1. Putting Labour into Free Trade Regulating Swiss Capital in the Context of Labour Relations in China Suki Chung Executive Director Labour Action China

2. 2 Structure of the presentation Part I Labour Relations in China: Current Landscape & Trends Part II The role of the ACFTU: Challenges to the Chinese trade union & Issues with Collective Bargaining Part III Labour rights compliance of Swiss capital in China

3. 3 Labour Relations in China: Current Landscape & Trends Rising labour disputes in China during the transformation in industrial relations Political and economic domination of the state-capital vis-à-vis the labour Workers’ activism on the rise Widespread dissatisfaction with the current labour system

4. 4 The Chinese government’s reaction The state’s priority is to maintain political stability and socially harmonized economic growth  significant rise in minimum wages  introducing Labour Contract Law and Social Insurance Law  new regulations on collective wage negotiation, narrowing rural-urban development gap Non-independent trade organizing of the only official trade union – the All China Federation of Trade Unions (ACFTU)  Pilot experiment in Guangdong Province to facilitate trade unions to initiate collective bargaining under the current political system Enterprises reaction  seeking alternatives to the low-cost model  Industrial upgrading to go up the ladder of value chains  Upskilling from disposable unskilled labour to skilled labour  Relocation of labour-intensive from the coastal regions to the less developed inland provinces

5. 5 The Role of ACFTU: Challenges to the Chinese trade union & issues with collective bargaining  The only legal trade union, ACFTU, has no popular mandate to represent workers  ACFTU is part of the party / state apparatus  Pushing through Democratic Management of Enterprise Regulation in Guangdong  Tripartite Collective Bargaining mechanism is a top-down bureaucratic unionising campaign led by the ACFTU

6. 6 Labour Rights Compliance of Swiss Capital in China  The China- Switzerland Free Trade Agreement, FTA, is an entrance point highlighting the importance of international labour solidarity  The FTA negotiations mark a formalization of trade relations between China and Switzerland which cannot be discounted or ignored  the active involvement of UNIA is crucial in the monitoring of Swiss investment in China Federal councillor Johann Schneider- Ammann and chinese Trade Minister Chen Deming signing FTA declaration of intent at the World Economic Forum in Davos 2011

7. 7 Comparison ILO Convention Switzerland China

8. 8 Swiss Capital in China  About 300 Swiss firms with over 700 branches  employing several tens of thousands of people.  Swiss direct investments in China in 2009 US$ 300 million,  In the first three quarters of 2010, Swiss companies invested US$ 177.4 million Major sectors  Food Processing  Machinery, apparatus, electronics  Textiles, clothing, shoes  Chemicals  Watches & Jewelry

9. 9 Facts and Figures NestleClariantABBSwatch Employees13’0001’30013’500? Turnover (aprox) 19 Mio CHF420 Mio CHF4 Mia CHF2 Mia CHF

10. 10 Global Compact Global Compact on Labour  Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;  Principle 4: the elimination of all forms of forced and compulsory labour;  Principle 5: the effective abolition of child labour  Principle 6: the elimination of discrimination in respect of employment and occupation. Nestle and ABB are member's of the UN Global Compact

11. 11 Do Swiss Companies have Collective Agreements in China? Nestle: No detailed information on collective bargaining in China available ABB: ABB does not specifically give information about China Clariant: Clariant claims it “ is fully compliant with the International Labor Organization Swatch: The Group maintains good relations with the trades unions, in a spirit of openness. CEO’s of the mentioned companies

12. 12 Expected impact of the FTA China has undertaken an ex-ante (foreshadowing) simulation of the effects of such an FTA predicting an up to 50% increase in the bilateral trade volume and result in an increase in Switzerland’s GDP of 0.23%. As the de facto outcome of such an Agreement depends on a plethora of internal and external factors, these figures are to be regarded with caution Felix Rosenberger, Senior Advisor of East Asia, from the Swiss Federal Department of Economic Affairs:

13. 13 We have to Act!  Monitor Swiss companies in China of labour rights compliance!  Educate Swiss Companies about Collective Bargaining in China  UNIA to push Swiss companies to adopt Collective Bargaining framework agreements in China.  To counteract the trend of ‘bureaucratic unionising campaign’ launched by the ACFTU in foreign enterprises  To create Steering Committee comprised of ILO, Swiss & Chinese union members, government officials, and concerned civil society organisations to Evaluate progress of FTA  Trade unions can take a position in labour rights advocacy through FTA review platform

14. 14 What else… Support Labour Action China through Unia and Swiss Labour Assistance So that we can maintain our  Legal Service for workers in China  Monitor Swiss Companies in China  To Organise workers at grassroots level  To lobby and network with Asian Labour Movement

15. 15 Thank you!