Under the dual pressures of economic downturn and the “mandatory social security” policy, the manufacturing sector in China has recently witnessed a wave of strikes. Within just one week, at least seven collective labor rights incidents have occurred from Hebei to Guangdong, Shanghai, and Chongqing, involving issues such as unpaid wages, pay cuts, severance compensation, and factory relocations. Many interviewees have expressed that companies are transferring the pressure of policy costs and shrinking market demands onto ordinary workers, leading to increasingly sharp labor disputes.
On the morning of August 8th, outside the Guoli Automotive Leather Parts Co., Ltd. in Minhang District, Shanghai, hundreds of workers held banners demanding increased severance compensation. A female worker who had been working on the sewing line for ten years angrily stated, “Only 2,740 yuan in compensation for one year of work, just over 20,000 yuan for ten years, this is clearly a brush-off.” She revealed that last year, the company’s failure to pay wages led to workers blocking the road in protest, “Many people were arrested that time. Now we are facing the same issue again, and we can’t care about that much anymore.”
In the early hours of the same day, Kaiyi Paper Packaging Co., Ltd. in Guangzhou suddenly shut down, with no one in the factory premises. According to workers, the boss went missing, and the company promptly announced bankruptcy, leading to about two hundred employees gathering at the factory gate to demand their wages. A worker expressed through a video, “Our factory only earned just over 200,000 yuan in profit in a year. With the new social security regulations, we now have to pay 500,000 yuan every month. The boss couldn’t handle it, so we closed on August 8th.”
The so-called “mandatory social security” refers to companies being required by law to contribute to five social insurance schemes for employees, including pension, medical care, unemployment, work-related injury, and childbirth, without the possibility of exemptions. While this move is viewed by the authorities as an important measure to protect workers’ rights, for small and medium-sized enterprises struggling with tight finances and slim profits, it undoubtedly increases labor costs.
Yiji Garments Co., Ltd. in Guangzhou has also found itself in a dire situation. Employees stated that forty percent of their wages were deducted for social security contributions. On August 7th and 9th, over a hundred workers went on strike twice to protest. A worker said, “Our monthly salary is 5,000 yuan, and we have to pay 2,000 yuan for social security. The boss wants us to bear it ourselves, leaving us with only 3,000 yuan after deductions.”
Mr. Liu, a former member of the Shenzhen Citizens’ Labor Rights Concern Group, mentioned during an interview with Dajiyuan, “Since the policy of mandatory corporate social security contributions took effect on September 1st, many factories have closed down due to being unable to operate. In fact, many companies were already struggling to stay afloat, and requiring them to purchase social security for employees will make it impossible for some low-profit enterprises to survive.”
In Shijiazhuang, Hebei, Liren Hall Pharmaceutical Co., Ltd. saw dozens of laid-off employees protesting on August 6th and 7th, accusing the company of violating promises by refusing to pay compensation and requesting old employees to prove their years of service. An employee with 20 years of service expressed indignation, “The records are all in the company’s hands, why should I have to prove my work experience? This is clearly making things difficult.”
Similar situations have been frequent in the southern manufacturing clusters. In Shenzhen on August 11th, employees at Leisong Technology Co., Ltd. in Guangming District demanded explanations from the company regarding the compensation plan for relocating to Huizhou and accused it of secretly transferring equipment. At another advanced semiconductor equipment company, over a thousand workers chanted slogans within the factory premises, protesting against the company’s failure to compensate them in accordance with the law. An engineer mentioned, “The company only promised ‘N’ times the compensation (based on years of service), but with profits of hundreds of millions every year, they have not given a fair compensation.”
At Beida Pharmaceutical Co., Ltd. in Beibei, Chongqing, a worker who had been in a position for seven years was asked to change positions, leading to suspicions of being covertly forced to resign. A worker in their fifties said, “The company didn’t clarify the position or the benefits, which clearly indicates they want me to leave.” This action sparked protests among the employees.
Veteran mainland media figure and retired university professor Li Song analyzed that this wave of closures has spread nationwide from south to north, potentially resulting in tens of millions of workers being unemployed. “Unless the authorities urgently halt the mandatory social security policy, a large number of low-level laborers will fall into despair.”
Another labor economist who chose to remain anonymous pointed out that against the backdrop of economic downturn, companies frequently resort to layoffs for self-preservation, and the mandatory social security policy makes the cash flow even tighter, ultimately transferring the conflict onto the workers. “Many enterprises have to cut wages in order to reduce costs. The number of businesses closing this year is likely to far exceed last year’s.”
He added that many companies have already closed over the past year, and the situation is more severe in the first half of this year, with potentially millions of businesses shutting down by the end of the year. From the perspective of the game between companies, employees, and policies, it is the ordinary workers who are always the most vulnerable.