Wal-Mart, already America's largest corporation, has been going global. It has extended its operations to 15 countries. But recently it has hit some heavy weather in its international operations. For the first time in ten years it has announced a quarterly decline in earnings. The main cause: Wal-Mart’s decision to divest its German subsidiary and write-down $863 million. German consumers and German unions apparently never warmed to Wal-Mart’s red state businesses ethos.
The German debacle followed trouble with the British union GMB at Wal-Mart’s big Asda chain in the UK. A strike was averted when the company agreed to giving the union broader collective bargaining rights and better access to workers.
In May Wal-Mart announced plans to close its Korean operations—the company’s original overseas outpost. The Koreans apparently also didn’t care much for big box stores.
Wal-Mart is famous for resisting unionization all over the world. So it made worldwide headlines this summer when, after resisting for two years, Wal-Mart finally agreed to recognize unions in its Chinese stores. To evaluate the significance of this, it is necessary to look at how Chinese unions usually operate -- and how Wal-Mart's case was different.
Chinese official unions are so pro-management that it's a wonder Wal-Mart resisted at all. The French company Carrefour, the leading foreign retailer in China, is 70% unionized.According to the Los Angeles Times:
Christian Roquigny, the store manager of a Carrefour in Urumqi, China, said he didn’t understand the commotion about unionizing at Wal-Mart.
Really, the union in China belongs to the [Communist] Party,” said Roquigny, whose 79-employee store is unionized. “They never interfere in the daily management as long as we follow Chinese labor laws. They are not a strong force as in France.”
As the Chairman of the Nanking Federation of Trade Unions, Chen Siming put it following the Wal-Mart recognition agreement:
“We trade union leaders will never organize the employees in launching a strike or to ask for unreasonable benefits.”
But Wal-Mart resisted unionization -- and something unprecidented occurred.
Under Chinese labor law if 25 workers petition for a union, a committee can be elected and must be recognized. Normally this is a top-down pro-forma affair, but in this case Wal-Mart resisted and the union apparently had to actually organize the workers. The first store to organize was in the southwestern province of Fujian, where the affiliate of the All-China Federation of Trade Unions (ACFTU)—China’s only trade union—announced that they had formed a union.
As described in the Asia Times:
The inauguration ceremony took place at 7:30am with none of the management attending. In contrast, the inauguration of a trade union in a state-owned enterprise would normally be a solemn affair, attended by company executives and even senior local party and government officials.
Our success was no accident. We began sending union publications and newsletters to its staff since the Wal-Mart outlet was established in November 2005, after holding fruitless talks with its management," said Chen Xiongnan, vice director with the general office of the Quanzhou Federation of Trade Unions.
After repeated rebuffs, Chen and his fellow union officials approached the outlet's employees directly, sometimes in the middle of the night. "It was as if we are working underground," said Chen. So by July 21, some 30 Wal-Mart employees had handed in applications for unionization to the local authority. But only 25 managed to attend a midnight meeting on July 28 to elect a seven-member union committee, the minimum requirement for such an election under China's labor laws.
But soon Wal-Mart's Shenzhen and Nanjing outlets became unionized, with the inauguration of their trade unions also taking place at night, after business hours. To sort out the financial problem, the official Nanjing Federation of Trade Unions agreed to subsidize the union with 20,000 yuan (US$2,500), according to the China Youth Daily.”
After the store in Fujian organized, 18 others quickly followed suit. Wal-Mart has 60 stores in China. ACFTU plans to organize all of them.
Wal-Mart has completely caved in to the union drive.
I hope to establish good relations with the ACFTU and its regional branches that would be conducive for our employees and business development," said Joe Hatfield, president of Wal-Mart Asia, adding - and quoting the latest Communist Party line - "it is in line with Chinese government's efforts to build a harmonious society.
Union officials in China often are part of management. In Wal-Mart’s case, store mangers, vice-managers, human resources managers, and their family members will be barred from holding union posts. Officers of the new unions will be elected by secret ballot from slates nominated by employees but approved by officials of the ACFTU.
Shortly after the ACFTU was recognized, the Chinese Communist Party also set up some cells in Wal-Mart stores. The Party and its Youth League, pledge to “...encourage members to play an exemplary role in doing a good job and that will be helpful to business development.”
With Wal-Mart, the ACFTU, and the Chinese Communist Party working in partnership can the workers expect anything? Australian expert Anita Chen writes:
But I also have the feeling that there may be new developments brewing among some ACFTU trade union officials. The way that these five trade union branches got set up was very different from any other in China that I know about…..
Wal-Mart's adamant stance had provoked the ACFTU into trying out real grassroots organizing for the first time. This may be an experience the union federation will want to analyze for possible future use in similar cases.
It is often thought that there is no collective bargaining in China. Actually there is, especially in the OECD countries' big joint ventures. There is also some in SOEs [State Owned Enterprises] or former SOEs. The bargaining may not be as sophisticated, legalistic or adversarial as the ones we witness in Australia or in the US, but nonetheless they involve a kind of bargaining. In the case of Wal-Mart, having been put in the spotlight, the ACFTU may want to let its own people and the world know that the union is serious about protecting employees' rights. I don't think this is likely, but it may be too early to rule it out and to simply assert that these union branches, especially the first few, are bound to be useless like so many others.
The big question is: how should the rest of the world’s labor movement’s react?
Next: division in the US labor movement on dealing with Chinese unions.
M.O.
Recent Comments