Wednesday, 30 July 2008

Wal-Mart gets its collective agreements in China

[Contribution by Fons Tuinstra] - When the largest retailer Wal-Mart and China's only trade union ACFTU started to sign this month - two years after the ACFTU started to organize its membership at one of the world's most notorious union bashers - their first collective
, it was for more than one reason a symbolic moment.
Not only the pure fact that the ACFTU got its agreements had a high symbolic value, also the initial pay raises for the two-year contracts of eight percent annually, had a high symbolic value. The number eight is an
auspicious number in China, figuring luck. That is why the Beijing Olympics start in August at eight past eight o'clock in the evening, on the eight day of the eighth month in 2008. You did not have to be much of an old China-hand to suspect that symbolism was more important than economics to get this deal done.
Some lawyers who are typically hired by foreign companies in China had some misgivings about the financial paragraph, writes Forbes: “Dan Harris, a U.S. attorney who represents small businesses in foreign markets with his firm Harris & Moure and writes the widely respected China Law Blog, says an 8% pay increase this year made sense. But the same amount next year sounds ‘strange’, since there's no telling what inflation will be a year from now, he adds”.
Inflation in June was nationwide at 7.1 percent year-on-year, eating away almost all the advantage Wal-Mart employees might have had in the first year. On Monday 28 July the National Bureau of Statistics said that in the first six months of 2008 urban salaries had gone up 18 percent year-on-year. That suggests that Wal-Mart workers have been paying a high price for being represented by the ACFTU.
The economics in China might vary very much from place to place and in Shenzhen the contract delivered a whopping 9 percent. Still a bit more, but the ACFTU might need calculators more than symbolism. According to the People's Daily, the newspaper of the Communist Party, the negotiators had asked initially asked for 12 percent and some of the members voted against the agreement when that did not materialize. Wang Tongxin, leader of the city's trade union commented in the paper: "This is a win-win contract which has balanced the interests of
workers and management."

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