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China: Privatized state firms shortchange workers

NewsNotes, November-December 2008


Millions of workers in China have lost their jobs with the privatization of state-owned enterprises (SOEs) that began in the late 1990s. Attempting to claim their rights, the workers have encountered obstacles from unexpected quarters: local governments and the courts, which often favor dishonest former bosses. The workers’ plight recalls similar situations in the former USSR and East Germany with the shutting down of inefficient factories, raising the question of the state’s responsibility to provide benefits and new jobs. This story is based on the research report “No Way Out: Worker Activism in China’s State-Owned Enterprise Reforms” at China Labour Bulletin.


The privatization plan called for closing down inefficient Chinese enterprises or merging them with more productive units. It was hoped that everyone would benefit from increased efficiency, economic growth and new job and business opportunities. However, the government’s plan lacked transparency, clear guidelines or proper auditing of company assets, which opened the door to corruption. More than 30 million workers were left without jobs and the means to support their families.

Workers seeking the back wages, pensions and other benefits owed them sometimes resorted to public protests after appeals through official channels failed. However, many local officials saw these demonstrations as a threat to “political stability” or to their own positions, and had the protests banned or the leaders punished. Meanwhile, one union official says mass protests and strikes – numbering in the tens of thousands every year across China – have become “as common as arguments between a husband and wife.”

For example, in March 2002 Yao Fuxin led over 10,000 fellow workers in public protests against alleged management corruption in the privatization and forced closure of the Liaoyang Ferro-Alloy Factory in Liaoning province. Initially charged with “illegal assembly and demonstration,” he was later convicted of the more serious crime of “subversion of state power.” Yao is serving a seven-year prison sentence in a remote prison and is limited to only occasional visits from his family.

Laid-off workers initially turned to the government for redress. However, China’s weak complaints and petitions system failed to resolve the escalating conflicts over inadequate or non-existent redundancy payments, wages in arrears and medical and pension benefits. In fact it exacerbated them, with workers’ complaints usually ending up in the hands of the same government officials being targeted.

The courts normally offer another channel to pursue complaints of labor rights violations; most labor rights cases that go to trial end in victory for the employee. In SOE-related privatization disputes, however, the Supreme People’s Court has imposed arbitrary barriers to workers’ quest to satisfy their grievances – effectively stripping tens of millions of citizens of a constitutionally guaranteed right.

Consequently, workers often see no option but to resort to marches, strikes, sit-ins and even road or railway blockades, to call the attention of government leaders. It is a risky strategy, however, as officials often use such actions as a pretext to frame protest leaders on trumped-up criminal charges.

After protesters blocked a local railway in one labor dispute, a worker explained, “They say it’s illegal for us to blockade the railway, picket the factory entrance or appeal to the government. But when we try to do things the legal way, first by mediation and then through litigation, our case is always rejected. We couldn’t resolve matters through blockades or picketing, or even by talking with city leaders, but taking the legal route got us nowhere, either.”

The central government has accepted some responsibility for depriving workers of their rights in the SOE restructuring process, and it has implemented measures that help those who were laid off to undergo job re-training and find new employment. However, thousands of labor disputes related to SOE privatization remain unresolved.

China Labour Bulletin has called on China’s local governments to provide welfare and pension payments – and new employment, if possible – to workers who have lost their jobs due to SOE privatization. The Hong Kong-based non-governmental organization, which defends and promotes worker rights in China, also asks the central government to remove arbitrary obstacles to workers seeking legal redress. It also urges that all citizens who have been unjustly imprisoned for fighting for workers’ rights be unconditionally freed.

Catholic social teaching insists that labor problems in a particular country or region “are not to be considered as isolated cases.” (Sollicitudo Rei Socialis, n. 9) The reason is that human dignity and workers’ right to a fair wage, private property and reasonable working conditions are universal concerns. China’s experience is not unique. Labor disputes spring from what Pope John XXIII described as “the exploitation of the weak by the unscrupulous strong, who flourish, unfortunately, like cockle among the wheat, in all times and places.” (Mater et Magistra, n. 58)

The demands of Chinese workers are in accord with the Church’s social teaching. In a recurring theme, the Church says labor is not intended to benefit only a small wealthy or powerful class, but is meant for individual growth and for the common good. “[W]hen a man works he not only alters things and society, he develops himself as well,” wrote Pope John Paul II as he explained “the gospel of work.” This kind of growth, he added, “is of greater value than any external riches.” (Laborem Exercens, n. 26)

 

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