AFRICA BUSINESS AND ECONOMICS LABOR

Indian Company versus Chinese Company: Insights on Differences of Labor Relation in Kenya

By Yuchen Tang

“Compared to Indian companies, the Chinese companies top the list as far as standard work and completion of projects within the stipulated time is concerned. They are however the most notorious when it comes to recognizing the union, underpayment of workers, unlawful termination of workers and other issues pertaining to terms and conditions of work.” This is the comment made by Mr. Rose, the general secretary of Kenya Building Construction, Timber and Furniture Industries Employees Union (KBCTFAIE), in regard to Chinese industries in Kenya. 

China and India, as the growing powerhouse of global economic development, have greatly expanded their economic ties to Africa. While Indians have established economic root in Kenya since the Great Britain’s colonial period, China has been greatly investing projects in Africa even as a newcomer. According to Ministry of Commerce People’s Republic of China, in 2015, China’s foreign direct investment (FDI) totaled $66.4 billion across Africa. At the same time, the statistics from International Centre for Trade and Sustainable Development show that as of 2013, India’s FDI totaled $13.6 billion, which accounts for 16% of investment in Africa. But their growing activities have raised controversies in the global society, especially in labor relation. 

“We have five strikes in three months. Labor union is like a cult,” as complained by Mr. Ivan, the project director from one Chinese state-owned company. Companies target at labor union as well. “We know workers start strike because of the incitation from labor union, therefore we reach oral agreement with workers to make sure that as long as they join labor union, they are going to be fired. We know it is illegal to do that, but we still reach oral agreement with workers”, as one Chinese manager exposed to us. 

On the other hand, Indian companies display an entirely opposite attitude in regard to labor union. “We encourage open discussion”, Mr. Charles, the human resource manager from one of the biggest Indian construction company said, “when there is a problem, we sit down and discuss with the labor union.” When labor union reaches collective bargaining agreement (CBA) with the company, all workers, by law, should benefit from the negotiation. This company, instead, only give the benefit to the union members exclusively. “Things become to be a lot easier when you only need to talk to the union instead of confronting individual workers,” Mr. Charles continued, “when all 

workers are in the union, we can settle every single issue by simply negotiating with the union.” 

It’s important to know, however, according to the statistics from the Ministry of Labor, the frequency of labor issues from Chinese and Indian companies differs conspicuously, where Indians have experienced significantly less amount of labor disputes than Chinese does. “For Indians there are very few. Even if there is, it’s easy”, labor officer Mr. Ray explained, “Indians are ok. If you call them, they respond and settle. But for Chinese small employers, you have to take them to court.” 

But the question is, are Chinese companies really unfriendly, or are there any other factors behind? “One thing worth knowing is that Chinese contractors have way more projects going in Kenya, meaning that it’s reasonable for them to have more disputes”, as said by Ms. Raven, a labor officer from KBCTFAIE. 

There are structural differences as well when it comes to labor relation. The Indian companies have an association called Kenya Association of Building Civil Engineering Contractors, which negotiate with labor union about a common collective bargaining agreement (all sections of labor issues that both parties are binding) that applies to all the companies affiliated. But with the Chinese, labor unions have to negotiate for a collective bargaining agreement with every single company. 

Other than the structural differences, socioeconomic disparity also contributes to the status quo. Mr. Eric, the labor officer on duty this week, provided explanation for comparatively more labor disputes associated with Chinese companies in terms of the difference in language ability, “There are language barriers for Chinese enterprises, both with labor office and employees. But most Indians are conversant with not just English but also local languages like Swahili.” The inability to speak contributes into miscommunication, which complicates the mutual understanding between Chinese companies and workers and labor unions. Where there are more misunderstandings, more problems occur. 

Moreover, historical difference is also playing an important role. “The Chinese Diaspora in Africa is generally not as deeply rooted as the Indian”, as concluded by China and India in Africa: An Analysis of Unfolding Relations. And this viewpoint is supported by Mr. Joe, the CEO from one Chinese central enterprise, who shed some lights on the issue via taking historical elements into account. He mentioned that Kenya used to be the colony of the Great Britain, which also had control over India during that era. In order to manage Kenya better, British sent Indians to Kenya to control and manage the economy. After Kenya declared independence, the British left but lots of Indians stayed 

and maintained the power, who now have control over approximately 60% of Kenya’s economy. This viewpoint is also supported by the labor officer, “The fact that Indians have been in Kenya long enough is also a major reason behind improved labor relations.” Throughout the history, Kenya’s people have been used to economic relationship with Indians, therefore being less resistant to Indians. 

One interesting point is made by a Chinese project director from one of the biggest central enterprises in Kenya when being asked about the difference in the frequency of issue between Chinese and Indian companies, “This is also related to company’s wage system”, he explained, “we pay wages monthly, and we need to have record for paying taxes, therefore we cannot pay in cash. But Indians pay weekly in cash. Since workers here usually don’t work on weekends, they like to drink on weekends and spend all the money.” Surprisingly, consumption attitudes affect labor issues as well. Each time workers get paid, they tend to spend them all. When they get paid monthly, it’s more likely for them to start labor strike because of lack of money compared to getting paid weekly. 

Despite of the objective factors that have impact on the difference in frequency of labor disputes, Chinese companies and Indian companies have their own active strategies in minimizing labor issues. 

Chinese companies have strategies targeting at the labor union. Chinese companies also try to eliminate labor union participation as much as possible. Since there is competition between all types labor union for gaining more membership fee, each of them will try to intervene as long as there are workers that are from the occupation. This always complicates the situation and makes it harder for Chinese industries to operate properly. “We talked to our own union and even paid them, using them as a way to prevent other labor unions from coming in”, Ms. Ying, human resource manager in one state-owned company, leaked the information to us, “Sometimes if we had a good relationship with labor union that is in charge of our own area, they can help us deal with some problems because they are ones which are trusted by workers.” 

Except for directly targeting at the union, Indian and Chinese companies are making efforts on worker’s side as well. “Workers sometimes don’t get happy even if you raise 

their wages by 10%, Mr. Charles explained, “they need motivation for working.” Via setting incentive system to award certificate to excellent workers, company makes workers feel recognized when they are being very diligent. The company has workshops and field trips for workers as well to enhance employees’ passion for working by satisfying some of their psychological needs. Chinese companies, on the other hand, establish their own system for management of workers. “We select employee representatives as media to connect workers,” as explained by Mr. Han, the executive director from one central enterprise. By avoiding solving disputes with individual workers, this system averts confusions and troubles because the representatives can filter out unreasonable requests. 

One interesting point is made by a Chinese project director from one of the biggest central enterprises in Kenya when being asked about the difference in the frequency of issue between Chinese and Indian companies, “This is also related to company’s wage system”, he explained, “we pay wages monthly, and we need to have record for paying taxes, therefore we cannot pay in cash. But Indians pay weekly in cash. Since workers here usually don’t work on weekends, they like to drink on weekends and spend all the money.” Surprisingly, consumption attitudes affect labor issues as well. Each time workers get paid, they tend to spend them all. When they get paid monthly, it’s more likely for them to start labor strike because of lack of money compared to getting paid weekly. 

As the investigation goes on, the focus in the future for both companies becomes clearer. Although Indians have a relatively long history and have established their own association for employers here, there are still a few things to work on. “While lots of big companies are part of the association, small companies still have troubles in labor issues”, said by one officer in KBCTFAIE. On the other hand, Chinese companies as newcomers are quickly adapting but still need to spend more efforts in the improvement in management of labor, as stated by the leading labor officer in the Ministry of Labor, “Chinese are new and having problems, but they are catching up quickly. We have minimized issues now than when they first arrived. Some of big industries have very few disputes nowadays.”

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