Balancing the Books: Chinese Companies’ Respect for Worker Rights

The patterns identified thus far are serious indictments of some Chinese companies’ approach to labour relations in the region. But, as we indicated at the outset, other patterns are discernible too – those in which Chinese companies show at least as much respect for worker rights as other firms.

Claude Kabemba's picture

Director of the Southern Africa Resource Watch (SARW)

October 10th, 2012

The patterns identified thus far are serious indictments of some Chinese companies’ approach to labour relations in the region. But, as we indicated at the outset, other patterns are discernible too – those in which Chinese companies show at least as much respect for worker rights as other firms.

In Zambia again, Chinese companies seem to have enhanced job creation, in contrast to the privatisation process of the mid-1990s, which resulted in high unemployment. Although there are no reliable statistics, it is projected that approximately 25 000 jobs have been created directly through various projects which have benefitted from a financial and capital injection by Chinese firms in the last four years. Many respondents interviewed during the study acknowledge that jobs have been created, especially in the mining companies and those that support the industry. The Chinese company LCM has created jobs which were lost by the mine’s previous owner – a study found, that so far over 2 250 workers who previously lost jobs are reported to have been re-engaged, and that the majority of the workers will be on pensionable contracts. The offering of pensionable jobs is a major point of departure from the practice of most Chinese firms in the sector, who have provided mostly for short-term contracts with high levels of casualisation.

Pay is also better than at many other firms. LCM is reportedly offering salaries that are better than the former employers, with the lowest-paid employee being at ZMK1,2 million (approximately US$250) and a housing allowance of up to 25 percent of one’s salary. This again is in contrast to most salary scales in which Zambian employees are given salaries not exceeding ZMK560 000 (well below the estimated living wage for a family in Zambia, which is approximately ZMK2m or US$450). In addition, the contribution of the mining firm to national budget (especially in the form of pay-as-you-earn PAYE tax) remains minimal. For those miners who have their income taxed, their take-home salary is less than ZMK600 000. The inadequacy of finances (and financial stress amongst miners) is seen in their inability to send children to school, or to meet the costs of health and other services. Most of the miners are in perpetual debt to micro-financing companies. But this is a general reality in the industry and wages at LCM, low though they are, are higher than those paid by other firms.

LCM’s attitude to trade unions is also more positive than that of many mining companies. Zambia’s mining sector has a tradition of miners being represented through trade unions, especially the Mine Workers Union of Zambia (MUZ) and the National Union of Miners and Allied Workers (NUMAW). But the role of trade unions as platforms to represent workers’ rights has not been favoured by mining firms; mine owners have preferred to deal with individual workers through contracts. The LCM management, however, signed recognition agreements with the two unions in October 2009. Management has extended an invitation to the unions to commence negotiations on conditions of service. During the maintenance and care period before the government offered the mine to the Chinese company CNMC, the labour movement was at every stage consulted. Their concern had been giving back jobs to their members, and they pressurised the government to shorten the company registration process.

Although the mine was not yet operational at the time of the study, safety may be an area in which Chinese ownership may be accompanied by improvements. Accidents have characterised most mining establishments in the recent past, but the Mines Safety Department (MSD) say they have been actively involved in the development phase of LCM, continuously inspecting the preparations for production. An important issue worth highlighting is that the MSD has been dealing with LCM’s sister company, NFNC in Chambishi, from which valuable safety and health experiences have been gained. While agreeing that safety has been of concern in most Chinese companies, the MSD was positive about their experiences of NFNC, which they described as impressive. The company is said to be adhering to high standards and practices, and as a commitment to its new development at the Luanshya Copper Mines, key staff responsible for safety (particularly the mining engineer) were transferred to Luanshya from Chambishi. The decision taken by the new management at LCM to start with development of the mine before production will lessen the likelihood of accidents. One of the reasons for bringing in management from the sister company in Chambishi was to ensure adherence to safety and health requirements.

In Zimbabwe, the Chinese company ZIMASCO’s claim that it is an equal opportunity employer which seeks to attract high-quality employees who can add value to the business and that concern for its employees well-being is of paramount importance’is corroborated by the labour movement. Research finds that management is patently aware of the need for health and safety to maintain productivity and value addition for the long-term viability of its chrome mining and smelting business. To this end, its safety, health and environment (SHE) management strategy includes:

·      SHE management issues form part of any value creation decisions made by the business;

·      establishing management systems to assess, monitor and control SHE risks associated with company operations;

·      compliance with relevant legal, internal standards and international SHE management systems;

·      participation in the national bodies that are concerned with matters of SHE;

·      educate, train and make all employees aware of their SHE responsibilities;

·      strive for continuous improvement in all SHE programmes.

Compliance with this policy was said to be mandatory for all employees.

ZIMASCO employs 2794 people. Of these, only three are Chinese at the managerial level. The rest of the staff is wholly local (understood in the limited sense of employees who had been with the company before Chinese ownership, because the data did not capture actual nationalities). In this case, the claim that preference is given to Chinese employees over locals is clearly not justified. It has a training and development function that is responsible for training new and old employees in various disciplines (including engineering, mining, smelting, supervisory and managerial skills). Apprenticeship, graduate, technician and skills-upgrade programmes are also offered. In all this there are no foreign personnel being understudied, and all the technology transfer is between Zimbabweans. Sino-Steel Zimbabwe, which owns the company, has four managers from China (the CEO, the Development Department Director, the Administration Director and the Finance Director). The local management team at ZIMASCO has been retained, and only the Finance Director and the Chairperson of the Board are Chinese. The management team at the Rushinga Iron Ore Project is wholly local.

In South Africa, the partnership between Chinese firm Zijin and Aquarius conforms to legislation and accepted business practice. This is said to be because diligent union oversight ensures that required programmes and procedures. But, while unions may take the lead in pressing for compliance, the company does not appear to resist this. Employment practices and procedures comply with internationally accepted standards and conventions, such as the UN Universal Declaration of Human Rights and the International Labour Organisation’s Fundamental Principles and Rights at Work. The company has a comprehensive safety management programme, along with extensive medical surveillance procedures. A plan to reduce noise levels to 110dBA by 2011 (as stipulated by legislation) is in effect. Housing subsidies, adult basic education and training (ABET) and bursaries are provided for workers, while specific recruitment programmes for women are in place.

Another Chinese-owned company, Jisco, appear to comply fully with legislation protecting worker rights. Investec Asset Management strategist Michael Power suggests that Jisco’s approach is guided by South Africa’s strict legal environment and robust labour legislation. Martyn Davies, head of the China-Africa Network at the Gordon Institute of Business Science (GIBS), has pointed out that South Africa’s standards of corporate governance require that all investors, including those from China, adhere to a socially responsible approach. Chinese investors do not appear to be resistant to complying with these requirements.

The Chinese-owned Buffelsfontein mine has a superior safety record to most of its competitors. It has recorded 6 million fatality-free person-hours and a low disabling injury rate of 0,38 – far below the industrial average. A delegation of inspectors from the Department of Mineral Resources recently commended the Australian-Chinese ferrochrome miner IFM on its good health and safety performance. The most recent environmental compliance audit indicated exemplary compliance with general environmental obligations, while the group has pledged its compliance with the Mining Charter, which sets social responsibility standards. Chinese-South African joint venture ASA Metals has committed itself to prioritising the prevention of occupational injuries, illnesses, property losses, responsible environmental management, and compliance with all applicable legislation and SHEQ requirements, with the aim of zero harm to people and the environment. ASA also has in place a comprehensive pollution-control policy and a training programme to ensure worker’s compliance with SHEQ requirements. The effective application of SHEQ requirements is reviewed annually by internal management and verified by an external assessment. All employees and contractors are required to accept responsibility and accountability to the SHEQ policy, thereby ensuring implementation and adherence. Although a worker was killed as a result of ground falls at the ASA’s Dilokong Mine in March 2009, high safety standards seem to have prevented other fatalities.

About the author(s)

Claude Kabemba is the Director of the Southern Africa Resource Watch (SARW). In 2006, the Open Society Initiative for Southern Africa (OSISA) asked him to spearhead the formation of SARW. He holds a PhD in International Relations (Political economy) at the University of the Witwatersrand (Thesis: Democratisation and the Political Economy of a Dysfunctional State: The Case of the Democratic Republic of Congo). Before joining SARW, he worked at the Human Sciences Research Council and the Electoral institute of Southern Africa as a Chief Research Manager and Research Manager respectively. He has also worked at the Development Bank of Southern Africa and the Centre for Policy Studies as Policy Analyst. Dr. Kabemba’s main areas of research interest include: Political economy of Sub Saharan Africa with focus on Southern and Central Africa looking specifically on issues of democratization and governance, natural resources governance, election politics, citizen participation, conflicts, media, political parties, civil society and social policies. He has consulted for international organizations such Oxfam, UNHCR, The Norwegian People’s Aid, Electoral Commissions and the African Union. He has undertaken various evaluations related to the work of Electoral Commissions and civil society groups interventions in the electoral process in many African countries. He is regularly approached by both local and international media for comments on political and social issues on the continent. His publication record spans from books (as editor), book chapters, journal articles, monographs, research reports, and newspaper articles.

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