Collective Contracts

By+Yuan+Yuan

Wang Bing has worked as a wedding dress photographer for more than 10 years in Beijings Xicheng District. He said he happily accepted an invitation to attend a consultation on wage standards in his industry held by the districts Federation of Trade Unions in the summer of 2012.

Wang commented that those working in the wedding dress photography industry lack the stability provided by salary standards and the unstable turnover of employees makes many feel there is no security. “We didnt expect this problem to be solved in the short term，”Wang said.

Wang and more than 1，000 other employees from over 40 wedding photography companies were at the meeting. They expressed their demands and voted for a wage standard setting. “I was surprised，” Wang said.“Before that， my boss was the only person that had any say over my wage.”

“We are glad to see that employees can benefit from wage negotiations，” said 58-yearold Xin Daxiong， one of the wage negotiators from the Xicheng District Federation of Trade Unions who later represented Wang and other participants at the meeting.

The negotiators are tasked with regulating the wage system in relatively chaotic industries. Sometimes， they take action before appeals are even made.

Xin and many of his coworkers are retirees from trade union organizations at different levels and have many years of experience in dealing with disputes between employers and employees.

“It is not an easy task to make the employers and employees from all the many companies sit together and discuss wage adjustments， but we make sure the result benefits everyone，” Xin said.

The collective wage negotiation system was introduced in China in the early 1990s， although it has not been a widespread practice until recent years， with the number of labor disputes having been on the rise. Li Shouzhen， a spokesman for the All-China Federation of Trade Unions （ACFTU）， said that low pay and the slow pace of wage rises are to blame.

Chinas Trade Union Law stipulates that unions can sign collective contracts and conduct wage negotiations with employers on behalf of employees. In 2011， the ACFTU made a plan to introduce collective wage negotiations to all enterprises to reduce labor disputes.

“Collective wage negotiations have led to the establishment of a reliable wage increase mechanism in some places，” said Zhang Jianguo， head of the Collective Contract Department of the ACFTU. “Wages of employees in enterprises that adopt the system are 10 percent to 15 percent higher than their counterparts without its protection.”endprint

In Wuxi， east Chinas Jiangsu Province， for example， workers wages have grown by 5 percent to 10 percent annually in recent years after collective wage negotiations were adopted in the late 2000s. Adoption of the system has also resulted in a yearly wage increase ranging from 10 to 22 percent for local enterprise employees in Tianjins Hedong District.

“It is not just the employees that benefit from it—the employers gradually realize that collective bargaining helps improve labor relations，” Zhang noted.

Successful outcomes

According to the ACFTU， the collective wage negotiation system works more effectively with enterprises in labor-intensive industries.

Wenling of east Chinas Zhejiang Province is a major woolen sweater production base with hundreds of enterprises involved in the industry， hiring more than 10，000 workers between them.

Employers， in order to reduce costs， would lay off workers during the off-peak season. When business picked back up， local companies found it difficult to keep skilled workers who were tempted by competitors using the lure of higher wages.

“Conflicts between employers and employees in the past were often quite tense and some workers turned to the local government for help，” said Chen Fuqing， Chairman of the Woolen Sweater Industry Trade Union in the citys Xinhe Town. “The unstable flow of labor jeopardized the industrys development in the town.”

The trade union led by Chen， the first industry-based labor organization for private companies in Zhejiang， was established In August 2003. On behalf of migrant workers， it negotiates with employers over wage claims.

At the end of summer every year， around September， the local Woolen Industry Association that represents employers submits its initial pay and bonus proposal for the coming year， based on a market assessment， to the trade union. A group of more than 100 worker representatives is then organized to discuss the wage proposal and hold a secret ballot at which they decide theirs.

Both are then discussed by the trade union and industry association， and after rounds of negotiations between employers and workers， a mutually acceptable salary is agreed upon.

The fixed salary standard， detailing different pay scales according to the type of work and covering the entire production process， is then made public and standard pay levels are adjusted each year in line with market demand and economic conditions.endprint

This process also took place in 2012 among the cap-making industry in Nanjian Village in Xinhe. After the negotiation between 106 worker representatives and 380 employers， they finally agreed to raise workers wages by 10 percent on average.

“The collective wage negotiation system has greatly changed the way recruitment is done in the town， and creates a good development environment for the industry，” Chen said.

The off-peak season did not see an exodus of workers as before， indicating an unprecedented sense of worker loyalty and security， said Wang Xinfa， President of Xinhes Woolen Sweater Industry Association.“Employers can concentrate on business management rather than fighting with other companies for skilled workers， or dealing with labor disputes.”

With the encouraging results that were achieved， businesses in other regions have followed suit.

The Dasailu Food Processing Co. Ltd.， located in Nanning， capital city of Guangxi Zhuang Autonomous Region， used to operate at a loss and had an unstable flow of employees. After Chen Ningde， chairman of the companys trade union， introduced the wage negotiation system to the companys management team and persuaded them to adopt it in 2011， more employees chose to stay longer.

Each year， the employer signs a new collective contract with the workers， making wage adjustments according to local GDP and consumer price index.

“Trade unions act as a bridge between workers and employers to find an appropriate solution that meets the interests of both and helps workers get the wages they deserve，” said Chen Fuqing in Wenling.

Increasing effectiveness

“In order to come to an agreement between employers and employees， wage negotiators need to be equipped with the right knowledge， including relevant laws and regulations， economic management， negotiation skills and detailed information of any company involved，” said Chen Ningde with the Dasailu Food Processing Co. Ltd. in Nanning. “Only after you are 100-percent ready， can you have the confidence to talk with both sides.”

According to him， the problem with those wage negotiators who are unable to perform their duty effectively is that they take action before they learn enough. “This can easily put them in an awkward situation，”he said.

Besides this， there are other obstacles that are frequently met when conducting wage negotiations.

“Many employers are not willing to sit down and talk about wages with their workers，” said Zhang with the ACFTU. “Some local governments have not yet realized the significance of collective bargaining to boost their regional economic and social development.

“Many laborers， especially those in construction and catering industries， are not aware of collective contracts. They dont have any leverage to demand employers to sit down for collective wage negotiations，” said Zhao Wei， Deputy Director of the China Labor Studies Center at Beijing Normal University. “It will take some time before collective wage negotiations are widely adopted.”

A lack of relevant laws and regulations has also hampered the negotiating process.“Currently， there is no law in China requiring companies to sign collective contracts with their employees， which explains why there is little incentive for them to do so，” Zhao added.endprint