Cablegate: The World's Factory Floor: Unions and Government

DE RUEHGZ #1275/01 3450821
R 110821Z DEC 07





E.O. 12958: N/A
SUBJECT: The World's Factory Floor: Unions and Government
Officials Downplay Labor Shortage Concerns

REF A: Guangzhou 1256

1. (SBU) SUMMARY: Widespread reports of a labor shortage in
the Pearl River Delta are exaggerated, according to
representatives from the Guangdong Federation of Trade
Unions (GDFTU) and local and provincial government labor
officials. Union officials boasted both of portable
pension schemes allowing migrant workers to take their
pensions with them for retirement in other provinces, and
of monitoring working conditions through a network of
thousands of informers. Though generally optimistic about
the impending Labor Contract Law, officials said that its
initial implementation would likely be challenging. END

2. (U) This is the second of three cables reporting on
current labor conditions in the Pearl River Delta. Reftel
examined the state of labor NGOs, and a subsequent cable
will describe conditions for migrant workers here.

What Labor Shortage? Oh, That One.

3. (SBU) The media is responsible for blowing the issue of
labor supply out of proportion, according to Guangdong
Labor Department Labor and Employment Service Center Deputy
Director Chen Ruibin. In his personal experience, said
Chen, the labor shortage was not serious. Chen placed much
of the blame on companies and factories, whose low wages
were sometimes insufficient to attract workers. In a
separate meeting, labor NGO director Huang Zhiming echoed
Chen's comments, saying that if factories were willing to
pay more in wages, there would be no problem recruiting
enough workers.

4. (SBU) Shenzhen Labor and Social Security Bureau
Assistant Researcher Huang Hanlin also thought the labor
shortage was not a serious problem. Huang said the new
generation of migrant workers has higher expectations when
job hunting than did its predecessors. In a separate
meeting, EBox Digital Technology Product Company General
Manager Boder Lau also noted this shift in job-seekers'
expectations, saying that his company had had to raise
wages by 20 percent in 2007 to attract enough workers.

5. (SBU) Guangdong Labor Department International
Cooperation and Exchange Division Director Wu Ling
described the Pearl River Delta (PRD) labor situation as a
"structural shortage," in which only certain sectors and
groups -- such as skilled workers or young, female workers
-- did not have enough people. Huang Hanlin added that the
high-tech sector in particular could not find enough
skilled workers, but it was also true that unskilled
workers in the garment, footwear, metal, and toy industries
were in short supply, due to low wages.

Seven Thousand Informants

6. (SBU) Approximately 7,000 informants working in
factories all over the province feed information about
working conditions to the union, according to GDFTU Legal
Aid Division Director Liu Guobin. Liu said that these
informants were expected to report incidents -- especially
those with the potential to develop into labor disputes --
to the union, which would then attempt to resolve the
incidents before they escalated into something more

7. (SBU) Due to a high prevalence of labor incidents
relating to the non-payment of wages, the province also has
developed an electronic system to monitor wage payment, Liu
said. The system allows the Labor Bureau and the GDFTU to
scrutinize factories' payment practices, making it more
difficult for employers to refuse payment or to make late
payments to workers.

A Portable Pension Scheme, but Many Do Not Participate
--------------------------------------------- ---------

8. (SBU) GDFTU Grassroots Organization Division Director
Zhou Wangsen said that, regardless of home province or
where they decide to retire, migrant workers in Guangdong
can benefit from the province's pension scheme at
retirement as long as required contributions are made to
the program for fifteen years. Guangdong Department of

GUANGZHOU 00001275 002 OF 002

Labor's Chen Ruibin noted that only about half the migrant
workers in Guangdong participate in the pension scheme,
which he said was modeled on a pilot program originally
launched in Shenzhen.

Rocky Start Likely for Labor Contract Law

9. (SBU) GDFTU's Liu said that implementation of the new
Labor Contract Law would initially be difficult, since it
would take time for companies to become "accustomed to the
law." Nonetheless, our government contacts were generally
optimistic that the new law would benefit workers.
Shenzhen Labor and Social Security Bureau Policy and Law
Division Chief Mo said he believed the law would "offer
stronger protection to workers" while simultaneously
keeping the labor market "well-regulated."

The Guangdong Federation of Trade Unions

10. (SBU) Founded in 1953 with the mission of organizing
workers and protecting their legal rights, GDFTU has nearly
15 million members and 137,000 grassroots-level trade
unions, according to Vice Chairman Lin. Zhou Wangsen noted
that 30,000 of Guangdong's 40,000 foreign companies had
unions, including 534 of 692 branches of Fortune 500
companies in the province. In response to a question about
why the national-level All China Federation of Trade Unions
has so publicly targeted foreign-invested enterprises for
union organization when China's trade Union Law makes no
distinction between domestic and foreign enterprises, Zhou
denied that foreign companies were particularly targeted,
claiming that GDFTU makes equal efforts to unionize
domestic and foreign companies alike.


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