Global Labor Strategies

A Letter from Europe: Labor at Malmo

The European Social Forum held in Malmo, Sweden from September 17-21 marked another step in the reappraisal by European trade unions of how to approach the neo-liberal policies of the European Union. The Forum featured a vigorous and productive debate on new directions for labor among traditional unions, the alternative labor movements, and allied social movements.

The debate could not come at a more opportune time. As the impact of the global economic crisis spreads throughout Europe, labor movements can not expect that the so-called European Social Model will protect workers from its consequences. That model, which emerged in the decades following WWII, was characterized—with national differences—by a generous welfare state, collective bargaining, and more or less full employment. It was the result of a tripartite “social partnership” between trade unions, employers, and the state.  But the reality is that, today, even before the crisis fully envelops the continent, you can barely recognize many of the model’s traditional elements. And yet while trade unions increasingly realize that the European Social Model has been undermined, they still tend to look back to the model as strategy for the future.

Neo-liberal Europe

But the good old days are gone. Today, the fundamental goals of the European Union are guided by the principles of neo-liberalism. Collective social programs such as health insurance, pensions, and educational systems have become partially privatized in some countries as politicians seek to open new markets to private capital. “Precarity” of work now extends to the entire life of an increasing number of workers. And collective bargaining is under direct attack by many European institutions. For instance, in the last two years, the European Court of Justice ruled on cases –filed by both corporations and the European Commission itself—which, while acknowledging that fundamental labor rights such as the right to strike and the right to collective bargaining exist in Europe, also ruled that they are less important than the right to freely compete by the employers. And the EU is just about to approve a new Directive (the term for European laws) which not only allows companies to increase working time to more than 60 hours per week, but also introduces individual bargaining in place of collective bargaining on this issue.

On migration there is a dual strategy: on the one hand, with the "Blue Card Directive”  the EU is promoting access to Europe by highly skilled and educated workers. On the other hand, policies toward undocumented workers are becoming increasingly xenophobic, legitimating current laws in some member states by “regulating” detention for up to 18 months as well as allowing repressive “deportation” policies.

Overall, conditions for workers in Europe are worsening. According to official EU statistics—which in many cases are underestimates—around 8% of all employees in the European Union are officially registered as unemployed. More than 16% of the EU population, that is 72 million EU citizens, are currently considered at the risk of poverty (with an income below 60% of the median income in their country). Furthermore, since the 1980s real wage increases are no longer in line with productivity growth and the wage share (the workers income in relation to the overall national income) has declined in almost all European countries. (see European Commission, European Economy, Statistical Annex, 2006. 

A developing discourse

Many trade unions are increasingly becoming open critics of neo-liberal Europe, and the European labor movement is trying to find ways to respond to the attacks that it is now under. This includes the European Trade Union Confederation (ETUC), which is the formal representative of trade unions within the EU’s tripartite structure and which is deeply enmeshed with the bureaucracy which runs the EU. They formally support both the Lisbon Treaty—the latest attempt to redesign the institutional and political framework of the EU along neo-liberal lines, and the aggressive free-trade agenda of the EU Commission (see Global Europe Competing in the World).

Trouble at Wal-Mart: The Rocky Road to Labor Reform in China

The industrial relations system in China is in play as workers, peasants, corporations, and a variety of civil society, state, and party actors vie to determine its future.  Now the collapse of the global financial system and the likelihood of a deep global recession/depression add a whole new dimension to the struggle of Chinese workers and reformers for a more equitable system. Global markets for goods made in China will shrink. Thousands of foreign companies with operations in China could be swept away or be forced to significantly downsize. Indeed, even global giants like automaker GM, one of China's biggest auto producers, are teetering on the brink of bankruptcy. China’s banking system—while somewhat isolated from global pressures—is likely to feel the effects of the financial crisis. No one knows what effect the crisis will have on the value of the vast quantities of the US dollars and debt that China currently holds.

Against this back-drop we take a look at aspects of the Chinese industrial relations system before China is sucked into the vortex of a global recession.

Trouble at Wal-Mart

It has been two years since the ferociously anti-union Wal-Mart recognized the ACFTU in its stores. The event made headlines around the world.

Under Chinese labor law if 25 workers petition for a union, a committee can be elected and the union must be recognized. Normally this is a top-down pro-forma affair in which both management and the official union play a part, but in this case, Wal-Mart’s refusal to play by the normal rules forced the ACFTU to actually recruit workers at the workplace and establish the union without management participation. Once Wal-Mart recognized the first union branch, at its Fujian store, recognition quickly followed at Wal-Mart’s other Chinese facilities. Today, the ACFTU says it represents 50,000 Chinese workers at 108 Wal-Mart locations in China. Many hoped the Wal-Mart experience would be a breakthrough in the development of the Chinese industrial relations system and in the evolution of the ACFTU. Things have not turned that way.

We have a good glimpse into the world of Wal-Mart’s workers through voices of the workers themselves as they discuss and debate--and criticize--the actions of Wal-Mart and the ACFTU in on-line blogs. Some of these discussion threads, as well as relevant articles from the Chinese press, have been translated by the excellent, and increasingly indispensible, China Labor News Translations (CLNT). Read them here.

Wal-Mart has not engaged in serious collective bargaining and the ACFTU has fallen into a typically cozy relationship with Wal-Mart’s management. After Wal-Mart and the ACFTU signed a substandard contract at a store in Liaoning province, the company presented the agreement as a template for contracts at stores throughout China and essentially refused to bargain any further. Among the contracts provisions were a pay increase that did not keep up with inflation and which will not come into effect until mid-2009.  According to CLNT report, “Many individual store unions were not even given a chance to sign the template themselves. Indeed in Shenzhen City, for example, the Buji store has signed a collective contract on behalf of fifteen other outlets in surrounding areas.”

For its part, the ACFTU defends its approach to bargaining with Wal-Mart. According to Zhang Jianguo, the ACFTU’s director of collective bargaining, the new contracts require annual negotiations, wages above the minimum wage, and contain language on working hours, vacations, and social security and training.

But workers at Wal-Mart’s Bayi store wanted to negotiate a better agreement. A grassroots leader, Gao Haitao, who has become a hero to Wal-Mart workers throughout China for his combative defense of Wal-Mart workers’ interests, organized a fight back and made new demands in negotiations with management. Instead of negotiating, “Wal-Mart simply bypassed Gao by convening the staff and workers’ congress and finding a trade union chair from another store to sign the contract in his place!”, according to CLNT.

The ACFTU—which says it supports Gao—stood by while Wal-Mart refused to bargain leading the CLNT to conclude. “….the experience of Gao Haitao and the farcical top-down collective bargaining contract negotiation procedure shows that there is no genuine collective bargaining by workers’ representatives. When a Wal-Mart union did come out to negotiate a good contract, the ACFTU did not tender its support.” As a result of Wal-Mart’s actions Gao resigned from his job in frustration in September in a move that many see as a blow to authentic union development in China.

Briefing Paper: What’s Going On in the EU?

If it is difficult for even informed Europeans to fully understand what’s happening in the European Union—as many in Europe say it is—it is even more difficult for people in the rest of the world to follow events with any degree of understanding. For instance, the US press, when it bothers to report on EU events at all, usually does a very poor job, often parroting elite European opinion while paying little attention to the views of ordinary people. Yet what happens in the world’s biggest single market has profound implications for people around the world. And it is especially important that global justice activists everywhere have a basic grounding on key trends and issues.

With this comprehensive post by our European based colleague Bruno Ciccaglione we launch a new GLS project to promote transnational solidarity by making regional issues more understandable to a global audience. What better place to begin than by trying to untangle the web of issues and trends that make the European Union seem so opaque to outsiders, (and to many insiders as well)?

The June defeat in an Irish referendum of the Lisbon Treaty—designed to deepen and expand European Union institutions—has emboldened critics and spotlighted the growing uneasiness of Europeans with the direction of the EU.

The EU was always a project of European capital to expand markets and be more competitive globally.  However, it was initially felt that the idea could only be effectively sold to the European people if it included a vision of a "social and democratic Europe" that provided for the social and political rights and well-being of other social groups besides business.  EU institutions were opened to labor representation and labor organizations actively participated in them. 

Over several decades, European capital has moved to a much more aggressive neo-liberalism that has lost its willingness to treat labor as a "social partner" with its own agenda.  It is now trying to institutionalize what might be called an "anti-social Europe."  But as this post details, it has met stunning defeats in that effort.

These developments are important for the way labor everywhere deals with transborder economic forces.  For example, the European Court recently ruled that a Polish construction company doing work in Germany could pay its workers the Polish, rather than the German, minimum wage, because requiring the German minimum wage would keep foreign service providers from competing on the basis of lower wages.  Such a "logical" extension of neoliberalism, if universalized, would mean that Chinese companies could bid on construction jobs in the U.S. based on Chinese wages! (For a pdf file of this briefing paper, click on the menu on the left.)

GLS.

What are the European Constitutional Treaty and the Lisbon Treaty?

According to the leaders of key countries in Europe, and to the members of the European Commission, the EU institutions need to be modernised to function more effectively.  In the last few years, various attempts have been made to do this using the argument that it would increase and strengthen democracy, help the integration of the new member states, eventually help enlarge the Union, and in general create better conditions for its citizens. But the attempts seem to be again blocked, after the failure to introduce the European Constitutional Treaty (http://european-convention.eu.int/DraftTreaty.asp?lang=EN) in 2005 and the serious problems currently facing the Lisbon Treaty (LT) (http://europa.eu/lisbon_treaty/full_text/index_en.htm)  blocked by Ireland’s NO vote in a June referendum..

Proposed changes in the Lisbon Treaty aimed at changing the EU’s Institutions and the decision making process include:

• To give the EU a US-style President but without a direct election by the European citizens;
• To establish a “Foreign Minister” by  combining the positions of the existing foreign affairs supremo and the foreign affairs Commissioner;
• To reduce the number of members of the European Commission (currently each EU member state sends one person to the EU Commission);
• To redistribute the voting weights among the member states. This also includes the removal of national vetoes in several areas;
• To give new powers to the European Commission, the European Parliament and the European Court of Justice. For instance the EU Parliament would at last be part of the decision making process, although legislative initiatives would remain in the hands of the Commission. Currently the EU Parliament is heard only on proposals presented by the EU Commission;
• To create a European wide popular petition. One million EU Citizens could ask the EU Commission to deal with a matter they consider important.

While some of these proposals could be welcomed, given the democratic deficit within the EU, the real goal of both the European Constitutional Treaty (ECT) blocked in 2005 by referendums in France and the Netherlands, and the Lisbon Treaty (LT) of 2007 blocked by the Irish referendum, was not merely the proposal of a different and more effective and democratic architecture of the EU: the two treaties intended to give institutional legitimacy to the current economic and social policies. These policies favour liberalization processes, the privatisation of public services, and the redesign of the European social model in order to make it more functional to the needs of global competition for European companies. The European Constitution Treaty (ECT) aimed at giving juridical legitimacy to these policies of the European Union at a “constitutional” level. The Lisbon Treaty (LT) was needed basically to “save” the ECT after the failure of its ratification process in 2005.

The ECT and the LT are not easily understandable documents. Moreover their contents sometimes seem bizarre, given the intention to simplify the functioning of the EU institutions, and they are not comparable with normal national constitutions. For instance, on the one hand in the ECT  the term "bank" was mentioned 176 times, "market" 88 times, "liberalization" or "liberal" 9 times, "competition" or "competitive" 29 times, and "capital" 23 times: all this was very unusual for a “constitution”. On the other hand the LT, which is largely based on the same concepts, is composed of more than 250 pages with a list of about 300 amendments to the Rome Treaty—which in 1957 founded the European Community—and around 60 amendments to the 1992 Maastricht Treaty. The Maastricht Treaty fixed economic rules to be followed by the national states and was largely written to prevent an active role by national states in the economy thus leaving a free hand to the markets. It also laid the technical basis for the Euro. Additionally there are also 12 Protocols in the Lisbon Treaty and several “statements”.

Labor Charts a New Course on China

Trade unions and labor organizations around the world are seeking to establish a presence in China. Initially, that means beginning a dialogue with the All China Federation of Trade Unions (AFCTU)—China’s only legal union. Last year, following its split from the AFL-CIO, the US Change to Win federation, comprised of 7 US unions, broke new ground when it opened talks with the ACFTU.  And in December, the Brussels based International Trade Union Confederation (ITUC), the global union umbrella organization comprised of 309 affiliated organizations in 156 countries, voted to begin a “critical dialogue” with the ACFTU. (The AFL-CIO is the largest affiliate of the ITUC, while Change to Win  is not a member.)

This is not simply a story of bureaucratic relationships. Trade unions are an especially important non-governmental interlocutor on labor and worker rights issues in China—a country with few civil society organizations but a significant formal trade union sector. The lack of civil society organizations means that rights oriented NGO’s have many fewer dialog partners in China than do trade unions. 

Today, one in four workers in the global economy is Chinese. Many are employed by the same global corporations or their contractors that employ union members in other countries. This employment relationship potentially gives foreign unions more standing to advocate for the labor rights for co-workers employed in China by those companies and for Chinese workers generally.   

We’ve written extensively about why the new engagement is a good thing and suggested topics for discussion. Labor’s opening to China represents a significant move away from its Cold War era shunning doctrine, long considered outmoded by many labor activists. Under that doctrine, most trade unions have had little contact with the ACFTU because they do not consider it a legitimate trade union but an arm of the Party/State apparatus. Chinese law does not recognize crucial international labor rights such as the right of workers to establish independent unions, to bargain collectively, to strike, or to elect union officials of their own choosing. 

There have been some previous attempts to create a dialogue with the ACFTU, particularly in the 1980s when China adopted a market economy and opened up to foreign investment. While some individual unions and Global Labor Federations have maintained contact over the years through various joint projects, most unions severed formal relations following the suppression of the pro-democracy movement in 1989.

Meanwhile global corporations and investors flocked to China to take advantage of China’s low wage labor force and business friendly environment.  The consequences of labor’s absence from China were graphically illustrated last year during the debate over the Labor Contract Law which extended new rights to workers. Foreign corporations and their business associations in China actively lobbied the Chinese government to weaken some of the law’s key provisions. But global labor—with no organization or influence on the ground in China—could only comment from afar. Many realized that this asymmetry needed to be addressed.

A GLS Report Back: The Crisis in Chinese Industrial Relations

Take a walk through Beijing or Shanghai or any big Chinese city and you will experience, in a very tactile way, China’s economic miracle. The forest of construction cranes, the neighborhoods being torn down and rebuilt, the shops bursting with consumer goods, the traffic clogged streets, and a prosperous looking citizenry all speak to the country’s remarkable achievements. China’s 20 year run of nearly double digit growth has transformed an economic basket case into a world economic power.

Look a little closer and you can see another side to China’s spectacular growth. The temporary dormitories on building sites for migrant construction workers, the barracks-like housing in the factory districts, the train stations full of workers with bindles or cheap suitcases coming from or going to their hometowns in the provinces. These images graphically portray the turmoil of life for large segments of the Chinese working class and they beg the big question yet to be answered: what role will workers have in the new economic order?

In this and a following post we offer some observations gleaned from recent conversations by GLS staff with dozens of knowledgeable observers—including workers—in China, in the US, and in Europe about what is currently happening inside and outside of China in the battle for economic fairness and labor rights and why it matters for workers everywhere.

Labor’s Opening to China

The announcement in December by the International Trade Union Confederation (ITUC) that it would begin a “dialog” with the All China Federation of Trade Unions (ACFTU) marks a sea change in global labor’s approach to China.  Equally significant is the endorsement of the talks by the AFL-CIO.  Until now, the ITUC, the AFL-CIO, and most national labor federations shunned official contacts with the ACFTU—China’s sole legal union—because they did not consider the party-state controlled organization a legitimate representative of China’s workers. 

But, according to Guy Ryder, the ITUC’s General Secretary,

“By starting a dialogue with the Chinese trade union, ITUC wants to have more influence on the ground in China….It should enable us also to discuss the role of China in the world.”

The action actually caps a gradual shift toward engagement with China by unions from around the world. Some European unions affiliated with the ITUC have been active in China for over a decade. The Change to Win federation in the US began talks with the ACFTU last year. Officials have exchanged visits and plans are underway to expand contacts in the coming months.

The policy shift by the ITUC, the AFL-CIO, and other global unions is long overdue. Three decades of rapid economic growth have transformed China from an economic backwater into the world’s workshop.  Workers, trade unions, communities, and countries throughout the world are confronting the challenges posed by China’s growing role in the world. Today, about 25% of all the workers employed in the global economy are Chinese.  The “China price” sets the global norm for wages and working standards up and down the value chain, from inexpensive garments to sophisticated electronics.  As a result the hard-won gains of workers in the global North are being rapidly undermined, while the aspirations of workers in the developing world are being dashed, as China becomes the wage setting country in industry after industry.

China’s export oriented development model has had a particular impact on trade unions everywhere. Multinational corporations—the very firms that employ millions of union members around the world—have flocked to China seeking to take advantage of its low wage workers and business friendly policies, reducing labor’s bargaining leverage and the number of union jobs. These firms have been central to China’s development. Roughly 66% of the increase in Chinese exports in the past 12 years can be attributed to foreign owned global companies and their joint ventures. (Stephen Roach, Business Times, Singapore, 8/8/06) These companies account for 60% of Chinese exports to the US. Despite all of the talk in the current presidential campaign, the “Chinese threat” is less about trade with China than it is about “trade” with US based companies like Wal-Mart, GE, or any of the other of the hundreds of Fortune 500 companies that have set up shop in China to cuts labor costs and avoid environmental regulations. Ways, however imperfect, must be found to reach out to Chinese workers to find mutually acceptable ways to halt a global race to the bottom, which in end, hurts all workers.

The Smithfield and Wackenhut RICO Suits: Forward into the Past

(second in a series)

In our last post we described how the RICO suits filed by Smithfield Packing and Wackenhut Corporation represent a sharp escalation in the long standing corporate assault on human and labor rights. Not content with stripping workers and their organizations of fundamental labor rights, big corporations are now going after basic constitutional rights. We argued that these suits threaten the civil rights not just of unions but of everyone.

There is a back story to these suits that stretches to the birth of the US labor movement over 200 years ago when conspiracy laws were first used to prevent workers from forming unions.

Unions as conspiracies

In 1806, members of the Federal Society of Journeyman Cordwainers—an association of Philadelphia shoemakers--— went on strike to demand higher wages.  In response, the Commonwealth of Pennsylvania went to court charging that the action by the 12 year old union was a “criminal conspiracy” since, according to prosecutors, the union used unlawful coercion to achieve its economic goals—for instance, union shoemakers refused to do business or associate with bosses or workers who did not abide by its wage rates and standards.  In a sign of the anti-labor legal bias that would inform much of US history, the prosecution was instigated and paid for by the employers. The government won. The union was broken and its leaders fined. 

In those bad old days, courts defined the effort of workers to organize  as a purely economic question. According to prevailing elite views, unions interfered with the  smooth functioning of the labor market, making them a restraint of trade.  The labor market was viewed like any other market with labor as a commodity like any other commodity.  For most of the 19th century and part of 20th century courts with few exceptions ruled that whenever workers banded together “in combinations” they were engaged in illegal conspiracies. Injunctions generally followed.

Smithfield Packing v. The Constitution

(first of a series)

A Federal court in Virginia ruled on January 29th that Smithfield Packing could proceed with a civil lawsuit filed under the Racketeer Influenced and Corrupt Organizations Act (RICO) against the United Food and Commercial Workers, Jobs With Justice, and others. At issue is a corporate campaign spearheaded by the union to support its organizing drive at Smithfield’s Tar Heel North Carolina pork processing plant. The action if successful could push the US labor movement into a legal black hole in which it could vanish.

The suit is one of two recently filed by corporations that threaten to turn the US labor rights clock back to the 19th century by dusting off the use of conspiracy laws to stop union activities. The suit attacks basic rights of free speech, free association, and criminalizes the legislative process by undermining the right to petition government. It affects not just unions but activists and advocacy organizations engaged in corporate campaigns no matter what the cause.

In what appears to be a new corporate legal offensive against organized labor, in November, the Wackenhut Corporation, a US subsidiary of the British based Group 4 Sericour, filed another RICO  suit, this one against SEIU for activities surrounding the union’s attempt to organize workers employed as security guards by the company. In this and subsequent posts we will mainly focus on the Smithfield Packing suit since the brief has been made public and is posted on-line.

Beyond China's New Labor Contract Law

China’s new labor code went into effect on January 1. It could have important consequences for workers in China and in the rest of the world.

The Financial Times on January 2 reports that,

Employers in China fear that a new labour contract law that took effect on Tuesday will intensify growing pressures on manufacturing costs by enhancing the bargaining power of workers.

We estimate that, added together, labour costs [in mainland China] will be close to 40 per cent higher for this year [2008],” said Willy Lin, Hong Kong-based managing director of Milo’s Knitwear (International) Group.

Mr Lin says the new labour contract law, which will make it harder to dismiss workers, could increase costs by about 8 per cent this year, with the rest of the increase caused by higher minimum wages, social security payments and the renminbi’s steady appreciation against the US dollar.

The new law was designed to address some of the rampant abuses in Chinese industry including long hours, dangerous working conditions, and employers that cheat workers out of wages or delay payments.  But like all laws everywhere, the new law will be worth little if it is not interpreted broadly and enforced strictly. If the past is any guide, this could be a problem. China has been notoriously lax in enforcing labor laws. Absent vigorous enforcement, the new law could lead to workers being squeezed even harder in an effort to keep labor costs down. 

Labor and Immigration: Looking Beyond the Elections

Right-wing politicians are trying to fan the flames of passion over immigration during the current election campaign. So far they have met with mixed success, but as the election nears and the Right becomes more desperate, we can expect their efforts to intensify and the flames to grow higher. How should labor respond?

The importance of immigration as a campaign issue varies from region to region and from constituency to constituency. Nationally, just 15% of those surveyed in December in a Los Angeles Times/Bloomberg poll list immigration as a “top priority” in the coming election, and only 27% list it as “one of the most pressing problems facing the country”, but 81% think it is an “important” issue. The two parties are running true to form. Republican candidates, trolling for votes among the nativist wing of the party, are vying to see who can promise the longest and the highest wall along the Mexican border and the most vicious law enforcement in the rest of the country. Democrats, unsure of where key parts of their base stand and unwilling to stick their necks out, are scrambling for cover with rhetoric about the need for “comprehensive” immigration reform.  This duck and cover approach is reflected in replies to a question about immigration and the election posed by the New Republic in November to five prominent Democratic “strategists and consultants” likely to play a key role in the upcoming election.

The press conveniently divides the debate between those candidates who believe in “enforcement only” approaches and those who believe in “enforcement and a road to citizenship”. It is assumed that everyone believes in “border security”.  Other approaches are pushed from mainstream media.

Gone are the hopeful days of two years ago when millions were in the streets demanding immigration reform and amnesty for the undocumented. Instead a Pew Research poll released last week shows that, “just over half of all Hispanic adults in the US worry that they, a family member or a close friend could be deported…..”    And, “nearly two-thirds say the failure of Congress to enact an immigration reform bill has made life more difficult for all Latinos.”