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Vol. 72/No. 33      August 25, 2008

 
Wal-Mart signs contract with union in China
 
BY DOUG NELSON  
Some 20 Wal-Mart outlets in China signed collective labor contracts with the All China Federation of Trade Unions (ACFTU) between mid-July and early August. The world’s largest retailer announced it will sign contracts at all its China stores, covering 48,500 workers, by the end of September.

The agreements stipulate that wages must be higher than the local minimum. The first contract, signed on July 14 at Wal-Mart’s Shenyang location, set an 8 percent annual wage increase over the next two years. The agreements also cover work hours, paid vacations, overtime pay, and benefits.

The government-affiliated ACFTU launched a high-profile campaign two years ago to unionize Wal-Mart stores across China, as part of its stepped-up efforts to organize large foreign-owned companies. The first location in Quanzhou was unionized in July 2006.

The Wal-Mart contracts come seven months after China’s new Labor Contract Law went into effect. The law, passed amid rising labor unrest and after two years of debate, mandates collective bargaining with the union federation. The law also places restrictions on companies’ ability to hire workers through third-party labor agencies and fire them without compensation.

The introduction of the new law at the start of the year gave some impetus to action by the labor federation. In Shenzhen, for example, arbitrated labor disputes quadrupled in January.

“The Labour Contract Law presented ACFTU with a big opportunity,” Han Dongfang, director of the Hong Kong-based China Labour Bulletin, told the Financial Times. The union federation risked irrelevance, according to Han, because it was neither able to control the growing unrest among workers or appear to do its job representing their interests.

In China unions independent of ACFTU remain illegal and workers don’t have the right to strike. Han was exiled in 1989 for leading attempts to form an independent union. “Bargaining doesn’t make sense without the right to strike,” he said. “The movement needs to push the legal system to develop.”

A labor shortage in China’s main manufacturing areas provides an upward pressure on wages and improved working conditions, Stephen Frost, executive director of Hong Kong Consulting Firm CSR Asia, told Business Week in July. A number of businesses are having trouble hiring and keeping workers. In the highly industrial Pearl River delta, for example, turnover rates in some plants are as high as 200 percent, he said.

Wal-Mart has locations in 15 countries, and is unionized in Brazil, China, Mexico, Germany, and the United Kingdom. The company has so far successfully thwarted efforts at unionization in the United States.  
 
 
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