U.S. Corporations Lobby Against New Protections for Chinese Workers

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April 13, 2007 12:13 PM

Labor rights advocates say U.S. multinational corporations have aggressively lobbied to weaken key provisions in a new Chinese law that would expand rights and protections for Chinese workers.

"U.S. corporations have used their considerable power and influence there to weaken the labor laws that are being proposed," said Ellen David Friedman, a  U.S. labor organizer who's worked  with developing trade union groups in China.  "They are in essence acknowledging that what they have liked about doing business in China is the very, very cheap labor and the low level of enforcement."

The Chinese government is drafting a new labor law, expected to be finalized in the next few weeks, in response to increasing worker unrest over low and unpaid wages and poor working conditions.  Labor rights advocates say the new law will provide Chinese workers with minimal protections that are commonplace in developed countries, including enforceable contracts, the role of unions to negotiate on behalf of employees and severance payments.

When the Chinese government announced the new labor law last year, American corporate trade groups were quick to object to many of the law's provisions.

The American Chamber of Commerce in Shanghai known as AmCham said the law was "a step backwards" and laid out what it called "fundamental defects" in the law in a 42-page document submitted to the Chinese government. The group argued that current Chinese labor law was sufficient for protecting Chinese workers if the laws were properly enforced.

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AmCham, along with the U.S.-China Business Council, which together represent hundreds of companies doing business in China, including Wal-Mart, Microsoft, General Electric and Dell, argued that the law would negatively impact China's competitiveness and appeal to foreign investors. None of the individual companies responded to requests for comment from ABC News.   

Several key provisions they took issue with, such as a requirement that employers negotiate with union workers over workplace conditions and large scale layoffs, were then removed from a second draft of the law.

"Corporations have been going in front of the American people and policymakers for a long time saying we are going to bring a culture of rights to places like China, and we're going to raise standards," says Brendan Smith of Global Labor Strategies, a labor rights group that has published reports tracking the new law.  "This lobbying campaign really belies those claims because here they are actively lobbying against improved rights."

Representatives at both AmCham and the U.S.-China Business Council contacted by ABC News denied they are lobbying against the law and said their comments to the Chinese government were meant for clarification purposes and not to prevent improved working conditions and protections.  Read AmCham's full response.

"The specific provisions that we submitted comments on were to make sure they equally benefited the employers and the employees," said Erin Ennis, vice president of the U.S.-China Business Council. 

Supporters of the law say the U.S. companies are not taking full responsibility for how their business practices allegedly contribute to worker exploitation.   

Liu Cheng, a Shanghai legal scholar who advised the government on the draft proposal, says the pressure U.S. companies exert on their Chinese suppliers to cut costs leads to labor abuse. "After so many years of the multinationals dominating, things are getting worse," says Cheng.

Chinese workers have staged tens of thousands of strikes and protests over the past few years, expressing discontent over poor working conditions and low and unpaid wages. Cheng says that the new law is a modest step toward addressing rising worker unrest and ensuring social stability. "It's reasonable and rational for companies to want to make money, but there has to be balance," says Cheng.