Union Establishment and Labor Unrest: What Every Employer Doing Business in China Needs to Know December 8 and 9, 2010 Wang Dongpeng Jeffrey Wilson

Unions

Unions—Key Concepts All-China Federation of Trade Unions (ACFTU)—unitary structure ACFTU independent, but must uphold the leadership of the CCP “Enterprise unions” Leadership from the “upper-level” union Employers must pay 2% of total payroll to fund a union

Roles of Unions Represent interests of employees Preserving harmony / social stability Mediating disputes Monitoring companies for employment- related compliance

Powers of Unions Right to notice before employee dismissal Consultation rights –Company policies –“material employee-related matters” –restructuring or “important operational issues” Demand collective bargaining

Union Establishment Unionization campaigns and targets Must a company have or establish a union? Establishment procedures

Management Strategies Unions Establishment –Ignoring –Circumvention –Compliance Types of Unions –“Paper” Unions –“Social Welfare” Unions –“Integrated” Unions

Other Employee Groups Employee Representative Congress Employee Assembly Employee Welfare Clubs

Strikes and Workplace Unrest

Are strikes legal? What are the employees demanding? –Basic rights –Interests

Strikes and Workplace Unrest What actions should be taken immediately? –Notify the authorities –Identify employee representatives –Reach temporary agreement to get facilities back on line

Strikes and Workplace Unrest Settling a strike –Involvement of the authorities ACFTU Labor Bureau –Negotiations with employee representatives –Company issues announcement or agreement is signed

Strikes and Workplace Unrest What actions can be taken by an employer? –Salary deductions –Termination of striking employees –Hiring of replacement workers –Lockouts

Strikes and Workplace Unrest Common Employer Mistakes –Not having ready crisis team, plan, and procedures –Lack of local government relationships –Underestimating ability of employees to independently organize and negotiate –Calling in outside security –Appearing too strong or too weak

Steps to Avoid Unrest Compliance with labor standards Compliance with government policy Competitive compensation and benefits Responsive HR policies and grievance procedures Communication channels with employees

Steps to Avoid Unrest Consider establishing employee representative congress Consider establishing and encouraging “integrated” union Consider entering into collective contract

Collective Wage Bargaining

Why the push? –Unbalanced income distribution –Economic crisis and inflation –Boost domestic demand –Changing structure of Chinese economy –Strikes and work slowdowns

Collective Wage Bargaining “Rainbow Plan” –Collective contract targets –Legislative proposals

Collective Wage Bargaining Does an employer have to: –negotiate? –enter into a collective contract? –raise salaries?

Collective Wage Bargaining Procedures –Either party may demand negotiations –Employee negotiators selected by union or employee assembly or employee representative congress –Negotiate in good faith –Draft contract submitted to employee assembly or ERC for approval –Sign collective contract –Submit contract to labor bureau for review

Collective Wage Bargaining References to determine salary increases –Salaries in different geographical areas –Salaries in the same industry –Company profits –Inflation indexes –Government salary increase guidelines

Collective Wage Bargaining Uncertainties –Government attitude –Stance of trade union –Lack of clear laws –Economic and social conditions

Questions?