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CHINA: Wal-Mart Agrees to Unionization

by David BarbozaThe New York Times
August 9th, 2006

After years of fighting unionization efforts at its stores, Wal-Mart, the world’s largest retailer, said today that it would work closely with Chinese officials to establish labor unions at all of its outlets here.

Wal-Mart said it would form an alliance with the government-backed All China Federation of Trade Unions because it wanted to create “an effective and harmonious way of facilitating the establishment of grassroots unions” at its stores.

The announcement came less than two weeks after Wal-Mart employees established their first union in China, the first time that a union had ever been formed at a Wal-Mart store. Since then, four other Wal-Mart stores in China have also formed unions, according to the government union officials.

Wal-Mart’s decision surprised observers because while the company had signaled earlier that it would not do anything to stop unions from forming at its Chinese stores, it had never suggested that it would actively participate in backing unionization efforts.

Wal-Mart’s decision to allow unions comes after years of pressure from the All China Federation of Trade Unions, which has been pushing companies with large foreign investments here to allow unionization, which is required under Chinese law.

Forming a union at Wal-Mart stores, which have been plagued by labor disputes in recent years, has proved incredibly difficult. For instance, the AFL-CIO has tried but failed to set up unions at Wal-Mart stores in the United States.

But exactly what it means to have a unionized Wal-Mart store here is unclear because unions in China do not have the history of bargaining power.

Wal-Mart officials see China as a potentially huge market and are determined to expand rapidly here. The company already has about 60 retail outlets and 30,000 employees here. And because of China’s mighty factories, this country is Wal-Mart’s primary sourcing base for the millions of goods its sell around the world.

Wal-Mart initially signaled its approval of unions here in late 2004, when the company said that if workers in China moved to unionize, Wal-Mart would not stop them.

But today, after meeting with union officials here, Wal-Mart issued a statement that seemed not just conciliatory but a strong echo of the Chinese government’s latest propaganda campaign, which promises to build a “harmonious society.”

In a brief statement today titled “Wal-Mart Supports China’s Effort to Build a Harmonious Society,” the company said that it would collaborate with the All China Federation because the two groups had the “mutual aim” to establish grass-roots unions.

Exactly how the unions are being formed and who has control of them is still unclear, and some experts doubt the unions now being formed at Wal-mart will engage in collective bargaining negotiations with the company.

Liu Kaiming, director of the Institute of Contemporary Observation, a labor rights organization based in Shenzhen, applauded the Wal-Mart announcement today but questioned whether it would lead to significant change.

“I don’t see any bargaining power in the unions in China,” Mr. Liu said. “The function of Chinese unions is to urge workers to participate in the work, to care about their welfare and to organize recreational activities for them.”

Independent unions are banned in China. But the All China Federation of Trade Unions — the government-controlled labor union — issued a statement earlier this week, suggesting that it would be able to contend with one of the world’s biggest companies.

“If Wal-Mart union members are subjected to unfair treatment at work, unions at the national, provincial, city and district level will strive all out to protect employees’ legitimate rights,” the announcement said.





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