Category Candidates & Labor market

China faces highest staff turnover rate

Source: CCTV.com

Employers in China are facing the highest staff turnover rate in Asia topping 20 percent last year. A survey by leading international recruitment and staff management company Hudson, reveals Chinese employees are seeking the highest salary increases in Asia this year.

Sara Lee, a Fortune 500 company, recently solicited advice from employees about what the company could do to make their jobs more enjoyable.

Ruan Weihua, Marketing Director of Sara Lee (China) Co. said “We quite often organize such events among our staff, and want them to know that the company regard them not only as employees, but also as a whole family. This is part of our efforts to reduce the staff turnover rate, however the figure doesn’t stay as low as we expect. ”

A growing number of companies recognize the importance of team-building and are offering more training opportunities to nurture loyalty. The efforts have had mixed success, however, as recent reports show salary is still the number on concern for Chinese employees, when choosing a job.

Angie Eagan, General Manager of Hudson Shanghai said “Many markets in the world give salary adjustments that are related to. And all this investment and all this economic activities is creating the demand of people. And that drives up people’s value in the economy. ”

A survey conducted by Hudson China suggests nearly one-third of all local employees plan to ask for pay rises of more than 20 percent this year. And two-thirds expect their annual bonus to rise by at least ten percent. Fitting into this picture is also a turnover rate, especially in the service sector, which has held firm between 10 and 20 percent over the last 12 months.

Migrants are China’s ‘factories without smoke’

By Alexandra Harney
For CNN

Editor’s note: Alexandra Harney is a Hong Kong-based writer and the author of the forthcoming book “The China Price: The True Cost of Chinese Competitive Advantage” (Penguin Press, 2008).

HONG KONG, China (CNN) — In the crowds still stranded by snow at train stations around China stand some of the country’s most valuable economic assets: migrant workers.

A migrant worker, right, joins a queue waiting to board trains this past week in Shanghai, China.

more photos » This group of 150 million to 200 million farmers — more than the population of the United Kingdom, France and Australia combined — account for the majority of employees in China’s world-beating manufacturing sector, the bulk of its coal miners and most of its construction workers.

During the past two decades, according to a conservative estimate from UNESCO and the Chinese Academy of Social Sciences, migrants have contributed 16 percent of gross domestic product growth.

Living for years at a time in coastal cities, China’s migrant workers have built the country’s skyscrapers and assembled its exports, sending tens of billions of dollars in earnings home to their families in poor inland provinces. For the workers known as “factories without smoke,” the Chinese New Year holiday is often their only annual vacation.

The forces that brought these smokeless factories to the cities took shape in the early 1980s, when Beijing, as part of an easing of central controls on the economy, loosened internal mobility regulations. Farmers have been pouring out of the countryside ever since, in what is believed to be the world’s largest internal migration.

They leave for mostly economic reasons: wages in the cities are higher than what workers could earn at home. And life there, many find, is more exciting than back on the farm.

Today, migrants dominate the Chinese labor force in dirty and dangerous trades: 70 percent of construction workers, 68 percent of manufacturing employees, and 80 percent of coal miners are migrant workers. But not all are on their hands and knees. More than 60 percent of staff in the service trade, according to state media, are migrants as well.

Don’t Miss
Fog worsens storm nightmare
On average, migrants tend to be among the best educated people in their villages. Still, many have little more than a junior high school diploma. Many migrate as teenagers, often with friends or neighbors, leaving behind their family in the countryside. More than half are men, but the toy and shoe factories of southern China prefer women — they are easier to control, managers say, and their fingers more nimble.

Wages vary by city and company, but many migrants in export factories in the south take home about Rmb1,000 a month ($139) — or even more. They sleep 12 to a room in bunkbed dormitories furnished by their employers, working six and sometimes seven days a week for months at a time. Wages are not always paid on time, occasionally not at all. Watch more about migrant workers’ living conditions in dormitories »

Victims of occupational disease, lacking of insurance

As little as a fifth of migrant workers in southern China’s Guangdong province, according to one Hong Kong non-governmental organization, have medical insurance. China’s household registration or hukou system links social benefits to the place where one is registered, and most migrants are still registered in their rural hometowns, hundreds of miles away from where they work. About 90 percent of the victims of occupational disease in China are migrants.

These migrants’ schedules are dictated by the fluctuations of demand from their foreign customers: winter is peak season for lawn furniture factories, for example. But most of the factories in southern China are busiest in summer, as they fill orders for the Christmas season.

Many of these plants close for the first months of the year and take the Chinese New Year holiday off, triggering an exodus of migrants as those who can afford the train and bus tickets travel home to see their families. Watch a migrant worker’s 1,000-mile journey home »

Much has changed since Chinese farmers began arriving in the cities two decades ago. Some of today’s migrant workers are “second generation” — the sons and daughters of the first generation of migrant workers. Most were born after China introduced a family planning policy in 1979, so they come from smaller families. Second generation migrants tend to be more demanding employees: they are pickier about where they work, preferring factories with better facilities and wages.

Their preferences, along with a rapid growth in factories in the Yangtze River Delta around Shanghai and a rise in rural incomes, have contributed to labor shortages in Guangdong province in the last several years. In response, the government is raising the minimum wage and strengthening labor laws. Forced to compete for workers for the first time in more than a decade, factory managers are building basketball courts and libraries, installing air conditioners and improving their cafeteria menus.

Beijing, too, is realizing the importance of migrant workers as a political constituency. The state-controlled labor union, the All-China Federation of Trade Unions, is targeting migrants in a recruitment drive. The government is expanding insurance coverage for migrant workers.

State media cover their hardships regularly. “Migrant Workers: We Need Them Just Like They Need Us,” read one headline in the China Daily last March. As the recent appearance of premier Wen Jiabao at the packed Guangzhou train station illustrated, migrants are crucial to keeping China’s economic development on track.

Survey: 2 in 5 Chinese employees consider themselves underpaid in 2007

BEIJING, Jan. 12 (Xinhua) — More than 40 percent of employees in China were unsatisfied with their salaries in 2007 amid rising costs of living, said a latest online survey.

Covering more than 8,000 people of various professions nationwide, the survey was conducted earlier this month by www.zhaopin.com, one of China’s leading job-hunting websites.

When the respondents were asked to rate their degrees of satisfaction on salary, 21.5 percent ticked 70-100 points representing “very satisfied and satisfied,” 36.4 percent chose 60-70 points indicating “an average degree,” with the remaining 42.1 percent opting for 60 points below to express their strong dissatisfaction.

Only one fifth of the employers have taken financial measures to increase employees’ income to reduce the effect of price hikes in the past year, according to the survey.

Most respondents said they hoped their salary could be raised this year, with 30 percent of them hoping for a 20 percent increase, 36 percent for a 50 percent rise, and 21 percent for a doubling of their salary.

At the same time, more than half of the people surveyed said they were looking to change jobs.

The consumer price index, a major gauge of inflation, is likely to climb 4.7 percent in 2007, Yao Jingyuan, chief economist of the National Bureau of Statistics (NBS), said in late December 2007.

Regional expertise is a priority in China

By Rolf D. Cremer

Published: January 28 2008 05:59 | Last updated: January 28 2008 05:59

Before the mid-1980s, there was virtually no management education in China capable of preparing managers for a new, market-oriented, and increasingly international business environment.

There were no business schools in the western sense, and the MBA was practically unknown.

The business departments of local universities lacked both the quality and the quantity of faculty to offer credible programmes, and they lacked faculty capable of working with senior executives in an EMBA or executive education programme.

Meanwhile, the foreign MBA providers in China did have faculty, and brought them into the country. Their lack of in-depth knowledge of China and lack of real involvement with management did not hinder enrolment because at the time, there were no adequate substitutes.

During this initial stage, the emphasis was almost exclusively on teaching, and foreign providers using western teaching methods. Their market-orientated course enjoyed a competitive edge over rival programmes offered by domestic institutions.

But China’s MBA business has changed fundamentally during the past five years.

The number of domestic universities approved by the Ministry of Education to offer advanced business education programmes has quickly increased.

Today more than 100 universities have been approved for MBA degrees. They offer around 250 MBA and EMBA programmes, roughly 40 of which operate in co-operation with, or as host to, a foreign provider.

During this growth, China’s management schools have become much more competitive. The financial and administrative ability of the leading universities in recruiting internationally qualified faculty has increased.

The economic rise of China has attracted back the so-called “sea-turtles”, Chinese graduates and faculty with world-class management degrees and teaching or research experience. China’s potential students are now better prepared than ever before.

Employers now also realise the limited value of degree programmes and executive education courses that lack China-relevant content and context.

The time of importing management programmes and faculty into China is now coming to an end. Business schools in China are re-positioning themselves.

China is no longer a passive recipient of knowledge and know-how, but is developing into a power centre for influencing management teaching content and research methodology. In this respect, the world of education mirrors the rising influence of China on world affairs.

The success of China’s re-positioning over the next decade or two within the business education arena depends on three factors.

First, a handful of China-based business schools will need to emerge as an internationally-recognised elite – on a par in performance and reputation with the world’s leading schools.

At present, this is not yet the case, even though a small number of leading Chinese schools are prominent within the country, and are highly respected.

The rise of these schools into the elite will be led by the School of Economics and Management at Tsinghua, by the Guanghua School of Management at Peking University, and by the China Europe International Business School (CEIBS).

Second, China-based schools will need to align themselves with practical priorities of business.

At present, Chinese and foreign faculty in China are reluctant to commit their research to the region.

With one eye on the faculty market in North America and Europe, they consider publication in leading international (that is, US-based) academic journals as necessary for career development.

But with abundant and exciting research opportunities, good funding sources, and an emerging group of elite business schools in China itself, the future will bring greater alignment with the region.

Third, China-based faculty will need to emerge as leaders in education and research.

This will reduce the passive import of knowledge into the Chinese classroom and will gradually alter the world perception of business. The challenge for education will no longer be: “How can we teach (and sell) western knowledge and know-how to Chinese students in China and abroad?”

Instead it will be: “What can we learn (and apply) from the sustained success of China’s economy, and Chinese businesses?” This development may be hindered by the need to change the Western mindset to embrace the goal of learning from China, rather than lecturing to China.

Co-operation between the leading Chinese business schools and their international counterparts is an important means to overcoming this obstacle.

Rolf D Cremer is dean of the China Europe International Business School

Asian universities gaining foothold in FT’s Top 100 MBA list

SINGAPORE : Asian universities are gaining a foothold in the Financial Times’ Top 100 MBA list.

China Europe International Business School (CEIBS) from China moved up by three spots to 11th position and the French-Singapore collaboration – Insead – was up a notch to 6th position.

At the same time, the Hong Kong UST Business School and the Indian School of Business are making their debut in the upper half of the list.

Jumping 21 spots to 46th position is the Nanyang Business School, the first Singapore university to make it to the top 50.

Not only is the Nanyang Technological University’s MBA programme the top 46th in the world, it is also the 15th best in terms of value-for-money.

While the current fees average about US$21,000 (S$30,000), annual salaries earned by its students three years after graduation have gone up by a whopping 111 per cent to an average of US$89,836.

When it comes to finding work anywhere in the world – or international mobility as the survey calls it – the Nanyang Business school is ranked 9th best.

The University’s MBA programme has about 100 students and almost 80 per cent of them come from over 20 countries. The school says it expects a spike of 20 to 30 percent in terms of enrolment for its July intake.

One of the driving factors not just for NTU, but also other Asian universities is the rising economic power in the region.

Professor Jitendra Singh, Dean, Nanyang Business School, NTU, said: “One of the primary reasons they have done so well in the FT rankings is that the salaries in China and India, in particular, are increasing dramatically as these economies are opening more and more to global competition.”

The school will also be trying to improve the salary rankings of its students, which still fall behind their western counterparts. For example, students from top ranking Wharton School of the University of Pennsylvania earn nearly US$76,000 more annually than the NTU alumni.

In terms of global ranking, NTU hopes to be in the top 25 within the next six years. It says it will be constantly recruiting top professionals and reaching out more to global recruiters for its students.

In October last year, the Economist Intelligence Unit placed NTU’s MBA as the top three in Asia. – CNA/ch

StepStone: Battle for Talent in Asia Could Threaten Business Growth

Skills Shortages and High Wage Demands Greet Companies Expanding in Asia – On Top of Credit Crunch

LONDON–(BUSINESS WIRE)–Companies looking to expand in Asia are bracing themselves for significant difficulties in recruiting and retaining skilled employees and a high wage bill as the war for talent in the region intensifies, according to a major global research report of business leaders’ views released today by StepStone (OSE:STP), one of the world’s largest providers of on-demand, talent management solutions.

The StepStone Total Talent Report 2008, researched and prepared by the Economist Intelligence Unit, concludes that “the idea of Asia as low-cost utopia with an abundance of labour is long-gone”.

Executives in Asia cited four major recruitment and retention obstacles which businesses faced:

rising wage and pay demands among potential candidates

a lack of suitable candidates to recruit and a lack of appropriate skills among potential candidates

a perceived lack of career opportunities among current employees

employee perceptions that pay and benefits could be better elsewhere

Asian business leaders also feared an increasing expectation among employees to switch careers and jobs as the most likely cause of talent shortages in their organisation over the next three years.

Sub-prime be damned: Asia remains the long term growth prospect

Despite the difficulties, 44 per cent of all business leaders surveyed globally believed the Asia-Pacific region offered their business the best opportunities for revenue growth over the next three years, shaking off short-term fears of the sub-prime led credit crunch for a positive longer-term view. Eighty-seven per cent of global business leaders expected either slight or significant improvement in their company’s growth prospects over the next three years, with only 29 per cent saying the rising cost of credit had caused them to be less optimistic about their organisation’s future prospects.

“While recent surveys and financial analyst predictions indicate a drop in business confidence in the next year, it’s clear that most business executives are still bullish on Asia as the growth machine in the longer term,” StepStone CEO, Colin Tenwick, said.

“While the credit crunch might be dismissed in boardrooms as a short-term speed bump, it would be folly for Western businesses rushing to invest in high-growth Asian economies such as China and India to ignore the clear signs of longer-term talent shortages in Asia. This research shows that many companies will have to prepare themselves for a huge battle for talent, one that is even tougher than in Europe and North America.

“Asia is seen as the engine for growth but without the right people, businesses will see their engine splutter and may not get out of first gear. Without a clear, formal talent management strategy in place, companies will find it difficult to get – and more importantly, keep – the people they need and may struggle to realise the growth they are promising their shareholders.”

Recruitment grows tougher globally

Globally, business leaders unanimously agreed that recruiting and retaining talented employees was getting tougher – 46.5 per cent saying it was becoming slightly more difficult and 41 per cent believing it was becoming significantly more difficult. Yet only a quarter of organisations surveyed had a formal, company-wide talent management strategy in place and a staggering 16 per cent did not have a talent management strategy at all.

“To compete for the best people it is clear from this report that many organisations need to address how they are going to manage their talent in a far more structured way or they place their ability to grow under serious threat,” Mr Tenwick said.

“Given the low number of businesses with a formal talent management strategy in place, it’s unsurprising that a third of respondents said their organisation was poor at forecasting talent requirements and retaining talent in the organisation.”

While it was in Asia where recruitment and retention difficulties were most acute, business leaders in Western Europe and North America agreed that employee career switching would be a major issue in fuelling talent shortages. However, they were more concerned than their Asian counterparts of the effects of an ageing population and a lack of alignment between education and the needs of business.

Older workers will return

“The difficulty in finding talent coupled with an ageing workforce presents a serious challenge particularly to businesses in developed economies in Western Europe and North America. With almost half of executives in those regions viewing an increased use of older workers in a positive light, it appears likely that we will see more older workers returning to the workforce or perhaps postponing retirement to fill skills gaps,” Mr Tenwick said.

The report found that organisations are also building their own online recruitment portals, turning to headhunters and outsourcing work to cover skills gaps. Middle management is the talent ‘pain point’ for most businesses – finding commercial and business unit heads was the number one recruitment headache, followed by staff in operations, sales and marketing, and information technology.

Employees in operations and sales and marketing were cited as the hardest to retain, with organisations using money as their greatest weapon in keeping staff – 64 per cent increasing pay and 48 per cent improving benefits to hang on to key employees. Other popular strategies included improving training, introducing mentoring programmes and flexible working hours.

The credit crunch – still a factor

“With most economies growing and shortages of talent becoming common, candidates and employees have held the upper hand in workplace negotiations in recent years. However with the fallout from the sub-prime financial crisis taking root and speculation that a U.S. recession could trigger a global business slowdown, the position of power in employment negotiations may soon change,” Mr Tenwick said.

While recent business surveys and financial analyst speculation around the world have pointed to reduced business confidence as a result of the credit crunch, executives who responded to the EIU research had a more positive long-term view. In September/October 2007 (during the first stage of the sub-prime impact), 87 per cent of executives polled believed their organisation’s growth prospects would improve over the next three years, and this view still held true in December when the wider impact of the credit crunch was being felt: 90 per cent believed growth prospects would improve over next three years.

“In potentially volatile economic conditions, not only is a talent management strategy vital but so is technology which allows an organisation to put the strategy into action and identify where talent gaps exist, or where headcount could be reduced. Whichever way the world economy turns, having the knowledge and agility to make swift decisions on the company’s employee base could make all the difference in being able to retaining the best people and maintaining business momentum.”

The StepStone Total Talent Report 2008 is available to download at www.stepstone.com.

About the research

The Economist Intelligence Unit surveyed 392 senior executives from the around the globe during September/October 2007, with most respondents from Asia (29%), Western Europe (28%) and North America (21%). The survey sample was extremely senior: all were management, with 67% operating as board members, CEOs and other C-level executives, or as senior vice-presidents, heads of business units and heads of departments. The executives surveyed represented all key employer sectors, including financial services (20%), professional services (14%), IT and technology (8%), manufacturing (7%), energy and natural resources (7%) and healthcare (5%). The organisations that the respondents worked for were predominantly large: 34% had annual revenues between $500m and $10bn, with 20% generating revenues of $10bn or more. In December 2007, the Economist Intelligence Unit re-surveyed senior executives to gauge the impact of the sub-prime credit crunch on business outlook.

The Economist Intelligence Unit’s editorial team executed the online survey, conducted the interviews and wrote the report.

About the Economist Intelligence Unit

The Economist Intelligence Unit is the business information arm of The Economist Group, publisher of The Economist. Through our global network of more than 700 analysts and contributors, we continuously assess and forecast political, economic and business conditions in 200 countries. As the world’s leading provider of country intelligence, we help executives make better business decisions by providing timely, reliable and impartial analysis on worldwide market trends and business strategies.

About StepStone

StepStone is one of the world’s largest providers of on-demand, talent management solutions, offering a portfolio of technology, software and online services that enable organisations to attract, recruit, develop, retain and manage the best available talent.

StepStone Online operates some of Europe’s largest and most successful Total Talent Communities, covering 13 countries and attracting 1.9million visitors each week. StepStone’s Total Talent Management Software Solutions are a range of on-demand services which enable organisations to manage the entire employee lifecycle, from initial attraction, through pre-hire online recruitment, on-boarding and post hire performance management including compensation management, skills and competency management and employee training and development. StepStone recently completed the acquisition of ExecuTRACK, a global leader in strategic Talent Management, which extends StepStone’s Total Talent Management solutions portfolio.

Thousands of organisations including Aviva, Amey, Royal Bank of Scotland, AXA, British Airways, Xerox and Fiat use StepStone’s products and services to help them recruit qualified staff globally. Founded in Norway in 1996, StepStone was the only European-headquartered vendor to be recognised as a ‘leader’ by Gartner, Inc’s recent “Magic Quadrant for E-Recruitment Software, 2006” report.

Employers in China face worst staffing turnover level

China’s employers have dual problems on the hiring front as they face the biggest salary increases in Asia needed to attract talent and the region’s highest turnover, according to a survey.

The findings appeared in the Friday edition of the China Youth Daily.

Nearly one-third, or 32 percent, of the employers surveyed planned to raise salaries by at least 20 percent to attract badly-need talent, said the survey by human resources company Hudson.

The survey covered employers’ first-quarter plans and expectations.

Year-end bonuses are expected to rise significantly, with 66 percent of the respondents planning to increase year-end bonuses at least 10 percent and almost one-fourth planning raises of more than 20 percent.

But despite significant increases in compensation, staffing turnover has been heavy.

Across all industries, 47 percent of companies surveyed had turnover rates of more than 10 percent in the past 12 months, and 13 percent said that the rate was more than 20 percent.

China’s staff turnover rate was highest in Asia, more than twice that of Japan, the Youth Daily report said. Unsatisfactory compensation and limited career progression were blamed for China’s high turnover level.

Among respondents, 22 percent agreed that limited career progression was a major cause of high turnover, while 18 percent believed it resulted from dissatisfaction over money.

The report predicted a persistent increase in salary levels in China because of limited talent resources.

Labor law strengthens Chinese union

By Han Dongfang

From a legal standpoint, the protection of workers’ rights in China is systematically improving, with the government adding another major component, the Labor Contract Law, to its already substantial canon of labor legislation at the start of the year.

Since the promulgation of the Trade Union Law in 1992 and Labor Law in 1994, the government has regularly introduced new legislation and regulations designed to protect the rights and interests of workers.

However, while the interests of workers are increasingly enshrined in law, their rights on the factory floor remain precarious and are

routinely ignored or violated by management. The cause of this apparent contradiction is not hard to find: put simply, workers in China still do not have the right to collective bargaining.

There is a labor union in China, the All China Federation of Trade Unions (ACFTU), which could potentially represent workers in collective bargaining with management. The ACFTU, however, is first and foremost a servant of the Chinese Communist Party (CCP) and therefore an instrument of the party-state – representing labor and protecting workers’ rights is secondary.

ACFTU chairman Wang Zhaoguo freely admitted in a speech in December 2006 that China’s unions “cannot blindly copy union models in Western countries”. The ACFTU sees itself as a “bridge” between labor and management, not merely as an advocate for labor. As such, it does not actively defend workers’ interests in negotiations with management but seeks to facilitate a compromise between the two sides.

The ACFTU’s approach may seem attractive on paper, but in reality it has categorically failed to protect workers’ rights and interests. Take the minimum wage for example. Because there is no freedom of association or genuine collective bargaining in China, employers can get away with paying the minimum wage to all employees regardless of the profits they make or the productivity of the workers.

Indeed, in the vast majority of enterprises across China today the minimum wage mandated by law has become the basic flat wage paid by employers by default. In other words, the minimum wage regulations designed to protect workers’ interests have become the legal foundation of management’s exploitation of labor.

China’s Trade Union Law mandates the ACFTU to represent workers’ interests in wage negotiations. Since, however, in the majority of enterprises, ACFTU branch union officials are appointed by or in some other way beholden to management, they would not dare raise an effective challenge to management on behalf of the employees. There is a mechanism – the “collective consultation and collective contracts system” – developed by the government and ACFTU over the past two decades, through which workers’ demands for higher wages can in theory be discussed.

Yet because there is no genuine collective bargaining between labor and management, most of the collective contracts that the ACFTU has announced do not represent the workers but are rather the results of a “collective contracts production line”. These mass-produced contracts are typically copied from the provisions of relevant labor laws and regulations and are of little or no help to workers on the factory floor.

There are also strict rules and regulations covering work hours and overtime. However, because of the excessively low wages paid by employers, workers very often cannot earn a living wage by working eight hours a day. Because they cannot bargain collectively, individual employees will certainly not dare to ask for a pay rise on their own. Their only option is to ask to work longer hours. In the majority of incidents where employees work long hours, it is because they requested it, and as such, the labor bureaus – who are supposed to monitor breaches of work hour regulations – are powerless to intervene.

The Labor Contract Law has numerous provisions designed to protect workers’ rights and enhance job security. One key provision is that workers who have been employed at the same enterprise for 10 years or more will be legally entitled to an “unlimited” labor contract, which should guarantee them adequate financial compensation should they be made redundant.

Many employers have panicked on learning of this provision and urged, bribed or coerced long-serving employees to take early retirement or voluntary redundancy. The most noted example of this tactic was the move by Huawei – the former state-owned enterprise and now privately owned telecommunications conglomerate based in Shenzhen – to persuade about 7,000 employees who had been with the company for more than eight years to resign. In return, the employees received a lump sum of one month’s salary for every year of employment, plus one additional month’s salary, and were allowed to rejoin the company on a short-term contract.

Huawei’s reaction to the new legislation was rational in a system where laws are largely theoretical and all the power inside enterprises resides with management. China’s numerous labor laws are like swords suspended above the heads of factory owners and managers. They can all see the swords but none of them can really be sure what will happen if one falls.

Huawei’s management could not be sure if the Labor Contract Law would hurt them or not, and so they did everything in their power to minimize the potential damage. Management had the power to persuade long-serving employees to give up their contracts, so it did. Yet again, a new law – intended to protect workers – instead led to the violation of workers’ rights.

The Huawei case begs the question: do the workers really want long-term contracts or is this just something that legislators and concerned academics think they want or should have? In the Huawei case, if the workers had the right to free collective bargaining, this situation would not have arisen. Even without a new law requiring employers to give employees unlimited contracts, workers and management could have sat down together as equal partners, raised their concerns, made their demands and ironed out their differences at the bargaining table.

If the employees wanted unlimited contracts, their representatives would be empowered to negotiate a deal with management on the issue. If workers did not consider unlimited contracts to be of great importance, they would not place it on the negotiating table.

With a collective bargaining system in place, workers would no longer walk into the “dead end” of rights protection that exists at present. Workers and employers would in addition both be able to improve their “fire prevention” work. An effective collective bargaining system would lessen the risk of labor disputes igniting into conflagration and allow both labor and management to focus on prevention, rather than trying to put the blaze out after it had already erupted and most likely caused irreparable damage.

China Labor Bulletin has closely monitored the workers’ movement in China over the past decade and has repeatedly noticed labor disputes that could have been prevented or resolved through a system of collective bargaining escalate into strikes, public protests and demonstrations simply because the workers had no other outlet.

Over the last few years, disputes over the non-payment of wages, low wages, forced overtime for little or no additional pay, unsafe working conditions and the lack of benefits, have all developed into mass protests. As a result, what should have been a simple matter between labor and management became a complex and very costly public matter.

Had an effective collective bargaining system been in place, the dispute would most likely have been resolved within the enterprise and the local government could have avoided expending its time and resources on trying to bring about a peaceful end to a dispute that had already gotten out of hand.

In terms of developing a collective bargaining system, the new Labor Contract Law comes at a good time and occupies a favorable position in China’s legislative landscape. It is a propitious time because both those in the central government in Beijing and ordinary workers across China now agree that – after three decades of accumulated tension between labor and management – something has to be done.

If the situation continues in which management routinely exploits labor and violates workers’ rights with impunity, workers, as in the past, will increasingly resort to protest and even violence in order to seek redress, and this will benefit no one.

The law occupies a good position because it effectively builds on China’s existing foundation of labor legislation and regulation. In particular, the Labor Contract Law stipulates that it is the employer’s responsibility to sign a collective labor contract with the employees’ representative. If the ACFTU and its branch unions can grasp the opportunity presented by the law, it is probable that after a couple of years of finding their way and gaining experience in negotiations with management, the creation of a genuine and effective collective bargaining system in China will no longer be a problem for the unions.

The big push for collective bargaining should come from grass-roots unions. Right now, the vast majority of the so-called “unions” at the enterprise level are controlled by management – they do not speak for the workers nor do they really listen to the higher-level unions that are supposed to supervise them. If the workers, however, can democratically elect their own union leaders, and those leaders can effectively represent the employees in negotiations with management, the union will not only gain credibility and the trust of the workers, it will be much more willing to listen to and benefit from the expertise and skills offered by the higher-level unions in terms of organizing and negotiating with management.

Thus, by developing collective bargaining at the grassroots level, the enterprise-level unions will both be transformed into a representative labor organization and once again become a functioning part of the ACFTU. In short, therefore, a collective bargaining system can, at the fundamental level, both protect workers’ rights and provide the ACFTU with an excellent opportunity to rebuild itself as a genuinely representative trade union.

Huawei will suspend ‘resignation’ plan

HUAWEI Technologies Co Ltd has agreed to suspend its controversial “voluntary resignation” scheme after talks with trade unions, the All China Federation of Trade Unions said on Saturday.

The federation said it called on China’s biggest maker of telecommunications network equipment to protect workers’ interests after its plan sparked fears that the company was trying to sidestep a new labor law.

The federation and union organizations in Guangdong Province and Shenzhen City, where Huawei is headquartered, called on Huawei to solicit workers’ opinions and respect their rights while making regulations related to their benefits.

Huawei would soon hold a workers’ conference to review the interim regulations, sources with the ACFTU said. A company source confirmed, on condition of anonymity, that they had reached a consensus with the trade unions.

He said the company agreed to suspend the plan, but the exact date to implement it will be decided after workers’ opinions were solicited at the conference since the plan was launched with their consent.

Huawei initiated a plan, calling for its staff who have worked for eight consecutive years to hand in “voluntary resignations,” according to Nanfang Daily.

The staff would have to compete for their posts, and sign new labor contracts with the firm once they were re-employed, while those who lost out would receive compensation.

On Friday, officials with the Shenzhen Federation of Trade Unions met with a Huawei vice president and they reached a consensus on three issues.

Wal-Mart to cut jobs in China

WAL-MART Stores Inc will reduce its employees in China by more than 100 as part of a restructuring program in its Global Procurement Division after pressure mounted on the firm due to slower profit growth.

The world’s biggest retailer plans to cut the payroll in its four sourcing offices in Shenzhen, Shanghai, Putian and Dongguan, according to Huang Jianling, a communications official from Wal-Mart China.

The lost jobs in China account for half of its global reduction.

“We have found some department functions overlap,” said Huang via telephone with Shanghai Daily. “The consolidation will help to reduce redundancy and improve efficiency.”

Huang added that some new positions will be created, but did not elaborate.

The layoffs in China, announced last weekend, came after the retailer posted a less-than-anticipated profit for the second quarter. Wal-Mart also lowered its earnings forecast after cutting prices on thousands of stationary items.

“The restructuring will by no means reduce our sourcing from China,” Huang said.

Wal-Mart entered the Chinese market in 1996, and set up its first procurement office in Shenzhen in 2002.

It has bought an average of about US$9 billion in products from China per year over the past two years.

The Bentonville, Arkansas-based retailer has been aggressively expanding in China, where retail sales grow more than 14 percent year on year despite growing competition.

The market still has huge potential as the central government stepped up efforts to encourage domestic consumption so that the economy is less dependent on exports and investment in fixed assets.

Wal-Mart operates more than 86 stores in China with a total investment exceeding 1.7 billion yuan (US$229 million). France-based Carrefour SA owns 95 stores.

It acquired a 35 percent stake in China’s Trust-Mart, which runs more than 100 hypermarkets, earlier this year.

The company plans to double its outlets in China in the next five years, Bloomberg News said in earlier reports.