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Collective Bargaining and Changing Industrial Relations in China.

Lessons from the U.S. and Germany

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Siqi Luo

This study focuses on the status and prospects of collective bargaining in China based on lessons learned from the post-war United States and Germany. The author regards collective bargaining as a type of core wage regulation that emerged from production regimes at the factory level and from economic and labor policies of the state. This analysis compares the production regimes and the state-labor-capital relations in China today with the U.S. and German models in order to identify the missing links as well as potential driving forces in the current system of collective contract in China. Finally, the author proposes an ideal model of collective bargaining in China, one that offers solutions to a more just and sustainable trajectory of industrial development and that tailors to the power status of the major actors in industrial relations.

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Introduction

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The issue of low wages in China has become a recurring problem in the Chinese national economy. As China is now widely acknowledged as the “workshop” of the world, its low wages, no doubt, have been an attraction for manufacturing. Nevertheless, the same low wages have also become a major bottleneck for further economic growth and social development. First, the necessity of increasing domestic consumption was addressed in the 2008/9 global recession. Clearly, the over-dependency of China on foreign demand in the past is no longer able to sustain its overproduction of industrial goods in the long run. Besides, the generally low skill levels of the industrial workforce have led to a vicious “low-wage/ low-skill/ low-value-added” trap. “Made-in-China” mainly means labor-intensive, low-end and low-tech products, or in many cases, high- tech products but with core design and technologies controlled outside China and a strictly limited input from Chinese workforce. At the same time, the high turnover rates and frequent labor disputes (e.g. in the electronics industry) reflect the lack of employees' loyalty and their unwillingness to cooperate. As an innovation and upgrading strategy may necessarily reduce the demand on unskilled labor or require skill development, only a trustful labor relations can make the strategy successful primarily by soothing workers’ insecurity of employment and relevant concerns. Consequently, the unstable situations in Chinese industries make any innovation or industrial upgrading extremely difficult. Further, low wages have become the top cause for several major waves of labor unrest. For instance, the recent slew...

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