Strikes are as big a problem for the government as they are for managers
The Economist | Jun 3rd 2010 | FOSHAN
AS CHINESE strikes go, the one that crippled Honda's car production in late May was relatively discreet: no picketing, no clashes with police, little sign of copycat action. But it was significant. The stoppage was one of the biggest and longest-running in an enterprise with foreign investors. And it has exposed worrying problems for the government and factory owners in China's industrial heartland.
Company officials said normal production resumed on June 2nd at the Honda Auto Parts Manufacturing Company's plant in an industrial zone on the edge of Foshan, a city in the southern province of Guangdong. The strike over wages (which broke out briefly on May 17th and began anew on May 21st) had halted production at the Foshan facility and forced the temporary closure of all Honda's car-assembly plants in China that depend on it. Trouble could flare anew. Some workers remain unhappy with a settlement offered by the Japanese firm.
Strikes and protests at factories are becoming more common. Outlook Weekly, an official magazine, reported in December that labour disputes in Guangdong in the first quarter of 2009 had risen by nearly 42% over the same period in 2008. In Zhejiang, a province up the coast, the annualised increase was almost 160%.
Workers have been emboldened by a law introduced in January 2008 aimed at strengthening their contractual rights. The global economic downturn kept wages down and increased workers' grievances. Now, wages in Guangdong have started growing again. This month the province raised minimum wage levels by more than 20%. Honda's troubles suggest upward pressure remains strong. The management's offer includes a 24% raise.
The official Chinese press sees this as no bad thing. China Daily, an English-language newspaper, warned in an editorial that a failure to "tilt income distribution" in favour of workers could "fuel already rising tensions" between labourers and employers. But the Honda strike has also highlighted how inept the Communist Party-controlled unions are in managing these tensions. In this case, the unions helped encourage them.
Young Chinese often seize any opportunity to castigate the Japanese, whom they see as insufficiently contrite for the atrocities of the second world war. But at the Honda plant, employees fume more about the factory's trade union than about Japanese managers. On May 31st more than a hundred high-level union members were sent to the factory by the local government. Some scuffled with workers who were trying to get to the gate to talk to reporters. "They're mafia," fumed one employee, as another showed a long cut on his face that he blamed on the union men.
Several workers complained that despite paying membership dues of around 10 yuan ($1.50) a month, they had received virtually nothing from the union, least of all help negotiating with managers. But their ability to keep up their strike for nearly two weeks seems to have rattled the government. Normally worker protests dissipate rapidly, with unions usually taking the side of managers. A few days into the Honda strike, however, the party's propaganda authorities secretly ordered the media to tone down their coverage. They may well have worried that the Honda workers' tenacity could inspire others (a brief strike did break out at a Hyundai car-parts factory on May 28th).
Wen Yunchao, a prominent blogger in Guangdong, says copycat strikes are a possibility (a wave of taxi-driver strikes swept China in late 2008). But at most factories, managers and their government backers will retain the upper hand. The Honda workers are unusual, he says, because many of them are "interns" sent by technical colleges. Their bonding as fellow students means they can organise themselves more easily than can workers who are usually migrants from different rural areas.
On June 2nd Foxconn, a subsidiary of Taiwan's Hon Hai Precision Industry Company, announced a 30% pay increase for its workers in China. This follows not a strike but a spate of suicides at a massive Foxconn plant in Guangdong's Shenzhen city. In response to the deaths, Wang Yang, Guangdong's party chief, called for unions in private enterprises to be "improved". Freeing them from the party's control, however, remains taboo.
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