Harbour View: Labour Clash

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With 3.1% unemployment, it should be the best of labour times, right? Wrong. Prosperity brings opportunity for savvy, strident unions.

With unemployment at 3.1%, business booming and salaries rising, Hong Kong should be a panacea with labour leaders and employers holding hands and working in harmony, beaming big toothy grins at each other, jubilant in each others’ success.

Really? Try again.

Strikes are on the rise. Unions are on the warpath with employers, employer groups – and with each other. Minimum wage levels, standard working hours and collective bargaining are all on the table. It is possible that prosperity has not helped, but has made labour tension worse as the calculus of power has shifted.

Constructing evidence of a shortage
The real battleground is construction. While cleaners and security guards have been the poster children for minimum wage politics, the game changer is the acute shortage of labour across the construction industry. Every major building project has seen budgets blown out by rising labour and material costs.

Prosperity has not helped, but has made labour tension worse.

The other major issue is the dependency ratio as Hong Kong ages. A fully employed labour force is fine, but not if it is shrinking and expected to support a burgeoning, healthcare-costly elderly cohort.

Employers see the short term problems and the long term trends and know what they want: imported labour. Training is slow, costly and, when government funded, normally misses the mark. Imported construction labour can go to work immediately, doesn’t bear long term company or welfare costs and goes home when the job is done. Singapore has seized on it with gusto, increasing
their ability to generate wealth without the costs associated with educating children and tending to retirees. Workers come, earn, benefit, leave. One night of spectacularly rare unrest aside, it’s mostly worked fairly well.

The shortage is bad and estimated to get worse with new projects coming online. The delay of the GZ-SZ-HK rail line can’t help. Employers are convinced they need this – and the unions smell blood.

Employers see the short term problems and the long term trends and know what they want: imported labour.

The long game
The FTU has power in LegCo, but rarely exercises it to its full potential. Minimum wage and perhaps standard working hours are the extent of their modest ambitions. Their closeness to the government means they know the government’s bottom line (see leader by Calvin Lam – “Labour Wars: Unions rising”). The
almost status quo is good enough for them.

Which brings them into direct conflict with their revolutionary doppelgänger, the
Confederation of Trade Unions (CTU). While the FTU flat out says no to imported labour, giving them a fig leaf of standing up to the government, the militant CTU claims they would be open to imported labour – “if”. They might be open to giving the employers what they want if they could get concessions for their ultimate prize – collective bargaining.

Collective bargaining, collecting power
Collective bargaining is the game changer the CTU has been after for decades. With it, they can bring their full organisational might to bear and change society.

Collective bargaining, gained by conceding the entry of imported labour eligible for union membership, would swell union ranks and power. Labour strife in the form of strikes and protests would be commonplace.

Collective bargaining, applied to local workers alone or including imported labour, would create a power centre too mighty. The government knows this, as does the FTU. Since the FTU recognises this is beyond the government pale, they don’t actively pursue it. We know the government considers collective bargaining anathema as they killed it in its infancy in 1997 after the British tried to install it in the dying moments of the Empire in Hong Kong.

[The CTU] might be open to giving the employers what they want if they could get concessions for their ultimate prize …

This is why the CTU are the key players in the labour battle. If the government is an immovable stone, the CTU is a relentless river with a decades long plan to achieve their objective. Flexible, they have street power and bargaining chips to get closer to their ultimate prize.

By contrast, employers are, broadly speaking, disorganised. They just want to get the job done in the most expedient manner and do not have the long term focus for an extended society changing battle. They think deals like offsetting employer MPF deposits against Long Term Service obligations are done deals, and move on. They are shocked to find their opponents wearing government down until closed files reopen.

The CTU has militancy and clarity of goal to execute on a decades-long game plan. That plan means crying oppression while winning every battle before them. While collective bargaining is off the table now, so once was minimum wage, as was standard working hours.

It is hard to see the business community organising themselves to effectively fight against CTU sought measures like standard working hours. The cards they hold cannot be exercised en masse. Businesses
will be picked off one by one and will respond by cutting staff here, moving staff offshore there, supplementing man with machine where they can. They have neither the focus nor will to change the way population thinks in the long term.

For the battle of the day, the CTU might be open to imported labour, but business organisations will never (if they know what is good for them) pay the price and sign off on a deal that says yes to collective bargaining. In time, the choice may not be theirs to make.

Current trajectory
The employers may get another temporary labour import program à la the 1990s. The FTU will celebrate their small wins and grumble about mini-setbacks. Street power will either see the CTU blocking imported
labour or getting collective bargaining. Either way, they win. The long game will be theirs.

The CTU’s labour agenda will be implemented, step by step, over time – as it has been in recent years. There will be increasingly restrictive labour laws until they get collective bargaining.

If the government is an immovable stone, the CTU is a relentless river, eroding the stone slowly.

The victory will be Pyrrhic. Workers will find the burden of caring for the elderly rising dramatically. They will either pay more directly, or via taxes, to support their parents and an aging population. The West has already been through this ruinous cycle and adjusted, with largely unionised industries collapsing and disappearing (manufacturing) or de-unionising and relocating (US auto making moving from Detroit to the US South). The only remaining unions of note are those serving university educated
civil servants; low end workers are not represented and on their own. In Hong Kong, automation is picking up and some jobs are being shifted to friendlier climes. When the crash comes, we will see the establishment
of a permanent unemployed and persistently higher unemployment, like the West.

The alternative would be to open the doors to more labour, if not Singapore style, then ‘Singapore lite’. But without a government strongly mandated by the people, via open and fair elections, to open the doors and grow our workforce, our policy will be set by the CTU river. The government stone may be immovable, but will erode over time. The leaves of business will float on to bigger seas, taking jobs and builders with them. It is hard to imagine this now, in a time of plenty, but when the tough times come, the calculus of power will shift again. Until then, the CTU wins. Whether Hong Kong wins is another question.