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China Trade Union Law and Regulation and Foreign Owned Companies - China Trade Union law and Regulation

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Wal-Mart's allegation is that according to Trade union Law of the People's Republic of China, the trade union is jointly made up voluntarily by the workers. The staff of Wal-Mart do not have this kind of will, so it is naturally reasonable not to set up a trade union. But external observers assert that Wal-Mart is for avoiding Article 42 of the "Trade Union Law"—"the enterprises, public institutions and government departments which set up the trade union shall pay the funds to the trade union according to 2 percent of workers'payrolls of every month". That is to say, "once the trade union is set up, funds have to be paid according to the total number of the workers, but not the number of workers who join the trade union". Taking Wal-Mart's nearly 20,000 staff in China into consideration, it is a really huge sum of costs.

Shenzhen, a southern city of China, once strongly required Wal-Mart to organize the trade union, but in order to obtain its further investment in Shenzhen, the trade union or Shenzhen city basically stopped advising Wal-Mart to organize a trade union.
If Wal-Mart is the only enterprise that refuses to organize the trade union, this debate would be meaningless. But in the list drawn up by the National Federation of Trade Unions, some multinational enterprises are seen, including Kodak and Samsung, whose parent companies have perfect trade union in their own countries. When it is a prevailing phenomenon, we should not only condemn those "don't-dos" conducts, but also inquire the systematic factors, which bread those phenomena.
The power of the trade union comes from the workers'trust. But when workers encounter contract trap, salary delay, welfare infringement, overwork, security protection danger, forces and other unlawful infringements, China sees more individual resistance of different forms. In most cases, trade unions of Chinese enterprises are quiet defective in effective actions. The loss of trade union's voice in these core areas is not going to be regained through organizing sports meetings and handing out film tickets. In a lot of companies, the week position of the trade union is an irrefutable fact.

Any behavior against sovereignties'laws should be prevented, no matter whether it is from trans-national or local enterprises. But why does this prevailing problem concentrate more on trans-nationals? One explanation is that "since Wal-Mart's source factories, trade union, insurance, laboring insurances and other factors are not counted into costs, this part of costs is paid by traditional Chinese social system. It is a hidden exploitation."

However it has nothing related to the purpose of trade union, which is to "fully protect the legitimate rights and interests of workers". It is not merely a right of choices. On this point, no matter state-owned enterprises, trans-national or private entities, they should all implement the same standard. If new entry qualification is formed or treatment is different due to investment rights, it is equally something to be regret about.

It is understood that China's National Federation of Trade Unions is planning to put forward the "Preparation Fund System". According to this system, even enterprises that are not to organize the trade union, should also pay a certain fee as the preparation fund to organize a trade union in the future. After the trade union is organized, it will be returned to the enterprise pro rata. Whether this action could get the support from enterprises and workers is still unclear. And the attitude of Chinese local governments who want to offer favorable conditions to attract foreign investment is also a key factor to determine the result.

But in any case, the core problem lies in whether the trade union could realize its functions and prove its value and reason of its existence in safeguarding workers'rights and interests and negotiating with other interest entities.

Possible Development of China Trade Union

Unions play an important role in almost every country’s political landscape. In this context, the amendment of the Chinese Trade Union Law presented a decisive signal for the further development of China. As illustrated, the text of the law enables unions to engage in various activities in order to represent the staff’s and workers’ interests. Nevertheless, the law lacks precision and the Chinese framework seems to hinder the implementation of most of the articles. In what way the Trade Union Law really represents an instrument to develop a workers’ representation inside the union structure is the crucial question. Despite the fact that China still has not yet ratified the ILO Conventions on freedom of association and collective bargaining, the government has introduced the Labour Law.

Furthermore, it significantly amended the Trade Union Law in 2001. Later, regulations on occupational safety and health standards were introduced, improving the legal possibilities to pursue occupational safety trainings and to implement international standards. Moreover, the court system will be reformed, including a qualifying examination for judges. Bilateral cooperation between China and the United States as well as Germany will improve the development of a Chinese constitutional state. These developments naturally increase the probability of citizens to know their rights and have them respected. Nevertheless, it remains to be seen whether these recent developments are comprehensive enough.

In the course of state-owned enterprise reform, the role of unions has greatly changed. Already relieved from their first assignment in the People’s Republic, the distribution and administration of social security as a sub-branch of the ministry of labour, their traditional partner, the government, has mostly withdrawn from its management role and rather supports the management as an independent institution which reacts on market forces. In spite of the newly acquired possibilities via the amended Trade Union Law, every union or union-like organization still needs to be part of the ACFTU structure. This, in turn, is heavily influenced by the Communist Party of China. Unions, overwhelmed by the new challenges as a consequence of the rampant economic reforms and developments, get confronted with a complex labour market situation (competition is paramount and leads to lay-offs and partly to a deterioration of labour conditions), in which workers are at a disadvantage and are driven to cause social instability.

There are many aspect should be think about in respect of China trade union law. However, it is so complicated that even experienced employment lawyer are reluctant to focus their research in this area. I suppose it is even harder for those foreign legal practitioner to understand and grasp it?

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