| DONGGUAN, China, April 17
DONGGUAN, China, April 17 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
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
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
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 10-20 percent 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
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.
"TEMPORARY" FOR YEARS
Another point of contention at Yue Yuen is that most, if not
all, workers are listed as "temporary", even though they say
they signed contracts years ago. Some also said the figures on
their spreadsheets didn't add up, while the savings were
difficult to cash in or transfer when they left the company.
"We feel like we were tricked," said Liu Shuixiang, who
works on a production line for Nike at Yue Yuen, and who visited
the Social Security office a day earlier.
"I've been at the factory for more than 10 years and my
account only has about 11,800 yuan ($1,900) in it. They've taken
out more than 150 yuan from my salary (each month) and should
have been paying more than 300 yuan a month," she said.
"After 20 years, how can they still list us as 'temporary
workers'?" asked fellow worker Zeng Jiabai.
In a filing to the Hong Kong stock exchange, where its
shares are listed, Yue Yuen announced on Thursday that it would
improve benefits from May 1. George Liu, an
executive director of Yue Yuen in Hong Kong, told Reuters the
company had done nothing illegal.
"We have been fully in compliance with the policies and
regulation, but the base for compliance has different
interpretations by different parties," he said. "Going forward,
we are adjusting up our base for calculation (to) eventually
reflect the full wages."
"We increase the social benefit. The intended objective is
to retain employees, not force them to go away," Liu added. The
company said the adjustments to benefit payments "may have a
material adverse effect" on its business.
Workers said they were unimpressed, and want Yue Yuen to
back-pay the social insurance shortfall. "They say they're only
going to start to pay from May 1, but what about the past?" said
Liu, the production line worker.
Yue Yuen director Liu later said the company's commitment
included paying social security arrears - for those workers who
wanted that. "Some employees may not want the company to pay the
arrears because if we do that it means they (also) have to pay
the arrears, (for) which they may need to put up a lump sum," he
told Reuters by telephone.
"What we're doing isn't stirring up trouble," added Zhou.
"We're just protecting our rights."
($1 = 6.2214 Chinese Yuan)
(Additional reporting by Donny Kwok, Alexandra Harney, Fiona Li
and James Pomfret; Editing by Ian Geoghegan)