The new labor law, fact and fiction - the WTO-column

When China announced earlier this year a new labor law, my primary instinct said: ignore it. I knew that apart from a few law-abiding - and often foreign - companies the old law largely ignored and was hardly worth the paper it had been written on. So, why care about the revision of the old 1995 labor law?
Even when the Chinese media told me that in the consultation phase 190,000 reactions had been collected with amendments, a record number, I wondered why I should bother. I estimate that there are more than 200,000 people living on my street and I do not think many of them have heard about this proposed law.

Now, I noted some recent changes that might suggest a change in labor relations in China. I saw how the presumed-dead Chinese labor union ACFTU suddenly swinged into action at Wal-Mart, after they got their arse kicked from upstairs. Some people inside this bureaucratic monstrum seemed to have liked it, since they took aim at Dell and Kodak after they got Wal-Mart done and are promising more action.
So, in my little way, I also swung into action and asked the American Chamber of Commerce in Shanghai for a copy of their paper fulminating against the new labor law. The bloody thing was longer than the law itself! I started to wonder. Have I been missing something here? Why would Amcham put so much effort what I considered to be at best an interesting theoretical exercise? Foreign companies would even withdraw there investments, it was suggested, when the current draft would become law.
I do not take that threat very serious. Amcham is not telling the foreign companies what to do, and even if some of them would go labor to less labor-friendly parts of the world, that might actually fit the agenda of the central government since they think this country to growing too fast anyway. European diplomats have been telling me that compared to the average labor European legislation there is not so much to get upset about in the proposed Chinese law.

Despite my sceptism the debate has become pretty heaed in academic circles too, I noted last week as I joined a delegation of a Dutch trade union consulting different experts on the labor law. To keep things simple we divide them into the Beijing and the Shanghainese camp. The Shanghainese think the current 1995 law is already pretty strict and should even be relaxed, since for example the requirement to have written contracts was pretty ludicrous in a country were most labor contracts are verbal, despite the legal requirements. By lowering the standards the Chinese trade union would even have possibilities to negotiate a better contract where possible.
In Beijing they plead for higher standards, as put in the current proposal, since it would give a strong signal to the poor and powerless in this society that the government is on their side, even if it is only an academic choice.
Since neither the government nor the Chinese trade unions seem to have the intention, let alone the ability, to uphold any labor law, the whole argument becomes a strange academic play.
Last week I was too busy in convincing my Dutch friends that a law in China does not mean that everybody complies the next day. It was even harder to explain to them that some laws end up being only window-dressing. Only this weekend I have been pondering why the European and US lobby organizations for businesses in China would have been raising the storm ball, while I tried very much to ignore the whole thing.
I guess it is because at least a portion of the foreign companies in China is actually trying to live to the letter of the law, like they have to do in their own countries. It is again an academic presumption, but in that case the already unequal playing field would become even more unequal. So, the ultimate question is, should foreign companies behave more like Chinese, or should Chinese behave more like international companies.

That seems enough to talk about today.

Fons Tuinstra