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backGLOBALtalk April, 2012

As Labor Unrest Increases, Government and ACFTU Continue Collective Bargaining Push

China is facing an increasing wave of labour unrest recently. For example, it is reported that more than 10,000 workers in Shenzhen and Dongguan alone have gone on strike over the past few weeks. Among the reported high profile strike cases, Hitachi, Pepsi, Citizen, and other multinational companies have been hit. Such strikes have become prevalent in companies planning shut downs, significant reductions in business operations, and relocations in light of the changing business climate. In the current climate, companies therefore need to be increasingly careful about how they handle these sorts of restructurings.

The above has also provided new impetus for the All-China Federation of Trade Union's ("ACFTU") "Rainbow Plan", in which the goal is to sign collective bargaining contracts in all companies that have established a union by the end of 2012.

As part of this effort, Shenyang Municipality issued its own Measures on Collective Bargaining of Wages, which took effect on December 1, 2011. The Measures require that both the employer and the employees may propose collective bargaining, and the other party must accept the invitation within 10 days. If the company fails to conduct the collective bargaining as duly proposed by the employees, the local labor authority will keep a record of this and may make the company's refusal public. If the company has not been unionized, the upper-level ACFTU may guide and supervise the bargaining process. According to media reports, around 40 out of a total of 57 Fortune 500 entities in Shenyang have signed collective bargaining agreements.

Similarly, Hunan province also issued its Provincial Measures on Collective Bargaining of Wages which will take effect on May 1, 2012. The Measures clarify that if a company has a union, the employees may propose collective bargaining with the company through its union. If the company has not established a union, the upper-level ACFTU may instruct and organize the employees to propose and conduct the collective bargaining with the company.

In addition to passing new legislation, many local authorities have been using other means to urge collective bargaining. For instances, in Guangzhou, the municipal-level ACFTU reportedly approached several large multinational companies to engage in collective bargaining. In Beijing and Shanghai, the local municipal-level ACFTU announced on their website that they will recruit and train a group of professional "collective bargaining instructors", and will assign them to private sector companies to instruct and supervise their collective bargaining. The first batch of 68 "collective bargaining instructors" have been trained and "licensed" by the Shanghai ACFTU and have started their work in their respective assigned companies.

Source: Baker & McKenzie - GAI

For more information or to contact Baker & McKenzie, please click here.

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