RESEARCH AND PRACTICE
IN HUMAN RESOURCE MANAGEMENT

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Frost, S. (2003). Labour Law, Trade Unions and IT-Enabled Work in Asia and the Pacific, Research and Practice in Human Resource Management, 11(1), 37-54.

Labour Law, Trade Unions and IT-Enabled Work in Asia and the Pacific

Stephen Frost

Abstract

Labour law in Asia and the Pacific inadequately safeguards workers in traditional sectors, and is unlikely to do so in the newly emerging IT-enabled sectors such as medical transcription, data processing and call centres. This paper examines labour law in the region and explores trade union responses to new workplace trends. It is argued that weak and poor implementation and enforcement will mean that IT-enabled workplaces are as likely to suffer the same problems faced elsewhere. Moreover, trade unions have generally been either unable or unwilling to confront new issues regarding organisational strategies and debate governments on key policy issues surrounding the burgeoning sector. These issues are discussed.

Introduction

Over the past two decades foreign direct investment (FDI) in Asia has changed the industrial landscape and stimulated the interest of scholars and activists in its impact on workplace conditions (e.g., Fröbel, Heinrichs & Kreye 1980, Nash & Fernandez-Kelly 1983, Burkett & Hart-Landsberg 2000). Levels of FDI globally have increased dramatically from about US$12.5 billion in 1970 to US$735.1 billion in 2001 - a 58-fold expansion. In Asia and the Pacific, the increase has been even greater, from US$924 million to US$102 billion over the same period (UNCTAD 2002). By 2001, investment in Asia as a proportion of global FDI had doubled to 14 per cent. At the same time, the World Bank notes that international trade in total output rose from 27 to 39 per cent in the decade to 1997 (PREM 2002). Some social scientists have seen these changes as cause to examine the ways in which transnational corporations (TNCs) have been involved in the global expansion of production (Sklair 1999). This has often included increased attention to the impact that TNC-funded FDI has had on wages and working conditions in industrialising countries, which means that they have generally focussed attention on the manufacturing sector, particularly low end manufacturing like shoe, garment and toy production.

Of particular interest have been the branded TNCs like Nike, Disney, Mattel, and Gap. All these entities have attracted strong criticism over cost minimisation strategies entailing the relocation of production to places characterised by low wages and a lax regulatory environment (Wong & Frost 2000, HKCIC 2000, 2001, Kwan & Frost 2002). The strategy of publicising conditions offshore has been successful, a testament to which are books like Naomi Klein’s (2000) bestseller No Logo and the phenomenal rise in popularity of community-based movements such as United Students against Sweatshops in the US and the Clean Clothes Campaign in Europe. There now exist dozens, if not hundreds, of global networks all hoping to raise consciousness about the conditions under which most common products are manufactured. Likewise, a growing number of companies are involved in the profitable business of monitoring factory conditions, conducting social audits, and certifying the safety of production facilities (e.g., Société Générale de Surveillance, Intertek Testing Services, Pricewaterhouse Coopers, Det Norske Veritas). Monitoring the impact of FDI has become big business, and researching and documenting it a large and global undertaking. This paper outlines labour laws and union responses to contemporary workplaces of the Asia Pacific region.

Background

The publicity campaign conducted against the big sports shoe, apparel and toy companies over the last decade now means that many consumers are at least familiar with some of the litany of complaints against companies like Nike and clothing retail giant, Gap. The notion of the ‘race to the bottom’ may not yet be a common phrase (Tonelson 2000), but there are more people in the US and Europe with a basic working knowledge of the consequences of shifting the supply chain to Asia than ever before. Concerned consumers are now opting to source their coffee, their clothes, and their children’s toys from workplaces they regard as fair (Boycott Nike 2000). Over the past two years, the mainstream media has published over 400 items reporting on Nike’s corporate governance and supply chain management. Scholars have also contributed to the debate, with over 100 critical academic articles on Nike alone (Boje 2001). However, the popularity of this extended publicity campaign, given new life by the so-called ‘anti-globalisation movement’, may have come at a cost. Spotlighting Nike and other well known companies might have resulted in better conditions for some workers in factories supplying goods to these branded giants - although this claim is the subject of acrimonious debate (e.g., Connor & Eitel 2000) - but the glare of publicity has perhaps blinded advocates of fair conditions to emerging trends also requiring documentation.

Just as manufacturers have moved to new locations to take advantage of lower costs, so, too, have a range of enterprises for which advanced technologies have provided new opportunities. New information technology enabling faster and more secure data transfer accounts for much of this shift. A good example of the transfer now well underway in the region is the banking sector’s relocation of data processing from Hong Kong to mainland China. Since the mid 1990s, the HSBC Group (Hong Kong and Shanghai Banking Corporation) - headquartered in London and one of the largest banking and financial services organisations in the world - has been shifting its customer transaction and data processing functions to locations where costs are a fraction of those borne in the London or Hong Kong offices.

With centres already in Hyderabad and Bangalore catering to London business, HSBC recently expanded or opened data processing hubs in Guangzhou and Shanghai to service Hong Kong. The bank plans to open another in Malaysia in 2003. Prior to the expansion of the Guangzhou centre, HSBC management circulated an internal memo to workers stating that over 1,000 positions in Hong Kong would be affected and that the bank had plans to move all credit card transaction processing to the mainland by 2004. The chairman of the Association of Banks supported the relocation of jobs and said that processing costs in Hong Kong were more than double those in China, and that most other banks in the Hong Kong Special Administrative Region (SAR) would follow suit over the next few years (HKCTU 2001a). Relocating from Hong Kong to Guangzhou provided savings in the order of 90 per cent on the wages bill alone (Zhao 2002), along with lower office rents and cost of living in general, and reduced welfare related costs.

The HSBC, together with a wide range of other business service sector industries, have relocated jobs because of lower wages and other financial inducements. However, wages are not the only inducement to relocate jobs to places such as China. As is the case in a number of other countries in the region, the regulatory environment is extremely lax, and workers rights are curtailed either by ineffective union representation or by a repressive state (Frost 2002, Chen 2003, Pringle & Frost in press). These two issues will be explored in the context of labour law and the capacity of trade unions to effectively represent workers rights in the face of changing patterns of cross-border IT-enhanced work.

Labour Law in Asia and the Pacific

Labour laws are, with few exceptions, weakly regulated and enforced throughout Asia and the Pacific. Despite the wide historical, economic and political circumstances, there are a number of clear trends.

Regulations are Contradictory or Ambiguous

It is not unusual for certain provisions within labour laws to contradict others. This is not a peculiarity of labour law; national laws are a living set of documents open to interpretation and contestation. Yet in a number of cases the contradictions are not simply the result of fine interpretations and lengthy legal arguments. Rather, they are the result of the State undermining workers rights by taking away with one hand what they have given with the other. For example, Chinese labour law provides gaping loopholes that allow employers to completely avoid compliance with key items like hours of work (Chen 2003). Thus, Article 36 of Chinese Labour Law states that the State “shall practise a working hour system under which labourers shall work for no more than eight hours a day and no more than 44 hours a week on the average.” Also, Article 38 stipulates that the “employing unit shall guarantee that its staff and workers have at least one day off in a week.” In addition, Article 41 states that the “employing unit may extend working hours due to the requirements of its production or business after consultation with the trade union and labourers, but the extended working hour for a day shall generally not exceed one hour; if such extension is called for due to special reasons, the extended hours shall not exceed three hours a day under the condition that the health of labourers is guaranteed. However, the total extension in a month shall not exceed thirty-six hours.” Together, Articles 36, 38 and 41 provide clear protection to workers. However, Article 39 effectively rescinds them by stating that “Where an enterprise cannot follow the stipulations in Article 36 and Article 38 of this Law due to its special production nature, it may adopt other rules on working hours and rest with the approval of the labour administrative department.”

Laws can be vague in any setting, and interpretation is a key element of the judicial process the world over. However, ambiguity to the point of confusion undermines workers’ rights and is an important element in many labour laws. For instance, labour law in Laos stipulates that employers must arrange a ‘reasonable production schedule’, but leaves employers to determine what reasonable might mean (Robertson 2003). For enterprises supplying to buyers with peak seasons, ‘reasonable’ production schedules may require 18-hour days for weeks on end to meet schedules for which the failure to do so may involve hefty financial penalties.

The Law does not Cover all Workers

Almost all labour laws define very clearly the persons covered by the law. The term ‘employee’ is often outlined with great care, as are exclusions with regard to coverage. Of course this varies across the region, but there are some stark examples where large numbers of workers are not provided for under labour laws. For example, Cambodia has a progressive labour law. It is the result of numerous actors, but among them the International Labour Organisation (ILO) had a major input in determining key sections. Thus, the law ‘guarantees freedom of association and the right to strike, provides for free registration of labour unions and collective bargaining, and sets a minimum age of employment.’ In many respects, it provides workers with protection and freedoms that can only be imagined in many other countries. However, this progressive law only covers workers who account for around 25 per cent of the total labour force (Falkus & Frost 2002, Pandita 2002).

In Thailand, the 1975 Labour Relations Act (LRA) does not provide coverage to public servants, agricultural workers, or workers in enterprises employing less than ten persons. These are not minority groups, and workers in these categories constitute nearly 50 per cent of the work force (Brown, Thonachaisetavut & Hewison 2002). That is, nearly half the workers in Thailand have no access to key provisions under the LRA, which includes the basic right to join trade unions. In Singapore, the Employment Act of 1968 includes almost all workers, but excludes various sectors from key provisions (Frost & Chiu 2003). For example, a range of provisions are applicable only to employees who are in receipt of salaries not exceeding S$1,600 per month, a figure that the Minister of Manpower may vary. Other provisions apply only to ‘workman’ (defined as ‘any person, skilled or unskilled, doing manual work, including any artisan or apprentice but excluding any seaman or domestic servant; any person other than clerical staff..., any person specified in the First Schedule of the Employment Act, namely, bus conductors, lorry attendant, tailors, all workmen employed on piece rates in the premises of the employer’, and so on). Thus, clerical workers (who are not defined as ‘workmen’) earning more than S$1,600 per month are not entitled to claim overtime payments because the relevant section of the Act (Part IV) only covers ‘workmen’.

Other Laws or Government Policies may Annul Labour Laws

Labour laws do not exist in a legal vacuum. All countries have legal frameworks to administer civil laws, and possess constitutions and acts of parliament regarding trade unions and dispute resolution. It is usual for stipulations in other legal traditions to counter, or even annul, provisions in labour law. For example, Bangladesh labour legislation protects key rights and allows for the free formation of trade unions (there were around 5,000 in 1999 - Jabbar 2003). However, the government has enacted special legislation to prevent trade union organising and activity in the country’s three fully functioning Export Processing Zones (EPZs). This state of affairs is common practice, but is a clear example of one set of laws eclipsing another.

Increased integration of the world’s economy along with enhanced trade and investment flows has led to some governments competing with others to attract FDI. This ‘race to the bottom’ has motivated governments to deny key rights so as to provide ideal conditions for investors (e.g., a compliant and subdued work force). For instance, in Pakistan government policies designed to encourage inward FDI prevents teachers, agricultural workers, most civil servants, workers in ‘essential services,’ and workers in export oriented industries and EPZs from organising or bargaining collectively (Sadiq 2003).

Current Labour Laws are Under Attack

Most of these provided examples have loopholes or use other laws to override existing labour regulations. However, in several countries current labour laws are under direct attack. This is most often the case where the trade union movement has been, or still is, relatively strong, and concerted efforts have been made to roll back hard won victories. Business groups are obviously one of the key beneficiaries in rolling back labour laws, but they have willing accomplices in both conservative and labour governments around the region who have adopted the neo-liberal cant that free markets and a competitive (read flexible) work force are the keys to national wealth, economic security and full employment.

Inconsistencies between labour and civil laws are widespread. In Japan, for instance, key policy makers and business groups have successfully argued that labour laws as they stand are too rigid and inflexible and that civil law is sufficient to deal with many workplace issues such as dismissal, protective measures for women and the right to hire dispatched workers (Tabata 2003). Also, workers in Vietnam have found themselves facing the same sorts of attacks (Collins & Zhu 2003). For example, until 1987 all full-time workers in state owned enterprises (SOEs) were part of a system termed ‘work for life’ (bien che). This system guaranteed that employees who had been provided with a ‘work for life’ job could continue to work until their retirement. During the period of economic reform (doi moi), permanent employment contracts in SOEs were seen as no longer appropriate, and all economic sectors were required to be more flexible in order to cope with market pressures. The government transferred all SOE employees from lifetime employment contracts to more flexible contracts which constituted a fundamental change in the government’s approach to workers’ rights.

Other Asia Pacific nations also experience similar issues. In Papua New Guinea, despite the exclusion of piece rate workers from maximum daily work hours, employers have still complained that the Act has not responded to the current needs of the manufacturing sector, particularly employment flexibility (Chand & Imbun 2003). Fiji faces similar problems. In 1991 and 1992 - following the military coup of 1987 - the Interim Government enacted significant reforms to various laws including the Industrial Association Act (1942), the Trade Unions Act (1964), the Trade Union (Recognition) Act (1976), and the Trade Disputes Act (1973). Most of the changes were aimed at reducing the power of trade unions to bargain collectively. For instance, under the new provisions of the Act, the Minister with responsibilities for labour has the power to declare strikes or lock-outs unlawful where required ballots have not been held. The Minister also has powers to declare strikes unlawful where agreed procedures contained in workers’ collective agreements have not been followed. Workers in essential services are prohibited from striking, and the Minister is able to order parties to compulsory arbitration prior to a report being lodged of a trade dispute (Khan 2003).

Interestingly, the government of North Korea also seems to have rolled back key legislation and denied workers access to fundamental rights (Shim & Kim 2003). Despite appeals in the name of socialism and North Korea’s isolation from the global economy, workers there have also found themselves at the mercy of what would anywhere else be regarded as neo-liberal economic reforms. For example, in April 2000, the Cabinet of North Korea approved an amendment to the Regulation of Labour Discipline (ReLD), which was originally enacted by the Central People’s Committee in 1978.

Governments do not Implement or Enforce the Laws

One of the most common comments about Chinese and Cambodian labour law regimes is that they are sound in principle, but not enforced. There is good reason for this condition. For example, Cambodia’s 1997 labour law stipulates that workers’ grievances can be dealt with in specially convened labour courts or the Council of Arbitration, neither of which has yet to see the light of day (Falkus & Frost 2002). However, they are not the only examples of countries with relatively comprehensive labour laws but the lack of political will to enforce them. In Papua New Guinea, for instance, the Office of Workers’ Compensation (OWC) is under resourced in terms of both finance and staffing capacity (Chand & Imbun 2003). As a consequence, workers are unable to access the full protection provided by legislation. On average, the OWC receives 1,300 claims each year, of which less than one half are resolved. Of the figures available, in 1995 some 1,370 cases were received and of these only 757 were settled. Even then, more that 5,600 claims were awaiting settlement.

In Mongolia, the weak enforcement of a comprehensive labour law is a major cause of workers’ disappointments in the obvious gap between the expectations from a new democracy and the results of the transition towards the market economy (Tsagaan 2003). Labour law has outlined minimum standards that have, in effect, become maximum standards. According to the trade union movement, private enterprises, especially in the mainly foreign-invested textile sector, even minimum conditions are not applied. For example, Mongolian Labour Law stipulates that employees should be paid for overtime work (that is, extending the eight-hour day) by at least 1.5 times average compensation. However, 62 per cent of workers responding to a union survey indicated that they did not receive overtime payment of any kind. In addition to insufficient wages, low standards of safety, health and sanitation in the working environment, and average workdays of 9-12 hours account for regular existing violations. Workers, however, rarely lodge a complaint to the relevant authorities for fear of dismissal.

Labour Law Reforms

Many countries in the region have attained independence only in the last half century or less, and territories still exist in the Pacific in which French, Australian, New Zealand and US interests exert control in one form or another. Despite debates over the impact of colonialism, it is undeniable that it has played a major role in determining significant aspects of current labour laws. For example, the British in India enacted key labour legislation (the Trade Disputes Act, 1929) to contain striking workers and trade unions (Mathew 2003). Although post-independence governments have modified such laws, much is still based on a clear partnership between labour and capital, where employers promise fair pay and conditions and labour promises uninterrupted production and higher productivity.

In Taiwan, laws enacted under Japanese control between the 1920s and 1940s are still current. Clearly, these laws need to be either abolished or overhauled to take into account changes in workplace conditions and practices, and the changing relationship with the People’s Republic of China (Hsu & Wei 2003). For example, the Trade Union Law was formulated on the basis of Taiwan’s tenuous relationship with the Chinese mainland immediately following the accession to power of Mao Zedong in 1949. Under these circumstances, and for the sake of political and social stability, lawmakers placed stringent restrictions on union formation and operation. Likewise, the Labor Standards Law of Taiwan states that a person who has worked for a single business for at least 15 years is entitled to a retirement pension (Hsu & Wei 2003). Today, 98 per cent of firms in Taiwan are small or medium sized (with regular employees numbering fewer than 200) and, on average, their survival rate stands at around 13 years. This means that a major proportion of workers do not meet the legal requirements for pension entitlements.

In North Korea, the situation is markedly different, but there, too, history has given rise to circumstances that deny the rights of workers (Shim & Kim 2003). For instance, one of the key characteristics of ‘The Socialist Labour Law (SLL) of the Democratic People’s Republic of Korea’ of 1978 is the absence of the provision for trade union rights. Neither the Constitution nor the SLL contains the right to organise a trade union. Workers are only allowed to join ‘mass organisations’ depending on the category into which they are assigned. The major ‘mass organisations’ are the General Federation of Trade Unions in Korea, the Agricultural Workers Union, the Socialist Youth Workers Union and the Women’s Union.

Bhutan, like North Korea, has remained almost invisible behind its self-imposed isolation from world affairs. This has enabled the ruling elite to deny workers almost every fundamental right imaginable (Neopaney 2003). With a policy designed to ethnically cleanse the country of groups traditionally resident in the southern parts of the country, the Bhutanese government has flouted international conventions and standards with little international comment. A workers’ movement exists in exile in Nepal where more than 15 per cent of the population live, but it has no impact on conditions inside the country. Bhutan has no written Constitution and there are no basic guarantees concerning the rights of individuals (let alone rights to freedom). Workers in the formal sector (a small minority) are covered by ‘service rules’, which are generally oppressive and provide no formal mechanisms for workers to air their grievances or to resolve disputes. Given that the civil courts are firmly controlled by the government, workers have low expectations that their complaints will be redressed. Many service rules are determined by individual employers. One such example is overtime payments that when paid, take the form of an ‘honorarium’ and not a legally binding rate.

The phenomenon of poor or poorly enforced labour laws is perhaps even more acute with regard to occupational health and safety (OHS) regulations. Some countries do not have OHS regulations. Cambodia, for example, has no specific OHS standards and the law makes only vague and ambiguous claims about the responsibility of employers to provide clean and safe working environments, without specifying what this might mean in practice (Falkus & Frost 2002). Other countries have a confusing morass of laws and departments responsible for OHS, which means effective monitoring and enforcement is all but impossible. For instance, in 1995 it took fourteen separate Chinese authorities to draft 18 rules and regulations pertaining to the prevention of fire and explosions (Frost 2002). Also, in India, where only six per cent of the labour force is in the formal sector, trade unions or other institutions have almost no capacity to enforce OHS regulations (Pandita 2001).

South-East Asian Contexts

With very few exceptions (such as Australia and New Zealand), labour law regimes across the region have made no provisions for new forms of work brought about by advances in technology. Major suppliers of back office services, or what some now call ‘offshore business processing’ (OBP), to US and European clients are to be found in India (Ayilavarapu 2002) and the Philippines where call centres, medical transcription and software design services have proliferated. According to Conrad (2002), other locations with some back office activity in the region include Hong Kong, South Korea, Malaysia, Pakistan, Singapore and Taiwan. China is offering very low-cost data entry and has a burgeoning call centre sector (Zhao 2002). Vietnam is only just starting to offer a small range of services (Conrad 2002). In addition, Australia has positioned itself as the leading site in the region for call centres, but faces stiff competition from New Zealand, where costs are lower (Conrad 2002). Generally, seldom are there appropriate laws to deal with the upsurge of casual and sub-contracted workers that fill jobs in the IT-enhanced sector and it is in this context that some issues specific to India, the Philippines, Hong Kong, South Korea and Australia are outlined.

India

The key distinction with regard to labour law in India is between the informal and formal sectors (Mathew 2003). The formal sector, which constitutes a mere six per cent of the work force, consists of workers in the public sector, which in India refers to the large nationalised or state run enterprises or sectors such as large steel works and banking. Very few workers in India outside the public sector are organised. India’s trade unions represent very few, if any, workers in the IT-enhanced sector, which is characterised by relations based on sub-contracting and which has more in common with homework than factory work. This has important ramifications for the level of protection afforded by the law.

British colonial law is the foundation of India labour law. Despite progressive changes since independence in 1947, the current regulatory framework is under attack from businesses seeking a more flexible legal regime. In spite of attacks, the unorganised and informal sector enjoys a modicum of protection on wages with the Minimum Wages Act of 1948. In reality, the minimum wage is so low that it affords almost no guarantee of survival for workers in the most poorly paid sectors (Mathew 2003). Casual workers, often unorganised and with no welfare benefits, are not even covered by statutory fixed minimum wages.

IT-enabled workers, although often casual, have significant advantages due to their skills and the profits to be realised from various back office employment. However, it is worth considering that as the industry plateaus and faces competition from even lower wage environments such as China, workers will find that the law offers them little recourse should disputes with employers arise. Although the law provides numerous provisions to protect workers, and there is a growing trend to provide welfare and pension entitlements for the informal sector, employees still confront major problems. One issue generating considerable frustration is the delays that workers face in bringing disputes to court. Indeed, bringing a case of unfair dismissal to the labour court takes almost a decade and if referred for judicial review may lead to an unlimited delay (Mathew 2003).

The Philippines

As in India, the Philippines’ Government has produced a comprehensive set of labour laws. Key rights such as the freedom of association and the right to strike are enshrined in legislation, and the law provides for working hours, minimum wages (currently 300 ‘minimum wages’) and safe working conditions (Quintos 2003). Despite this, in 2002 the ILO was critical of the Philippines’ ‘weak culture of compliance’ (ILO 2002). This may understate the case. In 2002, the Department of Labor and Employment (DOLE) found that 52.2 per cent of enterprises inspected violated ‘general labour standards’ and 26.4 per cent did not comply with minimum wage laws (Quintos 2003). The government’s unwillingness, in the face of the desire for foreign investment, to enforce its labour code is a serious problem.

A recent study by Edralin (2002) shows that of all the ILO conventions, firms were least likely to comply with conventions on the freedom of association and the protection of the right to organise. This suggests little respect for trade union rights. In reality, employers often conduct background checks to ensure that prospective workers do not have a history of union involvement (e.g., young women, unmarried mothers, school leavers with no prior work experience, and members of conservative Christian organisations). Some managers insist that workers remain sexually inactive whilst drawing a pay cheque from the company, and virginity tests are not uncommon (Quintos 2003).

The Philippines also has an unwritten ‘no union, no strikes’ policy for its Export Processing Zones (EPZs). The current governor of Cavite province, host to the country’s largest EPZ, solicited support by promising to ban strikes and ridding the province of trade unions. Indeed, many workers thus face a hostile environment with little recourse. Quintos (2003) has documented an increase in labour contractualisation in which a growing number of workers are denied tenure, paid less, receive insufficient training, and are effectively denied the right to join trade unions or engage in collective bargaining. Of particular concern is the upsurge in ‘labour-only-contracting’ (subcontracting), which is illegal under the law. Recent changes through DOLE Department Order No. 10, however, enable employers to circumvent the law and subcontract workers and effectively renege on provisions affording workers a minimum level of security.

Hong Kong

As the ‘freest economy in the world’, Hong Kong is characterised by what Greenfield (2003) has referred to as an overt state-capital collusion with restrictions on trade union rights with a systematic denial of basic social protection for working people. At first glance, workers in Hong Kong enjoy basic rights under the Basic Law and a number of ordinances on, for example, employment, discrimination, trade unions, labour relations, and OHS (Chiu 2002). On two issues, however, workers find little protection. First, there are no laws in Hong Kong that actually guarantee the right to collective bargaining, and second, there is no minimum wage. Less than one per cent of workers are covered by collective agreements, and a growing number of families now live under the poverty line - 28 per cent of all families (Greenfield 2003). Pressure to decrease wages in the current economic climate is exceptionally strong, and the business service sector looks set to replicate, if perhaps on a smaller scale, the hollowing out of the manufacturing industry in the 1980s as that sector relocated to the mainland.

The major problem confronting IT workers in Hong Kong is that they are hired as ‘self-employed’ which means they are not protected under the Employment Ordinance and are effectively outside the labour law. Under this employment relationship, employers are not obligated to provide work related insurance or contribute to the MPF.

South Korea

Major labour legislation in South Korea guarantees minimum standards and conditions, the right to join and form trade unions, minimum wages, and other important protection. However, since the early 1990s the government has encouraged labour flexibility in the name of effectiveness, which has ramifications for workers. Among the most important were revisions to the 1998 law. These resulted in major deregulation and a consequent decrease in worker protection, and legalised the casualisation of the work force (Lim, Kim & Kim 2000). It became easier for management to lay off workers, and the last few years have seen the rise in employment agencies providing casual labour. Under the current law, employers need not provide a number of benefits to casual staff, including overtime rates (Lim et al. 2000). Under these changes, the business service sector has seen conditions rolled back. Along with restrictions on the right to strike, South Korean workers find it more difficult to take grievances before the law due to the limited availability of public legal aid and the expense of private representation.

Australia

Australia is at the forefront of providing IT-enabled services. Australian workers are protected under a comprehensive system of arbitrated industry awards and legislation at both state and federal levels. Minimum wages, overtime, unemployment benefits, and collective labour rights are all mandated. Commentators critical of neo-liberalism have noted that the current Howard Liberal-National government elected in 1996 has taken legislative measures beyond that required for flexibility and are thus directed at reducing trade union capacity (Teicher & Van Gramberg 2003). Efforts at de-unionising key sectors such as the maritime industry in 1998 have not succeeded, but the deregulation of the Australian labour market has provided conditions for a more flexible work force.

Labour law across the region provides for the implementation of flexible labour regimes, is often vague, ambiguous or contradictory, and is in a number of locations poorly implemented and enforced. Despite laws stipulating fair conditions, employers are able with varying degrees of success to avoid their provision. Trade unions, the organisations traditionally most able to represent workers, have with the exception of Australia, failed to organise or even penetrate this new world of IT-enabled casual labour.

The Response of Trade Unions in Asia

Trade unions in various locations across Asia have generally failed to comprehend or devise strategies aimed at representing workers in the IT-enabled sector. Across Asia, trade union membership is generally in decline and as a result, unions are less able to effectively defend workers’ rights. The ability of workers to bargain collectively and negotiate with management over conditions of work and pay has been steadily eroded. Throughout the region there is weak enforcement of labour laws and in some cases, complete disregard for them. Labour standards are under threat and unions have had little success in preventing the roll back of regulations. Although union membership has increased in some countries, in some sectors, changing systems of production management, communication and transport, trade unions have by and large found themselves limited in their level and the extent to which they can organise workers.

In the locations mentioned previously, trade unions are not in a position to compel governments and business to provide better conditions for workers. Although some of the bigger call centres in India and Philippines offer reasonable working conditions, there are many others where the levels of surveillance, pressures to perform - to meet sales quotas, deal with a fixed number of enquiries per hour, key in a specified amount of data or lines per hour and cramped conditions - do not meet international standards or norms for OHS and general workplace standards. The following examples summarise the trade union responses in the selected nations.

India

Although the capacity of trade unions in India to represent a small percentage of the work force is high, their influence is confined to the small formal sector. Further, despite being able to organise some workers in the informal sector, trade union power resides in the public sector, in large state run factories and sectors. This means that unions represent only an elite minority, for whom conditions are relatively good and jobs are relatively secure. Into this gap have stepped a number of other groups such as nongovernmental organisations (NGOs) and community based organisations which have tried to provide services for specific groups (Mathew 2003).

A major characteristic of Indian trade unionism that diffuses its capacity is the affiliation of most of nine major central union organisations to political parties, all of which adhere to different political ideologies. For instance, the Indian National Trade Union Congress is affiliated with the Indian National Congress, the Centre of Indian Trade Unions is affiliated to the Communist Party of India (Marxist), the All India Trade Union Congress is affiliated to the Communist Party of India, and the Bharatiya Mazdoor Sangh is affiliated to the Bharatiya Janata Party (BJP) (Mathew 2003). Almost all political parties in India possess a trade union arm that is expected to advocate the party line. This has resulted in factions that unite over major issues only, and do not present workers in the informal sector with a viable alternative. The IT-enabled sector has been completely ignored and apart from a small number of activists, the issue of conditions in both large and small centres is of little import to the trade union movement.

The Philippines

The labour movement in the Philippines is broad and active, with nine national centres and over 13,000 enterprise or independent registered trade unions (Quintos 2003). Despite the protection of union rights under the law, trade union organisation is often difficult and sometimes dangerous. Membership campaigns frequently result in attempts by management to prevent workers from joining trade unions, with threats of dismissal and other forms of harassment occurring regularly.

Despite unwritten laws preventing union activity in EPZs and a rise in the number of workers in casual employment, various trade unions in coalition with other groups still successfully organise workers across various sectors. However, both issues have posed serious challenges. The management practice of retaining ‘core jobs’ whilst contracting out all others presents real difficulties for traditional trade union organisational strategies. This contractual relationship dominates the IT-enabled sector and trade unions have yet to seriously organise workers in this area. Nonetheless, in the face of stiff resistance, groups such as the Workers Assistance Center (WAC) have led successful campaigns involving grass roots organising and training in the Cavite EPZ. However, with workers spread over the country, traditional forms of trade unionism will find it difficult to provide workers with any real protection. The government and its supporters in the business community are unlikely to look favourably upon organised unionism in a sector many see as being a panacea to the high rate of unemployment in the Philippines.

Hong Kong

According to official figures, there are 594 registered trade unions in Hong Kong accounting for a unionisation rate of just over 22 per cent (Chiu 2002). However, a split between the pro-Beijing Federation of Trade Unions (the FTU, Hong Kong’s largest federation) and the Hong Kong Confederation of Trade Unions (HKCTU, the second largest federation), which supports independent trade unions in China and is strongly pro-democracy, has diffused union capacity in the SAR. All four of the main trade union federations are acutely aware of the problems in the IT-enabled sector. For example, from the late 1990s to 2002, the paging operating industry lost nearly 75 per cent of its clientele (Cheng, Cheung & Ngai 1996, HKGIC 2002). In a bid to cope with competition from mobile telephones, many companies moved to Macau where they employed imported Chinese labour (ABC 1997). This trend has continued with the banking sector and an increasing number of shipping and logistics companies moving data input operations to the mainland.

The HKCTU in particular has initiated training programs to retrain workers who lose their jobs and conducts workshops in an attempt to develop strategies for coping with the effects of globalisation (HKCTU 2001b). There is little hope, however, that trade unions will prevent 49 Labour Law, Trade Unions and IT-Enabled Work in Asia and the Pacific business moving across the border to minimise costs, and even the pro-Beijing, pro-Hong Kong Government FTU has expressed frustration at the job losses entailed by such moves. Further, given the current state of worker rights and workplace standards in China, there seems little hope that the government of ACFTU will seek to intercede on behalf of Chinese workers if IT-enabled workplaces fail to meet international standards and norms.

South Korea

With broadband penetration equal to the best in the world, and an equally highly developed mobile telephone network, South Korea is at the cutting edge of communication technologies. Companies outsourcing offshore keyboarding, data input and processing and other back office work have turned to South Korea for some years now. However, although the Federation of Korean Trade Unions (FKTU) and the Korean Confederation of Trade Unions (KCTU) both have the capacity to mobilise workers and shape policy formation, neither has started to seriously research and develop strategies designed to deal with either the conditions of work in the IT-enabled sector, or government policies mapping the future for the sector in South Korea.

Australia

Australian trade unions are keenly aware of the problems confronting workers in call centres and related industries. With 4,000 call centres employing around 160,000 workers across the country, stories abound of sweatshop conditions, surveillance methods, and very high turnover rates (Holt 2001). Despite the Australian Council of Trade Union’s (ACTU) ‘Call Central’ campaign aimed at convincing employers of the benefits of unionising the centres, two factors have mitigated against the campaign. First, workers know that conditions in large, unionised call centres are only marginally better. Second, the ACTU has publicly committed itself to working with call centre managers to ensure export opportunities (Holt 2001). Neither factor has convinced workers that the unions have the means to improve conditions and wages in the face of pressure from competitors such as the Philippines and India.

Conclusion

The inadequate enforcement of ambiguous and contradictory labour laws, the casualisation of the work force and ineffective trade unions mean that workers in the IT-enabled sector are generally isolated and marginalised throughout the region. Trade unions have not seriously debated government policies mapping the future directions of IT-enabled industries in the business service sector, and laws are sometime inadequate to deal with the rapid relocation of jobs and new conditions. There is almost no cross border liaison between unions in the region on the crucial issues surrounding laws and strategies to ensure that workers are not exploited.

The absence of effective and organised unionism within the region raises issues associated with the ethical treatment of workers in the IT-enabled sector. HRM practitioners, despite the limited impact of unionism within the region, should be aware that workers have fundamental rights and hold expectations that they will be treated fairly. Indeed, many HRM practitioners themselves are likely to be victims of exploitation. A failure to acknowledge such rights and expectations can only result in reduced productivity through, for example, increased job turnover and absenteeism. However, should unionism become sufficiently organised to improve conditions, jobs will be lost as owners look elsewhere for cheaper labour. The present state, however, suggests that in the IT-enabled sector, political influence and economic expediency rather than unionism will determine workers’ conditions for the foreseeable future. Therein lies the dilemma and challenge for HRM practitioners, namely, how to motivate workers in the face of employers and governments with little apparent concern for the conditions of their workers.

Author

Stephen Frost is a research fellow at the City University of Hong Kong.

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