China Tells Businesses to Unionize

Forming unions could be costly, lawyers and labor experts say, because a union could fight for higher wages and benefits and because companies are required to pay 2 percent payroll dues. The dues could amount to millions of dollars in additional costs for big companies. Yum Brands, for instance, has about 160,000 employees in China.

Manufacturers are already coping with soaring labor costs, which have jumped by 30 to 40 percent in some coastal manufacturing zones over the last four years. Also, a new contract labor law and stricter enforcement of older labor rules means some companies can no longer avoid paying overtime costs, which can be substantial because many factories insist that some employees work six days a week.

But whether unions can really protect workers and bargain collectively on their behalf is still in question.

“It all depends on how they are set up,” said Anita Chan, an authority on labor issues in China who is a visiting research fellow at the Australian National University in Canberra. “After you set up a union, these groups have to know how to become representatives of the workers, and really collectively bargain.”

Mr. Lauffs, the labor law expert, said it was too early to tell what impact new unions would have on companies here. But union members would need to be consulted on all employee-related and operational matters.

“Employees may have a say in major operational matters,” he said. “And employees may have the right to strike.”

Many big corporations in China that have recently allowed unions to form under pressure have declined to comment on the union drive. Some company spokesmen have admitted privately that they do not want to raise the ire of the state-controlled union or anger China’s political leaders, who are backing the effort.

But several big companies said they were working well with the union. Wal-Mart, which for years has fought against unions in the United States and elsewhere, now has unions operating in nearly all of its 108 stores in China.

“We have a good relationship working with the union,” said Jonathan Dong, a Wal-Mart spokesman in China. “The union provides a complement to what we do.”

The top executive in China at PricewaterhouseCoopers, Frank Lyn, said accounting and professional services firms like his could not be equated with manufacturers.

“We’ll continue to monitor the situation,” Mr. Lyn said. “At this juncture we don’t see a pressing need for a union.”

Ms. Wang, the official at the All China Federation of Trade Unions, said that by the end of September about 80 percent of the top 500 global corporations operating in China would have unions here. “We are making great progress,” she said.