A Legal and Empirical Study on Collective Labour Relations in China: Analysis on Collective Wage Consultation

Written by Lili Wang

Posted on April 24, 2020

Collective wage consultation, similar to but different from collective bargaining, is a strategy in China for preventing and resolving collective labour disputes relevant to remuneration. Under this process, employers and a labour union, or representatives of employees, consult about labour compensation, working hours, rest days and leaves, labour safety and hygiene, vocational training, insurance, welfare benefits, and conclude a collective contract draft, which must then be approved by the workers’ congress or a general meeting of workers of the enterprise, signed by the two of the consultation representatives, and confirmed by local government.

Legislation governing collective wage consultation sets out a model based on co-determination, that is, one which endows rights of wage determination to employees and employers. But in practice, Corporatism-Coordination, a system in which governments regulate collective labor relations, and employees, employers, and district trade unions work together to make it true, better reflects the actual functioning for collective labor relations in China. That is “one party governs, and three parties coordinate”. This article discusses how collective labour relations in China is moving from a model of Corporatism-Coordination towards the envisioned model of Co-determination.

The legislation governing collective wage consultation formally conforms to a model of Co-determination. First, both employers and employees have equal rights to negotiate and determine the wage and essential issues according to article 13 and 15 of Trial Measures for collective wage consultation and article 26 of Collective Contract Provisions. Employers have no right to shutdown business enterprises, and employees have no right of strike, although employees do have rights of final deliberation on the consultation result. Second, governments supervise the consultation process and mediate related disputes, but cannot interfere in the communication of the two parties. Third, related regulations help to keep the balance of the two parties. Article 3 of Provisions on the Democratic Management of Enterprises affirms the rights of workers to know, participate, express and supervise business management activities.

Collective labour relations in China is moving from Corporatism to Co-determination. Under a model of Corporatism, wages were managed by the government, and employees and employers had little opportunity to discuss or influence wage determination. Under a model of Co-determination, as discussed above, wages are determined mainly by employees and employers.

Currently, collective labour relations in China exists under a model of Corporatism-Coordination, in which government is reducing its intervention in the labour market, but continues to provide guidance to employees and employers in the consultation process. The graph below illustrates this change. The thick arrow illustrates strong bargaining relationships, where strength reflects the significance and influence of the relevant parties, and dotted arrow illustrates weak bargaining relationships.

Under a model of Corporatism, there is a strong relationship between the government and employees and employers, but a weak relationship between employees and employers. In Corporatism-Coordination, there is a strong relationship amongst all three parties. In Co-determination, there is a strong relationship between employees and employers, but a weak relationship to government.

The shift from Corporatism and towards Co-determination can be seen in existing collective wage consultation cases in China in the past decade. Based on the analysis of 61 collective wage consultation cases from relevant news in the website of All – China Federation of Trade Unions from January 1, 2008 to April 10, 2017, relevant articles in the magazine of China Worker from July 2009 to December 2016, relevant articles in the graphic database of the newspaper of People’s Daily from January 1, 2008 to December 31, 2016, and cases in the internal material of C district trade union, the practice of collective wage consultation presents four models: co-determination; co-determination with assistance; synergism; and, integration.

One case fell under the model of co-determination, in which parties of employers and employees completed the process with a little guidance from local government. 18 cases fell under the model of co-determination with assistance, in which the process could not be completed without help from local government, district trade unions, lawyers, scholars and other social resources, due to disputes arising during consultation or a lack of familiarity with the consultation process. 40 cases fell under the model of synergism, in which the process was completed by the three parties, two consultative parties and local government. This model is characterized by top-down direction and influence from local government, which persuaded the employers and employees to start collective consultation, gave pressure to the employers to finish it, helped the two parties to summarize their ideas, held informal conferences for them to communicate effectively and even provided the model collective contract and detailed consultation result suggestions. Finally, 2 cases fell under the integration model by enterprises, in which the employers controlled the consultation and the collective contracts did not reflect the needs and interests of employees.

In practice, each of these models fall within the ambit of Corporatism-Coordination. First, government participation is an essential condition in the process of establishing collective labor relations under each model. All cases included encouragement, persuasion, guidance, supervision, or mediation from government. Second, the cooperation between employers and employees is a dominant trend under most models and cases. Although in most cases employers and employees lacked the capacities to consult effectively, they did have motivation to communicate and conclude a collective contract.

Corporatism-Coordination is providing a pathway towards Co-determination for labour relations in China. Between the periods from 2008-2013 and 2014-2017, the cases falling under the model of co-determination by assistance increased from 19% to 55% and the cases falling under the model of synergism is decreased from 76% to 40%. The only co-determination model case appeared in the period of 2014-2017. Therefore, it is shows that the effective communication and cooperation between employees and employers is increasing, suggesting that the model of Co-determination, as envisioned under the legislation, may be emerging in China. Today, the Chinese government is encouraging harmonious labour relations and establishing a social governance model based on collaboration, participation, and common interests. That will also encourage employers and employees to develop a collective labour relationship, and advance Co-determination as the dominant model for collective wage consultation in practice.

 

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