by Guest

contribution by Owen Tudor

Yesterday’s FT contained a fascinating article reporting that China’s wage rates have increased in real terms by over 10% a year in the last decade (ie they have more than doubled since 2000), but that productivity has risen commensurately.

There are huge lessons here for trade unions addressing what has been one of the most persistent agenda items for the International TUC: the impact of China on everyone else’s living standards.



First, the data undermines some of the glib generalisations of both the anti-globalisation left and the pro-free market capitalists.

The fact that China has by and large not lost businesses as its wage costs have soared past other Asian economies (except, instructively, in low price, low margin, labour intensive industries like mass textiles and shoes) demonstrates that capital does not simply race to wherever living standards are lowest.

As the Germans demonstrate most clearly, capital goes where labour is most productive – and that doesn’t automatically mean cheap. China has kept and grown its high value, high margin ICT business, and companies with significant investment in infrastructure (often externalised in industrialised economies and the new China) will be reluctant to leave.

Second, the story told does not fit the easy narrative that Chinese workers are voiceless, powerless automata. The TUC has engaged with the official All-China Federation of Trade Unions for some time (not without criticisms from union movements who give greater priority to either anti-communism or human rights).

And our experience is that change is happening from below and within – not what is supposed to happen in communist monoliths. Experiments in collective bargaining are tentative, and not quite what we would expect.

But Kevin Brown’s FT article contains a telling sentence:

Chinese officials are seeking to head off a repeat of last year’s labour unrest amid fears that persistent and rising inflation could provide a further irritant in wage discussions.

Although the unrest is nothing new, the idea of “wage discussions” certainly is.

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Owen Tudor is head of the TUC’s European Union and International Relations Department.