ABSTRACT
Over two decades ago, an observer of Hong Kong's industrial relations remarked that Hong Kong had become a 'highly industrialized society with an underdeveloped system of industrial relations' (England 1971: 256). This assessment was based on the low density of trade-union membership (less than 20 percent) as well as on movement fragmentation including the prominent division between the pro-Chinese Hong Kong Federation of Trade Unions (FTU) and the pro-Taiwanese Hong Kong and Kowloon Trades Union Council (TUC) whose historic origins were tied to Chinese politics, the near absence of collective bargaining and the minimal role played by the British colonial government in regulating the labour market and employment relations. As a result, unilateral workplace regulation by employers (or occasionally jointly by employers and the government) prevailed. Despite substantial changes in Hong Kong's economy and polity since the 1970s, the organization of industrial relations has shown considerable continuity in three respects. First, the structure of the trade-union movement has continued to be characterized by a relatively low membership density and fragmentation. The union density rate (declared membership of employees' unions divided by the number of salaried employees and wage earners) was about 16 percent during most of the 1980s. It has risen since the late 1980s due to substantial growth in civil service unionization, but has levelled off in the 1990s at about 21 percent. The fragmentation of the trade-union movement has been even more pronounced in the 1990s than
it was in the early 1980s. The number of registered employee trade unions rose from 276 in 1971 to 491 at the end of 1993 (Registrar of Trade Unions 1972, 1994). Moreover, three new peak union federations have been formed since the early 1980s. Second, collective bargaining continues to be rare as a method for regulating labour market transactions. A recent study (World Bank 1995: 83) attributes the flexibility in Hong Kong's labour market to its decentralized enterprise bargaining, but this is misleading because the 'bargaining' that occurs at the enterprise level is typically in the form of unilateral determination of conditions of employment by the employer or occasional negotiations between individual workers and management. There is little collective representation by trade unions and such negotiations that do occur are rarely governed by formal procedural rules. A substantial proportion of union resources are instead devoted to providing welfare services, some in the form of running businesses such as canteens, restaurants, shopping cooperatives, housing schemes and recreation centres as selective incentives to entice workers to join (England 1989: 138-146). Third, although the colonial state expanded its regulation of substantive conditions of employment over the last 25 years of its existence (England 1989: 233-234), it abstained from intervening into core elements of the employment relationship. For example, although the Trade Boards Ordinance of 1940 empowered the state to set minimum wages, it never invoked this law in practice, insisting that wage determination should be a matter to be decided between employer and employee. The authority of the employers to hire and fire was also unchallenged by legal statutes and remained a managerial prerogative until the final days of colonial rule when an unfair dismissal ordinance was passed but was then suspended after the July 1997 handover and subsequently repealed. The state also adhered to the 'voluntarist' framework by not introducing statutes compelling employers to recognize trade unions as bargaining partners. Even if collective agreements between employers and unions were concluded, they did not carry any legal significance, but were, in effect, 'gentlemen's agreements'. In short, the legal framework has not been conducive to more formalized or centralized patterns of industrial relations. Some of the large private-sector business organizations in the relatively sheltered sectors of the economy including utilities, transport and communication have created joint consultation committees but these do not accord unions a formal representational or participatory role (Levin and Chiu 1997). The large firms in these sectors do not have formal bargaining relationships with unions with one notable exception discussed later. Chinese (mostly Cantonese) employers who predominate in the vast number of medium and small-sized enterprises in manufacturing and the service sector rely on more informal labour relations practices (Levin and Ng 1995: 122-125). As in the large private-sector firms, the individual employees in these enterprises can negotiate with employers over wages and other terms of employment, but the terms of employment are normally decided unilaterally by the employers (England 1989: 145). When the employer
unilaterally changes the terms of employment, the only options usually open to workers are to accept the new terms or quit. The organization of industrial relations thus continues to remain highly decentralized in the private sector in that decisions with regard to pay are made primarily at the enterprise level and are determined by individual agreements between employers and employees. Because there are rarely formal rule-making arrangements that guide decision making on pay and other conditions of employment or for resolving individual grievances, the organization of industrial relations also remains characterized by a low degree of formalization. The principal exception to this picture is the Hong Kong government which, with about 180,000 employees in 1994 (6.5 percent of the labour force), is Hong Kong's largest employer. The organization of industrial relations in this case involves formal joint consultation bodies at both the central and departmental levels of government and, unlike the private sector, civil service trade unions are accorded a representational and participatory role on these bodies which enables them to exert some influence on changes in their conditions of employment. Why it became exceptional is taken up later.
