The Financial Times is reporting that Foxconn, the major assembler for Apple, is to have truly independent elections for properly independent unions in its Chinese factories. This is a significant advance for civil liberty but it's not going to make all that much difference to either wages or conditions in the plants.
Foxconn, the contract manufacturer whose biggest customer is Apple, is preparing genuinely representative labour union elections in its factories in China for the first time, a powerful sign of the changes in the workshop of the world demanded by an increasingly restive workforce.
This would be the first such exercise at a large company in China, where labour unions have traditionally been controlled by management and local government. Foxconn is the country's largest private sector employer with 1.2m mainland workers.
The Taiwanese company, the world's largest contract maker of electronics, said that the new election process would see a larger representation of junior employees and no management involvement.
From one point of view this is simply excellent news. Freedom of association is as important a civil liberty as freedom of speech and that China has had little of either but is getting more is just, well, it's just simply good news that millions of our fellows are gaining more of the freedoms that we rather take for granted.
However, it's unlikely to change very much in the way of wages or working conditions. Those are determined by much larger forces than the existence of union representation or not. Yes, I know, it's part of the accepted history that it was only unions that increased the wages of the working man in our own past. But I'm afraid that this is very largely nonsense. For example, Ford did not double his wages to $5 a day to stave off a union nor under union pressure. He did it simply so that he could lower his hiring and training costs.
Similarly, Chinese manufacturing wages have risen by some five times (yes, really, from around $1,000 a year to a little over $5,000 a year) just since 2000. And given that this is the first major company to offer properly free union elections it cannot be free unions which caused that rise in wages.
What has caused the rise in wages (and improvements in working conditions, to the economist these are also "wages") is quite simply the increasing shortage of labour in China. To the point that the country is about to pass its Lewis Turning Point:
Within a few years the working age population will reach
a historical peak, and then begin a precipitous decline. This fact, along with anecdotes of
rapidly rising migrant wages and episodic labor shortages, has raised questions about
whether China is poised to cross the Lewis Turning Point, a point at which it would move
from a vast supply of low-cost workers to a labor shortage economy. Crossing this
threshold will have far-reaching implications for both China and the rest of the world.
One of those implications is that the increasing shortage of labour over the past few years has led to very quickly rising wages and better working conditions. All in the absence of unions. The second implication is that the future increasing shortage of labour will lead to wages and working conditions improving again: whether unions exist or not.
Yes indeed, we should celebrate that Chinese labour is gaining, even if so far only in one employer, proper freedom of association. This is a civil liberty which should be available to all. But don't think that this is going to make much difference other than at the margin. The forces driving up Chinese wages, improving working conditions, are far larger and more powerful than the existence of an independent union or not. And conditions will continue to improve whether the union exists or not.
