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Hong Kong Dockworkers Strike Attracts Huge Solidarity

After 40 days, the dockworkers have ended their strike with a settlement including a 9.8 percent wage increase. More details and an interview with a strike leader are here.

Five hundred dockworkers are facing down the richest man in Hong Kong (and, according to Forbes, eighth-richest in the world) in a strike that has entered its third week and brought transport in the world’s third-busiest port to a virtual halt.

Li Ka-shing, the billionaire behind Hongkong International Terminals (HIT), controls more than 70 percent of Hong Kong’s port container traffic and oversees a vast transnational network of enterprises including the oil and gas giant Husky.

Arrayed against this financial titan often referred to as “Superman” are dockworkers exhausted by 12-hours shifts lacking even toilet breaks, surviving in one of the world’s most expensive cities on wages that haven’t risen in 15 years, and now waging a labor battle that observers are calling pivotal.

The confrontation appears to have tapped a vein of indignation against the “greed economy” and its glaring inequalities, bringing the workers broad public support.

Strikes are rare in Hong Kong, and strikes that gain this much solidarity are unprecedented in recent memory. The dockworkers represent a new level of action among the fastest growing segment of workers: subcontracted, not yet unionized, hyper-exploited.

Fifteen days into the strike, union spokespeople say not more than 20 dockers have returned to work while 120,000 containers sit untouched, ships experience delays of up to 60 hours, and daily losses of half a million U.S. dollars mount.

On the other side of the fulcrum, thousands of Hong Kong citizens have rallied to “occupy” the Kwai Tsing Port, bringing vast quantities of food, water, and funds ($800,000 so far) to ease the strain on strikers.

Solidarity Sick-Out, Boycott

The dockers are holding firm in their demand for recognition of their newly formed Hong Kong Dockworkers Union, humane working hours, safety measures, and wage hikes of 15-20 percent. Under immense public pressure, Hong Kong’s pro-business government has had to intervene to make management negotiate.

A court injunction initially limiting strikers’ access to the docks was later amended, providing the right for 80 to picket at a time. But the sustained presence of hundreds of strikers and supporters camping out on surrounding streets has disrupted all normal flow of work, and a sympathy “sick-out” earlier in the week by port truck drivers reinforced the strike.

Meanwhile an activist student group, Left 21, has begun organizing a boycott of Li Kai-shing’s mega-supermarket chain Park and Shop, and the president of the International Federation of Transport Workers, the global organization of transport unions, traveled to Hong Kong for a solidarity event. The AFL-CIO’s Solidarity Center is donating $5,000.

While support floods in from students, other unionists, and citizens, buoying up the strikers, the solid commitment of the dockworkers themselves is driving this piece of history. The workers organized despite differences in craft and employer (at least four major contractors supply staffing to the Kwai Tsing Port), divisions between subcontracted workers and permanent port employees, lack of formal recognition of their union, and no precedent of collective bargaining.

The dockers have no illusions about the concentrated wealth and power of their ultimate boss Li Ka-shing, but they realize that they have in their hands something no one else controls: the ability to withhold their labor.

Repercussions on the Mainland

The colonial history of Hong Kong left little in the way of labor rights, and unions are rather weak, operating with limited legal rights to bargain or represent workers. Still, both of Hong Kong’s two major union federations are playing roles in this strike.

The larger, the HKFTU, has ties to mainland China’s official labor federation, the ACFTU, and is considered pro-business and politically conservative. In this strike its lack of legitimacy among workers was further weakened by revelations that one of its leaders holds a management position in Global Stevedoring Service, one of the contractors that employ dockworkers.

HKFTU tried to funnel management’s offer of a 5 percent wage increase to a subgroup of workers, but was shamed and now seems to have retreated entirely.

The smaller federation, the HKCTU, is considered a pillar in the pro-democracy movement in Hong Kong, and has taken the lead in supporting the strike: raising funds, organizing logistics, doing PR and outreach, making demands on politicians.

The conflicts between the two Hong Kong labor federations point to implications of this strike for mainland China. Though total reintegration of Hong Kong into China is still 35 years in the future, the two economies are already thoroughly enmeshed. Because of the strike, some portion of Hong Kong ship traffic will almost certainly be re-routed to the southern mainland ports at Shenzhen or Guangzhou, where labor conditions are way below those in Hong Kong.

A strike of crane operators at the Shenzhen port several years ago was met with swift government intervention and rapid agreement to workers’ demands, in an incident believed to show the government’s determination to prevent a spread of worker militancy—not through repression but through accommodation.

Given that there are already tens of thousands of wildcat strikes annually on the mainland, rising on 30 years of wage repression and an absence of union representation, the potential for this spark of Hong Kong labor militancy to jump the straits and ignite a prairie fire on the mainland may be on the minds of China’s leaders.

Ellen David Friedman is a retired union organizer, on the Policy Committee of Labor Notes, and a Visiting Scholar at Sun Yat-sen University in Guangzhou. Support the strike fund here.

Founder talks of IPO and beyond for Alibaba

China’s biggest e-commerce company, privately held Alibaba Group, has become the most profitable Internet company in the country, as the company is considering going public and will continue to invest heavily in mobile technology.

Alibaba said on Tuesday that its net profit in the four quarter was $640 million on revenue of $1.84 billion. Net profit was 172 percent higher than the same period of the previous year while revenue growth was 80 percent.

The $6.4 billion profit beat Tencent Holdings Ltd’s $550 million in the same period to become the most profitable Internet company in China.

Company founder and chairman Jack Ma said in a speech at Stanford University over the weekend that he doesn’t care where or when an initial public offering is conducted for his e-commerce empire, which saw total transactions of more than 1 trillion yuan ($160 billion) last year. What he cares about most is whether an IPO will help the company sustain growth and benefit shareholders.

The 49-year-old Ma, known for eloquence and wit, compared the IPO to a wedding and said it is more important to think about married life after the ceremony.

“If an IPO is a wedding, Alibaba is more concerned about the marriage after. The result that we don’t expect to see is the marriage becoming the grave of love,” he said.

Alibaba Group owns China’s largest business-to-business website, the online retail platform Taobao, and a PayPal-style online payment service, AliPay, among other services.

By itself, Taobao – a platform akin to eBay on which a variety of retailers sell products and services to consumers and small businesses – recorded transactions of more than 1 trillion yuan in 2012.

Yahoo Inc has a 23 percent stake in Alibaba after reducing its holding from 40 percent for $7.1 billion last year.

With explosive growth and huge potential in online retail in the world’s most populous country and No 2 economy, an Alibaba IPO would be regarded as one of the biggest in the technology industry, and international and Chinese investment banks are vying to underwrite an offering.

Stock exchanges are also trying to attract the Internet giant. Alibaba.com had traded on the Hong Kong Stock Exchange but delisted last year.

Various investment banks have valued Alibaba at $40 billion to more than $100 billion. According to a survey by Bloomberg News of eight investment banks, the latest valuation is about $62.5 billion, based on 84 times the company’s profit-to-earnings ratio.

Ma also said his company is an industry trend-setter and will continue to invest in operations.

Last week, Alibaba paid $586 million for 18 percent of Sina Weibo, China’s most popular microblogging site with over 400 million users, and has an option to increase the stake to 40 percent.

The company has acquired many smaller Internet companies in businesses tied to Internet search software, group-buying deals, online coupons and even an online taxi-reservation service to build its mobile Internet portfolio.

“The mobile phone will become the device of data consumption and is changing people’s lifestyles,” Ma said at Stanford. “If the PC has changed the way we work and produce, the wireless Internet is a revolution in lifestyle, and China will see revolutionary changes with wireless Internet.”

He said Alibaba will invest more in infrastructure including “big data”, unlike its main domestic competitor Tencent. Hong Kong-listed Tencent is the third-most-valuable Internet company in the world, after Google Inc and Amazon.com Inc, and is investing in Internet applications.

China HSBC April services PMI falls to lowest in nearly 2 years

Growth in China’s services sector slowed sharply in April to its lowest point since August 2011, a private sector survey showed on Monday, in fresh evidence that economic revival will remain modest and may be facing wider risks.

The HSBC services Purchasing Managers’ Index (PMI) fell to 51.1 in April from 54.3 in March, with new order expansion the slowest in 20 months and staffing levels in the service sector decreasing for the first time since January 2009.

The HSBC services PMI follows a similar survey by China’s National Bureau of Statistics, which found non-manufacturing activity eased to 54.5.

“The cooling of service sector activity in April likely reflected the knock-on effect of slower manufacturing growth, the impact of property tightening measures and the spreading bird flu,” said HSBC’s China chief economist Qu Hongbin.

A reading above 50 indicates activity in the sector is accelerating, while one below 50 indicates it is slowing.

Two separate PMIs last week showed that China’s manufacturing sector growth had slowed, suggesting the country’s exports engine is running into headwinds from the euro zone recession and sluggish growth in the United States.

In the latest survey, the sub-index measuring new business orders dropped sharply to a 20-month low of 51.5 in April, with only 15 percent of survey respondents reporting an increased volume of new orders that month, HSBC said.

“Again, this started to bite employment growth. All these are likely to add some risk to China’s growth in 2Q, as there’s still a bumpy road towards sustaining growth recovery,” Qu said.

The employment sub-index decreased to 49.6 in April, the first net reduction in staff numbers since January 2009, although HSBC said job losses were marginal, partially caused by firms down-sizing and employee resignations.

Employment is a decisive factor shaping government thinking because it is crucial for social stability. The services sector accounted for 46 percent of China’s gross domestic product in 2012, as big as the country’s better-known manufacturing industry.

At the depth of the global financial crisis in 2008/2009, an estimated 20 million rural migrant workers lost their jobs, prompting Beijing to unveil a 4 trillion yuan stimulus package to shore up the economy and provide employment.

China’s annual economic growth dipped to 7.4 percent in the third quarter, slowing for seven quarters in a row and leaving the economy on course for its weakest showing since 1999.

The government has set a 2013 growth target of 7.5 percent, a level Beijing deems sufficient for job creation while providing room to deliver reforms to the economy.

University seniors struggle to find good job

A majority of university and college students set to graduate in the city next month are still looking for a job due to the grim employment situation.

Only 29 percent of 178,000 students who are to graduate this June have signed an offer, been admitted to postgraduate studies or decided to study abroad as of last month, according to the Shanghai Student Affairs Center.

The percentage was up 4 percent from March but down 3 percent year-on-year, even though the number of graduates is about the same as last year, the center said.

The center attributed the poor employment prospects for graduates mainly on the recovering economy, adding that the number of available positions declined from the past two years.

Some industries, especially manufacturing and foreign trade, have either suffered a downturn or are in a transition, making it especially difficult for students who majored in those fields.

In order to get a job, some students lowered their salary expectations while others accepted a position in a different industry.

“I would take a job as long as the salary is 3,000 yuan (US$488) a month,” said a student majoring in printing art design at University of Shanghai for Science and Technology.

The senior said he has had more than 20 job interviews, but hasn’t heard back from any of the companies.

In February, students were still expecting a starting salary of at least 4,000 yuan, up 225 yuan from the average salary of 2012 graduates, according to China International Intellectech (Shanghai) Corp.

Only 20 percent of seniors at University of Shanghai for Science and Technology have signed up for a job or have been admitted to postgraduate studies, said Niu Xiangyu, director of the student employment guidance center at the school.

Niu said the demand for mechanical and manufacturing graduates was down 40 percent from last year.

Teachers from student employment centers at other universities and colleges said the accumulation of jobless graduates from previous years and the increasing number of overseas students who return to China for jobs have made it more difficult for this year’s graduates to land a job.

“The overwhelming number of applicants have made competition for jobs harder and fiercer,” said Tan Yuxu, director of the employment guidance center at Shanghai University of Finance and Economics.

“But the students are reluctant to lower their expectations,” Tan said.

For example, some students refused to take jobs requiring different shifts even though the salary could be more than 4,000 yuan per month.

“Many students lost job opportunities like that simply because they don’t want to endure hardships,” Tan said.

Tan also said some students were spoiled by their parents and gave up easily after they failed to find an ideal job. They then relied on their parents and missed the best time to get a job, Tan added.

Tan suggested parents help their children lower expectations for their first job rather than compare them to their peers or help them become a NEET, defined as a young person “not in education, employment, or training.”

Nationwide, nearly 7 million university students are about to graduate this summer, the largest number since 1949.

Education focus shifts to filling labor gap

Vocational schools emphasize skilled training to meet growing demand

China is gradually shifting its education focus from a pursuit of diplomas to vocational training, in a bid to meet the growing demand for skilled workers in the country’s technical upgrade.

The supply and demand in China’s labor market has been mismatched, which resulted in structural unemployment, said Rong Lanxiang, headmaster of Shandong Lanxiang Vocational School, one of China’s largest training bases of skilled workers.

“The overexpansion of university enrollment generates millions of graduates who struggle to find a place in the government or public institutions. But, on the other hand, the shortage of skilled workers in China’s manufacturing sector was more than 4 million at the moment,” Rong said, explaining that high-skilled workers only account for 15 percent of the country’s workforce.

Another reason is the stereotyped, stubborn image that workers are ranked at a lower class of the social hierarchy and fail to win enough esteem, he added.

Rong said the issue has drawn attention from the government and corresponding changes in policy have been made, as reflected by the change in students’ subsidies.

In February, China decided that from 2014 it will do away with the publicly funded postgraduate education system that has been in place for several decades.

Meanwhile, the government has also been increasing fiscal support for vocational schools. Since 2012, the Shandong government has provided annual subsidies of up to 4,800 yuan ($773) for each of Rong’s students, on top of the 1,500-yuan national allowance.

“The policy came 10 years late, otherwise we would not have seen such a large gap in the supply of skilled workers,” Rong said.

His words were echoed by Xu Xiaoping, a senior technician from Shanghai Volkswagen Automotive Co, who said manufacturers are facing a severe shortage of skilled workers.

“Even if we offer a salary of 5,000 to 7,000 yuan per month, it’s still hard to locate the right candidates,” he said.

He attributed the malaise currently afflicting the industry to the absence of trained professionals as well as the lack of enterprise engagement.

To iron out the issue, Xu said Shanghai Volkswagen has signed several memorandums of understanding with local vocational schools to nurture technical practitioners.

As for the Lanxiang school, Rong said employers have to pay 1,000 to 3,000 yuan for each graduate they book. Even so, only companies with a noted brand and good track record are eligible to do so.

A student of the school who went on to become an excavator operator or motor mechanic could make as much as 10,000 yuan a month, an enviable salary level even for top university graduates.

Graduates from the excavator operating class have also been employed by State-owned enterprises and sent for overseas mining project in Russia and Mongolia, with even better pay.

Although Lanxiang has trained more than 300,000 skilled workers, the labor gap currently stands at 4 million people.

Therefore, Rong suggested that training bases for skilled workers should be established in each province, in order to equip the 250-million-strong migrant workforce with skills or proficiencies, so that they’ll have a better chance to settle down in the cities.

Meanwhile, he said, skilled workers should have a similar social status with public servants and university graduates.

Apart from cash payments, he called for job certification to be granted for vocational school graduates so as to encourage more young people to become skilled workers.

“Nowadays kids aren’t used to hard work, partly because being a worker doesn’t sound decent enough,” said Zhou Zhenbo, a technician at Shanghai Delixi Group Co Ltd who has a tenfold pay increase over the past nine years.

“I think it’s still worth the effort and young people should learn to put their feet on the ground,” he said.

China’s bosses criticized over high pay

Under chairman Jiang Jianqing, the Industrial and Commercial Bank of China raked in $38.5bn in net profits last year, making it the world’s most profitable bank. For his efforts, Mr Jiang was paid $185,000, less than 1 per cent of the overall package awarded to Lloyd Blankfein, chairman of Goldman Sachs.

Mr Jiang fared well compared with other Chinese financiers — he was the best paid among the bosses of the country’s biggest banks.

Chinese executives at state-owned groups have long been among the lowest paid of their global peers, according to their officially declared salaries. But even their apparently meagre pay generates controversy at a time when executive salaries at public companies globally attract scrutiny.

In China, it is not a case of shareholder revolt — the government is the controlling shareholder of virtually all major Chinese companies and has the power to easily change salaries. Rather, public anger about inequality and corruption has made executive pay a focus for media attacks, even from official outlets.

The government-run Xinhua news agency said in an editorial: “If the top executives of state-owned companies just fatten themselves, giving themselves high salaries and rich benefits, this is a departure from the original intent of the founding of these companies.”

The People’s Daily, the mouthpiece of the Communist party, said: “High pay for high-level executives and low pay for ordinary employees is immoral.

“If the pay for high-level executives is severely out of balance with the pay for ordinary employees, then the management has a problem.” The harshest criticism was directed at China International Marine Containers. Net profits fell by 47 per cent last year, but group president Mai Boliang was the best paid of the top managers of the country’s state-owned companies, pulling in $1.6m. The People’s Daily noted that salaries of CIMC’s top executives had risen 13-fold in the past four years, while the average pay for employees rose just 32 per cent.

Executives at other state-owned groups cut their pay because of poor performance. Wei Jiafu, chairman of China Cosco, China’s biggest shipper, decided to take home $97,000, half of what he was due, after the company lost $1.5bn.

It is an unpopular view, but some Chinese academics and analysts say the main problem with executive pay at state-owned companies is that much of the time it is too low.

Tang Jie, a researcher at Renmin university’s school of finance, says the government has tried to develop better incentive systems at state-owned companies by linking pay to performance, but that it is some way off from achieving this.

“This issue derives from the history of the government’s management of state-owned companies. Executive pay is very low when compared to their contributions, their abilities and their responsibilities,” says Mr Tang. “State-owned companies need professional managers. They should be paid according to market standards, with compensation adjusted according to objective performance criteria.”

Proponents of better executive pay point to the idea of gaoxinyanglian — the theory that higher salaries could be used as a way to discourage corruption.

The fall of Communist party leadership hopeful Bo Xilai last year, exposed the extent to which officials have enriched themselves despite small salaries. Mr Bo’s official pay was $1,600 a month, but his family had net assets of $130m, according to Bloomberg.

Even in cases without extreme corruption, Chinese corporate executive have grey sources of income. Top bankers have low official salaries and small bonuses, but they often receive homes, cars, free schooling and more.

Fabrice Isnard, head of financial services in the Shanghai office of Robert Walters, a recruitment consultancy, says foreign banks in China can rarely afford to lure talent away from local banks because of the way pay is structured.

“We have seen that at local banks, senior positions have better packages than [at] foreign banks,” he says. “If you add up all the benefits it becomes too expensive for the foreign banks to hire them.”