You should probably print screen this, because this is probably the only time you'll ever see me propose the organization of labor unions. So here it is: China needs labor unions.
I'm sure you're familiar with (at least, if you're American) the figure of speech "owing your soul to the company store," referring to late 19th-century to mid 20th-century coal mining towns, where "Miners were paid by scrip, in the form of tokens, currency, or credit, which could be used only at the company store. Therefore, even when wages were increased, coal companies simply increased prices at the company store to balance what they lost in pay." (1) So what's my point? No, the Chinese are not mining coal. Okay, well, yes, they are. A lot of it. But that's not what I'm talking about. What I'm talking about is the 21st-century Asian equivalent.
If you're a little clueless about the Chinese economy or population, you should know a few things. Roughly 120 million Chinese citizens are migrant workers (12 million of Shenzhen's 14 million are migrant workers), leaving their families from inland rural China to work in factories on the south-eastern coast, sending back the bulk of their earnings to support their aging families who are almost always gripped by poverty. Only 10% of these workers have ever achieved education beyond middle school (2). They work in labor-intensive, low-skill jobs, often in factories producing for export.
Wages in China are increasing (3), driving up the cost of production of all those cheap exports that we Americans enjoy, but what's helping to keep the cost of production low at all (well, besides a seemingly endless supply of willing labor)? One factor is certainly the working conditions: cheap, minimalist, "efficient." Take, for example, Apple supplier Foxconn (富士康), who has received thorough scrutiny after more than a dozen employees committed suicide in just a few years. At firms like Foxconn, migrant workers live on site in snug dormitories (which charge rent) where they basically hot bunk. While the facilities usually include social facilities like a coffee shop, bar, dance club, lounge, etc., employees have little time (or money) to enjoy them, as they work long, sometimes 12-hour, days. The long days, which leave employees exhausted, keep workers from venturing out of the dorm life and sending home all their earnings keep them from spending money on leisure of any kind. This leaves many employees feeling isolated and hopeless as they fail to form relationships in or outside the factory and fail to earn enough to support themselves outside the factory as well as their families back home.
Is it the factory's fault that labor is plentiful and if one worker won't work under those conditions, another will? No, certainly not. I'm not trying to demonize firms like Foxconn. Most of them aren't making much profit anyway, squeezed by their clients, and are just trying to keep their costs as low as possible. But what does this mean? Are Chinese factory workers forever cursed to owe their souls to the company store?
For once, labor unions are the answer. Chinese workers need some bargaining power and labor unions would be a way to do it. Some villages have already started organizing marches and movements which have had mixed results.
But here's the problem: independent labor unions are illegal.
Shoot. There goes my theory. There is a single, national trade union federation, representing 193 million workers as of 2008: the All-China Federation of Trade Unions (4). It's a government-affiliated labor union, which, if you ask me, is entirely redundant. A labor union is meant to organize workers to protect them when no one else will. Workers don't need a union if the government goes to bat for them itself, which is one of the reasons unionization has declined in the US over the last few decades (structural change model). Frankly, a government- and party-affiliated labor union seems a bit redundant. It also means things aren't going to get better as they are. The government isn't protecting workers and workers don't have a way to organize to protect themselves.
So how long until Chinese workers experience better working conditions? Not until the government gets on the workers' side. At present, the government's incentives are not in line with the workers', because the government is focused on whole-economy growth. GDP growth doesn't need workers to be happy, just to produce, especially since the primary impetus of growth at present is exports, which sell primarily because they are cheap. They're cheap in part because labor is cheap. So until the government and the workers' incentives run in the same direction, we won't see organization or protection of workers.
What does this mean to you, though, if workers do manage to organize? Organization means cost of production go up. Cost of production goes up means price of the good goes up. That means paying a bit more for your beloved iPad (the $500 price tag already affords Apple over $200 in profit (5), although this profit margin has fallen a bit with newer models). How much are you willing to spend to assure better working conditions for Chinese workers?
(1: West Virginia Archives & History, West Virginia's Mine Wars, http://www.wvculture.org/history/minewars.html)
(2: China Labor Bulletin, Migrant Workers in China, http://www.clb.org.hk/en/node/100259)
(3: globalEDGE, Production Costs in China Rise as Wages Increase, http://globaledge.msu.edu/Blog/post/1123/Production-Costs-in-China-Rise-as-Wages-Increase)
(4: The Economist, Membership Required, http://www.economist.com/node/11848496?story_id=11848496)
(5: PC World, Apple's iPad Profit: Breaking it Down, http://www.pcworld.com/article/188196/apples_ipad_profit_breaking_it_down.html)
Want more? Try out this video lecture by Chinese labor activist Han Dongfang in Montreal, February 2007.
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