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China plans unionization push into Big Four accounting firms

The Deloitte Company logo is seen on a commercial tower at Gurgaon, on the outskirts of New Delhi August 9, 2012. REUTERS/Parivartan Sharma
The Deloitte Company logo is seen on a commercial tower at Gurgaon, on the outskirts of New Delhi August 9, 2012. REUTERS/Parivartan Sharma

By Lucy Hornby

BEIJING (Reuters) - China's state-backed trade union is planning to expand into yet another bastion of capitalism, targeting the Big Four accounting firms and their 40,000 employees in mainland China, according to state media reports and the companies on Friday.

The All-China Federation of Trade Unions made a push into foreign firms operating about four years ago and now has a union presence in most firms with a manufacturing or retail base.

The push to unionize PriceWaterhouseCoopers, Deloitte Touche Tohmatsu Ltd, Ernst & Young and KPMG comes from the ACFTU's Shanghai chapter, which decided in January to extend penetration into all top international companies based in Shanghai, according to a Shanghai government notice earlier this year.

The Shanghai union had previously established chapters in about 83 percent of foreign companies, whereas 91 percent of foreign companies are unionized nationwide -- possibly reflecting Shanghai's status as a financial rather than manufacturing center.

"It tends to be more about establishing social order and providing connection between employees and the (ruling Communist) party and not about bargaining for labor rights," said Paul Gillis, a professor at Peking University's Guanghua School of Management.

"It's not that alarming for the Big Four."

China's 2008 labor contract law says workers have the right to request a union chapter in any company with more than 25 employees.

"We will fully comply with government requirements in this matter," Ernst & Young said in a statement on Friday. The other three firms did not respond to a Reuters request for comment.

In practice, the union chapter in a company in China generally sides with management in any disputes and serves as a conduit to the party. The union also collects 2 percent of the firms' wage bills, a portion of which is supposed to be used for employees' social functions.

Foreign firms have found they have had little choice but to unionize under government pressure. In some cases, the tax bureau has refused to collect taxes until the union chapter was formed, thus putting the company formally in arrears, a source with knowledge of ACFTU negotiation tactics said.

Some smaller foreign firms have avoided establishing a union chapter by arguing that not a single employee has requested one, a labor lawyer told Reuters.

Electronics manufacturing giant Foxconn, the world's fifth-largest corporate employer with more than 1 million workers in China, said earlier this year it would allow workers to help choose union representatives for the first time.

Foxconn's move is part of an agreement with the Fair Labor Association, which issued recommendations to improve working conditions after a spate of suicides in 2010 and a number of investigations by labor activists. It has had a union chapter for several years.

The Communist Party does not tolerate independent labor unions, and workers' rights activists often face harassment or worse from companies, local governments and state security agencies.

(Additional reporting by Rachel Armstrong in SINGAPORE; Editing by Ron Popeski)

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