China’s economic downturn leads to increased worker protests and strikes across the country

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On Christmas eve, a group of construction workers stood on the edge of the roof of their former employer’s building in Times Square in southern Dongguan City in a dramatic demand for nearly $20,000 in unpaid wages.

Key points:

  • 1,700 worker protests were recorded in 2018, up from 1,250 the previous year
  • Around 80 per cent of last year’s protests were over unpaid wages
  • Factory relocation has reduced the number of jobs in Dongguan by 4-5 million

The construction company owner had disappeared, and the workers were desperate to receive their “hard-earned money”.

One of the workers posted an appeal on Chinese social media platform Weibo saying they had exhausted all means of finding him and receiving their wages.

“It [hasn’t worked] at all after more than two weeks of efforts … Please give us migrant workers a way to survive.”

As China’s economy slows, labour workers are increasingly under threat of unemployment and lost wages.

And as low-income families struggle to survive, worker protests and strikes have increased across the country.

Chinese leaders see labour unrest as a potential political threat and are particularly sensitive to demonstrations this year, as it is the 30th anniversary of the military crackdown on pro-democracy protesters at Tiananmen Square.

Last month, Chinese President Xi Jinping also warned his senior members of the Communist Party to be on high alert for “black swans” and “grey rhinos” — phrases pertaining to extreme unforeseen events — in the face of a slowing economy.

‘Ordinary workers are struggling to make a living’

In 2017, the China Labour Bulletin (CLB) recorded about 1,250 worker strikes and protests countrywide. Last year, the number topped 1,700.

Geoffrey Crothall, CLB director of communications, said while the increase may partly reflect an increased ability of the Hong Kong-based CLB to locate the protests, the figures still showed a “discernible increase”.

“The reasons for that are quite varied … but a lot probably has to do with the economic slowdown in China and the fact that ordinary workers are now struggling to make a living,” he said.

While most of the protests recorded were small-scale and short-lived, they were frequent and widespread, covering every province and region of China except Tibet.

About 80 per cent of last year’s protests were over unpaid wages, with 19 per cent related to factory closures, which CLB predict will increase as “the economy slows and the manufacturing sector contracts”.

Mr Crothall said strikes and protests were often the only means at the employees’ disposal to resolve collective wage disputes.

“There’s no institutionalised collective bargaining mechanism,” he said.

“The official trade union doesn’t do a good job at representing workers’ interests.

“The only thing workers can do is go on strike or stage a protest in the hope of forcing concessions from their employer or getting the local government to intervene on their behalf.”

Trade war, cheap labour lures manufacturers elsewhere

The threat of increased tariffs due to the US-China trade war and the lure of lower wages in countries like Vietnam, Cambodia and Bangladesh have seen dozens of manufacturers pack up and leave China for elsewhere.

Average labour costs in Vietnam are almost half that of China and in Cambodia it’s even less, according to Professor Anita Chan, visiting scholar at Australian National University’s political and social change department.

Factory relocations have also been increasing within China as transport and communication have improved in the central provinces, where wages are lower than in southern and coastal regions that formerly hosted the lion’s share of China’s manufacturing, Professor Chan said, leaving millions of workers unemployed and often unpaid.

“Relocation is a serious issue,” said Professor Chan, citing the closure of multiple factories in Dongguan — once dubbed “the workshop of the world” — as one example.

“The number of workers [in Dongguan] dropped by about four or five million in a few years. That’s a lot!”

In October, GoerTek, the Chinese company that assembles Apple’s AirPods announced it would be moving its production from China to Vietnam.

“Due to macro-economic factors — such as external market fluctuations and China-US trade disputes — the company’s operation and management has become more difficult,” said the company’s chairman Jiang Bin in Goertek’s 2018 biannual report.

Taiwanese officials revealed last October that almost 30 enterprises had abandoned China and relocated to Taiwan, citing impact from the trade war, while computer manufacturer ASUS also said it was considering relocating its Chinese manufacturing plants to South-East Asia.

“When relocation happens, wherever they go, these factories try not to pay compensation,” Professor Chan said.

“According to Chinese law, for every year of work you should be paid a certain amount of money.

“Another big issue in China today is social security — that means [workers] are entitled to get back a sum of money for retirement but often they discover the company has not been contributing their share for social security.”

In other cases, factories close up and owners disappear without paying wages.

“Sometimes the factories just close down secretly, and the workers were left with nothing,” Professor Chan said.

‘Trade war may have pushed manufacturers over the edge’

Both Professor Chan and Mr Crothall said factory closures and unpaid wages have been an issue for many years, but Mr Crothall said the situation had likely been exacerbated by the trade war.

“I think the trade war may have pushed some manufacturers over the edge. That’s led to factory closures,” he said.

Even in factories that remain open, wage payments can be delayed for months or even years.

In December, workers from Lantang Jiada clothing factory in Guangzhou posted photos of a worker strike on Weibo.

“Our salary is paid once every three months, and each time we were paid in instalments,” one user posted.

Mr Crothall said factory closures would become an increasing problem as the economy worsened.

“Up to this point the growing service sector in China has absorbed a lot of the jobs from workers who have been laid off in factories,” he said.

“The question of how long that can continue is the important one.”

‘Gap between rich and poor keeps on getting wider’

While there have been reports of protesters and activists being arrested, Mr Crothall said there were “far too many protests to crack down on” and in most cases police didn’t get involved.

“Only in larger-scale protests you see a police presence,” he said.

In November, Beijing announced changes to business and taxation laws to be implemented from January 1 in a bid to protect workers.

Employer contributions were to be collected by China’s tax bureau in an effort to increase China’s capacity to enforce its social insurance regulations, including cracking down on underpayment.

Since China’s economy began to slow, the Government has tried to ease the impact with strategies from keeping the Chinese manufacturing industry afloat to investing in public infrastructure.

In the past year, China’s central bank has slashed the reserve requirement ratio five times to alleviate pressure on small and medium enterprises, Reuters reported, while taxes have been cut for smaller private companies.

But Mr Crothall said he remained sceptical about promises to protect low-income workers.

“If you listen to official government pronouncements, they say it’s something they are concerned about, but if you look at practical action nothing seems to be happening,” he said.

“We’ve seen the same problems year on year and the situation really doesn’t seem to be getting any better.

“Meanwhile the gap between rich and poor keeps on getting wider and wider and even people you would consider to be middle class in China are struggling to make ends meet.”

By Tracey Shelton and Jason Fang
ABC

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