michael zhang the social marginalization of workers in...

Michael ZhangThe Social Marginalizationof Workers in China'sState-Owned Enterprises

THE PROCESS OF RESTRUCTURING CHINA'S STATE-OWNED ENTERPRISES

(SOEs) has seen workers at these enterprises stage repeated collectiveactions since the late 1990s. Scholars have attributed these sponta-neous collective actions—especially the massive protests with morethan 10,000 participants each in 2002 in northeastern and southwest-ern China—to a number of factors, including a subsistence crisis,antagonism with capitalist private ownership, and outrage at thecorrupt behavior of SOE managers (Chen, 2000, 2003; Lee, 2005; Pan,2002; Pringle, 2002). In response to the pressures exerted by thesecollective actions, the government, while still maintaining a nega-tive attitude toward the actions, has become more tolerant. It haschanged its tactics to deal with the workers' actions and has set upand revised some systems of public administration and social secu-rity in the hope of nipping such collective actions in the bud for thegeneral purpose of "maintaining social stability and constructing aharmonious society."

This paper vdll use primary data to present a picture of the socialmarginalization of the workers in the course of SOE restructuring anddefine the aftereffects of this process as the root cause of the workers'collective actions. The author believes that the workers have been grad-ually deprived of the rights and interests entitled to them under China'slabor laws. In addition, the rights and interests given to the workers bythe restructuring policies lag behind the restructuring practice. These

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rights and interests have been eroded by the policy implementers inthe course of execution, thus triggering intense indignation that hasfinally evolved into recurring collective actions that are, in fact, the cryof workers who are being marginalized.

This paper is divided into four parts. Part 1 describes the influ-ence of the SOE restructuring policies on the social marginalization ofworkers and points out that one of the aftereffects of the enactment ofthese policies is the deprivation of workers' legal rights and interests.Part 2 illustrates the damage done to the workers' rights and interestsin the course of SOE restructuring and highlights that the restructur-ing operators have worsened the marginalization of the workers byexploiting their own information advantage. Part 3 describes the work-ers' reemployment after restructuring and points out the consequencesof marginalization. In the last part, the author concludes, based on asummarization of the foregoing discussion, that the social marginaliza-tion of the SOE workers is the root cause of the collective actions takenby Chinese workers at the beginning of this century and that those inpower should adopt a tolerant attitude and provide such "disadvan-taged groups" with substantial assistance when such marginalizationhas become irreversible.

The author's analyses and discussions are mainly based on therecords of interviews with workers by Han Dongfang, founder of ChinaLabour Bulletin. Since its launch in 1994, China Labour Bulletin has been

concerned with protecting workers' rights and interests in the courseof China's economic reform and is devoted to promoting a true work-ers' movement in China. Han Dongfang has interviewed hundreds ofworkers by telephone since 1998 and the records of approximately 400such telephone interviews (some of which have been transcribed) havebeen broadcast on Radio Free Asia and are also published on the (JhinaLabour Bulletin website (http://big5.china-labour.org.hk/public/main).These interview records reflect the workers' psychological changesduring the restructuring and their situation since it took place. Theyalso reveal the deep-seated cause of the collective labor actions thathave taken place in the course of restructuring.'

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SOE RESTRUCTURING POLICIES HAVE HAD SIGNIFICANTEFFECTS ON THE SOCIAL MARGINALIZATION OFWORKERSChina has entered the final stage of its SOE reform, with a majorityof the small and medium-sized SOEs undergoing bankruptcy, closure,or privatization. The reform is intended to lead either to the strategicretreat of the state-owned economy by turning small and medium-sizeSOEs over to private management by means of sales, transfer, or a joint-stock system or to convert large and medium-size SOEs into joint-stockcompanies. This type of reform, called "restructuring" in the Chinesemedia, v«ll lead to the dominance of non-state-owned enterprises inthe Chinese economy while the restructuring policies v\dll push tens ofmillions of SOE workers into the margins of society.

What concerns the workers is the financial compensation theyare entitled to by the restructuring policies. The essence of these poli-cies is to "purchase" the workers' identity of being an "SOE worker." Itis true that over the past two decades of economic reform SOE work-ers have been much better paid than they were during the era of theplanned economy. However, after deducting price increases, therestill exists an extremely large difference between the actual pay of theworkers and their labor. Only a very minor part of this difference hasbeen reimbursed to them in the form of social welfare and social secu-rity. The greater part of the difference has been used by the workersto obtain from the govemment and the enterprises a kind of commit-ment to or a guarantee of their occupational and hfe security. And theevidence or proof that this commitment or guarantee is being compliedwith is their identity of being an "SOE worker." Theoretically, the work-ers must give up this identity after the SOEs have been restructured.And for giving up this identity, they are entitled to the correspondingcompensation. Since such compensation is calculated on the basis of thelength of service of the workers (years of service), this "identity replace-ment" process is informally referred to as "buying out one's years ofservice." Once the workers have received the economic compensation,they no longer have the right to put forward any economic require-

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ments in the capacity of an "SOE worker" to the government or theenterprises concerned. To the workers, the financial compensation isthe very last time for the government and the enterprises to honor theaforementioned commitment or guarantee. On the other hand, if theworkers are not sufficiently employed in the future, the compensationwill also be something that they can rely on to cope with their difficultlife and to continue to pay their old-age insurance. However, as a resultof the dramatically different standards and power of payment in differ-ent regions, industries, and enterprises, even the minimum amountjustified is barely achieved in the policies and actual payments of suchfinancial compensation.

The core of the financial compensation policy is comprised of thecompensation standards, which vary dramatically between regions andindustries. The people who created these standards did not considerthe accumulative difference between the labor of the workers and theirwage income, let alone their future needs. Constituted simply on thebasis of the fiscal capacity of the enterprises and the local governments,these standards allow compensation of several hundred yuan to severalthousand jman for each year of service, the latter being rare. Accordingto a survey covering 66 cities and launched by the Ministry of Laborand Social Security in December 2002, 13,603 yuan is the averagefinancial compensation and relocation allowance (ILSS Task Force of"Study of Labor Relations in Transitional China" 2004). On the assump-tion that the per capita insurance and welfare fee for state-owned enti-ties was 2,315 yusLn in 1998 and that on average the workers who areto undergo "identity replacement" have 10 years' time before retire-ment,^ the workers are entitled to a financial compensation of 23,150yuan, excluding the expenses that they need to cover their daily needsand other necessary expenditures. Consequently, the workers are oftendissatisfied with the financial compensation standards determined bythe local government. On August 4, 2003, more than 100 workers at theAnshan Iron and Steel Group Corporation took part in a sit-in in frontof the state-owned Assets Supervision and Administration Commissionin Beijing. According to a worker who had retired from the corpora-

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tion, this action took place because the workers believed the financialcompensation paid to them was too small;

The employees believe that the sum they get paid forbuying out their years of service is too small—only three tofour hundred yuan for each year of service—which meansthat for 20 or 30 years of service you merely get a bit morethan 10,000 3man and you are sent home for the rest ofyour life. So the workers believe it's too little.

(Question: Do you think the workers' requirements arereasonable?) Well, it's difficult to say. Who would be happyto be sent home for the rest of his days with a compensa-tion of 10,000 yuan after having been working for 20 or 30years? Is it a small compensation in your mind? Last year,Angang did quite well (financially), you know. And, theworkers have worked hard all their lives, right? And theyonly get such a little compensation. Now they are in theirforties or fifties and no longer competitive enough to find anew job out there. What are they going to do? They've gotparents and children to take care of and medical and hous-ing expenses to cover... ("An Issue Crucial, 2003).

The workers are dissatisfied with the standards of financialcompensation because their past contributions have not been takeninto consideration when such standards were designed, said a manage-ment cadre fi:om the petroleum industry:

There exist a great many problems in the design of the planfor restructuring the entire petroleum industry. As you mayknow, the petroleum workers are doing outdoor operations,which in fact are very backbreaking. The drillers, for exam-ple, have been working hard in a world of ice and snow for20 or 30 years and have contributed their youth and their


best years to the enterprises. They are now in their fortiesor fifties. But, in the end, they get kicked out v dth a littlecompensation and the whole of their surplus value is gone.Something is definitely wrong with such a design ("An In-Service Management Cadre from Chuandong Oil DrillingCompany Talks about the Policy of Bu3dng out One's Yearsof Service in the Petroleum Industry (II)," 2002).

Apart from the excessively low standards of financial compen-sation, quite a number of restructured enterprises do not have theability to pay such compensation. Most of the enterprises that areinstructed to restructure are small and medium-size enterprises thatwere already insolvent and in arrears to their workers for wages andsocial insurance before restructuring. Some had even stopped produc-tion wholly or partially or were on the verge of bankruptcy beforerestructuring. A survey conducted by the Labor and Social SecurityBureau of Heilongjiang province reveals that only 1.4 percent of theprovince's SOEs that have laid-off workers have the ability to paythe financial compensation and meet their liabilities; 20.2 percentof such SOEs only have partial ability to pay while the remaining78.4 percent have no ability to pay at all (Yi-ning, Xinhui, and Li,2002).[3] According to a survey conducted by the Ministry of Laborand Social Security in December 2002, 24.3 percent of the work-ers in the SOEs directly affiliated with the central government and42.1 percent of the workers in the SOEs directly affiliated with localgovernments have not received their financial compensation, whileup to 57.8 percent of the workers of collectively ovmed enterprisesare not compensated (ILSS Task Force of "Study of Labor Relations inTransitional China," 2004).

If an enterprise does not have the ability to pay, the restructuringpolicy requires that the local governments raise the money to coverthe financial compensation or that the workers may use this fund tobuy stocks of the enterprise as a condition of keeping their jobs in theenterprise. On this account, the workers are often found hesitating on

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whether they should take their compensation and lose their jobs, orconvert their financial compensation into stocks and keep their jobs. Aworker from Anshan, Liaoning said:

They (the factory management) won't give you the moneyfor "bujdng out your years." They want you to buy shares.And, if you don't agree, they vwll only give you a little bit,maybe only 500 yuan for each year of sendee, and thenyou will be dismissed and be unemployed and entitled tounemployment insurance for two years thereafter. If youwant to stay, you have to buy shares. If the factory makesmoney (profits) in the future, you may get some dividends,but if it loses money, your money will probably never bereturned and you vwU end up with nothing.(Question: Does that mean you may get some dividends ifthe factory makes mone}^) So to speak, but it's hard to say.The (factory) finance is not open, not transparent, is it? Thebooks are cooked and the workers have no way of findingwhether it makes money or not. True, they don't force theworkers to buy shares, but we have to take this road in theend because it's not easy to find a job once you have left thefactory ("A Talk vdth Anshan Workers about Compensationand Share Buying" 2003).

From October 19 to 22, 2003, about 300 employees of the People'sDepartment Store of Chengdu, Sichuan province, went on a strike,complaining that, although the store was making a profit, the stan-dards of financial compensation were excessively low, with only 917yuan for each year of service. And that compensation could be obtainedonly when the workers reached the age of retirement:

You are not allowed to take the money (the financialcompensation) wdth you. They (referring to the manage-ment) are going to use it for capital operation and how


will you be repaid if the operation fails? However, theydon't make you a shareholder, you will only get the bankinterest, which is very low, as you know. So, the workersare certainly not satisfied ("300 Workers of a DepartmentStore Went on Strike in Chengdu, Protesting against theGovernment's Compulsory Buy-out," 2003).

Some restructuring SOEs even concoct various pretexts to takeback the very limited financial compensation in the name of "reform,"thus arousing dissatisfaction among the workers. On November 18 and19,2005, the road and rail traffic in Xiangfan, Hubei province was blockedfor two consecutive days by nearly 10,000 workers from XiangyangBearing Factory asking for higher financial compensation. Accordingto the workers, the financial compensation standards proposed by thegovernment was 914 yuan for each year of service. However, at the sametime the government also released a housing reform policy asking theworkers to pay 35,000 yuan per household to buy the old houses theyhad been living in for more than two decades, when a couple who hadbeen working for 20 years could only receive compensation of around40,000 yuan. So, the workers believed that the government was actu-ally taking back the compensation money paid them ("Talking vdthXiangfan Woman Workers about SOE Reform," 2003).

In the course of SOE restructuring, another dilemma that theworkers have to face is whether they can keep their jobs. In this regard,the restructuring policy is often in conflict with the related provi-sions in the labor law. In the 1990s, in order to fully enforce the laborcontract system in SOEs, the government promised that the elderlyworkers with a long history of service might "sign labor contracts of nofixed period of validity." This promise is recognized in the labor law (seearticle 20 in the "Labor Law of the People's Republic of China"). Theselaws have provided workers with job security and prevented the "unim-peachable" workers from having their labor contracts cancelled orterminated. However, according to the local documents on restructur-ing policies, the restructuring enterprises are required to terminate the

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labor contracts signed wath the workers. On the other hand, the condi-tions for termination of labor contracts as stipulated in the labor lawand the local labor regulations do not exist and the performance of thelabor contracts shall not be affected even in cases as special as restruc-turing.'' The author cannot make any presumptuous comments on theconsiderations of the policymakers without any further backgroundinformation. What needs to be pointed out is that such policy arrange-ments have supported the smooth implementation of the restructur-ing actions. One of the fundamental goals of enterprise restructuringis the privatization of the SOEs, which is not easily realized in prac-tice. The purchasers from the private sector would often flinch at thedebts, the redundant employees, and the social security burdens in theto be restructured SOEs. In order to accomplish the restructuring goalsas soon as possible, the operators generally resort to practices such asunderestimating enterprise assets, underselling the enterprises, andso on. During the restructuring of some labor-intensive enterprises orenterprises with low-technology intensity, the purchasers would oftentreat the workers with labor contracts of unfixed period of validity asa kind of "burden." If the governments do not include any actions inthe restructuring policies to alleviate such "burden," the restructuringof such enterprises would still be difficult to accomphsh; policies thatrequire the cancellation or termination of labor contracts have the sameobjectives as the underestimation of enterprise assets. If the workersare "lucky" enough to keep their jobs in the restructured enterprises,they will have to renew their labor contracts with the management. Atthis moment, the latter will have the power to decide the availability ofa "labor contract of unfixed period of validity," the likelihood of whichis, in fact, very small.

INFORMATION ASYMMETRY DURING RESTRUCTURINGHAS ACCELERATED THE MARGINALIZATION OFWORKERS.The process of transforming the Chinese economic system into amarket economy is designed, launched, and propelled by the govem-


ment. During the initial stage of the market economy, the govern-ment usually constructs, develops, and regulates the market by meansof policies. These policies are expedient measures of the ruling partyand the government at a certain stage or during a given period of timeinstead of a supplement to and an embodiment of the laws. These poli-cies may change as time goes on and embrace specific ad hoc valuecriteria and objectives, all of v hich are variable. These policies are real-istic, pragmatic, and practical. But not much attention has been paidto their value rationality and normativeness (Hongqiang, 2001: 104-111). A serious consequence of neglecting their "value rationality andnormativeness" is "information asymmetry" in the course of enterpriserestructuring.

Both the central govemment and the local govemments requirein their restructuring documents the submission of the restructuringplans to the workers' assembly or the workers' representative assem-bly for discussion and approval (see, for example, "Suggestions onRegulation of SOE Restmcturing," 2003). Govemments at all levels statethat the workers should exercise a certain degree of supervision overthe restructuring operators by means of the workers' representativeassembly, which could mitigate the conflicts arising in the course ofrestructuring. However, this mechanism of supervision does not workin China, where there is no industrial democracy in the enterprises.And what is more, what the workers' representative assembly needsto supervise is not a common ordinary activity of production andmanagement, but an activity propelled by the govemment and closelyconnected with the personal interests of the enterprise management.When a labor union that is truly independent of the enterprise manage-ment and able to represent the workers' interests does not exist inan enterprise, the workers' representative assembly organized by thelabor union is nothing but a show staged by the policymakers for therestructuring procedure. It will not be able to deliver the workers fromtheir passive role in the restructuring process. The enterprise restruc-turing needs to accomplish two kinds of "replacements": "propertyright replacement" and "identity replacement." Therefore, just like the

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property rights, the workers have also become an object of restructur-ing. As this is the case, the workers, in the minds of the restructuringoperators, need not know about the restructuring, but need only toobey the restructuring arrangements. In fact, information asymmetryis a serious problem in the restructuring process of the great majorityof the enterprises. Such information asymmetry has enormously facili-tated the operators in realizing the restructuring goals. First, they canwork out the restructuring plan with little external resistance and thencall for a "workers' assembly" or "workers' representative assembly"to "pass the restructuring plan." Sometimes this practice also arousesstrong dissatisfaction among the workers. In August and September2004, more than 100 workers of Tongda Chemical Co., Ltd. in Dazhou,Sichuan province, blocked the main gate of the living quarters of thefactory staff and attempted to stop them from going to work because theworkers believed that the Dazhou municipal government had breachedprocedures and even suspected it of illegal activities in the operation ofenterprise structuring. One of the company workers said:

Do you know how they (the government) did the restruc-turing? A restructuring plan was first worked out secretlyby a group consisting of the vice secretary of the MunicipalParty Committee of Dazhou City and people from theEconomic and Trade Commission of Dazhou City and ourfactory manager. Then the workers' representative assem-bly was called. You know, there has been no reelection orverification of workers' representatives for many years.Some of the original representatives are gone, some are ill,and others have retired. So they just gathered up a bunchof people and rented a meeting room and a teahouse some-where else. At the meeting, the factory manager said: weare now to be restructured and you are here to sign thedocuments so that they can be submitted. Some of theworkers' representatives are on good terms with the factorymanager, so they won't raise any objections. Some others


may disagree with the plan, but they have no choice butto sign. The representatives were promised (by the factorymanager) that they would keep their jobs if they signed.The management team of the restructured enterprise wascomposed of the former factory manager, vice manager,chief of the finance department, chairman of the tradeunion and chief of the labor and salary department. Theywill spend 2 million yuan to buy the enterprise's assets("Staff Quarters Blocked by Workers Dissatisfied with theAnti-Procedural Restructuring Practice of Tongda ChemicalCo., Ltd. in Dazhou City, Sichuan Province," 2004).

In addition, information asymmetry also provides the operatorswith a chance for fraud so that they may deliberately keep back or modifysome information and even "cook up" some information. What is worse,the restructuring operators will cooperate with the friture purchasers (orthey may even themselves be the purchasers) and, by taking advantageof their information monopoly and their authority, very quickly buy outthe enterprise at a very low price. In addition, information asymmetrymay also mislead the workers to ignore or underestimate some variablesbut give more weight to other variables in the estimation of the gainsand losses of different alternatives of arrangement (for example, whetherthey should make claims for the one-oflF financial compensation or usesuch money in exchange for a job opportunity). They might be misledinto thinking that one option is more favorable than the other. However,the option that the workers deem "favorable" is often the one that theoperators would like to have the workers choose and is not necessarilythe most favorable option to the workers (Xiuyin, 2002). In the restruc-turing process of the China National Petroleum Corporation in 2000, alarge number of workers were laid oflFand lost their jobs, but after that,one after another oil fields throughout China raised the income of theremaining employees, leading to further expansion of the income gapbetween the laid-off workers and those in service, the management inparticular, and finally resulting in collective labor actions in 2002 in vari-

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ous oil fields. The workers felt that they had been cheated because theoil fields had, by fraud and magnification of the difficulties facing them,been persuaded to give up their jobs and buy out their years of serviceand forced to terminate their labor contracts with the enterprises. Aworker of Sichuan Chuandong Oil Drilling Company who had boughtout his years of service told us:

(Question: Was there a mobilization meeting to prepare theworkers for buying out their years of service?) There was ameeting, yes, but it's not a mobilization meeting, it was asituation analysis meeting. The workers were supposed tovolunteer to "buy out" of their own free will. But, after thesituation of the factory was analyzed (by the manager), youwere left v^dth no choice. If you don't buy out, you vdll notget a job and get paid. What can you do? The manager saidthe company would have a very hard time in the future.Everyone here may be laid off because the company isoverstaffed ("Workers were Forced to Give up Jobs after aSituation Analysis-An Interview of Sichuan Workers Bu3dngout their Years of Service," 2002).

Finally, information asymmetry makes it easier for the operators tohave their own way in the restructuring process. They may hold back thetrue causes of bankruptcy, asset assessment results, debt and credit infor-mation, the identity of the actual purchaser of the enterprise, as well asthe key applicable policy stipulations. As a consequence, they are enabledto design the restructuring plan according to their own interests andvwshes. The restructuring of Chongqing Wanzhou District DepartmentStore started in 1999 and was completed in early 2003. In this period oftime the restructuring went through two phases, starting v dth the stocksystem and ending up in a merger in early 2003. During this process,the vwU of the workers was at the mercy of the enterprise managementand local govemment officials. A worker from this company said thatthe company was once planning to practice the stock system in 1999 as


instructed by the local govemment. However, the management of thecompany suspended the stock system reform, afraid that they mightlose their positions after the workers became shareholders. When therestructuring resumed in 2002, a serious disagreement arose betweenlocal govemment officials and the company management and the work-ers. The govemment officials and the company management, for theirpersonal gain, hoped that the company would be merged vwth a privateenterprise. The workers, however, held out for the stock system. Morethan 90 percent of the workers voted for the stock system at the workers'assembly at the end of 2002. However, the voting result and the stocksystem reform plan were not approved by the govemment oflHcials, whostated that if the stock system was to be adopted, the company's assetswould require reassessment, and claimed at the same time that the work-ers would not be competent to operate the company under the stocksystem. The company was finally merged with another company recom-mended by the local top leader and the workers never were able to learnthe logic behind the operation.

A CONSEQUENCE OF RESTRUCTURING: THE SOCIALMARGINALfZATION OF SOE WORKERSAfter restructuring, reemployment of the unemployed has always beena hot potato for govemments at all levels. At least nine policies on thereemployment of the laid-oft'workers were promulgated by the CentralCommittee and the State Council from September 2002 to early 2003in which they instmcted local governments to use multiple channelsto help the unemployed find jobs. However, the employment channelsand support provided by such policies are not even close to meetingthe labor market demand. For instance, the Chinese govemment resortsto the development of the private economy for a proper solution tothe reemployment problem. However, on the labor market, which hasalready become a demand-constrained market, private entrepreneursare looking for labor with regard to their production activities and theirexpected surplus value. The employers' conditions for potential employ-ees are generally: at or below the age of 35; fit and healthy; junior college

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or above education; and technical competence certificates. The majorityof the unemployed do not meet these conditions. The govemment hasalso encouraged the unemployed to start up their own businesses byavailing themselves of preferential policies that include the reduction ofand exemption from the business tax and income tax and administrativecharges. However, according to workers, not many of the unemployedhave access to these preferential policies, and small businesses find itdifficult to generate profits in the intensively competitive commoditymarket. A woman who had "intemally retired" (carried out the formah-ties for retirement before reaching the official age of retirement) fromLiaoyang Paper Mould Factory and sells daily necessities on the openmarket told us when she was asked about her business:

Just keep the pot boiling! My husband is also internallyretired and we two get a total of retirement pension of a bitmore than 400 yuan a month. What can you do with 400yuan? No job can be found. Who wants to employ a womanin her forties like me! Fortunately, the vegetables and riceare cheap here, so we can manage and make do. Nowadays,there are more sellers than buyers and you've got a lot oftaxes to pay! In the past I only needed to pay 15man tax aday, but nowadays I have to pay tax for every kind of goodI sell. I've got three kinds of goods on the shelf, so I haveto pay three shares of tax coming to a total of 5 yuan a day,at least. They (the tax collectors) don't care whether youhave sold anything or not. You have to pay taxes to be here("Living Conditions of Liaoyang Workers (III)," 2002).

An unemployed worker of the Fushun Mining Bureau of Liaoningprovince said that it was extremely hard to find a job and that he hadlost the "sense of glory" of belonging to the working class:

They (the employers) want somebody below the age of 45,so no chance for me at my age. They can find a young guy


and pay him 10 yuan a day. I said I would take the job for8 yuan a day, but they don't want me! It's so hard to finda job out there! Back in the 1970s, I felt like a true workerand there was nothing to worry about after work! But now,I dare not to think about tomorrow if I make do today. Theysay that the living standards are higher. It's tme for thewealthy, but not for people who are penniless like me andhave no decent food, let alone the articles for daily use! Youcan come to my home with me and see for yourself if youdon't believe me. My refrigerator is down because it has runout of freon. You only need 80 yuan to refill it. It's been twoyears, but I have no money to buy the freon, not even thismuch ("A Conversation with Fushun Workers (II)," 2002).

The difficulties associated with reemplojnnent have producedapprehension about the future among workers who may becomeunemployed at any moment. They no longer readily accept any prom-ise made by enterprise management and even government officials.In July 2002, workers at Changzheng Brick and Tile Factory in BaotouCity, Inner Mongolia, blocked the streets in a three-day protest. Localofficials said that the factory's land was taken back by the local govem-ment to constmct an eco-industrial park. This meant the factory hadto terminate workers' labor contracts. The govemment was to providethe terminated workers with a monthly minimum of 156 yuan. Uponthe completion of the eco-industrial park, the workers would be givenpriority in job placement. However, according to the workers, the so-called monthly minimum was actually in several grades and the high-est was 156 5man a month. Ordinary workers could get only 40 yuan amonth while the eco-industrial park "where the workers will be givena priority in job placement" was to be completed five years later ("HugeDissension Still Exists between Protesting Workers 8f a Baotou Factory,Several Workers Still Locked up," 2002).

Cases of reemployment of laid-ofF workers do exist, but most ofsuch reemplojmients are in some non-normal sectors where employ-

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ment is unstable, no social insurance and welfare are available, andwages are low. According to a sample survey of 66 cities by the Ministryof Labor and Social Security in 2002, 85.4 percent of the reemployedhave temporary jobs and only 9.4 percent have regular jobs. Thesesurvey results have revealed that the professional status of the reem-ployed has dropped significantly (ILSS Task Force of "Study of LaborRelations in Transitional China," 2004).^ This fact does not seem tobe in agreement with reports in some media that "the workers haveenjoyed unprecedented rights of choice while faced with great pres-sure of competition" (Jin, Gang, and Li, 2002). The reemployed expe-rience a series of changes, including occupational transformation,lower income, and lower social positions, that leave them in a processof regression from "masters of their enterprise" to employed laborerswho are no longer entitled to the occupational security and indefinitelabor contract provided by the SOEs. Instead, they have not only towork for private entrepreneurs who regard profit as their only busi-ness objective, but must also accept wages lower than the average level.According to a survey by the All China Federation of Trade Unions in2002 in six subdistricts or communities in six cities, 76.8 percent ofthe reemployed have a monthly income of less than 600 yuan whilethe monthly income of 36.5 percent of the reemployed is less than 400yuan. The survey also shows that 80 percent of the laid-off workers hadworked 20 years or more in public-owned enterprises (ILSS Task Forceof "Study of Labor Relations in Transitional China," 2004).

The workers who remain in the restmctured enterprises gener-ally have a feeling of pressure or "oppression" that had never hauntedthem before. Workers of Hubei Zaoyang Chemical Plant, which has beenrestmctured into a private enterprise, complain that they are forced byplant management to work overtime but do not get paid accordingly asrequired by the labor law:

We were promised 600 yuan a month for our job (at thebeginning), but we could only get 300 or 400 yuan a monthon pay day. They (the factory management) promised that


the weekends would be off days, but actually we don'teven get one day off. When we asked them why we are notallowed to take a rest on the weekends, they said that wewould be paid 10 yuan extra per day if we worked on theweekends. We asked: "Shouldn't you go by the labor lawand pay us at least 200 percent of the wages for overtimework (on off days)?" They said, "Our words are the law. Ifyou are not pleased, go away!" ("Over 1,000 Workers ofHubei Zaoyang Chemical Fertilizer Plant Went on StrikeProtesting Against Unreasonable Working Conditions,"2003).

On November 28, 2004, a major accident with a death toll of 166people occurred at the Chenjiashan coal mine in Tongchuan, Shaanxiprovince. One of the causes of this accident was that the miners hadbeen instmcted by the boss to continue mining after the mine wasalready on fire. According to the family member of a miner, the termsof emplo3mient for workers of the state-ovraed mines have changeddramatically with restmcturing:

All the miners in the pit said that this accident was causedby human factors. The household living on the third fioorof the building where I live has a son working in the exca-vation area or coal face. He told his mother after work thatthere had been fire in the mine these few days. Sparks keptdropping down, but the mine (the mine management) hadtaken no action. His mother said: "Kid, mind your ownbusiness. If you dare to make any remarks, you will befired. Then, vwthout a job, how vdll you feed your kids andwife? . . . The boss will immediately swear at you and kickyou out if you dare to say anything!" So, the workers cannotbut choke vdth silent fury and keep silent. No one dares tosay anything. If you do, the boss will get very bmtal andslap you in the face.

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(Question: How can he raise a hand to the workers?) If youcannot meet or satisfy his requirements, beatings and scold-ing are normal treatment. You are not treated as a humanbeing ("Disaster in Chenjiashan Coal Mines in Tongchuan,Shaanxi Province-Workers Rage in Silence at the Big Boss(11)," 2004).

On February 1, 2005, more than 2,000 workers at the Dazhoucotton mill in Sichuan province went on strike vwth a request to be laidoff so as to draw the minimum living allowance of 130 yuan a month.According to a woman worker who was also on strike, the workersrequested to be laid off because they could no longer put up vdth theexcessive fines imposed on them by the mill contractor. After the fineswere deducted, they only had 300 yuan left as their monthly pay. In thiscase, the workers would rather have been laid off so that they coulddraw the minimum living allowance of 130 yuan a month and thenlook for work ("Over 2,000 Cotton Mill Workers Launched a 4-day Strikein Dazhou, Sichuan Province," 2005).

The sense of "enterprise master" among SOE workers has beenwashed away almost completely by the SOE restructuring. Even inenterprises offering an employee stock ownership system, workers stilldo not have the feeling that they are the true masters of the enterprise.In these enterprises, where the majority of the shares are held by oneor several managers, the workers deem themselves as identical to thehired labor of a private enterprise. A woman worker from a paper millin Suichang county, Zhejiang province, told us she had anything butthe feeling of a master, although she held a small quantity of shares ofthe enterprise:

(Question: Do you think that your rights are more secure afterrestructuring?) Well, actually less secure, quite the contrary.Everybody felt that they had rights in the past. But now,after the restructuring, the rights have become personal orprivate, ovraied not by us but by a few potentates.


(Question: How is that?) Oh, well, now it is a joint-stockenterprise and the majority of the stock is held by thesepotentates. We don't seem to have the sense of beingthe master as before. They are the decision-makers foreverything and we feel just as if we were their temporaryemployees. I cannot explain it very clearly. Anyhow, thismill has become the private property of a few people afterrestructuring. It's supposed to be a joint-stock enterprise,but to us it is just like a private enterprise ("We've Lost ourRights-A Discussion on SOE Reform vnth Women Workersin Zhejiang Province," 2003).

CONCLUSIONThe social marginalization of the workers during the restructuringprocess may be attributed to four causes. First, the original intention ofthe restructuring policies is not to defend the workers' rights and inter-ests; that is, these policies are designed to complete the restructuringprocess at an earlier date instead of safeguarding the workers' interests.The value orientation of these policies is not in the interest of the work-ers and, as a result, there is a lack of social justice in the concrete andsubstantial stipulations in these policies.

Second, the central government's policies requiring attention toworker rights and interests during the restructuring operation havebeen released later than those of the local govemments. Although theSOE restructuring started in late 1990s, the central government didnot promulgate a single normative document on the regulation of thisprocess until November 2003.^ As a result, the central government'spolicies failed to provide any criteria for the local governments to referto during the formulation of similar policies and local policies becamemore and more complex and variable. Third, the restructuring processis characterized by malpractice on the part of the restructuring oper-ators, who take advantage of information monopoly. As a result, theworkers have been excluded from the restructuring process while the

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restructuring objectives of the government have been realized. Fourth,after the workers' identity of "SOE workers" is bought out, the reem-plojmtient policies provided by the government cannot guarantee themsecure jobs and wages equivalent to the average. Once the workers havebeen expelled from the labor market, they do not have the ability tocome back again. It is observed that the social rights and political statusof the former "SOE worker" class are in continuous decline and thatthe workers have been reduced to the status of earning a living by sell-ing their labor; moreover, some of the workers have been completelyexpelled from the labor market.

If the restructuring process is deemed to be the process of socialmarginalization of the workers, the workers' dissatisfaction should bedeemed to be the root cause of the recurring collective actions thatthey have undertaken at the beginning of this century. It is true thatthe workers in these actions did shout slogans such as "We Want aJob! We Want Food! We Want to Survive!" but most of them are notactually already in a subsistence crisis. Instead, what they hoped forwas that such actions would show the mental pressures that had beenimposed on them. After the SOEs have been restructured or becomebankrupt, the jobless workers not only have to face the fact that theyare jobless, that their family living standards are declining, and theirmarital relationships are strained or even broken—they also becomedeeply worried about their future, for those workers who struck, thecombined pressure of life and psychology finally evolved into an idea of"a final battle cry" and the workers at last took to the streets.

As the SOE restructuring wanes to a close, the social marginaliza-tion of the workers has become an irreversible fact. Recognizing this fact,the government should take a tolerant attitude toward and accommo-date the workers' collective actions. The term "accommodate" containsmultiple implications. First, the Government should acknowledge thereasonable and positive aspects of these actions. Compelled by the quan-titative restructuring objectives in the SOE reform, the restructuringoperators have disregarded the workers' interests for the sake of theirovwi selfish purposes. Indeed, it is these selfish purposes, which are mixed


into the restructuring process, that are the most powerful impetus toinfringements of the workers' rights. Collective actions have become theinevitable and only choice of the workers who find that the channels forairing their views have been blocked, their right to speak has been takenaway, and their right to subsistence has been seriously endangered. Theseactions are positive in that they will further drive the reform of the admin-istrative system and trigger the establishment of an external supervisionmechanism. Second, these actions should be used as an opportunity toset up a dialogue mechanism between the workers and the govemment,in addition to the systems of complaints, appeals, and labor dispute arbi-tration. The govemment should adjust its posture in this mechanismand govemment officials should maintain an attitude of equal dialogue.Only when a status of equality for both parties has been establishedcan they look forward to a dialogue satisfying both sides. Third, majorreforms and improvements should be made to the existing systems ofcomplaints, appeals, and labor dispute arbitration. Workers should beallowed to take collective actions regarding complaints and appeals ordeliver their complaints and advice to a higher level of authorities in thename of a collective party to a labor dispute. The govemment may spec-ify the preconditions for such collective actions, restrict them vwthin acertain scope, and provide necessary protections to the representatives ofsuch collective actions. Fourth, impartial assistance should be made avail-able in the social security system to the "disadvantaged groups" that havebeen pushed to the margin of the society. Not only should considerationbe given to the workers' present and future living needs, but also recogni-tion should be given to their contributions in the past.

Translated from the Chinese by Huiqing Liu.

NOTES

1. The author has revised the Chinese wording of some of the interviewrecords that are too colloquial to be directly translated into English. Forthe original records, please refer to the "Voice of Workers" publishedon the China Labour Bulletin website at <http://big5.china-labour.org.hk/public/broadcast/list>.

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2. Calculated according to page 13 and page 551 of the ChinaLabor StatisticsYearbook 1999, which was compiled by the Population and Social Scienceand Technology Statistics Department of the National Statistics Bureauand the Planning and Financial Department of the Ministry of Laborand Social Security and published in October 1999 by China StatisticsPress. According to the "Explanation of the Major Statistics Indexes" ofthe yearbook, "The sum total of security welfare fees refer to the feesthat employers give in addition to the wages to the employees and theretired for individual and collective security welfare, including medi-cal service fees, death funeral relief fees, living allowance subsidies,retirement fees, transportation subsidies, etc." This statistical indexwas deleted in the subsequent issues of the yearbook.

3. The year to which this figure is applicable is not known, which couldbe 2000 to 2001 based on the date of publication of this article.

4. For example, it is prescribed in Article 44, paragraph 2, of the GeneralPrinciples of the Civil Law of the People's Republic of China that"when an enterprise as legal person is divided or merged, its rightsand obligations shall be enjoyed and assumed by the new legal personthat results from the change."

5. In 2002, the average annual salary was 12,422 yuan, equivalent to amonthly average salary of 1,036 yuan.

6. The General Office of the State Council did not officially circulate the"Suggestions on Regulation of SOE Restructuring" issued by the state-owned Assets Supervision and Administration Commission of theState Council until November 30, 2003. This document requires thatthe SOE restructuring plans must be submitted to the workers' assem-bly or the workers' representative assembly for review and discussionso as to sufficiently incorporate conaments by the workers.

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