Wall Street Journal: China Pressures Wal-Mart to Settle Labor Dispute

China Labour Bulletin is quoted in the following article. Copyright remains with the original publisher.

May 28 2014

BEIJING--Authorities in China are pushing Wal-Mart Stores Inc. to settle a dispute with employees in a case that highlights the increasing power of workers in China's labor market.

Wal-Mart was told by authorities in the city of Changde to file by Friday plans to settle a dispute with employees who worked at a store that has since closed, according to a spokeswoman for an arbitration committee hearing the claim. More than five dozen employees say they didn't receive proper compensation or notification about the store closing and are demanding that Wal-Mart double workers' severance, said Huang Xingguo, an employee and union official at the store who has led the effort.

The arbitration committee, part of the city's court system, has requested that Wal-Mart seek resolution outside of the courts, the spokeswoman said.

Wal-Mart said it would cooperate with authorities and has been looking for ways to reach an agreement that works for the union and the company. "We continue to seek a mutual settlement through reasonable and lawful methods," a Wal-Mart spokesman said.

He said the company acted within Chinese law, giving employees a two-week notice before closure and offered staff opportunities for relocation to work in stores in other cities. He also said it paid "fair compensation in accordance with the law." Wal-Mart didn't disclose the size of the severance, saying it depended on the individual and tenure.

Labor disputes are nothing new to China, where sometimes violent protests over the years have disrupted the manufacture of everything from Japanese cars to Nike and Adidas shoes. But labor experts say the relatively tame dispute in Changde marks a shift for workers' activism in China.

Mr. Huang, a former administrative manager at the store, has been leading the dispute since it began in March. He said that the arbitration court's move this week is "a milestone victory."

"It means that at least the government acknowledged that our efforts to defend our rights are within the framework of the law," he said.

The All-China Federation of Trade Unions, China's only legal union, is controlled by the Chinese Communist Party rather than by workers. Local chapters of the union have typically been led by company managers who have muffled workers complaints to safeguard corporate interests to ensure local stability and economic growth, said Liu Jiayi, a spokesman for Hong Kong-based workers' rights group China Labour Bulletin.

In this case, Mr. Liu said, local union leaders led by Mr. Huang have pushed their dispute with Wal-Mart to local authorities without explicit instruction from the national union.

"We are a grass-roots level of the federation and we work under its guidance," Mr. Huang said. "But for this dispute, we acted on our own."

The trade union federation didn't respond to a request for comment.

Experts say labor groups are increasingly active. "We've noticed more and more unprecedented behavior from the unions," said Kevin Slaten, program coordinator of China Labor Watch.

The labor market continues to tighten in some parts of the Chinese economy despite a slowdown in growth. Last year, China's 2013 average annual wage of urban private employees totaled 32,706 yuan (about $5,229), up 13.8% from 2012, according to official statistics. The increase was the slowest in four years but still well above last year's economic growth rate of 7.7%.

Mr. Huang said 69 of the 135 total employees at the store have been in arbitration talks with Wal-Mart.

Mr. Huang said he joined Wal-Mart in February 2009 as a cashier and worked his way to an administrative manager. He was elected the chairman of the union in March 2013. The Changde native said he plans to start his own business to sell black tea and rice after the dispute is settled.

Wal-Mart in October said it plans to close 15 to 30 stores over 18 months as part of a goal to improve its operations in the country. The spokesman said the retailer has announced 20 closures to date.

China is a key growth market for Wal-Mart, but the Bentonville, Ark., retailer has faced obstacles including repeat fines on food safety and stiff competition with local rivals. Authorities cried foul on Wal-Mart in January, claiming the retailer sold donkey meat that turned out to be fox. Wal-Mart recalled the meat and says it has increased testing and food-safety inspections.

Wal-Mart is No. 3 in market share in the country, according to the most recent data from market-research firm Euromonitor International. That is behind No. 2 China Resources Enterprise Ltd., which operates 4,100 stores under 10 retail brands, and No. 1 Sun Art Retail Group Ltd., a joint venture between Taiwanese conglomerate Ruentex Industries Ltd. and France's Groupe Auchan SA.

Liyan Qi and Laurie Burkitt

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