Wages in Honda Raised by RMB611 after Collective Bargaining

 ITUC/GUF Hong Kong Liaison Office


China Labor Net notes: On March 2, 2011, the Southern Metropolis Daily reported on the result of the collective bargaining between the workplace union and the management of Honda Nanhai. This IHLO report seems mostly based on the Chinese report.

Honda Auto Parts Manufacturing Co Ltd in Foshan city of Guangdong province went into a new collective bargaining with the trade union after the strike which halted the production lines of Honda in China in June last year. Wage bargaining was held on 1 March between the Japanese management, the provincial trade union, the enterprise union and 40 workers as observers. The new agreement increases the wage of production line workers in 2011 by RMB611.

Since the first negotiation held on 4 June 2010 with the presence of the provincial ACFTU, the General Manager of Guangzhou Automobile, the joint venture partner of Honda, and the elected workers’ representatives. The compromise was an increase by RMB500 in the aggregate salary rather than RMB800 as demanded by the strikers. Since then, a re-election of the Honda plant union was promised by the provincial ACFTU. The first meeting held between the elected Honda union and the Japanese management was held on 25 February 2011 in which the plant union demanded wage rise of RMB880 for production line workers in 2011, a 46.1% increase from the 2010 salary according to the management. Instead the management proposed a 27.7% increase by RMB531 for the 2011 salary emphasizing that the last salary rise was made in May 2010 and the union’s demand was too high. The Honda union however insisted on the RMB880 increase blaming the management for lack of sincerity and the traditional low wage level at the enterprise.

Nevertheless, a consensus on the benchmark on remuneration seemed to have been reached between the management and the union. The wage level of the production line workers in Honda’s Foshan plant should be raised to RMB3500 in 2013 to bring the labour competitiveness of Honda on par with FAW-Volkswagen. The German joint venture with First Auto Work is constructing a new production base in the same industrial district in Nanhai. The German plant is expected to start production in 2013 by setting the wage level to RMB3500-4000 to recruit production line workers.

The enterprise union rejected the management’s proposal and the negotiation was adjourned temporarily. The union conceded to bring down the increase from RMB880 to RMB731, insisting that it should include an increase of RMB200 in the basic wage. Wang Qiaoqun, the Deputy Chair of the Honda plant union told the management accepting the company’s proposal would dampen the morale and productivity of workers; escalate the turnover rate of the skilled workers, and most of all, aversely affect the role and image of the trade union amongst workers.      

The Japanese management did not agree to the union’s new proposal claiming that the incremental rate was still high with ramification in the auto parts and logistics subsidiaries and suppliers of Honda. The management gave a final proposal with a further increase of RMB30 in the bonus making the new offer to RMB561. The Japanese management threatened to leave the table and seek arbitration if the union refused to accept the final proposal.

The stalemate was broken by the Deputy Chair of the provincial ACFTU Kong Xianghong who rejected any “final” proposal by one side and demanded both the management and the union to use maximum respect for reaching a consensus. In the end, the management agreed to further raise the bonus by RMB50 making up the salary to RMB611, which is RMB80 more than its original proposal.

On 4 June 2010, Honda management negotiated with the workers’ representatives elected by the strike workers. The aggregate salary of production line workers was raised from RMB1544 to RMB2044. The RMB500 increase included a RMB300 in the basic wage, RMB66 in the bonus and RMB134 in other incentives. The new package was effective dating back to May 2010 when the whole workforce began the 4-day strike.


March 2011