Industrial Relations Experiments in China: Balancing Equity and Efficiency the Chinese Way

Abstract

China should build socialism by "crossing the river by feeling for stones" (Deng Xiaoping). Chinese industrial relations are changing accordingly. Local union experiments have implemented local-level changes experimenting with institutional reforms that address efficiency and equity imbalances. Local union leaders have exercised autonomy to develop multi-employer “community unions” in Changchun’s Chaoyang District to represent peasant migrant workers employed by small firms by targeting small geographic zones and hiring union presidents as organizers, aggregating union members into amalgamated units. While the union’s role still includes social harmonization, unions have undertaken an additional representative role. Similar efforts elsewhere have given the union representation experience. Unions have organized multi-employer federations across industries. Unions also have collaborated with local governments on innovative structures to ensure that companies in some industries, such as construction, post a “bond” to guarantee end-of-year compensation. Finally, this paper discusses the role of the new Labor Contract Law in institutionalizing these changes. The LCL defines more precisely employment relationships and workers’ legal rights and seems to increase unions’ legal authority to ensure that employers respect individual workers’ rights, supports the extension of collective contracts to more enterprises, and appears to give unions greater authority to represent workers within the employment relationship and before legal authorities. These changes may provide a material basis for balancing efficiency with equity. We think these experiments have political foundations, whether it is “harmonious society” or simply to extend the union’s organizing maintain political status. Further research will determine whether these experiments are successful.