In the realm of labor relations, the year 2012 was notable for the growing number of collective labor actions and general increase in labor unrest throughout the country. Anything from factory closures and mass lay-offs, to employee transfers and changes in ownership of the company could ignite a collective labor dispute. With growing anxiety over the gap between rich and poor, as well as the slowdown in growth, combined with an increased awareness of employee rights and willingness to assert those rights, the trend towards more widespread instances of collective labor disputes is likely to continue.
This trend is viewed with concern by the government and the Chinese Communist Party ("CCP"). In order to ameliorate the causes of labor unrest, both bodies have long promoted the establishment of union organizations within companies to represent company employees' interests and communicate employee concerns to management.
Recently, in addition to this unionization push, the national government and CCP have announced and started implementing new policy goals, which will likely have an impact on Chinese labor relations in the years ahead. The overall goal is for more "democratic management" of company affairs, particularly in relation to labor/HR matters, with more CCP oversight over labor relation matters.
In February 2012, national regulations issued by the CCP and various government bodies, provide that employee representative councils (“ERCs”) shall (“yingdang”) be established in enterprises to carry out democratic management of the enterprise. While in the past, ERCs were mandatory only in state-owned enterprises, this is the first time national regulations expand this requirement to all enterprises, presumably also foreign-invested enterprises. However, these regulations do not appear to put the burden of establishment of ERCs on enterprise management, nor do they stipulate any penalty for the failure to form an ERC, so the direct effect of these regulations may be negligible. They are more important as a signal to which direction the government is heading, and in the future local regulations with more specific ERC-related requirements will likely be issued (as has already been done in some localities such as Shanghai).
Following this, in May 2012, the Central Committee of the CCP circulated a notice urging lower-level CCP party committees and local governments to strengthen and improve the CCP’s work in private companies. All private companies with at least 50 staff should have at least some CCP members, and if a company has at least three (3) CCP members, then a Party organization should be established within that company.
Party organizations in private companies would have general responsibilities such as promoting harmonious labor relations. More specifically, the secretary of the Party organization may be entitled to attend important meetings of the company management. If a private company has a labor union, the party secretary would be encouraged to also take the role of union chairman (even if the Party secretary does not become union chairman, . The notice also contemplates providing special legal protection for Party secretaries against termination of employment at some point in the future.
Finally, local chapters of the All-China Federation of Trade Unions ("ACFTU") have been taking steps to implement the "Rainbow Plan", under which the goal is to have collective bargaining agreements in place at all companies with unions by the end of 2013. Some of the tactics used to pressure companies to start collective bargaining include: (i) local ACFTU chapters ordering company unions to request bargaining with company management; (ii) local ACFTU chapters directly approaching management and pressuring them to start bargaining with the company union or join an area-wide collective bargaining agreement by a specific deadline date (or face unspecified consequences); and (iii) some local labor bureaus refusing to accept applications for overtime exemptions unless the company submits proof that it has signed a collective bargaining agreement.
Furthermore, while in the past collective bargaining was generally a pro-forma procedural exercise, with the ultimate agreement containing little of substance, recently company unions (oftentimes under ACFTU supervision) have started bargaining harder and making tougher demands during negotiations with management.