Labor needs a China plan and it needs one fast.
The problem that the Chinese economy poses for the world’s workers—including Chinese workers-- is an extension of the core dynamic at work in today’s global economy. Corporations roam the world pitting workers and communities against each other in search of lower wages, lower taxes, more subsidies, few regulations, no unions or weak unions, and lax enforcement of any existing laws. The current final destination for this race to the bottom is China with its huge, disciplined, and very productive workforce on offer at rock bottom wages.
The downward pressure put on the world’s wages by China is enormous. Economist Richard Freeman estimates that the entry of India, Russia, and China into the world economy in the past few decades has doubled the workforce employed in the global economy. China, alone, accounts for 50% of this increase. And because these countries did not add significant capital to the global economy, more workers are competing to be employed by essentially the same amount of capital, increasing the bargaining power of capital and decreasing that of labor. This contributes substantially to wage stagnation or decline in countries around the world.
Andrew Ross of New York University, who recently spent a year in China studying how workers are coping with the rapid changes of the last decade, writes:
But if [China’s] breakneck growth is a threat, it is not because Beijing harbors sinister ambitions for its industrial expansion. The real problem is that China is playing host to the largest, and most corrosive, environment for offshore labor in the global free trade economy. For more than a decade, it served as a fast-track incubator for foreign investment in the low-wage export sector, cocooned from accountability to any principle not devoted to raw profit…..
Free trade zones in other developing countries have hosted much the same kind of cynical runaway culture. So why is the China case so alarming? The answer lies not just in the jumbo scale of operations, but also in its all-encompassing spread. China is leapfrogging so fast up the technology curve it is attracting the highest level investments—in product design and innovation, for example—from industry leaders….
No industrializing country has been able to compete for the top-end slot at the same time as it absorbs jobs lower down the production chain….To command this spread---from the lowest assembly platform work to the upper reaches of industry and services—is to be in a position to set the global norm for employee standards as never before. Given the chronic disregard for job security and workplace rights in China’s foreign-invested private sector, such a norm is a clear threat to the stability of livelihoods everywhere. [From a paper delivered at the Cornell Global Labor Conference on February 10, 2006. Ross is author of the forthcoming book A Fast Boat to China : Corporate Flight and the Consequences of Free Trade; Lessons from Shanghai. April 2006]
Two recent stories in the New York Times lend support to Ross's observation about the range of China’s industrial reach. The first describes China’s efforts to produce high tech, high quality cars by producing fuel efficient engines using state of the art technology. A joint public-private Chinese venture is negotiating to purchase a sophisticated engine plant from BMW and Daimler Chrysler in Brazil, take it apart, and move it to China. The second article reports on the increasing outsourcing of high skilled R&D and design work to countries like India and China. A survey of more than 200 multinational corporations revealed that 38 percent planned to shift R&D work to countries like China and India.
But if the Chinese economy poses a threat to the current or potential living standards of people around the world, it also offers a major opportunity: workers all over the world have a common interest in coming up with a solution to the race to the bottom. It’s no longer a North--South issue, it’s global. In a previous blog we told the story of what happened when the Namibian employees of a Malaysian based global corporation organized to improve their abysmal wages and working conditions: the company closed shops and moved the jobs to China. The message was clear: if you make waves, you loose your job. But the solution also becomes clearer: global action is needed to reduce the ability of corporations to pack up and move.
The issue for labor is not China vs. the rest of the world. The Namibian example highlights an essential point: the most powerful actors in the global economy are global corporations. It was a Malaysian based company that moved the jobs to China. And it is American, British, French, Japanese, German and other foreign based companies that are moving jobs and investments to China. According to Morgan Stanley’s Stephen Roach, “… 65% of the tripling of Chinese exports… – from $121 billion in 1994 to $365 billion in mid 2003 – is traceable to outsourcing by Chinese subsidiaries of multinational corporations and joint ventures”
To take another example: according to Jenny Wei-ling Chan of Hong Kong University and the Chinese Women Workers Network, Wal-Mart alone contracts with 20,000 suppliers in China, and is the 5th largest export destination for Chinese goods, ahead of Germany and the UK. This gives Wal-Mart the power to set wages and determine working conditions for hundreds of thousands of workers around the world and to exert significant influence over both the Chinese and the US economies.
To reverse the downward spiral, labor needs a plan that moves along several tracks at the local, national, and global level. These tracks include: policies to create more jobs that stay put; providing more support for those workers who loose jobs; a renewed fight for new global institutions to replace the corporate dominated ones like the IMF, World Bank, or WTO; public policies at all levels to regulate corporate/capital mobility; and a global drive for labor rights including democratic unions and worker organizations. Together, these tracks have been characterized as “fair globalization” and global labor must make fighting for fair globalization part of its core activity. For more on fair globalization see the ILO report A Fair Globalization and our report, Outsource This? .
A critical part of any labor supported China plan must include reaching out to Chinese workers who are already fighting to improve their living and working conditions and for a greater voice in the direction of their country and their economy. In our next blog we will look at what’s happening in China and how the global labor movement can support efforts by Chinese workers in their struggles.
Recent Comments