Strike settled, but reveals wider pension problems

0 Comment(s)Print E-mail Shanghai Daily, April 30, 2014
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A mass strike at a Chinese factory making shoes for Nike, Adidas and other brands has ended, with warnings that legal loopholes could become traps for companies.

The dispute broke out on April 5 at a factory run by Taiwanese firm Yue Yuan Industrial Ltd, in Dongguan city of south China's Guangdong Province.

Tens of thousands of employees joined the strike demanding their social insurance and housing fund be fully paid, after negotiations with management failed.

An agreement between workers and management was finally reached on Monday, and almost all workers have returned to work.

However, the strike revealed loopholes both in the country's social security scheme and investment conditions, and highlighted conflicts.

According to Chinese law, employers are required to make monthly social security payments to workers, to help provide a pension. But manufacturers often shirk their duties.

He Gaochao, a public affairs professor at Sun Yat-sen University, said many labor-intensive foreign companies in China pay as little as possible in social security funds for workers.

In the Pearl River Delta region, "it is especially common," He said, adding that some local governments even allow foreign companies to escape payments to attract their investment.

"Improvements in China's legal system and workers' increasing awareness of their rights means loopholes have turned into huge legal traps. Companies need to change to avoid the same mistake made by Yue Yuan," He said.

Li Zhongze, a Ministry of Human Resources and Social Security of China spokesman, said last week that the ministry will step up supervision of enterprises and will also guide workers to make demands through proper channels.

Yue Yuan said it suffered losses of US$27 million during the strike, and workers' social security debt payments will see it increase welfare spending this year by US$31 million.

A retired Yue Yuan staff member found that the company had been paying less in social security funds — causing his monthly pension to shrink from 1,500 yuan (US$240) to 800 yuan.

"The situation is completely different from 10 years ago," said Zhang Zhiru, a labor rights activist of Shenzhen Chunfeng Labor Disputes Services Center.

Some workers are coming to the age of retirement. They have paid their social security for 15 years and are expecting to live on their pension after retirement. But now they found their pensions have decreased sharply because of malpractices of their employers, said Zhang.

"They will not accept it," added Zhang.

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