Labor authorities in south China's manufacturing base of Guangdong Province are considering setting up a fund to help workers laid off in factory closures caused by the rippling global financial crisis.
More than 1,000 workers at a Hong Kong-invested electrical appliance plant in Shenzhen City took to the streets on Sunday to demand the government intervene to secure their unpaid wages.
The Bailingda Industrial (Shenzhen) Co. Ltd. officially closed its production line on Monday, leaving 1,500 staff out of work.
It was the second Hong Kong-listed firm in Guangdong to go bust in a month, after the closure of Smart Union Group (Holdings) Limited last Friday, which laid off 7,000 workers in Dongguan City. Both were export-oriented manufacturers.
Bailingda, with an annual capacity of 5 million units, produced household electrical appliances such as coffee pots, irons and radiators for the North American and European markets. Smart Union made toys for Mattel Inc., Hasbro Inc. and other U.S. companies.
An official with the provincial labor and social security bureau, who declined to be named, said the bureau had been working with the provincial development and reform commission to set up a benefit fund to help workers in difficulties because of unpaid salaries.
Bureau head Liu Youjun declined to comment on the fund or the demands of redundant workers, but he said the labor bureau would help laid-off workers find new jobs and obtain unemployment insurance. The bureau would also consider legal measures to bring the companies to account.
"The current labor problems cannot be resolved simply by government departments. The cooperation of banks and foreign trade departments is also needed to deal with wage defaults," he said.
A Bailingda worker surnamed Liu said he and his co-workers had not been paid since August.
A district court in Bao'an District, Shenzhen, confirmed that it had sealed the plant's fixed assets to prevent them being plundered by angry suppliers.
The court found that in addition to about 10 million yuan (1.46million U.S. dollars) in unpaid wages, the company was also 30 million yuan in debt to its suppliers in Hong Kong and the mainland.
The local labor department had sent investigators to the company, and will start mediation in the labor dispute on Thursday.
Since the closure of Smart Union's factories in Dongguan, the township government of Zhangmutou has promised to pay 24 million yuan to cover the company's two months of unpaid wages.
Xie Jianshe, rector of the Guangzhou Urban Development Research Center of Guangzhou University, said the government bailout failed to deal with the underlying causes of wage defaults in factory closures.
"Governments at different levels plan to earmark money for the contingency reserve fund to help unpaid employees, most of them migrant workers. However, it is not fair to spend tax-payers' money to cover for the companies' losses," he said.
He proposed the companies should be required to contribute to a mandatory reserve fund on registration, which would prevent layoffs from becoming a social problem.
Zhang Yansheng, director of the International Economic Research Institute under the National Development and Reform Commission, foresaw a gloomy picture for exporters who were hit by both falling global demand and rising costs.
"The country's exporters are in a very difficult situation right now," he said.
Guangdong makes one third of China's exports. However, rising materials and labor costs are forcing many plants to move out of the province.
Source:Xinhua
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