From the TUC

China needs strikes for higher wages, says Financial Times

15 Jun 2010, by in International

The Financial Times printed an editorial recently headed “Why China’s pay unrest is healthy“. But it wasn’t a guest editorial from Socialist Worker. What the FT argued was that higher wages in China are an important part of rebalancing the global economy.

The recent disputes at Foxconn and Honda have thrown into sharp relief a number of key elements of modern China. Productivity has outstripped wages, leaving China a far more unequal society. And exports have outstripped imports, leaving the world more unequal too. Inequality between and within nations is at the heart of the economic problems facing the planet. In recent years, there have been countless strikes and disturbances in Chinese factories (not just over wages – often over corruption and job losses – but those are all at base about the distribution of wealth too). They rarely hit western headlines, but have been recorded by the excellent TUC-supported China Labour Bulletin, based in Hong Kong. So how should China go about raising wages?

In recent years, China has introduced new laws on collective bargaining, and higher minimum wages (quite a lot of Foxconn’s recent wage increases have actually been mandated by such legislation, rather than being an act of contrite generosity). These have been opposed by some employers – especially Americans and Koreans – and lobbied for by the All China Federation of Trade Unions, who are state -run, but have become more independent as multinational enterprises have penetrated further into the Chinese economy.

The TUC, other trade union movements and the ILO are working with the ACFTU on such issues – something that would perhaps address some of the criticisms of the effectiveness of the ACFTU made in China. We need to do more to promote these initiatives, as well as Chinese use of mechanisms to control the behaviour of multinationals such as the OECD code, and supply chain approaches like the Ethical Trading Initiative.

In addition, the Chinese Government needs to re-establish some elements of the welfare state such as free health and education, unemployment benefit and pensions which will make it possible for Chinese workers to spend more and save less.

2 Responses to China needs strikes for higher wages, says Financial Times

  1. The Squeeze
    Jun 16th 2010, 12:18 am

    Saving is as engrained in eastern cultures as homeownership is in British culture. The other thing the Chinese love is gambling.

    The paradox is that while the state discourages recreational gambling, more and more asset classes are becoming available to Chinese savers.

    No government bar the most brutal of regimes has ever successfully controlled the madness of crowds, so what makes you think the Chinese will use an increase in purchasing power to consume goods and services as opposed to speculate on property, shares or precious metal?

    All the British seem to do if you give them more income is take on a bigger mortgage! Hence around 20% of my ISA will be staying in silver.

  2. Tweets that mention China needs strikes for higher wages, says Financial Times | ToUChstone blog: A public policy blog from the TUC — Topsy.com
    Jun 16th 2010, 7:49 am

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