The World's Factory Floor: Unions and Government

UNCLAS SECTION 01 OF 02 GUANGZHOU 001275 SIPDIS SENSITIVE SIPDIS STATE FOR EAP/CM, DRL E.O. 12958: N/A TAGS: ELAB PHUM PGOV CH SUBJECT: The World's Factory Floor: Unions and Government Officials Downplay Labor Shortage Concerns REF A: Guangzhou 1256 ¶1. (SBU) SUMMARY: Widespread reports of a labor shortage in the Pearl River Delta are exaggerated, according to representatives from the Guangdong Federation of Trade Unions (GDFTU) and local and provincial government labor officials. Union officials boasted both of portable pension schemes allowing migrant workers to take their pensions with them for retirement in other provinces, and of monitoring working conditions through a network of thousands of informers. Though generally optimistic about the impending Labor Contract Law, officials said that its initial implementation would likely be challenging. END SUMMARY ¶2. (U) This is the second of three cables reporting on current labor conditions in the Pearl River Delta. Reftel examined the state of labor NGOs, and a subsequent cable will describe conditions for migrant workers here. What Labor Shortage? Oh, That One. -------------- ¶3. (SBU) The media is responsible for blowing the issue of labor supply out of proportion, according to Guangdong Labor Department Labor and Employment Service Center Deputy Director Chen Ruibin. In his personal experience, said Chen, the labor shortage was not serious. Chen placed much of the blame on companies and factories, whose low wages were sometimes insufficient to attract workers. In a separate meeting, labor NGO director Huang Zhiming echoed Chen's comments, saying that if factories were willing to pay more in wages, there would be no problem recruiting enough workers. ¶4. (SBU) Shenzhen Labor and Social Security Bureau Assistant Researcher Huang Hanlin also thought the labor shortage was not a serious problem. Huang said the new generation of migrant workers has higher expectations when job hunting than did its predecessors. In a separate meeting, EBox Digital Technology Product Company General Manager Boder Lau also noted this shift in job-seekers' expectations, saying that his company had had to raise wages by 20 percent in 2007 to attract enough workers. ¶5. (SBU) Guangdong Labor Department International Cooperation and Exchange Division Director Wu Ling described the Pearl River Delta (PRD) labor situation as a "structural shortage," in which only certain sectors and groups -- such as skilled workers or young, female workers -- did not have enough people. Huang Hanlin added that the high-tech sector in particular could not find enough skilled workers, but it was also true that unskilled workers in the garment, footwear, metal, and toy industries were in short supply, due to low wages. Seven Thousand Informants -------------- ¶6. (SBU) Approximately 7,000 informants working in factories all over the province feed information about working conditions to the union, according to GDFTU Legal Aid Division Director Liu Guobin. Liu said that these informants were expected to report incidents -- especially those with the potential to develop into labor disputes -- to the union, which would then attempt to resolve the incidents before they escalated into something more serious. ¶7. (SBU) Due to a high prevalence of labor incidents relating to the non-payment of wages, the province also has developed an electronic system to monitor wage payment, Liu said. The system allows the Labor Bureau and the GDFTU to scrutinize factories' payment practices, making it more difficult for employers to refuse payment or to make late payments to workers. A Portable Pension Scheme, but Many Do Not Participate -------------- -------------- ¶8. (SBU) GDFTU Grassroots Organization Division Director Zhou Wangsen said that, regardless of home province or where they decide to retire, migrant workers in Guangdong can benefit from the province's pension scheme at retirement as long as required contributions are made to the program for fifteen years. Guangdong Department of GUANGZHOU 00001275 002 OF 002 Labor's Chen Ruibin noted that only about half the migrant workers in Guangdong participate in the pension scheme, which he said was modeled on a pilot program originally launched in Shenzhen. Rocky Start Likely for Labor Contract Law -------------- ¶9. (SBU) GDFTU's Liu said that implementation of the new Labor Contract Law would initially be difficult, since it would take time for companies to become "accustomed to the law." Nonetheless, our government contacts were generally optimistic that the new law would benefit workers. Shenzhen Labor and Social Security Bureau Policy and Law Division Chief Mo said he believed the law would "offer stronger protection to workers" while simultaneously keeping the labor market "well-regulated." The Guangdong Federation of Trade Unions -------------- ¶10. (SBU) Founded in 1953 with the mission of organizing workers and protecting their legal rights, GDFTU has nearly 15 million members and 137,000 grassroots-level trade unions, according to Vice Chairman Lin. Zhou Wangsen noted that 30,000 of Guangdong's 40,000 foreign companies had unions, including 534 of 692 branches of Fortune 500 companies in the province. In response to a question about why the national-level All China Federation of Trade Unions has so publicly targeted foreign-invested enterprises for union organization when China's trade Union Law makes no distinction between domestic and foreign enterprises, Zhou denied that foreign companies were particularly targeted, claiming that GDFTU makes equal efforts to unionize domestic and foreign companies alike. GOLDBERG