Faced with a legitimacy crisis, China’s Communist Party calls for reform to the country’s labour union

Inequality between rich and poor and mass protests are growing. Xi Jinping has called for a change of style and goals for the country’s labour union to no avail. China Labour Bulletin provides an analysis.

Hong Kong (AsiaNews) – In a system defined as "socialism with Chinese characteristics”, the Party seems to be sliding increasingly towards a legitimacy crisis as a result of the huge gap between rich and poor.

The massive development of the past few decades has not in fact been shared by the majority of the population. According to research by the Beijing University’s Social Sciences Research Centre, 1 per cent of the population owned one third of the nation's wealth in 2014. At the other end of the scale, 25 per cent of the population owned 1 per cent of the wealth, a situation that has led to growing labour action and workers’ protests.

To avoid social polarisation, the Communist Party of China has turned up the pressure on the All-China Federation of Trade Unions (ACFTU), which is getting ready to meet for its upcoming quinquennial national congress in Beijing. The ACFTU is accused of not defending workers and acting as a pawn of the Party, protecting the alliance between business, Party and political leaders.

What follows are some excerpts from an analysis by the China Labour Bulletin published on 10 October.

Why does the ACFTU need to reform?

1. Growing wealth inequality in China has led to a crisis of legitimacy for the Party.

China’s much vaunted “economic miracle” has undoubtedly strengthened the nation state, enhanced productivity and improved the material lives of millions. However, all this was achieved with the blood, sweat and tears of China’s workers. Although the number of people living in poverty has been reduced, and the middle class has expanded, the most dramatic growth has been in the wealth of the one percent. According to a 2014 survey by Beijing University’s Social Science Research Centre, the top one percent of households owned more than one third of the country’s wealth, while the poorest 25 percent owned just one percent. Officially, China’s Gini coefficient has been in decline since 2008 but in 2016 it still stood at 0.465, well above the acknowledged danger level of 0.400. The extreme disparity between rich and poor poses a serious challenge to the political legitimacy of the Communist Party.

From the outset of the reform era four decades ago, China’s leaders have always staked their legitimacy on economic growth, which granted, has been achieved, but it has been done at the expense of low pay, inadequate social security and environmental degradation. Ordinary working people in China will no longer tolerate it if the gap between rich and poor continues to grow. If workers are unable to share in the fruits of economic development while at the same time witnessing the blatant collusion of big business and government, and the rise of the axis of money and power; they will eventually come to call into question the legitimacy of the government’s promise of a happy life. Social unrest, including labour disputes, will continue to erupt as a result. The Party now clearly understands the imminent threat to its legitimacy and has put forward a comprehensive proposal to change the direction of reform and focus more on a fairer, more rational, distribution of wealth.

2. The divergent paths of economic development and social equality

In the early stages of the economic reform program, the Party and government adopted the policy of “prioritizing economic development while giving due consideration to social equality.”  While this rationale was understandable at the time, today, some four decades later, we can no longer accept the fact that the government is still allowing business owners to exploit cheap labour while refusing to establish a collective bargaining system. This state of affairs runs directly counter to the need to improve people’s livelihoods. As the economy has continued to grow, the proportion of wages to GDP has declined and wages have failed to keep pace with overall social and economic development. If we continue to follow the principle of “prioritizing economic development while giving due consideration to social equality,” ordinary people will be left even further behind.

The Party leadership, realizing that continuing down this path would eventually pose a threat to its political legitimacy, decided in 2013 to focus more on ensuring that income growth actually matches increases in productivity by raising the minimum wage, tackling wage arrears and improving the union-led collective wage negotiation system in enterprises. The 13th Five Year Plan (2016-2020) included proposals to improve income distribution, while at the 19th Party Congress in 2017, Xi Jinping marked a significant change in policy by stating that the mantra of the 18th Party Congress that encouraged the liberation and development of social productive forces in order to address the “contradictions between the growing material and cultural needs of the people and China’s backward social productivity” should change to the “contradictions between the yearning of many people for a better life and China’s unequal and insufficient development.” Instead of stressing vigorous economic development and the creation of wealth, the Party now focuses on a balanced economic development and the rational distribution of wealth.

We can see that, prior to the ascendancy of the Xi administration in 2013, the issue of income distribution did not receive the attention from China’s top leaders that it deserved. The government introduced a minimum wage system in 1993, the Labour Law in 1994, and the subsistence allowance in 1999, however, these mechanisms only guarantee the bare minimum and do nothing to tackle the fundamental problem of income distribution or ensure a decent standard of living for ordinary workers. Moreover, these administrative measures fail to address the overwhelming imbalance of power in labour relations that still exists in China today. The widespread and frequent collective protests by Chinese workers are a direct response to this unfair distribution of income and the fact that workers have no say in the distribution process.

3.  The Party’s high hopes for the ACFTU

In October 2013, Xi Jinping broke with tradition and summoned the newly elected leadership of the ACFTU to Party headquarters in Zhongnanhai for a group discussion. General Secretary Xi reportedly told the assembled union officials to “fully integrate the China Dream into the ideals and work life of every worker,” and proposed that the union should focus on “the issues of most pressing concern and direct interest to the workers.” Fundamentally, this meant that living standards and the quality of work should improve in tandem with economic development so that workers can finally enjoy the benefits of China’s economic miracle. It is clear that at the beginning of his tenure as Party General Secretary, Xi Jinping was unhappy with the work of the ACFTU but also had great expectations and high hopes that it could rise to the challenge and help to resolve the problems faced by hundreds of millions of workers in China.

From the Party’s perspective, the ACFTU should represent China’s workers and as such it should organize workers and protect their fundamental rights and interests. At the enterprise level, the trade union should improve employee pay and benefits through collective bargaining with management, and establish harmonious and stable labour relations.

On a policy level, local unions should help the government devise macro-economic solutions that can reduce the gap between rich and poor. Put another way, the Party hopes the union can help workers realise the China Dream and thereby kill two birds with one stone by improving the peoples’ livelihood and bolstering the Party’s political legitimacy. The leadership of the ACFTU however have come up with their own interpretation of Xi Jinping’s instructions, based on their own interests, namely reinforcing existing systems and continuing with same inward-looking policies it has adopted for years.

If the ACFTU and its local federations continue to do nothing in the face of increased worker activism and the Party’s demands for reform, and even if they adopt the traditional approach of regarding the reform program as a routine task to be placed on its schedule, the union will miss a real opportunity to help workers and at the same time plunge the Party into a crisis of legitimacy. Meanwhile, workers will continue to protest and take collective action in even greater numbers than before.

(Picture of coal miners demonstrating in Shuangyashan in 2016 over unpaid wages)