Tripartite consultation in China: A first step towards collective bargaining?

International Labour Review, Vol. 147 (2008), No. 2–3

Tripartite consultation in China:A first step towards collective bargaining?

Jie SHEN* and John BENSON**

Abstract. Tripartite consultation has become widely established in China and isoften referred to as “collective bargaining” by the Government and the All-ChinaFederation of Trade Unions. This article reviews its development and structure‚ andexamines its role in dispute settlement‚ labour regulation and collective bargaining.China’s tripartite consultation system is found to differ from that advocated by theILO due to its lack of neutrality and independent workers’ representation‚ poor legalenforcement of consultation outcomes‚ and restricted responsibilities. Notwithstand-ing these major deficiencies‚ the authors conclude‚ such tripartite consultation is afirst step towards more genuine collective bargaining.

any countries have‚ at different times‚ sought to resolve labour disputesM through some form of tripartite consultation (Trebilcock‚ 1994).Although there are various meanings to this term‚ “tripartite consultation” isgenerally understood to refer to a process whereby workers‚ employers andgovernment contribute to the development of labour standards and the protec-tion of workers’ rights through voluntary interaction and dialogue (Simpson‚1994). Such an approach has been supported by the ILO‚ which‚ since its incep-tion in 1919‚ has advocated tripartism as a means of reconciling the interests ofthe various social actors and of achieving fair and reasonable conditions of work.As part of its economic restructuring‚ the People’s Republic of China (PRC)recently introduced a formal system of “tripartite labour consultation”. Thisdevelopment is significant in that it occurred in the context of transition to a mar-ket economy‚ with increasing emphasis on the “rule of law”‚ the creation of a“harmonious society” and the building of new social and political institutions.

This article reviews and assesses the development and structure of China’ssystem of tripartite consultation. The Chinese Government and the All-ChinaFederation of Trade Unions (ACFTU) often refer to it as “collective bargaining”.

* Associate Professor‚ Department of Management‚ Monash University‚ Melbourne‚Australia‚ email: [email protected]. ** Professor and Head of School of Manage-ment‚ University of South Australia‚ email: [email protected].

Responsibility for opinions expressed in signed articles rests solely with their authors andpublication does not constitute an endorsement by the ILO.

Copyright © International Labour Organization 2008

232 International Labour Review

But the accuracy of this description has been challenged by a number of writerson the grounds that the Chinese system is not equivalent to Western-style collect-ive bargaining (Shen‚ 2007a; Warner and Ng‚ 1999; Zhu‚ Warner and Rowley‚2007). Despite its importance and widespread institutionalization throughoutChina‚ little research has been conducted into the characteristics and operation ofthis form of tripartism. In addition‚ past studies have not differentiated tripartiteconsultation from other forms of collective consultations such as bilateral nego-tiations between employers and workers or trade unions (Clarke and Lee‚ 2002;Clarke‚ Lee and Li‚ 2004; Warner and Ng‚ 1999). As a result‚ little is known aboutthe characteristics of Chinese tripartism‚ and any assessment of its collective bar-gaining credentials is therefore premature.

This article addresses these shortcomings by assessing China’s tripartiteconsultation system in terms of the role it plays in labour relations‚ particularlyin the settlement of labour disputes‚ the formulation of labour regulations andcollective bargaining – i.e. those functions suggested in the ILO tripartite model.Unlike previous studies‚ the article focuses on the formal tripartite consultationcommittees that involve employers‚ employees and government rather thanother forms of collective consultation. By doing so‚ it aims to provide a betterunderstanding of the formal tripartite system in order to help domestic andforeign managers deal more effectively with labour issues and to contribute topolicy debates concerning the future of Chinese tripartism. By adopting such afocus‚ the article is also expected to contribute to the literature on how economictransformation and transition can effect changes in micro-level activities such ascollective bargaining.

The article commences with a discussion of the ILO model of tripartism.This is followed by sections that outline the development of the Chinese systemand the structure of its committees. The functions of the committees are thenreviewed and analysed in terms of the ILO model by drawing on a range of offi-cial reports and studies‚ and on our own research. This comparative analysisallows for the workings of the committees to be assessed from the broader per-spective of what are accepted to be the key features of any system of tripartism.On the basis of this assessment‚ we argue that the Chinese system of tripartiteconsultation is not up to the standards set by the ILO model due to its lack ofneutrality‚ poor legal enforcement of consultation outcomes‚ the lack of inde-pendent workers’ representation‚ and its restricted responsibilities. The articlethen considers the relationship between Chinese tripartism and collective bar-gaining‚ as well as the future outlook for the tripartite system. Notwithstandingits deficiencies‚ we conclude that China’s system of tripartite consultation maywell be a first step towards the emergence of a more genuine form of collectivebargaining in the future.

The ILO model of tripartismTripartism underpins the philosophy and operations of the ILO. In the ILOmodel‚ tripartite consultation is supposed to play three roles in labour relations‚

Tripartite consultation in China 233

namely labour dispute resolution‚ labour regulation formulation and collectivebargaining. From its inception in 1919‚ the ILO has promoted tripartism amongits member States as a means of giving voice to all parties and preventing labourdisputes from becoming intractable. In such a tripartite system‚ the governmentconsults representatives of employers and workers and involves them in the for-mulation of socio-economic policies and‚ in particular‚ the legal framework oflabour relations at the national and industry levels. The social partners’ viewsand concerns are thus reflected in the policies and laws adopted (de Silva‚1997a).

At the heart of the concept of tripartism‚ and often more visible‚ is collect-ive bargaining. Collective bargaining has been the principle mode of governanceof employment relations in market economies for most of the past century(Brown et al.‚ 2000). Conceptually‚ collective bargaining is defined as “volun-tary negotiation between employers or employers’ organizations and workers’organizations‚ with a view to the regulation of terms and conditions of employ-ment by means of collective agreements”.1 The premise of collective bargainingis that independent trade unions represent their members and have bargain-ing power in labour relations on account of their collective nature. The develop-ment of genuine collective bargaining thus presupposes freedom of associationfor workers and a well-developed labour law system (de Silva‚ 1996).

Whilst collective bargaining occurs between an employer (or employers’organization) and the representatives of employees‚ a neutral third party canassist in this process. Indeed‚ in the ILO’s tripartite model the three parties aresupposed to be independent and strong enough to carry out a meaningful “socialdialogue”. For example‚ the Canadian Industrial Relations Board‚ a tripartitebody made up of equal numbers of employees’ and employers’ representatives‚administers the Canadian Labour Code‚ particularly in regard to the conduct ofcollective bargaining. The Board is responsible for approving the union as thebargaining agent‚ and assists in the conciliation process (ACTU‚ 2006). A similarbody in the United States is the National Labour Relations Board (NLRB)‚which recognizes unions for the purpose of bargaining and hears unfair labourpractice complaints (ACTU‚ 2006; GAO‚ 2002). As these examples suggest‚ atripartite consultation committee can serve as a third party in the collective bar-gaining process‚ although the collective bargaining itself is typically bipartite (deSilva‚ 1996).

Indeed‚ various forms of tripartite consultation are often seen as the pref-erable means for resolving labour disputes in Western market economies (ILO‚1999)‚ largely because the outcomes are accepted and owned by the partiesthemselves (Honeyman and Yawanarajah‚ 2003). The successful resolution of adispute through such consultation depends on the balance of bargaining powerbetween the parties and whether they perceive the final settlement to be fair (de

1 Quoted from Article 4 of the ILO’s Right to Organise and Collective Bargaining Conven-tion‚ 1949 (No. 98).


Silva‚ 1997b). When tripartite consultation is used to resolve a labour dispute‚the party serving as the mediator is supposed to be neutral and disinterested inthe outcome: its role consists in facilitating communication and negotiationbetween the parties to the dispute‚ helping them to focus on the real issues andgenerating options that meet their interests or needs. In other words‚ the key tosuccessful mediation therefore lies in the impartiality of the mediator andbalanced bargaining power between the disputants. The neutrality of the thirdparty gives the other parties confidence in the consultation process and thusplays a crucial part in facilitating a settlement. Whether and how the Chinesesystem of tripartite consultation performs these functions will be the primaryresearch objectives of this article.

Development of the Chinese tripartiteconsultation systemSince 1978‚ when China embarked on market-oriented economic reforms andthe opening up of trade with Western economies‚ the incidence of violations ofworkers’ rights and labour disputes‚ both individual and collective‚ hasincreased substantially. In 2005‚ there were 314‚000 disputes‚ which representedan increase of 20.5 per cent on the 2004 figure (MOLSS‚ 2006). Prior to 1978‚ theinterests of Chinese workers and enterprises were reconciled through politicaland administrative mechanisms‚ and when labour disputes did occur they wereresolved by Chinese Communist Party (CCP) organs within the enterprise or atthe industry level (Ng and Warner‚ 1998; Shen‚ 2006). In the post-1978 market-oriented economy‚ however‚ these CCP bodies proved increasingly incapable ofresolving labour disputes effectively.

As employment relations became more diverse‚ sophisticated and intenseas a result of economic reform‚ the Chinese Government turned to tripartism. Indoing so‚ its overriding objectives were to provide for a mediation mechanism todeal with the increasing number of labour disputes‚ to promote the conclusion ofcollective agreements‚ and to involve all major players in employment relationsin dealing with labour issues (Shen‚ 2007a). Such an approach had becomenecessary because economic reform had shifted responsibility for profits andlosses to the individual enterprise. Workers‚ once the so-called masters of thenation‚ had become employees and were now concerned primarily with theirincomes‚ job security and personal development‚ while enterprise managementhad become employers with a focus on efficiency‚ profits and organizational suc-cess (Warner‚ 1995).

China’s system of tripartite consultation is rooted in the country’s histori-cal and cultural backgrounds. Historically‚ Chinese tradition required conflictsor disputes to be resolved through consultation involving a group of senior fig-ures in society (Fox‚ Donohue and Wu‚ 2005). Its system of labour tripartism isalso in line with the CCP’s socialist ideology‚ which assumes unity of interestsbetween workers and employers: labour disputes are usually regarded as“people’s internal conflicts” (ren ming na bo mao deng) and many disputants


wish to solve them before they are brought to the relevant arbitration body or tothe courts (Shen‚ 2007a).

China’s tripartite system is also the result of pressure exerted by inter-national organizations‚ including the ILO‚ the World Trade Organization(WTO) and the International Confederation of Free Trade Unions (ICFTU).The ILO has been active in promoting its standards and the principle of a “cor-poratist” structure in employment relations in China. International and Chinesescholars and practitioners in the fields of human resource management andindustrial relations (including top-level ACFTU officials) also did much to per-suade the Chinese Government to adopt tripartism by demonstrating its pos-sible benefits (Shen‚ 2007a). The Government was by then searching forsolutions for dealing with the growing number of labour disputes and was willingto accept such advice as would help it to maintain social stability. Against thisbackground‚ tripartism appeared to offer the ideal means for addressing thedeterioration of labour relations within the current political framework.

Although tripartite consultation had been introduced on an experimentalbasis in 1986‚ as part of the system of mediation and arbitration for individualand collective labour disputes‚ it was not until the early 1990s that a more formaland systematic tripartite consultation system began to take shape. In November1990‚ China ratified the ILO’s Tripartite Consultation (International LabourStandards) Convention‚ 1976 (No. 144). Underpinning this Convention is theconcept of “representative organizations”‚ defined as “the most representativeorganizations of employers and workers enjoying the right of freedom of associ-ation” (Article 1). For the first few years‚ however‚ this commitment remainedlargely a dead letter. Guided by the “Rules for Organizing and Operating Enter-prise Mediation Committees (1993)”‚ the early consultation system was pri-marily an enterprise-level development. Following the transposition of ILOConvention No. 144 into the 1994 Labour Law‚ other regulations concernedwith tripartite consultation were promulgated. In 1996‚ the ACFTU‚ the Minis-try of Labour and Social Security (MOLSS)‚ the State Economic and TradeCommission‚ and the China Enterprise Confederation (CEC) jointly issued a“Circular on Gradual Implementation of Collective Negotiation and CollectiveContracts”. This circular stressed cooperation between the labour adminis-tration‚ employer associations and trade unions in promoting collective agree-ments‚ particularly in “foreign-invested enterprises” (FIEs). A year later‚ theMOLSS issued “Several Opinions on Collective Wage Consultation in FIEs”‚focusing on the promotion of “wage consultations”. In 1998‚ the ACFTU issued“Guidelines for the Participation of Trade Unions in Wage Consultations”‚which extended wage consultation to all enterprises and highlighted the role ofenterprise unions in the consultation process.

With the adoption of the revised Trade Union Law in 2001‚ which alsoincorporated the provisions of Convention No. 144 (Yu‚ 2005)‚ a national systemof tripartite consultation was finally inaugurated in August 2001 whenthe National Tripartite Consultative Committee (NTCC) was established. TheNTCC is chaired by a Deputy Minister of the MOLSS and composed of five


vice-chairs who are department heads from the ACFTU‚ four department direc-tors from the MOLSS and three senor officials of the CEC. The first meeting ofthe NTCC was held in November 2001. This meeting defined the functions of theNTCC and authorized a campaign for the establishment of tripartite consult-ation committees (TCCs) at the provincial level by the end of 2002. The secondmeeting of the NTCC‚ in February 2002‚ called for the extension of TCCs tomunicipalities and townships across the country.

The significance of establishing the tripartite consultation system was fur-ther stressed in the “Guiding Opinions on the Establishment of a Sound Systemof Tripartite Consultation for Labour Relations” (hereafter referred to as theGuiding Opinions)‚ issued jointly in August 2002 by the MOLSS‚ the CEC andthe China Enterprise Directors’ Association (CEDA) (MOLSS‚ 2002). Thisinstrument recognized tripartism as an important mechanism for protecting theinterests of the parties and harmonizing labour relations‚ and as an effectivechannel for collective bargaining in the Chinese socialist market economy. Inparticular‚ these “Guiding Opinions”‚ specified that each provincial level TCCshould involve the labour and social security administration bureau‚ regionaltrade unions and a representative organization of enterprises. Also stressed inthe Guiding Opinions was the NTCC’s call for extension of the system:

Areas that have already established a tripartite system of consultation shallurgently focus on undertaking coordination regarding the most important issuesin labour relations‚ move forward in the perfection of the system and procedures‚and from the foundation of overall practical experience gained‚ gradually extendto the municipal and county level‚ so that a multiple level system of tripartitecoordination takes shape (MOLSS‚ 2002).

These developments were followed up in 2006 when the ACFTU‚ the MOLSSand the CEC issued the “Opinions regarding the Work of Developing Regionaland Industry-specific Collective Consultations”‚ which further promoted tripar-tite consultations.

In practice‚ tripartite consultation appears to have become increasinglypopular as from the late 1990s. For example‚ at the enterprise level‚ a pilot tri-partite consultation programme launched in the PuTuo District of Shanghai in1997 had by the end of 2001 been extended to 11 districts and counties‚75 streets‚ 112 towns and 45 economic development zones. This programmeappears to have been embraced by industry‚ as illustrated by the fact that 80 percent of companies of the Shanghai Electronics Group conducted tripartiteconsultations between 1997 and 2001. In 2001‚ seven large-scale tripartite con-sultations were held in the Shanghai chemical industry‚ over wages‚ insuranceand employees’ democratic rights. Overall‚ by the end of 2001 in Shanghai‚some 29‚983 enterprises in 26 industries had established labour consultationsystems; 227 enterprises in 26 industries‚ including textiles and light industryhad established sectoral consultation systems; and a further 19 districts andcounties‚ and 143 sub-administrative zones (covering streets‚ towns and eco-nomic development zones) had established tripartite consultation systems(SHMTUC‚ 2002; Shen‚ 2006).


The tripartite consultation system has been set up in other regions as well.For example‚ Beijing had established TCCs in five districts by May 2002. Dalianhad by then also established tripartite structures in all 13 of its subordinateadministrative units (Clarke and Lee‚ 2002). By the end of 2002‚ TCCs had beenestablished in all cities and counties in Jiangsu and Henan Provinces. Nationally‚by the end of 2004‚ 31 provincial TCCs had been established. According to theACFTU (2005)‚ 94.1 per cent of municipal cities‚ 53.5 per cent of counties and2‚240 streets and communes had established TCCs.

Nevertheless‚ under the current labour law‚ enterprises have no legal obli-gation to establish internal TCCs. Indeed‚ Fu and Choy (2004) suggest that mostnew enterprises – particularly non-state-owned enterprises (SOEs) – had notset up enterprise TCCs. A recent empirical study found that only 32 of the192 Chinese enterprises surveyed (16.7 per cent) had established enterprise-level TCCs (Shen‚ 2007a). While TCCs have been widely established above theenterprise level these findings suggest a reluctance to deal with labour issuesthrough such a mechanism at the enterprise level. This is a surprising findinggiven that consultation is generally perceived by Chinese managers and workersas a low-cost and highly efficient mechanism for addressing labour issues. Suchenterprise-level TCCs as were established were often found in SOEs‚ althoughmany of these TCCs were subsequently disbanded in the course of enterpriserestructuring and privatization driven by the economic reforms (Shen‚ 2007a).

The structure of tripartite consultation committeesThe 2001 Trade Union Law stipulates that the TCCs should consist of represent-atives of the labour and social security bureaus‚ trade union organizations‚ andorganizations of enterprises (article 34). The labour and social security bureausare the MOLSS at the apex level and its local branches at other levels. TheMOLSS‚ under the State Council‚ is in charge of the management of labourthroughout the country. Under chapter 1‚ article 9 of the 1994 Labour Law‚ thelocal labour bureaus are responsible for the management of labour within theareas under their jurisdiction. Trade unions are represented by the ACFTU atthe national level and by its branches at other levels.

The representative of employers on the TCCs is the CEC. This bodyemerged in 1999 from the merger between the China Enterprise ManagementAssociation‚ founded in 1979‚ and the China Enterprise Directors’ Association‚which was established in 1983. The CEC’s diverse membership includes enter-prises‚ companies‚ entrepreneurs‚ provincial and municipal associations‚industry associations and trade associations. By the end of 2004‚ the CEC had545‚000 members representing 34 industries and distributed across 30 provincesand 260 industrial cities and regions.

According to the 1994 Labour Law‚ the 2001 Trade Union Law and theGuiding Opinions of 2002‚ the TCCs should be chaired by a representative ofthe labour and social security bureau. However‚ Clarke and Lee (2002) foundthat the municipal TCCs had three representatives from each party and that the


chair rotated between them‚ rather than being held by the representative of thelabour and social security bureau. The 1994 Labour Law also specifies thatthe labour and social security bureaus should represent the interests of bothemployers and employees in TCCs above the enterprise level. Based on the trad-itional concept of the unity of interests of employers and employees‚ the repre-sentative of employers is also required to protect the interests of both employersand employees‚ rather than those of employers alone. In reality‚ however‚ theemployer organizations support only the enterprise management’s interests‚namely profits‚ which is also consistent with the interests of the State. Politically‚enterprise organizations are subordinate to the CCP‚ as are the trade unions.Constitutionally‚ trade unions should represent workers on the TCCs; however‚since trade unions have to uphold the CCP’s ideology – namely‚ unity of inter-ests between employers and employees – they are also required to represent andprotect the interests of both employers and workers.

The subordinate status of the enterprise and trade union representativeshas been confirmed by Clarke and Lee:

Tripartite consultation provides a channel through which enterprises can petitionthe city government rather than a means for their participation as employers inthe consideration of labour issues. … CEC does not effectively represent theinterests of employers‚ nor does ACFTU effectively represent the interests ofemployees … both organizations are more strongly influenced by the Party andthe government than they are by their own membership (2002‚ pp. 69 and 72).

According to these authors‚ few officials of the CEC or the ACFTU have hadany serious disagreements with the MOLSS. The relations among the represent-atives on TCCs above the enterprise level are depicted in figure 1.

The Government has encouraged TCCs to establish mediation commit-tees at the enterprise level in order to resolve labour disputes internally. Accord-ing to the 2003 “Rules for Organizing and Operating Enterprise MediationCommittees”‚ if an enterprise has subsidiaries‚ TCCs should be established atboth the parent company and subsidiary levels. The three parties represented on


the TCC are different at the enterprise level from those specified for otherlevels. The 1994 Labour Law stipulates that an enterprise-level TCC should becomposed of worker representatives‚ the representatives of the employer‚ andtrade union representatives. The chairperson of this committee should be atrade union representative (chapter 5‚ article 80).

The representative of the employer on the TCC is the legal representativeof the enterprise‚ i.e. the enterprise owner in a private enterprise or the execu-tive manager in any other type of enterprise. According to the 1994 Labour Law‚workers’ representatives should be elected by workers or workers’ councils andrepresent the interests of workers. In reality‚ however‚ worker representativesare often appointed by the enterprise management. In most circumstances‚ theindependence of worker representatives is questionable as they are subordinateto both enterprise management and enterprise unions. Moreover‚ enterpriseunions are financially dependent on the enterprise and their officials are typi-cally appointed by management. In other words‚ not only are enterprise unionssubordinate to enterprise management‚ but they are also a part of enterprisemanagement. The relations between the representatives on enterprise-levelTCCs are shown in figure 2.

Roles of tripartite consultation committees

Labour dispute resolutionIn the Chinese system‚ the parties to a labour dispute are encouraged to reach asettlement through consultation‚ but they are not free to choose their own medi-ator. The 1994 Labour Law and the 2001 Trade Union Law specify that the“mediator” must be the TCC at the appropriate level (excluding the NTCC).Joint labour consultation is widely used in handling employment relations issues‚often prior to‚ or in the process of‚ arbitration‚ but also in the process of litigation.There are many reasons for its widespread use‚ including reduced time and costs‚as well as the fact that the process is designed to maintain the relationship


between the parties who will have to deal with each other again‚ and may helpthem learn how best to handle future conflict with other parties (Mo‚ 2000).

When a labour dispute occurs‚ the parties involved can apply to the labourdispute consultation committee of their enterprise for mediation pursuant tochapter 5‚ article 79 of the 1994 Labour Law. This must be done in writing within30 days of the occurrence of the dispute (Article 14 of the 1993 Rules for Organ-izing and Operating Enterprise Mediation Committees). There is no require-ment that the consent of both parties to the dispute be obtained beforeproceeding with mediation. Consultation is normally regarded as unsuccessful ifa TCC fails to reach an agreement within 30 days (Article 10 of the 1993 Regula-tions on Resolving Labour Disputes). According to Fu and Choy (2004)‚ theTCCs in Jiangxi Province handled 2‚115 labour disputes between 2001 and 2003.Of these‚ only 177 were resolved. This represents a settlement rate of 8.4 per cent– and Jiangxi’s situation appears to reflect the situation nationwide. The TCCsexamined in another study resolved somewhere between 5 and 15 per cent of thelabour disputes referred to them (Shen‚ 2007a). In both of these examples‚ how-ever‚ it is likely that the final settlement rates would have been higher if disputessettled after the expiry of the mandatory 30-day period had been included.

According to Shen (2007a)‚ TCCs are not normally approached byworkers when labour disputes occur: 85 per cent of the workers in his samplereported that they would not go to the TCC for help if they were involved in alabour dispute. When a labour dispute occurs‚ the aggrieved person generallyappeals to the trade union or a local government body‚ such as the industrybureau‚ rather than the TCC.2 Relevant trade unions (including union councilsabove the enterprise level) or local government bodies then coordinate the pro-ceedings between the parties to the dispute. Such reliance on trade unions orlocal government bodies suggests that workers prefer some administrativeauthority to be involved in mediation of the dispute. When unions or industrybureaus deal with labour disputes they do not normally involve TCCs. Insome government statistics‚ however‚ labour disputes resolved through TCCshave been merged with those settled through mediation by unions or industrybureaus alone (Shen‚ 2007a).

Due to a lack of reliable statistics‚ it is not known how many labour dis-putes have been dealt with and settled through the tripartite consultation systemnationally. However‚ empirical evidence suggests that the tripartite consultationsystem has been relatively ineffective in the resolution of labour disputes com-pared to other dispute settlement mechanisms‚ particularly arbitration (Shen‚2007a). Given the system’s nationwide coverage‚ the TCCs thus appear to havehad a limited impact in this respect.

The ineffectiveness of tripartite consultation in dispute resolution can beexplained by two reasons. The first is the lack of adequate legal enforcement ofmediation outcomes. Under the 1994 Labour Law and the 2001 Trade Union

2 Industry bureaus are government agencies with responsibility for administering all labourand business matters pertaining to particular industries.


Law‚ the TCCs are encouraged to mediate labour disputes but not empoweredto settle them. Unlike labour arbitration and litigation‚ TCC proceedings cannotproduce rulings on the cases they deal with because the process is voluntary. Fur-thermore‚ although the 1994 Labour Law stipulates that settlements reachedthrough mediation are to be implemented by the parties involved (article 80)‚the disputants are not forced to reach or accept a mediated settlement. Ifconsultation fails‚ the parties can submit the dispute to arbitration. Consult-ation‚ however‚ can continue during arbitration and the labour litigation process(article 77). Moreover‚ some disputes are triggered by management corruption‚massive workforce reduction and non-payment of wages or insurance contribu-tions – situations resulting from enterprise restructuring and bankruptcy whichare technically beyond the TCCs’ terms of reference (Shen‚ 2007a).

The second reason for the ineffectiveness of tripartite consultation as ameans of dispute settlement is its lack of impartiality. Since the tripartiteconsultation system was based on the belief that the interests of employers andemployees were the same‚ the TCCs were supposed to be neutral. However‚within TCCs only the Government and union councils at higher levels protectthe interests of both employers and employees. Employer organizations repre-sent only the interests of employers and‚ since the Government has retreatedfrom managing enterprises directly‚ enterprise management has assumedalmost unlimited power over employment relations. The influence of the labourdepartments over enterprise management’s interest in profit and competitive-ness – especially in regard to terms of employment above the statutory minimumstandards – is declining‚ and the resulting vacuum has not been filled by tradeunions. It has also been argued that enterprise-level unions are a part of enter-prise management and that since unions and workers’ representatives at thatlevel are economically dependent on enterprise management‚ they tend to pro-tect the economic interests of employers (Shen‚ 2007a). As a result‚ the TCCshave hardly been in a position to act as impartial mediators in labour disputeresolution. Indeed‚ arrangements for tripartite consultation with workers havetended to be undermined by the economic reforms‚ which have stressed man-agement prerogative almost to the exclusion of all else‚ with many managersnow actually hostile towards consultation with workers (Warner‚ 1995; Whyte‚1999). Therefore‚ with workers seeking expedient and impartial channels tosettle their grievances‚ tripartite consultation has become a last resort for thehandling of labour disputes.

The formulation of labour regulationsThe responsibilities of the TCCs for researching and analysing the effects ofeconomic restructuring and socio-economic development on employment rela-tions and making suggestions for their adjustment and regulation have beenspecified in various statutory instruments‚ including the 1994 Labour Law andthe Guiding Opinions. The NTCC has been involved in the formulation ofnational labour and social security regulations‚ policies and measures aimed at


readjusting the interests of the three parties. The national regulations concernedwith collective consultations – such as the “Regulations on Collective Con-tracts”‚ “Several Opinions on Collective Wage Consultation in FIEs” and the“Guidelines for the Participation of Trade Unions in Wage Consultations” –were developed through many rounds of tripartite consultations (Clarke andLee‚ 2002). In accordance with article 34 of the 2001 Trade Union Law‚ theTCCs at the provincial and county levels address regional policies‚ promotethe tripartite consultation system and participate directly in the mediation oflabour disputes‚ especially collective disputes. For example‚ through theconsultation system‚ regional labour administrations have established macroguidelines for wage levels and labour-cost indicators for enterprises. But thissuggests that the employers’ organizations and the trade unions are politicallysubordinate to the Government and that the TCCs have failed to give adequateexpression to the opinions of all three parties (Shen‚ 2007a). Although theACFTU provides leadership to its enterprise-level branches‚ this function isconstrained by its close links with the CCP and government agencies. Forexample‚ there is a strong desire within trade unions for independence‚ althoughno such demand has been formally put forward because the CCP regards inde-pendent workers’ organizations as a threat to its rule. At the enterprise level‚unions are an integral part of management. Union officials are appointed andpaid by employers or enterprise management. Many union leaders concomit-antly serve as directors of company offices or deputy general-managers. Undercurrent circumstances‚ if workers’ representatives were to disobey the orders ofmanagement‚ they may get demoted or sacked (SHMTUC‚ 2002; Shen‚ 2007a).It is thus clear that TCCs at the enterprise level are not usually involved in thepolicy formulation process.

Collective bargainingThe ACFTU was the driving force behind the development of the tripartite con-sultation system‚ and its primary objective was to promote collective bargainingand collective agreements – although the terms “collective negotiation” or “col-lective consultation” are more commonly used in China (Shen‚ 2007a). Thisobjective was – and‚ indeed‚ is – particularly important to the ACFTU becauseeconomic reform had diminished its traditional roles as “production cam-paigner” and “welfare distributor” (Zhu and Warner‚ 2005). The first tentativestep towards a collective bargaining system was taken in December 2000‚ whenthe Chinese Government announced its “Interim Measures on Collective WageNegotiation”‚ outlining the principles and details on the basis of which wagescan be increased through “collective consultation” between the enterprise andthe trade union/workers’ representatives. In 2003‚ the Government issued the“Regulations on Collective Labour Contracts”‚ which further promoted nego-tiations between employees and employers on wages‚ working time‚ workingconditions‚ training and welfare. A recent study found that multinational enter-prises in China that have signed collective agreements have experienced much


less labour confrontation than have those that have not signed such agreements(Shen‚ 2007b). However‚ in China a large proportion of “collective contracts”are signed by unions and management without collective consultation or bar-gaining (Shen‚ 2007a). And many employees do not know or care about theexistence of collective contracts because those contracts do not set new labourterms (ibid.). Nevertheless‚ the regulations on collective consultation andcollective labour contracts have been enshrined in the new Labour ContractsLaw‚ which came into effect on 1 January 2008. Given this new supportive legis-lative framework‚ collective bargaining is likely to grow significantly at theworkplace level‚ although the final form that this process will take remainsuncertain.

There are‚ however‚ no clear guidelines on the part that tripartite consult-ation will play in collective bargaining‚ the rights and responsibilities of repre-sentatives‚ or how they should reach and implement settlements. As observed inan earlier study‚ ”there is not yet any legislative basis for the functioning of theTCCs‚ which determine their own procedures within the framework of broadguidelines laid down by the NTCC‚ transmitted through the MOLSS to its pro-vincial departments and municipal bureaux” (Clarke and Lee‚ 2002‚ pp. 65–66).Moreover‚ no specific role has been set for the TCCs in collective negotiationsunder the Temporary Measures on Collective Wage Negotiation‚ the Regula-tions on Collective Labour Contracts or in the new Labour Contract Law.

In fact‚ the “collective consultation” advocated by the Chinese Govern-ment and the ACFTU is mainly bipartite‚ between employers and trade unionsor between employers and workers. The Government wants the trade unions touse their extensive membership to coordinate labour relations between manage-ment and employees. As stated in the Regulations on Collective Labour Con-tracts‚ “the representatives of workers should be appointed by enterpriseunions. If there is no union‚ the representatives should be elected by workers.The union chairperson should be the chief representative of workers”. Whiletrade unions have increased their influence over employment relations bybecoming involved in the determination of conditions of work above the statu-tory minimum standards‚ the new Labour Contract Law significantly restrictsthe role of workers in directly negotiating collective agreements without unionsupervision. According to this legislation‚ “collective contracts” should besigned by the trade union representing the workers and by the representative ofthe enterprise. If there is no workplace union‚ the signatory for the workersshould be a representative elected by the workers under the guidance of thenext-higher level union. To facilitate “collective consultation”‚ the ACFTU hasdeveloped manuals for collective bargaining and has trained a large number oftrade union and worker representatives.

As mentioned earlier‚ collective consultation in China has so far focusedon wages. But according to ILO research‚ the TCCs have not participated inactual wage determination‚ and their role in this respect has been confined to:• setting up an office for wage negotiations‚ thus providing an institutional

framework for such work;


• formulating policies for wage negotiations;• providing grass-roots trade unions and enterprises with information about

relevant laws and policy‚ guidelines for annual wage increases and labourcosts;

• and extending specific assistance to enterprises‚ setting good examples andproviding guidance (Fang‚ 2003).

It is also worth noting that the jurisdiction of enterprise-level TCCs canextend beyond labour issues. Indeed‚ Fu and Choy found that “a mediationcommittee‚ where it is well-established‚ would take in more disputes unrelatedto labour and serve as a general forum for dispute resolution” (2004‚ p. 17). Nev-ertheless‚ Benson et al. found that the role of enterprise trade unions “is to assistmanagement in achieving a productive enterprise” (2000‚ p. 191).

DiscussionAs Chinese economic reform continues‚ employment relations have becomemore complex‚ leading to widespread labour disputes and social instability.Since the late 1990s‚ in an attempt to create a more effective system for dealingwith these issues‚ the Government has established a tripartite consultation sys-tem involving the labour administration‚ trade unions‚ employer organizationsand workers at various levels. International organizations‚ such as the ILO‚WTO and ICFTU‚ have contributed to the adoption of this system by advocat-ing social dialogue mechanisms‚ ILO standards and the principle of a “corporat-ist” structure in Chinese industrial relations. The tripartite consultation systemis also consistent with the CCP’s socialist ideology of unity of interests betweenworkers and enterprises and the notion that labour conflict should be dealt withinternally at the enterprise level.

The three parties represented on the TCCs differ according to the levels atwhich they operate‚ as do the roles they play in labour relations. While the TCCsabove the enterprise level are composed of representatives of the governmentlabour administration‚ unions and employers‚ those operating at the enterpriselevel are composed of representatives of employers‚ unions and workers. Exceptat the national level‚ all TCCs are involved in resolving labour disputes‚ but theyhave been ineffective in this regard because of their lack of neutrality and theweak legal enforcement of mediation outcomes. TCCs above the enterpriselevel participate in the formulation of national or regional labour regulations byforwarding suggestions to the relevant national bodies. But their contributionsin this respect have been undermined by the three parties’ political subordin-ation to the CCP and the subordination of employers’ organizations to theGovernment. Enterprise-level TCCs‚ however‚ are rarely involved in the policy-making process because of the dependent status of enterprise unions andworkers’ representatives.

The ACFTU has been the main driving force behind tripartite consult-ation‚ its primary objective being to use such consultation as a mechanism for


persuading employers to sign collective agreements‚ although a large number ofcollective agreements are not the result of collective consultation (Shen‚ 2007a).The ACFTU sees the development of collective agreements as an opportunityfor consolidating its position in the face of economic reform and legitimatizingits continued existence. But when collective consultations are conducted‚ theTCCs are not usually involved since such consultations tend to be bilateral‚either between trade unions and management‚ or between workers and manage-ment. This modus operandi reveals considerable differences between theChinese system of tripartite consultation and the ILO model (see table 1 for acomparison).

Notwithstanding these differences‚ we contend that China’s current tripar-tite consultation system is a first step towards collective bargaining. A number offactors underpin this conclusion. First‚ tripartite consultation has been advo-cated as a means of promoting collective bargaining and collective agreementsin China. And it has indeed played a critical part in their development becausesuch tripartism has helped to persuade employers to accept collective bargainingand sign collective agreements. This‚ coupled with government endorsementof the ILO’s Right to Organize and Collective Bargaining Convention‚ 1949(No. 98)‚ and the nature and widespread development of TCCs‚ places the latterin a good position to oversee these processes.

Second‚ while the Chinese system of collective bargaining differs fromWestern-style collective bargaining because of the lack of independent workers’organizations‚ there are already signs that Chinese trade unions are becomingmore independent. And given the pace of economic reform‚ we seen no reasonfor this trend not to continue. Indeed‚ Shen and Leggett (2007) have argued thatChina has already seen the emergence of regional trade unions set up by higherlevels of the union hierarchy‚ which are independent from employers and repre-sent all employees in a particular region.

Third‚ since the system of collective bargaining has been reinforced in thenew Labour Contract Law‚ Western-style bargaining can be expected to grow

Table 1. A comparison of the ILO model and the Chinese tripartite consultationsystem

Role ILO model Chinese system

Labour dispute resolution The tripartite body is a neutral mediator

TCCs are not neutral

Formulation of labour regulations

Three parties are independent and equal

All parties are subordinateto the CCP‚ and enterprise unions and workers’ repre-sentative are subordinateto employers

Collective bargaining The tripartite body isresponsible for approvingbargaining agents; thereshould be an independentrepresentative of workers

TCCs are not responsiblefor approving bargaining agents;there is no independent unionor workers’ representative


considerably‚ although the time needed for such a transformation should not beunderestimated. In the process‚ tripartite consultation will continue to expand‚albeit within the framework of the emerging system of collective bargaining.Such consultation should therefore come to play a significant role in bridgingeconomic reform and labour relations‚ and it may well prove an importantvehicle for the emergence of a more genuine form of collective bargaining in thefuture.

ConclusionThe Chinese tripartite consultation system is a result of the deepening of eco-nomic reform‚ the Government’s retreat from direct enterprise management‚and the growing incidence of labour disputes. Although the tripartite consul-tation system is now widely established throughout China‚ little research hasbeen undertaken to investigate its characteristics‚ roles and prospects. This art-icle has aimed to contribute to the literature by reviewing the system’s develop-ment and structure with a focus on its role in employment relations. Theadoption of tripartite consultation has been driven by the same political andadministrative rationales as those which led to the endorsement of the ILO’sRight to Organize and Collective Bargaining Convention‚ 1949 (No. 98).Despite their fundamentally different roles in labour dispute resolution‚ labourregulation formulation and collective bargaining from those prescribed in theILO model‚ we have argued that the TCCs represent a first major step towardsgenuine collective bargaining. It now remains to be seen whether the other rolesof tripartite consultation as envisaged by the ILO are adopted.

ReferencesACFTU (All-China Federation of Trade Unions). 2005. Blue paper on the role of Chinese trade

unions in safeguarding the legitimate rights and interests of workers (2004). Beijing.Available at: http://www.sa8000.org.cn/NewsCenter/1235.html [accessed 9 Aug. 2006].

ACTU (Australian Council of Trade Unions). 2006. A fair go at work: Collective bargaining forAustralian workers. Available at: http://ww.actu.asn.au/images/Dynamic/attachments/5352/ACTU-coll-bargain-report.pdf [accessed 9 June 2008].

Benson‚ John; Debroux‚ Phillipe; Yuasa‚ Masae; Zhu‚ Ying. 2000. “Flexibility and labour man-agement: Chinese manufacturing enterprises in the 1990s”‚ in International Journal ofHuman Resource Management‚ Vol. 11‚ No. 2‚ pp. 183–196.

Brown‚ William; Deakin‚ Simon; Nash‚ David; Oxenbridge‚ Sarah. 2000. “The employmentcontract: From collective procedures to individual rights”‚ in British Journal of Indus-trial Relations‚ Vol. 38‚ No. 4 (Dec.)‚ pp. 611–629.

Clarke‚ Simon; Lee‚ Chang-Hee. 2002. “The significance of tripartite consultation in China”‚in Asia Pacific Business Review‚ Vol. 9‚ No. 2‚ (Winter) pp. 61–80.

—; —; Li‚ Qi. 2004. “Collective consultation and industrial relations in China”‚ in British Jour-nal of Industrial Relations‚ Vol. 42‚ No. 2 (June)‚ pp. 235–254.

de Silva‚ Sriyan. 1997a. Tripartism‚ employers and their organizations. Geneva‚ ILO. Availableat http://www.ilo.org/public/english/dialogue/actemp/papers/1998/srstripa.htm [accessed9 June 2008].

—. 1997b. The changing focus of industrial relations and human resource management. Paperpresented at the ILO Workshop on Employers Organizations in Asia-Pacific in the


Twenty-First Century‚ held in Turin‚ 5–13 May 1997. Available at http://www.ilo.org/public/ english/dialogue/actemp/papers/1998/srsirhrm.htm [accessed 9 June 2008].

—. 1996. Collective bargaining negotiations. Geneva‚ ILO. Available at: http://www.ilo.org/public/english/dialogue/actemp/papers/1998/srscbarg.htm [accessed 9 June 2008].

Fang‚ Dan. 2003. Research report on wage determination and workplace management in China.Geneva‚ ILO. Available at: http://www.ilo.org/public/english/region/asro/beijing/download/ training/wage.pdf [accessed 9 June 2008].

Fox‚ Jeremy B.; Donohue‚ Joan M.; Wu‚ Jinpei. 2005. “The arbitration of labour disputes inChina today: Definition and implications”‚ in Employee Responsibilities and Rights Jour-nal‚ Vol. 17‚ No. 1‚ pp. 19–29.

Fu‚ Hualing; Choy‚ D.W. 2004. “From mediation to adjudication: Settling labor disputes inChina”‚ in China Rights Forum‚ No. 3‚ pp. 17–22.

GAO (United States General Accounting Office). 2002. Collective bargaining rights. Inform-ation on the number of workers with and without bargaining rights. Report to Congres-sional Requesters‚ United States Senate‚ GAO-02-853‚ Sep. Available at www.gao.gov/new.items/d02835.pdf [accessed 9 June 2008].

Honeyman‚ Christopher; Yawanarajah‚ Nita. 2003. “Mediation”‚ in Guy Burgess and HeidiBurgess (eds): Beyond intractibility. Boulder‚ CO‚ University of Colorado Conflict Re-search Consortium. Available at: http://www.beyondintractability.org/essay/mediation/[accessed 9 June 2008].

ILO. 1999. Date‚ place and agenda of the 89th Session (2001) of the Conference. GoverningBody Document GB 274/3. Geneva. Available at: http://www.ilo.org/public/english/standards/relm/gb/docs/gb274/gb-3.htm [accessed 22 Feb. 2007].

Mo‚ John. 2000. “Probing labour arbitration in the PRC”‚ in Journal of International Arbitra-tion‚ Vol. 17‚ No. 5‚ pp. 19–83.

MOLSS (Ministry of Labour and Social Security). 2006. Labour dispute resolution in 2005 (inChinese). Available at: http://www.molss.gov.cn/gb/ywzn/2006-06/08/content_119054.htm [accessed 8 June 2008].

—. 2002. Guiding Opinions on the Establishment of a Sound System of Tripartite Consultationfor Labour Relations (in Chinese). Issued jointly by the Ministry of Labour and SocialSecurity‚ the China Enterprise Confederation (Qiye lianhehui) and the China Enter-prises Directors Association (Qiyejia xiehui). Beijing‚ Ministry of Labour of the PRC.Available at: http://www.molss.gov.cn/trsweb_gov/mainframe.htm.

Ng‚ Sek Hong; Warner‚ Malcolm. 1998. China’s trade unions and management. London‚ Mac-millan/New York‚ NY‚ St Martin’s Press.

Shen‚ Jie. 2007a. Labour disputes and their resolution in China. Oxford‚ Chandos Publishing.—. 2007b. “Approaches to international industrial relations in Chinese multinational corpor-

ations”‚ in Management Revue‚ Vol. 18‚ No. 4‚ pp. 1–17.—. 2006. “An analysis of changing industrial relations in China”‚ in International Journal of

Comparative Labour Law and Industrial Relations‚ Vol. 22‚ No. 3 (Aug.)‚ pp. 347–368.—; Leggett‚ Christopher. 2007. “Contradictions in Chinese unionism”‚ in International Journal

of Comparative Labour Law and Industrial Relations, Vol. 27, No. 2, pp. 227–244.SHMTUC (Shanghai Municipal Trade Union Council). 2002. Lao Dong Guang Xi Diao Cha

(Labour Relations Survey). Shanghai‚ Shanghai Municipal Trade Union Council.Simpson‚ William R. 1994. “The ILO and tripartism: Some reflections”‚ in Monthly Labor

Review‚ Vol. 117‚ No. 9 (Sep.)‚ pp. 40–45. Available at: http://www.bls.gov/opub/mlr/1994/09/contents.htm [accessed 13 Mar. 2007].

Trebilcock‚ Anne (ed.). 1994. Towards social dialogue: Tripartite cooperation in national eco-nomic and social policy-making. Geneva‚ ILO.

Warner‚ Malcolm. 1995. The management of human resources in Chinese industry. London‚Macmillan.

Warner‚ M.; Ng. Sek Hong. 1999. “Collective contracts in Chinese enterprises: A new brand ofcollective bargaining under ‘market Socialism’?”‚ in British Journal of Industrial Rela-tions‚ Vol. 37‚ No. 2 (June)‚ pp. 295–314.


Whyte‚ Martin King. 1999. “The changing role of workers”‚ in Merle Goldman and RoderickMacFarquhar (eds): The paradox of China’s post-Mao reforms. Cambridge‚ MA‚ Har-vard University Press‚ pp. 173–196.

Yu‚ Xiaomin. 2005. State-intervened legal activism: Case studies of labor unrest at foreigninvested enterprises in south China. Hong Kong‚ Hong Kong University‚ Service Centerfor Chinese Studies. Available at: http://www.usc.cuhk.edu.hk/wk_wzdetails.asp?id=3299 [accessed 9 June 2008].

Zhu‚ Ying; Warner‚ Malcolm. 2005. “Changing Chinese employment relations since WTOaccession”‚ in Personnel Review‚ Vol. 34‚ No. 3‚ pp. 354–369.

—;—; Rowley‚ Chris. 2007. “Human resource management with ‘Asian’ characteristics: Ahybrid people-management system in East Asia”‚ in International Journal of HumanResource Management‚ Vol. 18‚ No. 5 (May)‚ pp. 745–768.

Documents

Tripartite consultation in China: A first step towards collective bargaining?