A company representative instructs job seekers during a recruitment event by Foxconn company in Shenzhen, on February 13, 2012. Photo: IC

Tension has mounted between Hong Kong and the Chinese mainland over the past few months, and while most of the headlines have revolved around spats between tourists and some Hong Kong locals, another issue is bubbling under the surface - the protection of labor rights.

Six of Hong Kong's major business chambers, whose members include the most influential enterprises in an area known as a bastion for free trade, are trying to obstruct an ongoing lawmaking effort by southern Guangdong Province. The legislation, if approved, will give more say to workers and significantly strengthen their power in claiming their rights from employers, but Hong Kong business owners fear it will push up already increasing costs of labor.

Guangdong is a zone haunted by labor disputes. The factory-dotted Pearl River Delta in particular has witnessed ballooning numbers of labor disputes and protests by workers this year, especially when high-profile labor conflicts in South China stunned the world in March and April, including the mass strike staged by Yue Yuen shoe factory workers to claim unpaid pension contributions by the company. This made local authorities fear that it may pose a challenge to social stability.

Experts say that most of the conflicts were caused by the fact that workers were unable to express their disagreements with employers. By codifying legal procedures for labor negotiations, the authorities hope many of these disputes can be resolved in a less chaotic manner.

Guangdong started the legislation process in October last year to amend the Guangdong Province Enterprise Collective Contract Regulations, a provincial ordinance which dates back to 1996. A key aspect of the changes would foster "collective consultation" between workers and employers, as opposed to individual negotiations, thus granting them a stronger hand in negotiations and also codifying situations in which they have the legal right to go on strike.

Hong Kong moguls speak out

The amendment of the law has widely been welcomed by labor organizations around China, but has sent business owners into anxiety, as they fear the law will push up the labor costs of running businesses in Guangdong when they are already grappling with a more demanding working class that is better able to protect its rights.

Among the concerned business owners are moguls in Hong Kong, as Hong Kong investment has traditionally been a major source of investment in the province.

In 2010, investment from Hong Kong accounted for 77 percent of all overseas investment received by Guangdong.

The Hong Kong General Chamber of Commerce on March 20 issued a letter to the Guangdong Provincial People's Congress and expressed concerns over the difficulties that the draft law would bring to Hong Kong business owners. In the letter, the chamber opposed the legislation, saying that the amendment would seriously "hamper free operation, damage vitality and constrain the development of enterprises."

The chamber cited the mounting pressure of labor and production costs amid rising minimum wages and China's efforts to transform its economy, and asked the Guangdong legislature to postpone deliberation over the amendment.

In its suggestions, the chamber disputed the range of situations that collective consultations should cover, and said that giving too much sway to the workers would go against the principles of a market economy.

This was followed by a stronger wave of opinions voiced on April 15 when six major commerce chambers in Hong Kong jointly issued letters to Hong Kong governor Leung Chun-Ying and 13 central and provincial departments, including the Guangdong provincial government and the liaison office in Hong Kong of the State Council, expressing strong opposition against the law.

A total of 59 commerce chambers and guilds in Hong Kong, representing 18,000 Hong Kong enterprises that hire 3 million workers in the mainland, published an ad in Hong Kong-based newspaper Ming Po, with sensational language, saying the Guangdong legislation would worsen conflicts and wouldn't contribute to social harmony in the mainland.

In the joint letter to the Guangdong Provincial People's Congress, the chambers said the draft law "doesn't conform to the legal spirit," as the law would support workers even in cases when they are going beyond current laws, and force enterprises to conform to whatever they want.

Labor activists fire back

The letters were met with fierce criticism from labor organizations and lawyers.

Dozens of labor rights organizations from around the country published a joint declaration on May 9 to denounce what they say is "the reckless distortion of mainland laws, swashbuckling, and misleading public opinions" by the Hong Kong commerce chambers.

They went further to criticize Hong Kong enterprises which, they say, in general, were the worst at protecting the basic rights of workers among all the overseas investors on the mainland, and said some Hong Kong factories were "sweatshops."

According to a report compiled by the Hong Kong Confederation of Trade Unions, 90 percent of the 15 strikes in Hong Kong enterprises last year were due to enterprises breaching mainland labor laws.

On May 12, seven Hong Kong trade unions and labor rights institutes joined the charge against the Hong Kong commerce chambers, with another public letter to the central, Guangdong and Hong Kong authorities.

The Hong Kong labor organizations requested that the authorities address increasing labor-capital conflicts by fostering mechanisms of collective consultations, and called on the chambers to respect the workers' rights of engaging in collective consultations.

It's not the first time that Hong Kong commerce chambers have attempted to obstruct labor rights legislation on the mainland.

Both the mainland and Hong Kong labor organizations denounced the records of the six Hong Kong chambers of commerce in relation to past efforts to obstruct the Guangdong labor legislation.

Sociologists Pan Yi and Chen Hangying, in their comments, also criticized Hong Kong commerce chambers for "damaging the already strained labor relations." They said that Hong Kong enterprises have taken advantage of the low costs of labor and a lack of effective labor organizations in the mainland for decades.

As China has witnessed a notable increase in the number of labor disputes between workers and enterprises this year, finding ways to deal with the upheaval between the "proletariat" and the "capitalists" in the new era has been a key task for the authorities.

Right to strike

In October last year, the Guangdong Provincial People's Congress published a draft to solicit public opinions, and so far has issued three drafts.

The last draft was submitted to the standing committee of the Guangdong people's congress for discussions, and is due to be determined this morning.

 The amendment not only stipulates the specific terms that can be negotiated by the two parties, but also specifies the procedure for workers to initiate a negotiation.

According to the draft provisions, workers are able to initiate a negotiation as long as one third of the workers are involved, with or without the participation of their labor union. It also says that the employer, within 30 days upon receiving the negotiation request, must respond to and participate in the negotiation.

The draft also formally codifies workers' rights to cease to work and stage a strike, in cases where employers fail to respond or refuse to negotiate. The enterprise cannot punish the workers for a lawful strike.

In regards to salaries, the central subject of most disputes between workers and employers, the provisions order that consultations be held every year between the two parties to discuss how much the workers can make in general and a mechanism for a pay rise.

This consultation is aimed at renewing the Collective Contract annually which is, as stipulated in the Labor Contract Law, signed between the employer and the labor union to secure a pay increase.

This is the first time the practice of "collective consultation" has been specified in provincial legislation. China's Labor Law and Labor Contract Law regulate that such negotiations can be held to resolve labor disputes in factories and companies, however, loopholes remain in the articles when it comes to really practicing these activities, as many of the terms are unspecified thus create room to be interpreted in various ways, said Wang Jiangsong, a professor in labor relations.

Generally speaking, according to Wang, the workers are vulnerable when it comes to protecting their rights, and their bargaining power is at a much lower level than their employers. The workers, many with manual jobs, lack the legal knowhow and the financial backing to challenge their employers.

Some labor organizations have expressed dissatisfaction with the draft law, as the punishments for business owners who breach the law are not fully explained.

Wang said that at least the objective for the Guangdong legislation is clear, as it aims to reduce the power disparity between workers and enterprises, and the legislation is a necessary move towards that direction.
Newspaper headline: HK moguls obstruct Guangdong legislation on labor rights protection