Decisions

  11. China’s Labor Market • emerged only after reform & openness came about in 1978 • rural economic reform mainly in the early period of the 1980s • SOE reform mainly in the early period of the 1990s • urban-rural employment promotion policies in the initial years of the new millennium

  12. LABOR MARKET AND CURRENT TRADE UNIONS IN CHINA • Labor Supply: marketized labor force, which is subject to market competition • Demand for Labor: mainly from 'marketized' enterprises • TU: largely retained the old features of a traditional planned economy---activities of trade unions have to retain consistency with the orientation of government policies

  13. STRUCTURE OF TRADE UNIONS IN CHINA • 2004: 136.9 million TU members. • 51.7% of total urban employees (264.8 million) in China. • Employees in the government sector, SOEs and collective-owned firms, have all entered TU. • 73% for privately-owned enterprises; TU leaders in private enterprise are either relatives of the firm head or are themselves in positions of power. • Limited TU membership in foreign-funded firms.

  14. WHO REQUEST INDEPENDENT TRADE UNIONS IN CHINA • Low skill workers in traditional employment (or non-core employment) markets, • Workers come from rural areas where they have been farmers or casual farming workers, • Workers have experienced poor working status, wages and other labor conditions, • Workers find it very difficult to get assistance from the local government and official trade unions, • These workers have a strong motivation to build an independent trade union to protect their own interests.

  15. TU Improvement with ILO Help-1 • 2001: Trilateral Meeting -Ministry of Labor and Social Security -All-China Federation of Trade Unions -Enterprise Association of China and Chinese Entrepreneurial Society • The meetings has been held annually on a grand scale, and quarterly on a smaller scale at both national and provincial levels.

  16. TU Improvement with ILO Help-2 • To solve or alleviate problems in -labor contracts -labor conflicts during SOE reforms -compensational contractions -work conditions -quarrels between employer & workers • Find hard to: -protect union leaders from revenge -prevention of nepotism -correct trilateral asymmetry of information

  17. Why Is Independent Union Movement Turning Down? • Government policy became more neutral, fair and more convincing to workers. • Government changes its means of policy implementation from the heavy hand to educational and judicial processes. • Individuals take more responsibilities for their personal security more cares on their stable pays under new social security system

  18. (Continued) • Enterprises have begun to introduce modern HR management techniques: --linking job performance with wage levels and promotions --raising firm's internal cohesion by training programs --offering entertainment events --developing a good relationship with employees and union members --introducing flexible working time system

  19. New Schemes Taking Place of Independent Trade Unions • Models of HR, the corporate culture and the idea of team production: Large Firms • Measures of reform to "stabilize employees to raise efficiency“ • Chair of a TU in a firm holds a concurrent position as a director or a supervisor • Government policy has begun to pay increasing attention to the living and working conditions of the migrant and unskilled workers

  20. CONCLUSION: Cooperative TU is Possible. • Government: focus on insistence and implementation of the principles of "rule of law“; encouraging and protecting enterprise innovation and core employment development. • Business: hold the idea of “a market economy as innovation economy“; achieve sustainable competitiveness by ISO-9000, SA-8000, ISO-14000etc. • Individuals: promote personal knowledge of lawful rights and duties, and working skills at desirable levels.

  21. Thanks for Attention! Tel: 0086-10-68032260(O) 0086-10-88454664(H) Fax: 0086-10-68032473 Email: wangcheng@cass.org.cn

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