Labor conditions improving -- slowly -- in factories


HONG KONG, China (Reuters) -- Pressure on Western firms to improve conditions at factories in China is paying off, experts say, with some firms granting workers rights that are still taboo for most employees in the Communist state.

After being faced with boycotts in the 1990s, many international companies adopted stricter labor codes to counter accusations by consumers and labor activists that the firms were operating sweatshop-style factories in developing countries.

Now factory managers in China supplying big retailers such as Nike say they regularly receive surprise audits, with inspectors turning up unannounced to question workers about their food, working hours, and even checking that their beds are a proper minimum size.

"There's a real push to get the rules up to international standards.

(Beijing is) slowly exploring letting businesses get on with it -- they do it very discreetly," said Stephen Frost, a research fellow at Hong Kong's City University.

For its part, China is eager to burnish its image to attract further investment and has stepped up labor law reforms, and Beijing has approached the International Labor Organization to ratify parts of its labor code.

"Ever since China joined the World Trade Organization and emerged as a major economic power, they are very aware that they have to play by the global rules, and I think that's why we have seen so many reforms to the labor laws in recent years," said Auret van Heerden, president of non-profit Fair Labor Association.

Open for business

To be sure, many international companies continue to be drawn to China precisely because they can escape the protective labor and environmental regulations that contribute to the higher cost of production in their home countries.

International protests have led some companies to raise working standards above what is legally required in China. Even so, pay and working conditions in China generally remain far below those in developed countries, including at companies that have set new minimum standards.

"China does not have to depend on having clean manufacturers to get work -- what China has is incredible mass and economies of scale,"

said Frost.

Protests have had an impact, acknowledges Reiner Hengstmann, global head of environmental and social affairs at German sports brand Puma AG, which works with Fair Labor.

"Consumer pressure is definitely one case, while in general all companies have implemented their standards and are looking very closely into the manufacturing process now," he said. Improved working conditions are "definitely" good for business, he said, noting they help attract skilled workers amid a labor shortage in southern China.

Hong Kong supply chain manager Linmark Group Ltd. has helped China National Textile and Apparel Council (CNTAC), an industry group, promote a charter on workers' rights.

And Nike agreed to publish a list of more than 700 of its contract factories around the world in an effort to crack down on abuses, winning praise from human rights activists.

Room for engagement

A number of firms' labor codes include freedom of association and collective bargaining, which theoretically pave the way to full trade union rights to negotiate with management.

But China, which recently granted rights for collective bargaining and freedom of association, only recognizes the Communist Party- controlled All China Federation of Trade Unions, outlawing any attempts to form independent unions.

"Chinese workers are not allowed to form a real, independent trade union and, therefore, they have no power to negotiate with their employers," said Lucy Lu, CNTAC's spokeswoman in Beijing.

CNTAC, whose code of conduct specifically mentions collective bargaining, is headed by a government-appointed official. Beijing's willingness to allow a prominent industry group to encourage collective bargaining might be a sign the government is responding to outside pressure, some observers say.

"Freedom of association, collective bargaining, those are areas where ... there is room for engagement," said William Anderson, head of social and environmental affairs at Adidas-Salomon AG.

But the move to promote in-house labor standards may be mostly practical, since China's labor laws can be confusing to implement and some manufacturers ignore them altogether.

"Weak enforcement of Chinese labor laws is a well-known fact, and the existence of a variety of operating standards makes it even harder to implement them, for the factories are not sure which one they should follow," said Li Qiang, founder of New York-based China Labor Watch.

Despite constraints on collective action, China's workers also are becoming more vocal in demanding better working conditions. Last year, workers staged 74,000 protests, up 16,000 from 2003.

But Fair Labor's van Heerden sees progress, at least among foreign companies operating in China.

"If you spend a lot of time on the ground in China," he said, "you would see that the situation is moving a lot quicker than expected."