Labor Unions: Greasing the palms that oil the gears

If Saudia Arabia has oil, then China has people. Specifically, it has great quantities of unskilled labor. Unfortunately, there is no equivalent of the NYMEX crude oil futures to mark the price of labor in China, but if there were, it would advance on fears that the All-China Federation of Trade Unions (ACFTU, the "OPEC" of this story) will implement newly drafted rules that will make operating in China more expensive and difficult.

The New York Times writes:

The move, which underscores the government's growing concern about the widening income gap and threats of social unrest, is setting off a battle with American and other foreign corporations that have lobbied against it by hinting that they may build fewer factories here.

The proposed rules are being considered after the Chinese Communist Party endorsed a new doctrine that will put greater emphasis on tackling the severe side effects of the country's remarkable growth.

Whether the foreign corporations will follow through on their warnings is unclear because of the many advantages of being in China — even with restrictions and higher costs that may stem from the new law. It could go into effect as early as next May.

It would apply to all companies in China, but its emphasis is on foreign-owned companies and the suppliers to those companies.

The conflict with the foreign corporations is significant partly because it comes at a time when labor, energy and land costs are rising in this country, all indications that doing business in China is likely to get much more expensive in the coming years.

But it is not clear how effectively such a new labor law would be carried out through this vast land because local officials have tended to ignore directives from the central government or seek ways around them.

Further on they write:

Hoping to head off some of the rules, representatives of some American companies are waging an intense lobbying campaign to persuade the Chinese government to revise or abandon the proposed law.

The skirmish has pitted the American Chamber of Commerce — which represents corporations including Dell, Ford, General Electric, Microsoft and Nike — against labor activists and the All-China Federation of Trade Unions, the Communist Party's official union organization.

The workers' advocates say that the proposed labor rules — and more important, enforcement powers — are long overdue, and they accuse the American businesses of favoring a system that has led to widespread labor abuse.

Squeezed between the need to maintain the break-neck growth necessary to create new jobs for migrants and simultaneously improve conditions for workers, it would seem an increasingly delicate balance that forces contradictory policies with the same objective of social stability.