From the Desk of Anita Chan, Contributing Editor, Australia

The Wenling model of collective bargaining

By Staff Writers
China Labor News Translations

Much is written about the trade union in China, but how much do we know about how it actually operates inside workplaces, and how it negotiates with private enterprises over wages and conditions for workers? The Wal-Mart company-wide collective bargaining agreement was one such insight into the All China Federation of Trades Union's (ACFTU) approach to collective bargaining. But as CLNT has documented in the posting of May 2009 it was not much more than a window-dressing exercise. (1)

Meanwhile, for several years now, the ACFTU has been up-holding another county-level trade-wide collective bargaining model — the Wenling model of "collective wage consultation", from Zhejiang province. How did the model emerge and what is its significance and implication for Chinese industrial relations? This issue of CLNT seeks to answer these questions. We have translated two Chinese newspaper reports, which discuss how this experiment in collective wage consultation came about, and evaluate the success of the model with reference to the experiences of trade union and government cadre, industry players and worker representatives involved.

The Background of the 'Wenling Model'

Wenling City with a population of 1.2 million is located in the southeast coastal region of Zhejiang province, and is home to more than 20,000 small domestic privately owned, labour-intensive enterprises. The story began in Wenling's Xinhe county where its woolen knitwear industry which flourished in the 1980s had become a major local industry by early 2000s, attracting a large number of migrant workers.

The industry is subject to high seasonality—almost no work from January to April, followed by four months of off-season and two months of high season in September and October. The short busy season has led to fierce competition for skilled labor and high wages causing a very high labor turn-over rate, and disputes over wages and severance pay. Workers began organizing themselves collectively demanding pay rises (see translated articles). As a result, there were frequent collective labour disputes involving strikes, petitioning to the government, damaging factory properties and even beating up of factory owners. It is not clear what impact these wild cat actions had on working conditions. Both employers and the local government became alarmed at the large number of incidents. This was when some employers and the local government and trade union decided to come together to find a solution to the problems.

The Birth of the 'Wenling Model'

The significance of this new development was that employers began to see that to curb excessive competition among themselves and to have a stable workforce, they needed to get organized into an association and standardize wage scales. On the other hand, most workplaces did not have unions, and the local union branch identified a need to set up a trade-wide union. With much pressure from the government, the trade-wide employers' association finally agreed in 2003 to negotiate a collective agreement with its trade union counterpart. This was the birth of the Wenling tripartite collective bargaining model.

At the centre of the widely publicised story of the successful negotiation between the industry and trade union as reported in the first article published in China's Commercial News was the deputy chairperson of the Xinhe county trade union, Chen Fuqing. Chen is said to have later nominated himself and subsequently became the first chairperson of the woolen sweater trade-wide union without an election while retaining his previous post as the deputy chairperson of the official Xinhe county trade union. In the second article translated from Chinese Labor and Social Security News the local labor bureau's deputy head was given a bigger role.

Extent of Workers Participation

In the many reports published on Wenling, it is difficult to know the extent to which the workers themselves participated in these negotiations. While it seems there was some consultation with the workers by the union and a few workers did occupy high positions in the trade union, these supposed workers' representatives were not democratically elected but merely "selected" (xuanchu) by the government or the enterprise owners. Particularly interesting to note in some of the newspaper reports is a linguistically subtle distinction between workers representatives being 'xuanchu' (selected) which is what the reports have used and 'xuanjuchu' (democratically elected) which is what will be used if they are indeed democratically elected. Other reports are more open in pointing out that the workers' representatives were appointed rather than elected. In any case, it is difficult to know how much power they have been given, whether elected or selected.

More fundamentally, the Wenling industrial relations system seems to have been almost entirely initiated and established by the government and the industry. It was not demanded initially by the workers themselves, and subsequently it could hardly be expected that they would (be given the chance to) play an active role as an independent force in building and shaping the system. They are at best consulted. It is difficult to know how well the new union could represent their interests given all the limitations, and whether knitwear workers have found the wage consultation system to be beneficial.

Whither the 'Wenling Model'?

The industry-wide collective bargaining system in Wenling in the last few years has been hailed as a model by the local and national Chinese governments, to be replicated in other industries and other regions. In Wenling, seven similar trade-wide unions now exist. In late 2007, the Chinese Premier Wen Jiabao directed that the Wenling model should be promoted nation-wide. But how successful is the Wenling model both in Wenling and elsewhere is difficult to tell. Once propelled to a model-status, critical reports would have difficulty finding a place in the media.

Just as with the Wal-Mart collective bargaining model, we need to be cautious that implementation of the Wenling model may not be as successful as portrayed by government and the trade union. One problem is that the average annual wage increase under collective agreements in Wenling (5 percent to 12 percent, according to government estimates does not account for inflation. (2) These annual increases in collective agreements are even lower that the increases in the Wenling minimum wage since 2003, of 10 per cent-15 per cent. It makes one wonder why the Wenling model is hailed as such a success by the national government despite rather limited gains for the workers.

One obvious "success" of the model from the government and the union's perspective has been the relative pacification of industrial relations, marked by a dramatic reduction of labor disputes by up to 70 per cent in Xinhe county, Wenling, according to government statistics. (3)

Having said that, collective wage bargaining has only been successfully implemented in a small number of enterprises. The local government and trade unions have encountered strong resistance from enterprises, which argue there is no need for collective bargaining. In some cases, even local governments have been half-hearted or even obstructionist in promoting collective bargaining because they are concerned that it might damage the enterprises and thus the local economy. Even in places where there are formal trade-wide collective bargaining agreements, it may be no more than a piece of paper, according to a provincial trade union official in Zhejiang quoted in one of the translated article from China Business Report).

Even in Wenling itself, a government official has revealed that regular and effective annual collective bargaining has happened only in the woolen knitwear industry, and in Xinhe county alone. Many observers, such as Xu Qulong from the Taizhou City Federation of Trade Unions, have also pointed to the absence of law on collective bargaining, and thus the enterprise owners can ignore any agreement that does not have a legal basis. Furthermore, many employers have simply opted not to join their industry association, or not to honor any collectively negotiated wage agreements.

Despite these problems, the model has some positive aspects to it. First, this is a first step to the Chinese unions negotiating at trade-wide level rather than merely at enterprise level providing coverage for workers in workplaces too small to have its own unions or collective bargaining. Secondly, in the long term despite the present top-down model, it could help raise workers' awareness of the power of collective bargaining and how to bargain with the industry, even beginning to put more pressure on the union, government and business, and demand a more active and assertive role.

Finally, there has been some new development on the part of the ACFTU to move to push for a law on industry-wide collective bargaining, which will be discussed in a future issue of CLNT.

Click below to download to the two translated articles:

"Collective Wage Consultation a Breakthrough for Resolving Labor Disputes in Wenling, Zhejiang",

"How Bosses and Workers Can Become 'One Big Happy Family': a report on an inquiry into the introduction of collective wage consultation in Wenling City, Zhejiang",



October 21, 2009 — Return to cover.