The Contagious Revolt By A Chinese Worker That Shook Up The Global Economy

June 14, 2015 EcoVadis

A retrospective on the five-year anniversary of one worker’s courageous act of protest in China that sparked a chain reaction…

In May 2010, revolt was brewing in the Pearl River Delta, one of the most industrialized regions in the world and home to automobile parts manufacturers for Volkswagen and Toyota, among others. In the Honda transmissions factory of Nanhaï, where Tan Zhiqing had worked for nearly three years, workers were discouraged. The raise in monthly minimum wage that had been announced by the local government on the May 1st, from 831 yuan (110 euros) to 994 yuan (119 euros), had been partially rolled back by factory management, who also reduced social benefits by nearly the same amount. When all was said and done, the final raise was a mere 34 yuan (4 euros) per month.

On May 17, 2010, instead of reporting to his workstation, Tan Zhiqing pressed on the emergency button and stopped the production line. In no time, 50 other workers also stopped working. Four hours later, 100 workers were meeting with the aggravated management team. Negotiations were called for on May 20 and 21. They failed. On May 22, Tan rallied 300 workers for a sit-in. The bosses announced that he was fired. The strike intensified until it attracted the attention of the international media.

On June 4, under pressure, management agreed to a raise of 500 yuan per month, a salary jump of 24%. It was an unexpected success. Like a line of gunpowder, it immediately ignited more strikes. Honda was obliged to stop production in four of its establishments. According to the Guangzhou Trade Union Federation, over 100 strikes broke out over the next few days. On June 6th, Foxconn, in response to a scandal over a series of worker suicides, announced that it would raise monthly salaries from 1,200 to 2,000 yuan (a 66% raise).

Near the Toyota factory of Nansha, eight of the 14 main suppliers experienced workplace uprisings. Every one of them led to significant salary raises. On June 10, Bloomberg analyst Kevin Hamlin estimated that China had reached the “Lewis Turning Point” (named for Arthur Lewis, winner of the 1979 Nobel Prize), the critical point at which the work force of an emerging economy is no longer considered as unlimited, which in turn causes wages to rise. In October, Yiping Huang, a researcher at the University of Beijing, wrote that, “Economists still refuse the idea that China is nearing the Lewis Turning Point (…), but the business world considers that we are already there, as it is harder and harder to find employees and wages are skyrocketing.”

In 2010, the minimum wage rose by 22.8% as compared to an annual 12.5% rise between 2006 and 2010. As a result, Geoffrey Crothall told the China Labour Bulletin in 2011, “The global race to produce products at the lowest price, is over (…). We can find cheaper workers outside of China, but it is impossible to find so many of them.”

Since the spring of 2010, the social conflicts have not let up. The Human Rights League reports that, “the new generation of salaried workers is less likely to accept sub-standard work conditions.” Barely a day goes by that a strike doesn’t break out somewhere, like what happened in March 2015 at factories that supply Nike and Reebok, when 5,000 employees went on strike. Indeed, cell phones and social media now play a key role in spreading information to millions of workers, known as “digital rebels.”

Further, the majority of Western multinationals have set up responsible purchasing processes to encourage their suppliers to implement decent working conditions. These companies don’t only do it to minimize the risk of getting a bad reputation, but also to secure their supply channels. “Better transparency and continuous improvement in the supply chain is not simply a way to improve the image of those who give orders. It reflects a will to adapt in order to secure business,” commented Nathalie Perroquin, the Vice President of Corporate Responsibility for the Coty group.

On March 28, 1985, at three seconds before 10:00 a.m., Ronald Reagan rang the bell at the New York stock exchange, officially opening the trading day on Wall Street while exclaiming, “We are going to turn the bull loose.” This marked the symbolic departure point for unrestrained globalization. Will historians point out that twenty-five years later, on May 17, 2010 at 7:50 a.m., Tan Zhiqing retorted by pressing the emergency stop button of a Sino-Japanese factory while shouting, “Don’t work for such low wages!”?

Certainly, this gesture was just the manifestation of a fundamental course that had already begun. This type of incident was not the first of its kind, and the trend would inevitably have been confirmed three or six months later. What’s six months in the scale of globalization? Not much. However, for a poor family in central China that has to choose between sending their daughter to school or putting her to work, a few hundred extra yuan over three or six months can represent an almost-existential difference.

Author: Sylvain Guyoton, Vice President of Research for EcoVadis

[Note: This article is an English translation of the French language articleEn Chine, le tournant du 17 mai 2010 bouscule l’économie mondiale

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