About 95 percent of Fortune 500 companies operating in China will have collective wage bargaining by the end of 2013, a senior union official said.

Approximately 80 percent of the 4,100 enterprises set up by Fortune 500 companies in China had introduced collective bargaining by the end of 2011, Zhang Jianguo, director of the collective contract department at the All-China Federation of Trade Unions, told China Daily.[HK Corporate Registration]

Zhang said the target that the federation set in 2011- 95 percent of Fortune 500 companies to have trade unions to carry out collective wage talks by the end of 2013 - could be reached.

"We prioritized boosting wage talks in Fortune 500 companies because those companies play an important role in China's economic and social development and they set an example for other enterprises," he said.

Zhang said in some places the target had already been accomplished.

For example, all 49 enterprises of Fortune 500 companies set up in Shenyang, Liaoning province, conducted collective wage bargaining.

All Wal-Mart outlets in China have also signed collective wage contracts. The retailer signed its first collective contract with employees in its Shenyang store in 2008. Other Fortune 500 companies, such as McDonald's, Carrefour and Honda's auto parts manufacturer in Guangdong, have also introduced collective talks, according to Zhang.

Of the nearly 1,000 enterprises set up by Fortune 500 companies in Shanghai with unions, 81 percent held collective talks and the contracts covered about 322,000 workers. The city plans to lift this up to at least 90 percent by the end of this year, according to the Workers' Daily.

Noting the benefits from collective bargaining, Zhang said the mechanism will not only help increase pay but will also help enterprises maintain employment and resolve labor disputes.

"Workers in enterprises that hold collective talks will see quicker wage rises than workers in other companies," he said.

Workers with Fortune 500 companies in Shenyang, on average, saw an annual wage rise of 8 percent after collective talks were introduced, according to Zhang.

[Hong Kong Company Formation, Incorporation, Business Registration]Around 35 percent of labor disputes in China are wage related, Zhang said.

Collective negotiations provide a platform for both sides to present their case, he said.

"We noticed that strikes in Fortune 500 companies were mostly solved by collective bargaining," he said. "Collective talks are the most effective and the least costly way to address labor disputes."

But obstacles still exist, Zhang said.

China's Trade Union Law stipulates that a corporate unit with 25 employees or more should set up a union. The primary task of a union is to boost collective contract agreements and to mediate labor relations through negotiation between employees and employers.

Some Fortune 500 companies set up branches in various locations in China and there can be problems in these situations with wage bargaining, either through management structure or slow communication with headquarters.

"Fortune 500 companies that have not set up their overseas headquarters in China can sometimes make approval of a collective contract even harder," Zhang said.

Lack of capable union leaders had also hampered introducing collective negotiations to more companies, he said.

Zhang said his federation and local union organizations will try to get more support from governments, especially on regulations, and will also try to boost collective negotiations as well as coordination among workers, employers and unions.

Currently there is no law requiring companies to sign collective contracts with employees. He said his organization will push the top legislature and the central government to amend laws so that they spell out negotiating procedures and punishments for violators.