Policemen are seen on patrol as workers go on strike outside a Yue Yuen factory in Dongguan, Guangdong province, in this handout picture. Striking workers believe Yue Yuen Industrial Holdings Ltd, which owns the factory making footwear for Nike, Adidas and others, has for years underpaid into workers’ social insurance accounts – government-mandated nest eggs for disability, unemployment and retirement. — Reuters photo
DONGGUAN, China: Zhou Hujun, one of thousands of shoe factory workers on strike in southern China, drove his motorbike to the local government’s Social Security Department seeking answers.
After a few minutes, he left clutching spreadsheets that just raised more questions.
Zhou and other striking workers believe Yue Yuen Industrial Holdings Ltd, which owns the factory making footwear for Nike, Adidas and others, has for years underpaid into workers’ social insurance accounts – government-mandated nest eggs for disability, unemployment and retirement.
The issue goes far beyond the shoe plant, and highlights a looming problem for China: the workforce that has transformed the country into a global manufacturing powerhouse over the past 35 years is coming up to retirement age.
And, as these millions of blue collar workers begin claiming retirement benefits from local social security funds, they may find there’s less in the pot than they thought.
The underpayment of social insurance contributions is common practice by factory owners across China, labour lawyers say.
The strike at Yue Yuen – which says it is the world’s largest branded footwear manufacturer, making over 300 million pairs of shoes last year – is not just one of China’s biggest in recent years, it’s also more clearly driven by workers’ fears that they have been scammed by an opaque and convoluted welfare payment system.
Today’s workers in China – a total workforce of some 920 million – know more about their rights and are more proactive in using both collective action and the law to protect their interests.
The Yue Yuen strike comes amid a wave of industrial activism, with the number of work protests in China so far this year up by close to a third, according to China Labour Bulletin, a Hong Kong-based labour rights group – as firms cut costs and retrench in response to slowing growth in the world’s second-largest economy.
Demanding higher wages and safer working conditions are standard fare.
Workers at Yue Yuen have shown more sophistication in protesting what they claim to be inequitable, perhaps fraudulent, social insurance contributions.
At the Social Security office in Gaobu, a Pearl River Delta factory town that is home to a Yue Yuen industrial complex, workers like Zhou flocked to collect detailed printouts of the history of payments made into their accounts.
Few seemed to know exactly how to decipher the spreadsheets, but many were convinced Yue Yuen hasn’t been honest.
“I don’t fully understand it,” 45-year-old Zhou admitted.
Workers told Reuters they felt Yue Yuen has short-changed them by under-contributing company payments into their social insurance accounts.
Each month, both the company and the employee pay into these accounts – often 10 to 20 per cent of the total pay cheque.
Zhang Zhiru, a prominent labour activist who was shown copies of Yue Yuen pay slips, said the company had paid a lower social insurance contribution based on workers’ base salary, rather than a substantially higher full wage including overtime.
“China’s social insurance law stipulates that social insurance payments should be based on the actual salary,” he said.
While China’s National Council for Social Security Funds requires local authorities overseeing social insurance funds to put the money into low-risk vehicles such as bank deposits or treasury bonds, corruption involving officials and middle-men has blighted the system for years.
Former Shanghai Communist Party Secretary Chen Liangyu was arrested in 2006 after siphoning off millions from the city’s pension fund. — Reuters