Vicious cycle

In May 2010, thousands of workers fed up with low wages at a Honda Motor factory in Guangdong province walked off assembly lines and went on strike. In doing so, the workers risked being jailed or fired in a country where strikes are essentially illegal. Yet workers were ultimately rewarded for their transgression: Although Honda did not agree to the full 75% raise they demanded, the 1,900 workers struck a deal for raises of 24% or 32%, according to varying media reports.

Strikes have grown more prominent in the Chinese news and social media since the Honda strikes. Hong Kong-based advocacy group China Labor Bulletin recorded 185 labor incidents – predominantly strikes – in 2011 and 357 incidents in 2012 across all sectors, based on second-hand media reports. But censorship of unrest in the media means the scope of strikes is likely far wider.

As labor shortages grow more severe in China, workers are in an even stronger position to push for higher wages. That may precipitate more strikes, freezing China’s assembly lines at a time when the economy is growing more vulnerable.

“The only way to demand higher wages is through collective action because the official trade union is pretty useless,” said Geoffrey Crothall, a spokesman for China Labour Bulletin.

Grinding gears

China’s only union with legal authority to represent workers, the All China Federation of Trade Unions (ACFTU), may be helping to create more tension than it resolves. The most notable scuffle at Honda that year was not between workers and police, but a fight between workers and the union, said Mary Gallagher, a University of Michigan political scientist who studies labor.

The ACFTU has the impossible mandate of both representing the workers and pleasing central leadership. Representing workers is among the founding tenants of the Chinese Communist Party, established in part to protect the people against avaricious capitalists. But as the CCP has evolved it has become more interested in preserving stability. Since the party appoints ACFTU officials, the government’s priorities have become the union’s overriding mandate.

As a result, workers generally feel they must look beyond the union for ways to improve their conditions – often by striking. By walking off the job, workers force the ACFTU to intervene as a mediator to maintain social stability, Gallagher said. The ACFTU pressures both workers and the employer to reach a compromise that settles the dispute – and with the weight of the government behind it, the union generally succeeds in bringing about a compromise.

 In the end, the workers have bettered their wages or working conditions to some extent, which only encourages them to strike again the next time they want to bring their employer to the negotiating table.

“You have sort of an ironic situation where too much emphasis on stability leads to more conflict, more wildcat strikes and also more distress for political institutions,” Gallagher said.

No quick fix

Left unreformed, this system of worker representation seems likely to lead to more instability as worker shortages mount. China is headed toward its Lewis Turning Point, the period at which there are no more excess rural laborers with the means and incentive to migrate to cities for work. With no source for new workers, wages will rise even faster than they have in the past.

Employers will naturally seek to suppress rising wages to keep costs low. But as pressure builds up among workers demanding higher wages, the system will need a release valve.

“At some point workers are very significantly dissatisfied, so it blows up and there are illegal strikes or other types of unrest. Then there is a significant jump in wages and working conditions,” said Raymond Torres, an economist and head of the International Labour Organization’s research arm. “A better way for the turning point to happen would be for gradual improvement in the possibility to negotiate wages and working conditions.”

If workers had power over the trade union or the ability to form their own trade unions, they could bargain rather than immediately turning to strikes, Torres said.

The government aims to involve workers by increasing the number of low-level ACFTU representatives who are directly elected by workers, a reform already tested at Honda and some other select factories. But in a paper examining such elections, Chinese labor activist and doctoral student Elaine Sio-ieng noted that past attempts at holding direct elections of union officials were mostly formalities.

Beijing appears unlikely to hand over real control of unions to workers since leaders fear collective action could turn against the government. A more realistic scenario workers can hope for would be wider toleration of non-union collective organization, Gallagher said.

“So we won’t call them a union and they won’t operate as one, but they’ll in some ways provide structure for collective articulation.”

But a more empowered worker may be just as likely to strike. One might think a tumultuous period of striking that results in higher wages would be followed by a period of relative calm, Gallagher said. But instead, workers only strike further in pursuit of even higher wages.

“Wages have been going up pretty rapidly since the beginning of the 2000s, and we have seen more and more strikes,” Gallagher said. “So higher expectations and better conditions are driving higher expectations and better conditions.”