China's leaders faced a series of labor protests in 2002, as tens-of-thousands of laid-off state workers demanded unpaid wages or retirement benefits. And the situation is only likely to get worse. China continues to streamline industries and open markets as part of sweeping economic reforms.
China's northeastern rust belt has long been the center of communist industrial output, at least in the days when centralized economies did not pay attention to profit. That has now changed. China has become a member of the World Trade Organization, and must liberalize many sectors of the economy. The country has sped through a series of market-oriented reforms, and the northeast region has been hit hard by unemployment, as outdated and unproductive state-owned factories closed down.
Ferro Alloy Factory, in Liaoyang city, is one such company that went bankrupt. Several thousand people were out of work, after not being paid for as long as two years. It was a situation all too familiar in the depressed town of Liaoyang and other industrial northeast towns, where residents say more than half of workers have lost their livelihoods.
What is different about the Ferro Alloy Factory is that, in March, angry workers staged demonstrations, which spread throughout the province. Tens-of-thousands of jobless, from as many as 20 different factories, took to the streets at the same time, and protested for weeks, instead of just days.
For the first time, China's leaders were presented with the specter of a well-organized labor uprising, in a country where independent unions are banned. By the end of March, police had broken up the protests, and arrested the organizers. At the same time, local governments quelled further demonstrations by promising to pay a portion of the workers' back wages and, in some cases, investigate charges of corruption.
Labor activist Han Dongfang, in Hong Kong, says he thinks China's strategy for dealing with this new phenomenon of labor unrest does not address the core issues. Mr. Han calls the government's strategy "killing the chicken to scare the monkey." He says that by arresting labor leaders, the government wants to frighten workers from organizing future protests, which it fears could threaten its hold on power.
Mr. Han says that, so far, this method has succeeded in keeping most worker demonstrations relatively short, but it is likely to backfire in the long run. He explains that Chinese workers are gaining more courage to demand basic rights, and they also realize they cannot receive compensation, unless some labor organizers step forward to represent their interests.
Analysts say worker protests and labor disputes across China are on the rise, and the government must address the grievances quickly. Hu Angang, an economist at Qinghua University in Beijing, says unemployment is the Number One challenge for the Chinese government, and that no country has ever cut so many jobs before. He adds, the problem will be compounded, as China faces tough foreign competition.
Since 1998, official statistics show that at least 26-million workers have been laid-off because of the closure of state enterprises. But the actual number of layoffs could be far higher. China's labor minister, Zhang Zuoji, recently admitted that the country's urban unemployment problem is far worse than the government published figure of almost four percent. Mr. Zhang says that about seven percent of urban Chinese workers, or 14 million people, are jobless.
Mr. Zhang says official statistics do not count laid-off state workers who receive nominal benefits from their former employers. Government figures also do not include some 150 million jobless in the countryside, or the 100 million rural migrants searching for work in the cities. But the labor minister is hopeful, since, he says, many of the displaced workers are finding jobs in the growing number of private and foreign companies.
Economist Hu Angang takes issue with that proposition. He says most of the older state workers are not qualified for the newly created jobs, and will not be able to take advantage of the new labor market. He says the government will encounter increasing difficulties generating enough jobs to keep up with massive lay-offs.
In the meantime, labor activist Mr. Han says there is no end in sight to worker discontent in China. In December alone, Mr. Han counts at least two major worker protests. He says hundreds of laid-off and retired employees at a carpet factory in the eastern port city, Tianjin, blocked roads for several days, demanding unpaid wages from the past year and a half.
Also in December, more than 2,000 unemployed workers from a paper mill in northern Heilongjiang Province protested against corrupt officials siphoning off their social security benefits.
Mr. Han says that, until the government allows open dialogue between employees and management, Chinese workers have no recourse, but to take their grievances to the streets.
Part of VOA's yearend series