Labor Unrest Continues At Toilet Maker Toto
The recent wave of labor unrest at big multinational factories has taken a step into China’s heartland, with word that hundreds of workers at a Shanghai plant operated by toilet giant Toto (Tokyo: 5332) went on strike last week. But the unrest was reportedly short lived, with the strike lasting just 3 days before the workers agreed to go return to their jobs. The strike and its rapid resolution reflects growing boldness among workers to demand better working conditions, which looks worrisome not only to employers but also to Chinese officials obsessed with maintaining public order.
Probably the most positive note in this story is the fact that this latest strike is coming in mid-May, which is typically towards the end of the annual season for this kind of labor conflict. The seasonality of such strikes is due to several factors. Those include the return to their jobs of many of China’s migrant workers after the Lunar New Year holiday, and the arrival of spring that makes it more comfortable to be outside on a picket line than during the more extreme temperatures of summer or winter.
Still, the wide range of labor actions this year seems a bit bigger than usual, and we still do have about a month left in the latest striking season until the hot weather of summer sets in. What’s more, this latest action could represent a worrisome turn of events since it marks the first time the unrest has spread beyond the manufacturing-intensive Pearl River Delta area of southern Guangdong province.
According to the latest reports, the strike began on Tuesday last week when Toto, a top maker of toilets and bathroom fixtures, rolled out a new salary plan for its employees. (English article; Chinese article) The company said the plan represented a pay increase, but employees felt differently and said it represented a cut. The reports don’t say how many workers were actually involved in the strike, which halted production for several days as negotiations took place.
The 2 sides reportedly reached an agreement late last week, which included a revised salary package and the replacement of one manager. This particular case is the latest in a recent string of similar actions dating back to mid March, when hundreds of workers at an IBM (NYSE: IBM) plant in the Guangdong city of Shenzhen walked off the job to protest their pending transfer to Chinese PC giant Lenovo (HKEx: 992) under an M&A deal between the pair.
After that workers also walked off the job at a factory operated by leading domestic microwave oven maker Galanz, and one of the season’s biggest and longest strikes took place last month at shoe-making giant Yue Yuen (HKEx: 551). One other report says leading US retailer Wal-mart (NYSE: WMT) also experienced labor unrest at some of its China operations this year.
On the one hand, this kind of unrest is quite common at this time of year and thus may not be a cause for huge concern. Some might say the heightened level of unrest is due to China’s rapidly rising living standards, which are causing migrant workers to become more bold in demanding better pay. China’s slowing economy may also be playing a role, putting pressure on many factories to cut costs by freezing or even lowering wages.
As I said at the outset of this post, one of the more worrisome elements of this latest action is that it occurred in Shanghai, showing the trend of unrest could be spreading out of the Pearl Delta area. I would expect we’ll probably see at least 1 or 2 more similar actions in the Shanghai area, and perhaps even some other major cities before the current strike season finally comes to an end next month.
Bottom line: A strike at a Shanghai Toto plant marks the spread of a recent wave of labor unrest beyond the Pearl Delta, reflecting pressure factories are feeling to control costs during China’s economic slowdown.
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