Opposing Trends of Labor Protests in Cambodia and China. Do High-Capacity Authoritarian Regimes Create More Space for Institutional Arrangements?

Introduction

Since the ending of the international Multifiber Agreement (1974-1994) and the Agreement on Textiles and Clothing (1995-2004), which imposed quotas to protect industries in the developed world, textile and apparel exports from developing countries have been augmented, although some quotas and restrictions persist (WTO, 2014). However, the end of textile and apparel import quotas is often cited as a key driver behind increased competition among giant transnational manufacturing contractors in developing countries, primarily those based in East Asia, putting pressure on wage levels and labor standards (cf. Appelbaum et al., 2005).

With the rapid expansion of capitalism and market economies around the world, multinationals based on the principles of capitalism are seeking profit by moving capital to low-wage countries, leading to the so-called “race to the bottom” and, in some cases, to the occurrence of “sweatshop labor.”

Manufacturing workers in China and Cambodia, like many other workers around the world, suffer from the global race to the bottom and associated low wages and adverse working conditions, which have in both countries led to the emergence of labor conflicts and protests.

Conventional wisdom suggests that China’s authoritarian regime is expected to have more difficulty committing to the institutionalization of labor interests, as this commitment bears the danger of social empowerment, in turn weakening state power. Cambodia, on the other hand, as a more open, formally democratic regime, would be assumed to provide more spaces for the institutionalization of labor interests.

However, recent trends show the surprising opposite. While the Chinese government has become more responsive to workers’ demands, in Cambodia, labor rights and conditions seem to deteriorate, reaching their peak with deadly clashes between the state and workers.

This raises the intriguing question of why labor movements appear to be more successful and less violent under China’s authoritarian rule than in supposedly more open Cambodia.

In order to explore these diverging results, this paper addresses a set of questions. To what extent do the protests challenge the regimes? How do economic development and state capacity correlate with “institutional moments?” How do the two governments aim at preserving political power, and how does that shape their responsiveness to labor protests? And more broadly, what are the mechanisms at play that lead to the different outcomes?

The first section serves to provide a brief theoretical background on labor movements, institutional arrangements, and regime transition. Then, I introduce Cambodia’s and China’s economic and political situations as well as the development of labor protests and government responses. This is followed by an analysis of the prevailing distinctive features of the two development patterns, which will help to answer the question of why institutional arrangements appear to be more favorable under China’s authoritarian rule.

Labor Movements and the Counter-Hegemony Struggle

Labor movements are an outcome of relationships between non-institutional and institutional political actors. Critical considerations that drive labor protests relate to access to employment, working conditions, and the right to a decent and secure livelihood (Deyo, 2012, p. 139). Labor movements entail the social mobilization of workers, generally from a specific class or occupational group, attempting to achieve institutional moments where class compromise and de-commodification of labor are institutionalized in the economic and political spheres (Deyo, 2012, p. 139).

Labor movements seek influence through the primary means of labor union activism, NGOs, engagement in labor-friendly social movements, or the organized threat of protests and social disorder (Deyo, 2012, p. 141).

Through these means, labor movements might disrupt the economy and put significant pressure on governments to expand their pro-democratic agenda (Neureiter, 2013). Thus, labor movements can play a crucial role in the counter-hegemony struggle and the promotion of political transition and the development of democratic states. Neureiter (2013) highlights in particular labor unions as a crucial component for the process of democratization. For instance, he states that organized labor movements in Indonesia have been a leading force in the democratic transition, whereas the inactivity of the labor unions due to state repression in countries, such as Malaysia and Singapore are drivers behind the duration of authoritarianism.

Authoritarian regimes often face the dilemma of taking either a repressive stance against labor movements, which may aggravate workers and lead to violent clashes, or granting major concessions, which might empower workers and weaken state power (Neureiter, 2013).

On the other hand, labor movements might help to consolidate hegemonic ideas. Assuming that every authoritarian regime consists of elites that can be more or less stringent and thereby be categorized as “hard-liners” and “soft-liners,” labor movements might foster authoritarian rule as soft-liners start to fear a total loss of control over social forces, in turn allowing hard-liners to restore order by taking a repressive stance against the labor movement, impinging on the transformation into democracy (Valenzuela, 1989).

State repression generally tends to suppress protest movements due to high costs for participants (Johnston, 2012). Furthermore, authoritarian and non-democratic regimes are assumed to escalate violence if necessary due to the lack of concern about human rights and legitimacy. However, vice versa, these violent escalations may also backfire and trigger unprecedented backlashes, similar to what is experienced in Syria today (Johnston, 2012).

On the other hand, democracies and more open regime types providing workers with freedom of association tend to have higher levels of protests (Robertson & Teitelbaum, 2011). However, low levels of state repression, generally found in more open democratic societies, in association with space for political participation, might mitigate protest mobilization (Johnston, 2012).

Robertson and Teitelbaum (2011) found that democracies are better able to handle labor conflicts via institutional arrangements than authoritarian regimes. This is based on the premise that political competition forces democratic regimes to incorporate labor conflicts, which facilitates grievance resolution.

However, according to Huntington (1968), increasing social mobilization and political participation in combination with a low rate of political organization leads to political instability and disorder, arguing the case for the primacy of the development of political institutions before social change, which might concede the case for authoritarian political systems in developing countries.

The following sections will extend these hypotheses to the case studies of Cambodia and China and provide the basis for determining the mechanism at play that led to different outcomes of labor protest.

Contemporary Labor Movement in Cambodia

Since 1991, Cambodia has transformed from war to peace, from autocracy to democracy, and from a centrally planned to a market-based economy (UNDP, 2009).

However, the democratization process in Cambodia is far from completed. Cambodia has been ruled by Hun Sen for almost three decades, and he has been accused of serious human rights violations and of taking a threatening and repressive stance against opposition (HRW, 2014). The major opposition party rejected his election in 2013 due to reports of irregularities and fraud. The call for an investigation, however, failed (Freedom House, 2014).

With this structural transformation began Cambodia’s integration into the global economy (UNDP, 2009). Cambodia is one of the poorest countries in the world. Nonetheless, Cambodia’s GDP grew by 7.2% in 2012, and the manufacturing sector is expanding, gradually decreasing its dependency on agriculture (Asian Foundation, 2013; World Bank, 2014).

Since the end of the quota system, challenging labor standards in the developing world, Cambodia participates in the ILO-mandated Better Factories Cambodia (BFC) program to improve factory conditions (Appelbaum et al., 2005). As a result, Cambodia has become attractive for giant retailers from the developed world. For instance, the US signed a bilateral trade agreement with Cambodia securing preferential extra quotas, which are conditional to decent labor standards for factory workers and rights to strike or engage in collective bargaining (Appelbaum et al., 2005). Cambodia is especially focusing on low-skill, export-oriented industries such as garments and shoes (Asian Foundation, 2013). The garment industry accounts for 75% of total exports and is Cambodia’s largest export industry (Reuters, 2013).

Dicaprio (2013) states that Cambodia’s labor rights experience is a success and that clusters of sweatshop labor have disappeared. She concluded that following the end of bilateral quota agreements in 2005, the ILO’s multi-stakeholder program BFC adopted monitoring mechanisms which promote institutionalization of labor agreements and create political space for workers to make claims to their labor rights. International buyers can refer to the reports of BFC and ensure suppliers comply with labor standards (Dicaprio, 2013).

However, the ILO (2012b) report on working conditions for garment workers in Cambodia contradicts this statement and shows that no significant improvements have been made. Challenges such as excessive working hours, overcrowded workplaces, discrimination against the hiring of men due to a higher perceived threat of leading strikers, dismissal of pregnant women, and child labor remain.

Large-scale economic integration of multinational firms is leading to environmental degradation and a lack of legal protection and labor rights, impinging on citizens’ livelihoods (Freedom House, 2014). Sweatshop labor and the race to the bottom are most severe in the garment industry, and with great economic integration into the world economy came great dependency for Cambodia.

Cambodia has a significant number of independent labor unions, and workers have, in principle, the right to strike. The number of registered trade unions has increased from 87 in 2001 to 1,758 in 2010 (ILO, 2012a). However, union leaders are often exposed to threats and physical assaults (Freedom House, 2014). The most prominent example is the killing of Chea Vichea, a leader of a labor union, in 2004, which remains unsolved due to a lack of official investigation (Dicaprio, 2013).

According to the ILO’s latest report (2013), many of the aforementioned aspects further deteriorated, which can be attributed to the rapid growth of the garment industry. Between 2010 and 2012, the number of strikes increased by nearly 170%. Main concerns include higher wages and secure working conditions (ILO, 2013).

LICADHO (2014) reports that 2012 and 2013 were the most violent years in terms of lethal force against civil society ever documented. Since June 2013, tension between the government and garment workers has taken on increasingly severe proportions. Although minimum wages were marginally increased in response to the protest, several workers were arrested, and labor rights have been undermined (Freedom House, 2014). Moreover, following the garment protest in June 2013, Nike fired almost 300 workers who joined the protests (Reuters, 2013).

On January 3, 2014, Cambodian garment workers took to the street, demanding a doubling of the current monthly minimum wage, which is today set at only US$80 – only marginally above the internationally defined poverty line of US$2 a day (Worrell & Sokchea, 2014). Protests escalated when military police officers opened fire and killed at least three protesters (Mullany, 2014). Peaceful protesters were brutally beaten by military police and government-hired thugs and several people were arrested, including labor union leaders and monks, who have joined the protests (LICADHO, 2014; Worrell & Sokchea, 2014). On top of that, US retailers such as Nike and Walmart have failed to condemn the brutal crackdown by the government, making the bilateral agreement on labor codes seem ridiculous (Bacchi, 2014).

The labor movement of garment workers continues and is posing a major threat to the government, not only due to the significance of the garment industry but also because the protests align with political opponents who are providing profound support for the labor movement (LICADHO, 2014; Mullany, 2014).

Contemporary Labor Movement in China

The Chinese Communist Party (CCP) has ruled the country since 1949 and has never faced competitive election, repressing every opposition and surge of expansive discontent with the party rule.

Johnston (2012) describes China as high-capacity authoritarian regime whose predominant features consist of one-party rule, centralization of governance, media control, a highly developed social control apparatus, absence of citizen protection, political venality, and clientelism.

Xi Jinping’s nomination as president in 2013 raised hopes among intellectuals and reformers. However, the crackdown of activists and new jurisdiction tightening freedom of speech has discouraged hopes (Freedom House, 2014).

China’s economic development, on the other hand, is impressive. Since the 1980s and the transition from a planned to a market-oriented economy, China achieved almost 10% economic growth and is classified as an upper-middle income country today (World Bank, 2014).

The economic transition has led to large-scale rural-to-urban migration, providing a large labor pool of low-skilled workers. China is one of the major beneficiaries of the end of the apparel and textile quotas. Thanks to the vast supply of cheap labor, China holds a comparative advantage in labor intensive manufacturing industries. As a result, China is the world’s largest manufacturer and the largest exporter of apparel (Appelbaum et al., 2005; Meckstroth, 2012).

In combination with China’s hukou system, preventing migrant workers from access to basic public services in the cities, China’s industrialization has promoted proletarianization of the poor and the occurrence of sweatshop labor (Gallagher, 2014). The ability to work is often the only power migrant workers possess, which reduces their bargaining power, in turn leading to low wages and labor protection. These economic and social inequalities have led to emerging class conflicts.

China has only one government-controlled labor union. However, the All-China Federation of Trade Unions (AFCTU) is often criticized for failing to protect and promote workers’ rights (Freedom House, 2014). Although labor unions are, by law,

Opposing Trends of Labor Protests in Cambodia and China: Do High-Capacity Authoritarian Regimes Create More Space for Institutional Arrangements?

The emergence of structural opportunities has stimulated reforms such as the Employment Contract Law, Labor Disputes Mediation and Arbitration Law, and other regulations on minimum wages, social protection, and employment (OECD, 2010, pp. 127-140).

The establishment of a legal basis for grievances and arbitration has led to a surge of disputes handled by the labor arbitration committees. From 2001 to 2012, the number of disputes handled increased from around 200,000 to almost 1.6 million and a substantial and increasing number have favored workers rather than employers (Deyo, 2012, p. 211; Gallagher, 2014). On the other hand, China’s average monthly minimum wage more than tripled over the period 1995 to 2008, mostly affecting rural migrants in low-skill employment (Wang & Gunderson, 2011; China Briefing, 2013). However, it is important to note here that China’s minimum wage standards are still among the lowest in the world, and a large gap remains between formal legislative protection and law enforcement (Deyo, 2012, pp. 97-98).

Although Chinese labor movements have led to significant institutional arrangements and have been settled without violent escalation and state oppression, criminal prosecution of protest leaders continues, and violent clashes between citizens and the state apparatus did not fade away. For instance, during a recent large-scale demonstration against a waste plant in Hangzhou, several police officers and demonstrators were injured (Barboza, 2014). Yet, it is important to note here that protest turned increasingly violent before state intervention, which indicates that Chinese citizens are increasingly willing to challenge the state authorities, in particular in regards to land grabbing, health, and environmental issues (cf. BBC, 2012; Barboza, 2014). However, recent protests do not appear as broadly coordinated social movements, but rather as ad hoc insurgence of public dissatisfaction.

The Puzzle

The divergence of government responses to labor protests in Cambodia and China is contradictory to what one would expect, considering China’s high-capacity authoritarian rule and Cambodia’s arguably more open democratic regime.

In order to answer the question of why labor movements in China appear to be non-violent and more successful than in Cambodia, we need to investigate the aspects where the two countries deviate most significantly.

On the one hand, we have China’s high-capacity authoritarian rule without compelling oppositional parties compared to a weak democratic system in Cambodia, with oppositional parties challenging the current rule. In China, the CCP remains the ultimate authority, implying that it also holds ultimate responsibility for local and international affairs. Thus, while concessions in China foster legitimacy of the CCP, in Cambodia, however, the government fears losing out to opposite parties who would, in turn, gain legitimacy due to the fact that they were part of and supported protests from the beginning.

The absence of direct involvement of political opposition in China’s labor protests suggest that rather than being driven by ideals and desire for political change, labor movements in China appear to be steered by social realities, such as inequality, low pay, or poor working conditions. Labor protests often target companies and take aim against the government only if the latter can be surely held responsible for the underlying factor of dissatisfaction (Nathan, 2013).

Furthermore, the absence of independent labor unions in China and the numerous labor unions in Cambodia propose the facilitation of institutional arrangements of labor disputes in Cambodia. However, Cambodia’s emerging numerous labor unions are debilitated by their strong ties with oppositional parties. Furthermore, similar to what happens in the Philippines, union fragmentation and competition due to competing affiliation with economic and political elites might hamper the development of a unified labor movement and leads to more violent trade unionism (Deyo, 2012, pp. 236-237). Thus, although Cambodia’s civil society today might have more space and operating environment to take on the government, the labor movement might actually be weaker.

Another striking contrast can be distinguished in opposing economic attainments. While China has been promoted to an upper-middle income country, Cambodia, despite growth, remains a low-income country. The degree of economic development affects the outcome of labor disputes in several ways. First, it leads to the growth of a better-educated urban industrial workforce, excelling in framing concerns and dissatisfaction which is less likely to lead to radical measures and violent outcomes. Furthermore, as Deyo (2012, p. 204) notes, economic growth mutes opposition, increases government resources to expand social policy, and creates leeway to develop alternative responses to labor unrests.

As Nathan (2013) puts it bluntly, although the growing middle-class in China sees through the regime and is aware of prevailing injustice, it is too busy enjoying reclaimed wealth, thereby hampering broader social movements that challenge the current regime. This is in conjunction with what is observed in other higher-income states with low public political participation, such as Singapore and Malaysia.

A further major aspect of the outcome and implications of labor protests is the dependency of affected industries. As discussed earlier, Cambodia is highly dependent on the garment manufacturing sector. Any rise in labor cost endangers Cambodia’s position as a cheap manufacturer, resulting in capital outflow to countries with lower labor costs. The Cambodian government got a glimpse on the sensitivity of the garment industry through the experience of the Philippines, whose garment industry rose as factories fled from industrializing Hong Kong, Korea, and Taiwan. However, since the ending of the quota legislation, garment manufacturers relocated from the Philippines to lower-labor-cost countries such as Vietnam and Cambodia (Ofreneo, 2012). This is said to have cost the Philippines almost one million jobs and might be responsible for today’s economic slump and high unemployment (Ofreneo, 2012). For a small country like Cambodia whose economy is highly dependent on the garment industry, accounting for almost all of its exports, such a capital outflow would have severe consequences which might constitute an additional explanation behind limited concessions and increasing violent responses to labor protests.

In China, thanks to demographic changes leading to labor shortages, but also to the gradual decline of low-skilled workers associated with higher educational attainments, manufacturers have started to compete for cheap labor, which amplifies workers’ bargaining-power, in turn leading to higher wages and better working conditions.

Equivalent to Cambodia, increased labor costs in China will threaten China’s position as a cheap global manufacturing center. However, higher wages in combination with China’s current structural economic condition bring the opportunity to join the ranks of industrialized nations and transform into a promising consumer market.

Similar to what has been experienced in many high-income countries in East Asia today, such as Singapore and Taiwan, the Chinese government might deliberately adopt a higher-wage policy, forcing low-value manufacturing to move up the value chain and upgrade to higher value-added industries, as China today has the ability to produce more complex and diverse products.

Thus, China’s industrialization might not only have naturally lifted wages but also further promoted workers’ bargaining power and provided economic structure where dependency on cheap manufacturing decreases and circumstances in fact allow the government to adopt more favorable labor policies for workers.

Conclusion

Social movements derived from a seemingly flourishing civil society across Asia are believed to provoke gradual political changes from within (Philling, 2013).

Whereas in many fields the Chinese government has become more restrictive, it has become more responsive to labor protests.

There is a strong consensus of slow but gradual change in China, putting an end to its authoritarian regime. However, predicting regime change is intricate and difficult, even if the sequence of events supports such a prediction (Nathan, 2013).

This paper argues that China’s labor protests only provide a limited challenge to the current regime. The protests are predominantly local and targeted against factories and not directly against the regime. Labor protests in China are less political than in other parts of the world, and the absence of real opposition and alternatives to the CCP allows the Chinese government to be more responsive and introduce major labor reforms without losing power. In fact, in combination with China’s economic and social development, major concessions enhance the legitimacy of authoritarian rule. Moreover, China’s current economic structure allows the government to adopt more labor-friendly policies.

In Cambodia, on the other hand, the presence of strong labor unions, joined by lurking opposition parties, in combination with a high dependency on the garment sector and a narrow set of exports, constitutes a high perceived threat to the government, which determines its repressive level, providing an explanation of the hostility against current labor protests.

As a result, this paper opposes conventional wisdom and proposes that labor protest in high-capacity authoritarian regimes, in combination with advanced economic development, is more favorable to institutional arrangements of labor conflicts than in low-capacity democracies in low-income countries.

These findings coincide with Huntington’s notion that despite more space for political participation, freedom of assembly and association, and the existence of independent labor unions in Cambodia, social mobilization and political participation in weak states promote political instability and disorder. Authoritarian regimes, on the other hand, while upholding the possibility to fall into the other extreme, tend to grant more freedom to their citizens where it feels less threatened and enjoys greater legitimacy and stability.

Cambodia and China partially conform to Huntington’s case that regular elections and other democratic outcomes in modernizing countries destruct the structure of public authority and limits governance, underlining the importance of political order over political system, challenging the constricted view that democratic regimes are inherently good for development.

However, the finite sample of two countries does not allow cross-country generalization and workers’ actions and government reactions remain highly complex issues, consisting of almost limitless factors and dynamics that are hard to grasp and control. Moreover, despite basic rights and significant space for civil society, Cambodia’s democracy resembles components of authoritarianism.

Nevertheless, this paper explores the interaction between political regimes, economic development, and labor conflicts and analyzes how these dynamics shape government responses. The findings might be applied to other countries in the region, providing a valuable framework for further research.

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