Chen Jiabao, Vice Mayor of Nanjing, noted that, "The per capita GDP of Nanjing City reached $4,000 in 2005, which is in sharp contrast to the average salary of ordinary employees."

"Our survey showed that the major shareholders' year-end bonus was as much as 24 times that of the average workers, and the monthly salary of the management was six or seven times more than that of the ordinary workers," he continued.

"This kind of sharp gap is unacceptable for ordinary workers," said Chen. "Workers are the major productive force and it is they who create value for companies and should not be treated unfairly."

One of the major reasons companies are reluctant to increase workers' salaries is that they fear this will result in higher production costs and cause them to lose the competitive edge in pricing to their rivals.

However, Song Zheng, Vice Chairman of the Trade Union of Nanjing City and a veteran economist, pointed out, "The increase in workers' salary will enhance their purchasing power, which means they are able to buy more commodities. Therefore, from the perspective of the whole society, the increase in workers' wages is conducive to the economy, in turn benefiting the company itself."

Explaining further, Song said, "For instance, if a pair of Nike shoes is sold at 600 yuan with a cost of 200 yuan, a mere increase of 20 yuan-10 percent-in workers' salaries is just a drop in the bucket." But he said this "drop" can boost workers' enthusiasm as well as their productivity. In return for management's goodwill, workers will do their best to use innovative technology and reduce the cost of production.

As China's economic reform deepens, the government has been reducing its role in corporate management and has switched its efforts to macro-control. Taking advantage of the loosened control, some companies tend to restrict workers' salaries in order to achieve the maximum profit.

Considering the problem, the labor and social security department of Nanjing will consider the collective bargaining mechanism an important part of its investigation and registration of a company labor contract.

At present, Nanjing runs a "harmonious enterprise" campaign on a yearly basis, involving foreign companies, domestic companies and joint ventures.

An Erkang, a senior researcher at the China Management Academy of Sciences, noted that salary distribution is one of the core areas of the "game theory" strategy between employees and employers. But, An said, "Workers are generally disadvantaged and have no competitive edge in this game theory practice."

Foreign-domestic dichotomy

In a world where the supply of talent far outpaces the demand, people hold firm in their jobs. Despite being eager to see a salary increase, employees dare not have a direct confrontation with their bosses. "Therefore, the government should guide them and enact favorable policies to guarantee the workers' rights," said An.

Qian Guanghao, an employee at Deltak Power Equipment (China) Co., has been involved in salary negotiations in the company. Asked why he dared to take the job and whether he feared being fired, he said, "Actually, after a worker is elected as a negotiator, he or she signs a three- or four-year contract with the company. In these three or four years, the company has no right to fire the negotiator." In this way, negotiators can feel secure even amid a strong confrontation with the management. "If the negotiator does a good job, he or she can be re-elected for another term without being afraid of losing his job," said Qian.

Fu Xiaojun, Assistant Director with the Public Relations Department of the Nanjing Trade Union, agreed. "The negotiators' interest is fully protected by the trade union and relevant government departments."

In the meantime, the government must devote itself to promoting the quality of both employees and employers, and make both sides realize that their interests are bound together, experts say.

A labor contract draft law, aimed at thoroughly protecting workers' interests, is now being deliberated by the government and is expected to take effect soon, despite harsh criticism from employers.

"It has been easy to set up trade unions in state-owned enterprises-just issue an administrative order. It has always been difficult to set up trade unions in foreign companies," said Xia Yinchun, Secretary General of the Nanjing Trade Union.

From the perspective of foreign companies such as Wal-Mart, however, trade unions are viewed negatively. A Wal-Mart public relations manager who requested anonymity said, "Our bosses from the United States have felt there is no need to set up a trade union, which seems like a divisive force in the whole company."

In Western countries, trade unions are sometimes a headache for management. Song of the Nanjing Trade Union said, "Workers care about their own interests without considering the overall performance of the company." In Nanjing, however, workers are aware that "if I want to have my salary increased, I have to work hard," he added.

At Kumho Tire, one of the first companies to adopt collective bargaining, the workers' annual salary jumped to over 35,000 yuan in 2005 from a mere 16,000 yuan in 1999. "Our workers have the habit of seeing their income grow every year. If the salary remained the same as in the previous year, their enthusiasm for work would be hurt," said Wu, the company union head.

Currently, the company faces enormous pressure from the workers' call for salary increases and rising costs. Wu noted that the price of rubber has jumped to about 24,000 yuan per ton this year from 13,000 yuan several years ago. The company's profitability is not as strong as it was before.

Maintaining sound and sustained growth while not posing an unbearable burden on the company's daily operations has become a nerve-racking problem for both the trade union and management.