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China's Labor Pains

Young factory workers are demanding a share of China's new prosperity. Will their next demands be for political rights?

By David Barboza in Shanghai

Tan Guocheng was just 19 when he left his home in central China four years ago in search of a factory job. Tan hoped that working on an assembly line for a company like Honda would be his path to a middle-class future.

For years, China's economic boom has been driven by young people like Tan from poor, interior provinces migrating to coastal factory towns. They work long hours for little pay, often six or seven days a week, in steamy, high-pressure factories. But now many of them want better jobs and a larger share of the fruits of China's economic miracle.

Last January, when Honda offered to increase Tan's $175 monthly salary by only $7, he was distraught. He planned to marry soon, and it was not enough money to buy a house or raise a child. So he decided to fight back.

The strike he led at the Honda factory in Foshan last spring eventually resulted in a 24-percent wage increase. But beyond that, news of the workers' resistance, which spread quickly via cellphone and the Web, inspired similar strikes at factories across the country that make everything from auto parts to flat-screen TVs for export to the U.S. and the rest of the world.

For the last three decades, China has been an odd hybrid of communism and capitalism. In 1978, China began opening up its state-run economy to free-market capitalism, but politically it remains an authoritarian state, run by the Communist Party.

Using Technology to Organize

Wielding cellphones and computers, members of China's emerging labor movement so far seem to be outwitting official Web censors in an effort to build broad support for what they say is a war against greedy corporations and their local government allies.

Ironically, the labor movement might not be possible if the Chinese government had not made a concerted effort in the last decade to shrink the country's digital divide by lowering the cost of mobile phone and Internet service. That's given China the world's biggest Internet population (400 million) and allowed even the poorest of the poor to log on to the Web and air their labor grievances.

"This is something people haven't paid attention to—migrant workers can organize using these technologies," says Guobin Yang, a professor at Barnard College and author of The Power of the Internet in China: Citizen Activism Online.

There may be other reasons the Chinese government is allowing the labor movement to press its demands for higher wages. Policy makers hope higher wages will ease a widening income gap between the rich and the poor, and stimulate domestic consumption: If China's workers start buying more of the TVs and smartphones they produce, China will be less reliant on exports to the U.S. and other countries to keep its economy growing.

But a looming question is whether the government will crack down on the worker uprisings if they become too big a threat to stability—or if people begin to demand political rights in addition to better work conditions.

In choosing to strike, Chinese workers are taking advantage of new clout they have as a result of a labor shortage. The number of Chinese in their late teens and early 20s—the age range preferred by factory employers—has leveled off in recent years because of increasingly strict enforcement of the "one child" policy through the 1980s and 1990s, and is expected to fall in the coming years.

At the same time, China has rapidly expanded university enrollments, resulting in fewer less-educated workers willing to accept the rigors and monotony of assembly lines.

More Expensive iPhones?

Unlike in the United States and many other countries, Chinese workers don't have the right to form labor unions independent of those controlled by the government, which in theory represent workers but in practice have close ties to management.

But with China's economy growing at an average rate of 10 percent, workers have more leverage to demand higher pay. Even before the wave of strikes, some factories had begun raising wages just to attract enough workers to keep assembly lines running at a full pace.

Now, largely as a result of the strikes, more factories are raising wages, and local governments are increasing minimum-wage standards. The salaries of factory workers in China are still low compared with those in the U.S. and Europe. But economists say wage increases will eventually ripple through the global economy, driving up the prices of everything from cellphones and computers to T-shirts.

As China discovers some of the messier aspects of capitalism, the two-decade-long trend of global companies moving their manufacturing to China to save money could be coming to an end.

Says Dong Tao, an economist at Credit Suisse, "This may be the beginning of the end of an era."

(The New York Times Upfront, Vol. 143, September 6, 2010)