China’s Labor Union Movement Affecting Foreign-Invested Enterprises: Nair & Co.

Posted by financer | September 19, 2011 .

SUNNYVALE, Calif.–(BUSINESS WIRE)–China’s state-run All China Federation of Trade Unions (ACFTU) has
announced it aims to create labor unions in 65% of the country’s
foreign-invested enterprises by the end of the year 2011 and increase
the percentages to 78% by 2012 and 90% by 2013.

“The enforcement campaign is affecting companies with subsidiaries
in the PRC as some face increased costs in complying with the labor
union requirements”

“The enforcement campaign is affecting companies with subsidiaries
in the PRC as some face increased costs in complying with the labor
union requirements,” said Dr. Shan Nair, CEO and Co-Founder of Nair
Co., a global services firm that specializes in helping companies expand
overseas.
Read more at http://www.nair-co.com/ChinaTradeUnionMovement.aspx

Impact on Companies with subsidiaries in China
Employers
that reject pressure to establish unions may face the following measures:
a.
A “union preparatory fund” calculated at the rate of 2% of total payroll
and collected by the tax bureau;
b. Annual inspections required by
the Administration of Industry and Commerce;
Read more at http://www.nair-co.com/ChinaTradeUnionMovement.aspx

Legally, neither the trade union nor the Tax Authority has the
right to collect a preparatory fund from employer’s bank account without
prior approval by the employer.

“At the national law level, a company is not obliged to pay preparatory
fund if a trade union has not been formed or preparation for setting up
a trade union has not been initiated…the ACFTU has no legal authority to
require

Article source: Read more