Chinese Union Increasing Pressure on U.S. Corporations

More than half of the respondents now report that they have an All-China Federation of Trade Unions (ACFTU)-affiliated labor union in their facilities, according to the 2010 Member Priorities Survey released Nov. 17.

While long considered a union in name only, the government-sanctioned ACFTU has gained credibility with independent western unions in recent years for its renewed focus on improving working conditions for its members.

The USCBC said its members are watching several key regulators and groups in China, including the ACFTU, for signs of increased activity on labor issues such as unionization of foreign invested enterprises (FIEs), mandated wage increases and collective bargaining. Specifically, USCBC members are focusing on collective bargaining petitions and government-set wage increases.

Though 82% of respondents indicated their companies had not yet been approached to engage in collective bargaining for their workers, the PRC central government has clarified that collective bargaining is a key component of its plan to redistribute income and boost domestic consumption – and some provinces and cities, including Shanghai and Shenzhen, have released specific regulations designed to promote collective bargaining, reads the report.

At the same time the central government is considering a plan that would set guidelines for future wage increases. This comes directly on the heels of provincial governments announcing double-digit increases to local minimum wages this spring and summer.

The findings were part of a 21-page report released by USCBC that indicates growing pessimism about labor and market access issues facing U.S. companies in China.

Twenty-one percent of respondents said conditions pertaining to “Human Resources: talent recruitment and retention” deteriorated in the last year. Another 67% said they remained unchanged, while only 8% said conditions improved. Four percent said they encountered new problems.

Those responses pushed Human Resources issues to the top of the list of members’ concerns alongside growing signs of protectionism. Human Resources had fallen to third on the list in 2009 after three consecutive years at the top of the list.

“Finding, hiring and retaining employees in China’s highly competitive environment remains a significant challenge for companies,” reads the report, released earlier this month. “Talent supply still does not meet demand. Though the problem lessened somewhat during the recession as hiring was curtailed, companies are now seeing the previous hiring and retention pressures return as economic recovery gains momentum.”