China’s Effort to Implement Collective Wage
It has never been a better time to expand as China offers tremendous prospects for international expansion. The Chinese Government and the All-China Federal Trade Unions (ACFTU)are escalating efforts to promote collective wage bargaining amongst corporations, especially multinationals operating in the country.
Trade unions have been formed in a number of enterprises according to the All-China Federal Trade Unions (ACFTU) reports. Legally, the union’s nature is an organization formed by the employees voluntarily under People’s Republic of China (“PRC”) Trade Union Law. While an employer has no obligation to form a trade union, they also have no e right to form a trade union irrespective of the employees’ opinions. The ACFTU and the central government in 2004 initiated a campaign targeted especially at foreign-invested enterprises to form a trade union.
China aims to rope in 80 percent of its enterprises with labor unions in what it terms as the ‘Rainbow Plan’, which is a massive effort to institute collective wage bargaining practices in the country by 2013. For smaller companies without labor unions, the collective bargaining will be in the form of regional or industry-specified collective contracts.
First announced in 2010, efforts to promote the plan have gained steam recently in view of increasing labor disputes in the country. The current labor law gives a brief outline for collective bargaining but it is difficult to enforce in practice due to bureaucratic hassles. In a recent case Swedish firm Ikea agreed to higher monthly wages and pay hikes linked to company’s yearly turnover for employees under the collective bargaining agreement.
Besides having the right people work for you when doing business overseas, partnering with an expert can help tremendously. It can be an office with qualified staff, or a consultant hired to assist you but having support from those experienced in the market will be a huge advantage to your company. Knowing what to provide and what to negotiate is the key to handling local trade unions and working with the right partner can not only guide you through difficult times, but also provide unlimited assisted in other areas of business like regulatory filing requirements, international accounting services etc.
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