Well-aimed

Workers protest in Dongguan

Fifteen years ago, the chance of travelling to a city and earning a monthly pay cheque was enough incentive for millions of rural Chinese to take factory jobs.

People might work on a production line for a season if work was slow on the farm at home. Or they might choose to leave for a year or two if school fees or a large medical bill needed paying.

But the view was all too often that this work was somehow temporary; something one did when young or as a short term choice to boost the family coffers back in the countryside.

Over the years the concept of urban living has changed. Life in towns and cities has become more of a norm for many of China’s 260 million migrant workers. And this greater sense of permanency means that the workforce wants more than a few monthly pay cheques. Instead it wants to be surer that employers are meeting their obligations to fund social benefits including pensions and unemployment insurance.

A two-week strike at the huge Taiwanese-owned Yue Yuen shoe factory in the southern city of Dongguan offers further evidence of this desire. The action, which involved 40,000 workers, was triggered when they discovered that their employer had been underpaying its social security contributions for years.

Employees were furious when they realised that they might receive smaller pensions when they retire or lower unemployment benefits if they are laid off.

Yue Yuen – the world’s largest sports shoe manufacturer – is reported to have been underpaying its social security contributions by about a third.

The Hong Kong-based China Labour Bulletin has speculated that this could have been the result of an agreement with local authorities keen to attract the manufacturer’s business in the first place. “There is no way this could have been done on this scale without their knowledge,” Geoffrey Crothall, a spokesman for the organisation, told WiC.

So when workers unfurled their banners and started to demonstrate, some of their anger was directed at the local government as well. Dongguan officials then sent in the riot police, with protesters complaining of beatings and detentions. Nonetheless, the strike spread to a sister factory in neighbouring Jiangxi province a few days later.

Officials from the central government then stepped in. “The ministry is closely monitoring the developments and will guide Guangdong province in its handling of the situation to protect the legal interests of the workers,” Li Zhong, a spokesman for the Ministry of Human Resources and Social Security told Xinhua.

Li also reminded Yue Yuen that underpaying social benefit contributions is a criminal offence.

The company responded by agreeing to pay all outstanding social benefits and pay an extra Rmb230 ($37) in monthly living allowances for workers. It also reported that the direct costs of the strike were already $27 million and that the increases in social security payments and housing benefits would amount to $31 million a year. The cost of making up the arrears on past payments is yet to be finalised.

The Global Times – one of the few newspapers not to simply rerun Xinhua’s copy on the strike – said that a number of recent disturbances had focused on disputes over social security benefits rather than basic pay. It thought that this was a result of the aging of the workforce, although it also believed that better awareness of worker rights was a factor.

“In the past, workers migrated very frequently and they didn’t think they had the right to benefit from social insurance,” Liu Kaiming, the director of Shenzhen-based think-tank the Institute of Contemporary Observation, told the newspaper. “The development model of having a cheap labour force always at the edge of the economy has nearly come to an end and must be ended. These strikes are a warning to employers and the government that they should not neglect social security benefits for workers any longer,” he added.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.