Dan Harris of China Law Blog brings us an interesting take on the new pay deal Wal-Mart struck on Friday with the All-China Federation of Trade Unions (ACFTU) in Quanzhou, Shenyang, and Shenzhen. As reported by Forbes, the U.S. retailer operates more than 100 of its namesake stores throughout China and employs 48,589 people. Its new agreement with its employees in Shenyang calls for an 8% pay increase in both 2008 and 2009. Harris remarks that a pay increase of the same amount next year sounds strange, since there’s no telling what inflation will be a year from now: “Is this an admission by Wal-Mart that it wasn’t paying enough?” he asks. The deal further marks Wal-Mart as “something of a poster child” for the Chinese government’s drive to get all foreign-owned enterprises to recognize the ACFTU, Forbes writes, since it comes two years after Wal-Mart allowed the union to organize at its local outlets. “What happened to Wal-Mart is no surprise,” Harris adds. He continues:
It is just another step in China’s efforts to move away from being a destination for foreign companies seeking super low paid workers. Just as with so much else in China, we are seeing foreign companies getting out in front in terms of going along with what China wants to do with its economy. Domestic companies are and will continue to follow in terms of having to deal with unionized and higher paid employees… anybody who still thinks China will do anything for foreign investment is living in the past. Times have changed and China is getting more and more selective in terms of the foreign (and even domestic) companies it wants.
Photo by umm.