For a long time, I have argued that our problem with China is not really the difference in currency nor, on its face, the trade deficit. At heart, the real issue is the truly abysmal working conditions faced by millions of Chinese workers--working conditions that are the reason corporations love China and love moving production overseas. And, now, I see corporations agree. Many of the largest corporations--many of whom contribute significant amounts of money to the Republican and Democratic parties and their candidates--are doing everything possible to keep their slave wage heaven in China. Check it out: this is one of the most important economic issues facing our country.
Since the spring, there has been a debate within China--ignored by the mainstream media in the U.S. and much of the world--about a new labor law in China. I want to say, upfront, that one has to view labor laws in China with a bit of skeptisicm since we are still talking about laws overseen by an authoritarian regime that carefully calibrates what is permissible or not.
Having said that, as The New York Times reports today:
China is planning to adopt a new law that seeks to crack down on sweatshops and protect workers' rights by giving labor unions real power for the first time since it introduced market forces in the 1980's.
This is fairly extraordinary, as is the response of multinational corporations:
The move, which underscores the government's growing concern about the widening income gap and threats of social unrest, is setting off a battle with American and other foreign corporations that have lobbied against it by hinting that they may build fewer factories here.
Part of what is motivating the consideration of the new labor law is, as the Times reports, a concern for the stability of Chinese society. Virtually every day in China, there are work actions, protests and strikes over the conditions faced by millions of workers in the rapidly expanding urban areas. The government fears that the widespread unrest could threaten its rule.
Up until now, China did its bidding for U.S. corporations. As the AFL-CIO's petition to the U.S. Trade Representative pointed out, China artificially suppresses wages by anywhere from 47 to 85 percent of what they should be. In the Chinese labor system, people work twelve- to eighteen-hour days with no days of rest, earning meager wages, in factories full of chemical toxins and hazardous machines, and suffer sickness and death at the highest rates in world history. I have always viewed, as I said, a change in the Chinese currency--what some people in Congress have been ranting about--as having little meaning as long as an authoritarian regime artificially suppresses the market for wages by ruthlessly enforcing a system that controls where people can work, and imprisons and tortures people who attempt to organize real unions or strike. That labor system--not the currency difference--is the reason, for example, that Wal-Mart saves 10-20 percent on its global procurement, according to the Harvard Business School.
But, this new labor code may begin to force wages up.
Which is driving corporations up the wall. Today, Global Labor Strategies is releasing a startling report. The report reveals that:
US-based global corporations like Wal-Mart, Google, UPS, Microsoft, Nike, AT&T, and Intel, acting through US business organizations like the American Chamber of Commerce in Shanghai and the US-China Business Council, are actively lobbying against the new legislation. They are also threatening that foreign corporations will withdraw from China if it is passed.
The opposition to the labor code--a code that would require that labor contract contain wages rates, basic terms of employment and the duration of employment, hardly radically requests--is being lead by:
...three major organizations representing foreign corporations operating in China:
o The American Chamber of Commerce in Shanghai represents over 1,300 corporations, including 150 Fortune 500 companies.
o The US-China Business Council represents 250 US companies doing business across all sectors in China.
o The European Union Chamber of Commerce in China represents more than 860 members.
This story is crucial for every person in our country to follow. As the report points out:
At a time when China exerts a growing impact on the global economy, efforts to improve the conditions of Chinese workers are profoundly important for workers everywhere. As U.S. wages stagnate, many Americans worry that low wages and labor standards in China are driving down those in America. Improving labor conditions in China can help workers in the rest of the world resist a race to the bottom that threatens to bring wages and conditions worldwide down to the level of the least protected.
So, for all our fighting over raising the minimum wage and other economic issues--and I am not suggesting these are not important--in my humble opinion, the struggle over labor laws in China, and, by extension, the wage rates and working conditions of the Chinese worker, will have more impact on our lives, in the long term, than if the minimum wage is raised.
It's also quite interesting that, at the jump for the Times article, there is a side story that reports that all Wal-Mart stores in China have been unionized.
At the same time, not a single Wal-Mart store in the U.S. is unionized.