SHANGHAI, May 7
THE Chinese government is gaining an unlikely ally in its effort to overhaul the economy: striking Chinese workers.
So far this year, the China operations of International Business Machines Corp, PepsiCo Inc, Wal-Mart Stores Inc and Yue Yuen Industrial Holdings Ltd, a major supplier to Nike Inc. and Adidas AG, all have been idled by labour protests.
“This is not a blip,” says Dan Harris, a Seattle-based attorney representing companies operating in China. “It’s going to continue and get worse.”
While China’s communist party was founded to benefit the country’s “workers and peasants,” Chinese leaders aren’t known for their patience with protest.
This latest wave of labor unrest — at least when confined to pocketbook concerns — might be different. The government wants to rebalance the slowing economy to rely more on consumption. Higher incomes for workers would be a good start.
“The government is trying to play a game that uses worker demands to push its broader economic goals,” said Mary Gallagher, director of the Center for Chinese Studies at the University of Michigan. “They have a belief they can use this kind of activism.”
That’s a gamble. Six years after a new labour law gave workers greater rights, Chinese labour remains in a twilight world. While the central government wants workers to see income gains, local Chinese officials — often promoted based on their ability to maintain stability and generate growth — usually side with employers in any dispute.
Lin Dong, a volunteer with the Shenzhen Chunfeng Labour Dispute Centre, an independent group that trains workers in collective bargaining techniques, was pulled from a hotel dining room on April 13 and forced to leave town by police before he could meet with striking Yue Yuen workers.
“In China, there is a common saying,” says Lin. “The government doesn’t help the people fix their problems. They fix the people who point out the problems, instead.”
A more vocal Chinese labour force could help Chinese President Xi Jinping achieve his economic goals. Wage gains in China’s manufacturing heartland would support the government’s efforts to promote consumption and also encourage some factories to move to the undeveloped interior, Gallagher said.
Chinese leaders in November endorsed weaning the economy from its addiction to investment, which has resulted in overcapacity in industries such as steel and cement. The aim is to have domestic demand “play a greater role in driving economic growth,” Premier Li Keqiang told the Boao Forum April 10.
Workers who were valued principally as inexpensive production cogs during China’s initial economic flowering are now expected to star as consumers. Consumption accounts for only 35 percent of the Chinese economy, well below the 50 percent- plus characteristic of East Asian countries such as South Korea, which modernized earlier.
“It’s like that old Henry Ford story: I’ve got to pay my workers enough so they can buy my product,” said David Dollar, a former US Treasury Department official in Beijing. “China’s reaching that Henry Ford moment.”
The strike wave comes as Chinese labour is enjoying demographic and technological tailwinds. No longer is there an endless line of potential replacements for dissatisfied workers; China’s once bottomless labor pool is in its third year of shrinkage, according to the National Bureau of Statistics.
China has 35 million fewer 15- to 39-year-old potential factory workers than it did five years ago, according to one US estimate. “Workers definitely have a stronger bargaining position now,” said Eli Friedman, a specialist on the Chinese labour movement at Cornell University. “The glory days of limitless cheap labour are really over.”
Chinese leaders in Beijing who want to boost consumer spending often tolerate labour protests that are confined to wage and benefit demands and remain within the factory gates. That’s especially true if the employer is a foreign-owned corporation rather than a state-owned enterprise with direct links to local officials.
Though the government stopped releasing the specific number of labour disputes since 2010, from mid-2011 to the end of 2013, the China Labour Bulletin in Hong Kong counted 1,171 strikes and worker protests — more than one each day.
There are limits to the government’s tolerance. China’s Communist rulers are determined to maintain their monopoly on political power. That means avoiding the rise of an independent labour movement akin to Poland’s Solidarity, the “Polish nightmare” that the Sinologist Richard Baum said lay behind Deng Xiaoping’s decision to use force against democracy protesters in 1989.
China’s ad hoc approach to labor relations can’t last, Friedman said. The repressive formula used to manage unskilled workers who could easily be replaced is proving too costly as the economy and its workforce matures. “They need to allow other kinds of mechanisms for workers to express their grievances,” said Friedman, “rather than every time there’s a problem, workers have a wildcat strike and you have to call in the riot cops.”