Aligning Rights and Incentives
Chapter 9: Labor resistance and local government – supplier collusion in post-1986 China
AbstractIn this chapter, we argue that labor violations persist in China because local governments and suppliers collude against the interests of workers, and often against the interests of multinational brands. Local government officials are willing and eager to work with supplier factories because the Chinese Communist Party (CCP) has created a political equilibrium through use of the cadre evaluation system and fiscal decentralization, which creates short time horizons and a ‘development and investment at all costs’ policy outlook. Those who perform well are rewarded with promotions and other material benefits. Furthermore, there are intense divisions within the worker cluster stemming from the hukou system and strict repression of independent unionization. This has prevented Chinese workers from forming a sustained or coherent countervailing force to business. These factors all combine to create immense barriers to change, even when opportunities for leverage exist. We examine two episodes of labor resistance at Foxconn and Yue Yuen factories. We find that while transnational campaigns and media attention did, temporarily, change the calculations of Foxconn, however, the firm still seems to be acting against the interests of its workers, just in different ways and in different locations. Local officials are still complicit. The unusual levels of alignment among workers during the Yue Yuen strike managed to briefly break down the alignment between local governments and suppliers. However, investment and development had to be threatened in order to change the calculations of the firm and the local government. These two within-country cases illustrate how long-term beliefs about rewards and punishments for upholding labor standards are incredibly difficult to change. They are even more difficult to change in places where the political system consistently reinforces divisions among workers, prohibits independent unionization, and rewards local officials for economic development and revenue generation above all else.
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