Trade Unions in China

The Challenge of Labour Unrest

Tim Pringle

• Publisher: Routledge
• Year: 2011
• Print ISBN: 9780415559584
• eBook ISBN: 9781136826566
• Topic: Politik & Internationale Beziehungen
• Subtopic: Kommunismus, Postkommunismus & Sozialismus

The transition from a command economy to a capitalist market economy has entirely altered the industrial landscape in which Chinese trade unions have to operate. This book focuses on how the All China Federation of Trade Unions (ACFTU) is reforming under current conditions and demonstrates that labour unrest is the principal driving force behind trade union reform in China. Presenting case studies where reform has been largely inspired by the pressure of worker activism from below, the book examines three crucial areas of trade union activity - collective bargaining, labour rights and trade union direct elections - against the background of China's turbulent industrial relations history.

As well as exploring the principal direction of trade union reform, which has been to channel disputes into juridical forms of dispute resolution sponsored by the State, the book also highlights key examples of more innovative experiments in trade union work. These represent a clear break with past practice and, crucially, have been recognised by both the union and Party leaderships as models for future trade union policy and practice. The book provides both a timely reference point and highlights the road to effective trade union solidarity.

1 Industrial relations in the
People's Republic of China

This chapter summarizes the history of China's labour relations since 1949, the year the CPC defeated the Guomindang (GMD), established a new government and embarked on a programme of economic reconstruction. In contrast to the land reform in the countryside where enforced redistribution was deemed the most effective way of restoring production to a war-ravaged agriculture, urban areas were distinguished by a period of compromise in which the need to create jobs was prioritized over practically all other considerations. Over thirty years later, the spectre of unemployment and accompanying economic stagnation was to play a similar role as the unemployment crisis of the late 1970s and early 1980s became ‘the initial impetus to labor policy change’ (Ngok Kinglun 2008: 45).

If employment creation has been a major economic concern of the CPC since it won power, stability at work has been a consistent political concern. Although the addition of ‘Chinese characteristics’ via the thoughts of Mao, Deng, Jiang and Hu has at times made it difficult to perceive Marx's influence on CPC theory and practice, the Party has nevertheless remained cognizant of Marx's central idea on change: the collective power of the working class. This chapter examines how various industrial relations regimes in China have been developed on the basis of both exploiting and containing this power. It is an extraordinary journey imbued variously with revolutionary excitement, chaos, triumph and trauma.

The organization of the chapter is relatively straightforward. I have employed labour and the unions as anchors to a basically historical approach split into four broad sections: the danwei era, the early years of reform, the socialist market economy and developments since China became a member of the WTO in 2001.

Industrial relations under the command economy

The danwei

The institutional core of industrial relations in pre-reform China was the urban work unit known as the danwei. Lü and Perry offer a useful five-part functional definition of this institution: power over hire, fire and transfer; communal facilities such as housing, dining halls, cars and health clinics; independent accounting; an urban purview; and existing in the public sector (Lü and Perry 1997: 5–6). From an industrial relations perspective, I would add three main characteristics: stability via enforced low labour turnover rates; a top-down administrative remuneration system based on wages, bonuses and high levels of welfare; and the ideological integration of the interests of managers and managed.

Individually, none of these characteristics is specific to a command economy, Chinese or otherwise. Dore conceptualized Japanese industrial relations as an ‘organization-orientated system’ that offered lifetime employment in exchange for workers’ loyalty to a given enterprise (Dore 1987: 30). In the circumstance of a developing country, the total remunerative packages in a large key (zhongdian) danwei were high (Lü and Perry 1997: 3; Weil 1996: 35). In fact ‘workers real wage levels in 1970 represented a thirty-five per cent rise above those of 1952’ (Lee Ching-Kwan 2000: 42), permitting comparisons with the Scandinavian model, albeit cautious and qualified. In Soviet Russia, Clarke explained how the term ‘labour collective’ (trudovoi kollektiv) was used to refer to ‘the whole workforce of the enterprise – from manager to cleaner’ (Clarke 2006: 31). This ideologically inspired integration of interests resonates with the Chinese word ‘zhigong’ which, during the command economy era, generally referred to all the staff and workers of a work unit regardless of managerial authority or the lack of it. Indeed, continued use of the term zhigong in post-reform Chinese statistics has hampered the reliability of data on wages and working conditions.

Writing on the former Soviet Union, Clarke located a material basis for the common interest of managers and workers in the absence of capitalist-style compulsion on managers to reduce costs and intensify the rate of work. As a consequence, managers and workers at an enterprise had a shared interest in the negotiation of a slack production plan and ensuring that the targets contained therein were not overfulfilled (Burawoy et al. 1993: 15–17, 26). In the People's Republic of China, the picture was complicated by an overabundance of labour and the leverage over working conditions this allowed Chinese managers – especially during campaigns such as the Great Leap Forward and in some phases of the Cultural Revolution – as opposed to the USSR's chronic lack of skilled workers that in turn awarded Soviet workers considerable advantage at enterprise-level negotiations.

The danwei in China was as much a political and social undertaking as it was a productive unit. It has even been described as a ‘small city’ (O'Leary 1998: 54) able to meet all the basic social and welfare requirements of urban living and into which ‘individuals are born, live, work, and die’ (Naughton 1997: 170). The capacity to provide comparatively high standards of living in a developing economy, i.e. in conditions of scarcity, required the power of the state to ensure that the always-precarious integration of the interests of urban residents was not upset by peasants moving to the cities and demanding a share of the metropolitan cake. To this end, the state developed a rigorously implemented system of restrictions on residence known as hukou based on the division of town and country. Beginning in the late 1950s, hukou regulations successfully underpinned danwei exclusivity until well into the reform era (see Chapter 2). Put another way, the danwei's durability relied on strictly enforced boundaries that kept peasants out of danwei membership and the privileges that came with it. Thus, state power and control became the mainstay of the danwei system, enabling it to fulfil comprehensive social, political and productive functions (Naughton 1997: 167). The obvious agency to deliver this power and control was the CPC itself. The Party was directly involved in the administration of industrial relations in the danwei era and, as we shall see, its withdrawal presented the trade unions with a major crisis of legitimacy.

There is a range of views on the implications of the Party's dominant role in danwei management and labour relations. Although You Ji premised his conceptual approach on the research of Walder's ‘communist neo-traditionalism’ and Womack's ‘work unit socialism’ – both of whom argued that control in urban China could not be reduced to fear of a totalitarian state alone – he nevertheless characterized danwei relationships as a condition of totalitarianism that has since been undermined by the autonomy that market reforms and privatization have brought to SOEs. You Ji's totalitarianism has its origins in the ‘Party's monistic control’ of enterprises developed during the political campaigns and worker recruitment drives of the early 1950s (You Ji 1998: 32–3) during which ‘workers “active consent” gradually gave way to passive submission to a powerful “new class” of cadres’ (You Ji 1998: 17). He also traced a direct relationship between the increasing presence of party cells in enterprises and the decline in union power at primary level. Beginning in October 1951, following a fierce debate over whether or not the state's interests were separate from those of trade unions, the ACFTU leadership was purged and ‘more direct party control started to take root in shop-floor politics in the wake of the clampdown on the unions’ (You Ji 1998: 35).

As union autonomy began to fade, the danwei’s capacity to provide access to consumer goods and welfare services in a time of general scarcity strengthened the hand of factory cadres over workers (You Ji 1998: 13). In exchange, the urban working class apparently accepted political controls and monitoring by party cells in enterprises. It was this allocation of economic benefits in return for acceptance of political constraints which, according to some scholars, partially accounted for a ‘relatively high level of social order’ (Lü and Perry 1997: 3). Citing Korzec, Warner frames the arrangement as a deal, a ‘social contract’ between the CPC and the working class that ‘fed, housed, hospitalised and generally cosseted the “vanguard” of the working class’ (Warner 2000: 3). On the other hand, Lee argues that the arrangement did not imply worker passivity in return for Party largesse. She points to blue collar wage hikes, the capping of enterprise managers’ salaries at 10 to 30 per cent above those of skilled workers and the requirement for them to participate periodically in shop-floor labour as evidence of workers’ enhanced position vis-à-vis managerial cadres (Lee Ching-Kwan 2000: 42). Moreover, Sheehan's new history of Chinese workers has demonstrated that intermittent outbreaks of working class militancy continually reinforced the CPC's anxiety over working class power (Sheehan 1998). She contends that, far from the existence of a ‘social contract’,

conflict, often originating from economic grievances, but quickly developing into a political dispute as a result of the dominance of the Party within enterprises, has been a far more common feature of industrial life in China than is generally recognised.

(Sheehan 1998: 2)

I will return to the central question of labour unrest in Chapter 2.

Walder's concept of ‘communist neo-traditionalism’ emphasized the complexity of the relationships that workers formed within a danwei in order to survive and improve their lot. His definition of the term makes use of two descriptive elements. The first refers to the absence of market forces, and of bargaining between worker and danwei in determining wages and conditions. Under communist neotraditionalism, employment in a danwei cannot be reduced to a purely economic activity solely for the extraction of surplus value in return for wages. It also carried a welfare role with a ‘value in itself’ (Walder 1986: 11). As such, the danwei is not just an economic entity but also a (state) agency for the delivery of a range of social services that, as we have already seen, were not available to those outside the danwei system. Walder's second descriptive element referred to the institutionalized dependency on which this arrangement rested. The absence of non-Party affiliated institutions within the danwei – and wider society – forced workers into a dependent relationship producing three characteristics that, in Walder's view, distinguished industrial relationships in the danwei from those of Western enterprises: dependency on the enterprise for goods and services (including wages); on the Party and its auxiliary organizations – such as the trade unions – for representation; and on the supervisors for personal promotion and increased access to non-pecuniary forms of remuneration – a larger flat, for example – that came with it (Walder 1986: 8–14). Xu also uses notions of dependency to conceptualize danwei relationships and designated the period from 1957 to 1978 as the second stage in the post-liberation development of industrial relations during which the danwei’s ‘urban purview’ and ‘public sector’ attributes reigned supreme. He characterized the period as one in which ‘the capitalist class was abolished, labour-capital relations were wiped out, and “labour” as a subjective entity lost all significance. The free independent labourer was extinguished as [China] entered [a period of] socialism’ (Xu Xiaohong 2003: 15).

But, as I have already suggested, theories that focus on the danwei as the source of complex relationships inducing layers of dependency and the disappearance of the ‘free labourer’ have not gone unchallenged in the literature. While certainly important to our understanding of labour relations in the command economy, these theories tend to rely on somewhat stereotypical notions of received passivity and dependence resulting from ‘simple Leninist imposition from above’ or even as the ‘reflection of any alleged cultural propensity toward an unquestioning obedience to authority’ (Perry 1997: 43). In contrast, by homing in on the traditional Chinese concerns with geographical origins, Perry has argued that while household registration (hukou) certainly restricted a tradition of ‘urban sojourning’, the victory of the CPC and consequent political campaigns did not miraculously replace native-place identity and affiliations with class identity and the dependency that Maoist interpretations of class interests tended to imply in practice. For Perry this was too clean and simplistic a break with the past and ‘[P]lace-based divisions of rural and urban residence or collective sector employment versus a job in a state-owned unit constituted equally significant socioeconomic distinctions in Maoist China’ (Perry 1997: 43–4).

As we shall further explore in Chapter 2, the actions of danwei employees themselves demonstrated that it was hardly the case that China's urban working class was simply persuaded or repressed into acquiescence by a combination of welfare and state control. Indeed, as is currently the case, the ebb and flow of working class militancy was a major influence on the political status of trade unions, despite their overall subordination to Party leadership and near elimination during the Cultural Revolution.

Danwei stability

Whether awarded, negotiated or won, the superior conditions enjoyed by the ‘privileged minority of the urban industrial workforce’ (Perry 1997: 44) were real and even had a colloquial name: the ‘iron rice bowl’.¹ Basically, this referred to the high level of job security and the absence of labour markets, both of which contributed to very low labour turnover rates. For example, in 1979 there were 22,000 ‘quits and fires’ of state employees representing just 0.03 per cent of the labour force (White 1993: 44). Naughton emphasizes the lack of general mobility – both geographical and occupational – as a characteristic of industrial relations during the command economy era. He points out that in 1978 ‘death was four times as important a cause of job-leaving as were resignations or being fired’ comparing this with much higher labour turnover in the former USSR where ... ‘[I]n 1978 in the Russian Republic, sixteen per cent of all industrial manual workers quit their jobs during the year’ (Naughton 1997: 173). In fact, by tracing the economic foundations rather than the political development of the danwei, Naughton argues that the catastrophe of the Great Leap Forward (GLF) and subsequent famine (1958–61) provided the economic conditions for a ‘completion’ of the danwei system. The threat of hunger spreading from the rural areas to the cities and the dire need to reverse the flow of migrants into the latter as a result of the Great Leap induced the state to take full control of employment in urban areas, ‘allocating ninety-five per cent of first jobs in urban areas and taking away the hiring function from the individual enterprise’ (Naughton 1997: 172).

The danwei wage system

Following a post-liberation period in which the CPC accommodated private enterprise and, according to Harris, ‘inequality of income was a deliberate act of policy’ (Harris 1978: 96), a major wage reform was introduced in 1956 when the Sovietinspired eight-grade wage system was implemented and remained in place until 1985. In a Chinese context, the system was perhaps symbolic of institutionalized inequalities lying at the heart of a remuneration system that was nevertheless far more egalitarian than wage systems in the West or the Soviet Union. As the name suggests, eight grades of pay were established with variations of about 30 per cent across different industries and 11 geographical areas (Harris 1978: 97). It was a highly centralized system that left enterprises with ‘little or no autonomy in the distribution of wages which remained ineffective as an instrument of labour mobility’ (O'Leary 1998: 57). O'Leary argues that the ‘one big pot’ (da guo fan) was part of a three-factor industrial relations policy on wages, levels of employment and working conditions that emerged out of a ‘complex interaction between state, managers and employees’. However, this appears to contradict his assertion that enterprises – and by implication in a command economy, their employees – had hardly any say in the matter of wages (O'Leary 1998: 51–4). You Ji and White respectively bring clarity by explaining how the eight-grade system worked. At national level:

First of all, an aggregate national wage bill was worked out by central planners on the basis of the State's financial situation. Then this wage bill was used to determine a national employment system quota specifying how many new workers to recruit. A central decision, taken each year, was also embodied in the bill as to whether and when wages were to be increased and by how much, and how many workers were to be promoted.

(You Ji 1998: 111)

At municipal level the ‘labour plan’ was

based on an estimate of the needs of enterprises and offices within the city, each of which submits its labor requirements to the labor and wages office of its superior bureau which then communicates with the municipal labour bureau. The ensuing recruitment plan draws on three sources of labor: the strategic groups under centralized ‘unified allocation’ who must be given priority; junior and middle school graduates from the city ... and people with jobs who want to move. The actual process of assignment to a state enterprise is handled by three agencies in concert: the enterprise, the relevant bureau's labor office, and the city labour bureau.

(White 1989: 162)

The annual decision on the national wage bill would have taken into account factors such as commodity prices, production targets, the political atmosphere and the mood of workers. This in turn would have involved factory managers, Party Secretaries and the trade unions, which is probably what O'Leary meant in his description of three-way negotiations. Managers of large SOEs pulled as many strings as possible in order to channel resources to their work units, yet there was no formal bargaining process (O'Leary 1998: 52). Working class input into the process was influential but, due to the absence of freedom of association...

Table of contents

• Cover Page
• Trade Unions in China
• Routledge Contemporary China Series
• Title Page
• Copyrights
• Dedication
• Contents
• List of Illustrations
• Acknowledgments
• Abbreviations
• Introduction
• 1 Industrial relations in the People’s Republic of China
• 2 Labour unrest in the state sector: the rise and demise of decent work with Chinese – and some Russian – characteristics
• 3 From victims to subjects: the long march of migrant labour
• 4 Experimental pragmatism I: collective consultation in Xinhe town
• 5 Experimental pragmatism II: trade union rights centre in Yiwu
• 6 Trade union elections: from dependency to democracy?
• 7 Constraining capital in the era of globalization
• Notes
• Bibliography
• Index
• Backcover