Economy, Talking Point

A proletarian revolution?

Does Foxconn’s union vote mark a new departure for labour politics?

A proletarian revolution?

Anyone seen our union rep?

This time last year Foxconn’s management faced an unexpected twist in its labour relations.

Under pressure from its international customers – principally Apple – the world’s largest manufacturer of consumer electronics had promised limits to the overtime demanded of staff each week. But far from welcoming the new restrictions, Foxconn’s million-plus army of workers were soon demanding the right to work more hours.

“We are here to work and not to play, so our income is very important,” a 25 year-old worker told Reuters.

The dispute rumbles on. A radio reporter from America’s NPR visited Foxconn’s Shenzhen factory last month. He interviewed another worker who told him there could be industrial action if the newly imposed 49-hour limit on working hours is not lifted.

That’s created an “unusual scenario” says Auret Van Heerden of the Fair Labor Association. Bizarrely, it’s now possible that Foxconn’s workers might go on strike to force management to let them work longer. What would Karl Marx make of that?

It would also pose a strange quandary for Foxconn’s mostly American clients.

As WiC reported as far back as issue 63, the Taiwanese firm has long struggled with a litany of bad PR – from staff throwing themselves off its factory rooftops to international labour activists complaining about low pay and poor working conditions for its workers.

In part due to pressure from its clients, Foxconn has sought to improve its labour relations. Indeed the big news last week was that the firm’s workers will soon be able to elect their union representatives – a groundbreaking change not just for the company but China.

How do unions work in China today?

In terms of numbers, China’s trade unions are gigantic. Nearly one out of every five Chinese is a paid-up member, the China Daily reported in January, with total membership now reaching 258 million, more than all the other unions put together worldwide.

But the huge number of unionised workers doesn’t equate to proportionate power for the rank-and-file. Despite their title as “the nation’s leading class” (as per the constitution no less), China’s workers have generally trailed other sections of society in economic progress since the early 1980s (when the market reform era began in earnest).

In fact, there is only one union in China, the All China Federation of Trade Unions (ACFTU), below which stretches a lengthy chain of sub-unions set up by province, industry, municipality and district all the way down to the workplace.

The ACFTU has been awarded its monopoly for a reason. While it has been pushing more keenly for legislation and dispute resolution favouring workers in recent years, it doesn’t represent their interests in the adversarial way often associated with unions in other parts of the world.

Instead it serves much more as a government agency, with loyalty to the Party taking precedence over the interests of its members. The setting up of independent, alternative unions is illegal and although there is no legislation specifically banning stoppages, the right to strike was removed from the Chinese constitution in 1982. Grassroots worker representation in union roles is limited, with the senior places usually taken by company management or apparatchik appointees. In many cases workers don’t even know who their union representative is.

That means that industrial confrontations like the National Union of Miners’ bitter clash with the British government in the mid-eighties or the periodic general strikes that bring France’s transport system to a standstill are unthinkable for the ACFTU. Although it will push for worker demands in specific instances (especially, it seems, if foreign-owned enterprises are involved) it won’t do so if it means that the higher priorities of maintaining social stability and fuelling economic growth are compromised.

But the talk of Foxconn’s workers having more of a say is new?

Not completely. Projects with more of a grassroots vote have been trialled on a piecemeal basis in the past. The most recent was in May last year, when workers at Japanese-owned Ohms Electronics in Shenzhen elected a new union chief. This wasn’t a direct election in the sense of “one member, one vote”. After a strike over pay, the municipal union agreed to a vote that would see workers elect a committee of 70 by secret ballot. The committee was then allowed to nominate candidates and vote for them. And according to Elaine Sio-ieng Hui, a research assistant at the City University of Hong Kong, trade union officials retained the right to nominate candidates for the top roles of union chair and vice-chair, although the committee then got to choose between them.

A senior figure at Shenzhen’s municipal union told the Southern Metropolis Daily at the time that 163 other enterprises in the city would have similar votes when their own union officials came up for re-election.

None of these cases has the symbolism of more open union elections at Foxconn. In part that’s due to scale: Foxconn is China’s largest private sector employer (it has well over a million staff). But it’s also because the Taiwanese firm has become an unwilling crucible for the wider sense of grievance felt by many Chinese workers, following a series of unofficial strikes (mainland media reported on the latest in Beijing at the end of January) and even a factory riot (in Taiyuan last year, see WiC166).

Also, although it has no consumer brands itself, Foxconn gets the spotlight because it plays a crucial role in the global supply chain, most famously making products for Apple but also for other brands like Dell, HP and Sony. In fact, it produces an estimated 40% of the world’s consumer electronics, which makes what happens in its factories more telling from a media perspective than for more non-descript Chinese SOEs. That’s also why news of its union elections has garnered so many headlines.

Isn’t Foxconn an unlikely candidate as a reformer?

It does look like an awkward role model, especially with Terry Gou at the helm of Hon Hai, Foxconn’s Taiwanese parent.

Gou leads Hon Hai in a paternalistic style in which employee opinion hasn’t in the past seemed to be a major priority (see WiC67 for a profile of Gou).

The company’s regimented approach to managing its staff has offered easy column inches to its critics for some time. For instance, in the wake of the suicide epidemic at Foxconn factories two years ago, reports that workers were being asked to sign contracts promising not to kill themselves were widely credited as accurate, despite denials from the company. This said something for its reputation at the time.

Then there was the account of Gou calling in the head of Taipei’s zoo to speak to his senior executives because he thought they had something to learn from zoo keeping techniques.

“Hon Hai has a workforce of over one million worldwide and as human beings are also animals, to manage one million animals gives me a headache,“ Gou was reported to have said at the corporate gathering.

What was intended as a light-hearted remark resonated uneasily with allegations of sub-standard working conditions at Foxconn’s factories.

So is Foxconn now pushing for a more responsive union to counter its reputation as a harsh employer? An alternative view is that it had little choice, after Apple grew fearful that its own brand might be tarnished alongside that of its key supplier. Accordingly, Apple pressured Foxconn to undergo review by the Fair Labor Association (FLA), a non-profit network that monitors labour standards. The FLA then identified a lack of proper union representation as a key failing, alongside lengthy working hours, low pay and safety concerns.

Apple and some of its multinational peers have taken a lot of criticism for appearing to care little about the low-wage workforce that assembles their products. But the sense is that much of the impetus for a wider union vote came less from disgruntled workers or even the union bosses promising a greater effort to represent them, and more because of demands from Foxconn’s customers that the workers get more say.

So the move is significant, then?

The early reports in the Financial Times at the beginning of February seemed to think so, calling the plans “nothing short of revolutionary” and “paving the way for the first-ever competitive elections among 1.2 million workers”.

But in contrast to the international press, the Chinese media has made little mention of the Foxconn initiative, including no obvious reference in the Workers’ Daily, the ACFTU’s own newspaper.

There are different conclusions that might be drawn here. One is that the measures won’t be as groundbreaking as the international coverage suggests. An alternative view is that the elections are significant enough for the Chinese press to be told not to say much about them for now.

On balance, WiC leans more to the former view than the latter, albeit with caveats.

Xinhua’s English-language edition was one of the few Chinese news sources to mention the story, but it seemed fairly underwhelmed by the news. First it pointed out that the current plan applies to the 400,000 staff on the production line at Foxconn’s Shenzhen plant, not the full 1.2 million workforce. Of course, that’s still a significant number of people, and many thousands more than the votes held at other unions in the past. But Xinhua’s description of the electoral process at Foxconn also suggests something similar to the Ohms vote in Shenzhen last year, rather than a genuinely new departure. A “special team” is to be given responsibility for organising the vote, the newspaper said, anonymously selecting candidates for union roles “after discussing with all workers” (which might take a while, if all 400,000 are to be asked). This list will be circulated for public opinion, after which the union panel will “eventually be elected among the candidates”.

That doesn’t sound like a democratic vote. Nor is there much sign of the ACFTU ceding wider control. According to Gu Cheng, head of the municipal union in Shenzhen, “Foxconn has established a detailed programme on the election process under the instruction of the federation. Every process, from candidate election, public notification to final vote, has been clearly regulated subject to Chinese laws and regulations.”

Foxconn too is emphasising the continuity of its approach, highlighting that the elections are part of a process that began with the establishment of the Foxconn Federation of Labor Unions, in 2007.

Yet there is also the suggestion that more is being done than might have been the case without the involvement of the Fair Labor Association (and implicitly, in the absence of pressure from Foxconn customers like Apple).

For instance, Foxconn is increasing the number of junior employee representatives on union committees, which was one of the FLA’s recommendations. It has also promised that management won’t be involved in the election process, a more specific commitment than before.

And it is trying to position itself as more of a pioneer, presumably in search of a reputational boost. “Our hope is that our efforts in implementing these reforms will not only benefit Foxconn, but also help lift the standards and practices for our industry in China,” a spokesman suggested.

That sounds like more of a voice for the workforce?

Much will depend on how the voting works out for positions on the union committees coming up for election this year and in 2014.

Of course, there is also the question of whether having more workers in union positions will end up with the rank-and-file getting a greater say over pay and conditions.

For now, there seems to be a degree of scepticism among the international onlookers. “Foxconn is not the first company in China that has tried ‘democratic’ elections,” Anita Chan, professor at the China Research Centre at the University of Technology in Sydney told Reuters, citing similar moves by Reebok, Walmart and Honda. “They all caught a lot of international attention at the time of the union elections but all came to nought. It is all PR.”

Geoff Crothall, a spokesman for Hong Kong-based China Labour Bulletin, a longstanding Foxconn critic, was also guarded in his response, pointing out that there is still no scope for union membership other than the ACFTU. Additionally, ACFTU bosses can still step into any collective bargaining process going on at lower level, relegating local union representatives to the sidelines.

Jackie Sheehan, an associate professor in Contemporary Chinese Studies at Nottingham University, was a little more optimistic, telling CNN that the move might be significant if it means that more of Foxconn’s workers understand that they have a union that is supposed to represent their interests.

But Sheehan warned that worker ignorance is a major obstacle and acknowledged the difficulties in getting the message across: “Trying to educate hundreds of thousands of workers in Foxconn’s case will take months, and many of them only stay six months. It’s like running up the down escalator.”

How about the bigger picture for labour relations?

Foxconn would hardly have announced its plans without getting approval from the authorities first. Government officials would have known that any mention of a more representative vote was likely to cause a stir, not only because of Foxconn’s involvement but also by stimulating wider debate about the longer-term implications for labour relations.

But policymakers are being pulled in different directions on union reform. Clearly they won’t want to see the ACFTU’s position undermined. Nor are they likely to show much enthusiasm for votes in which Party authority is eroded or that leads to calls for more open elections in other areas (see WiC123 for speculation that a TV talent show was pulled on concerns about viewer voting via mobile phones). Yet there is also awareness that China’s unions need to do more to represent their members’ views, especially in a context in which the working population is shrinking, the economy is growing more sluggishly, and millions more rural Chinese move to towns and cities to work.

“Foxconn’s offer reveals less about the development of workers’ rights in China than it does about the pragmatism of Communist Party leaders when faced with the social pressures of urbanisation, labour shortages and a slower economy,“ a Financial Times editorial observed a few days after its first reports on events in Shenzhen.

Here, the danger for the government is that the gulf between the rank-and-file and their union bosses grows too wide, and that frustrated workers take their grievances to the streets rather than rely on the formal channels.

Something similar happened in the summer of 2010 when there was unrest at a Honda component plant in Guangdong province. Wildcat strikers scuffled with enforcers brought in by their own union bosses (see WiC63). “We pay union fees every month. You should represent us, so how come you’re beating us up,” the pickets cursed, according to reports in the South China Morning Post.

Union executives had acted after signs that the Honda dispute was triggering walkouts at other factories, and the domestic media ran a number of stories hinting at a bolder, angrier mood on the factory floor.

The day after the altercation, union bosses called for calm, issuing a qualified apology for their heavy-handedness.

But there was also a reminder that workers should toe the official line.

“Please trust the union,” it directed. “Trust each level of Party officials and government. We will definitely uphold justice.”

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