Futher to the discussion on China. 

NYT November 18, 1999

Caught Between Eras: China's Factory Workers


BEIJING  -- The middle-aged workers outside the aging Beijing 
No. 2 textile factory Wednesday said that they already knew their 
days of employment were numbered  --  that they knew it even before 
China signed a landmark agreement this week to open its doors wider 
to global competition. <p>   Their biggest worry, they said, is not 
the impact of China's probable admission to the World Trade 
Organization. They agree that it is essential for China's future, and 
they know that it should eventually expand the country's exports of 
textiles, like the cotton cloth their factory makes.

What worries them now, said the two workers, who stopped for a
discreet conversation, is how well the government will support them
after they get the inevitable notice from their factory, which
sheds more workers every month. Will they get a livable allowance?
What if they need expensive surgery? Will they have any help
finding new jobs in a fast-changing economy?

I hope they won't just throw us out into the society," said
one of the workers, Wu. Now in his late 40s, he said he doubted
that he could ever find another job, because his health had been
damaged by 28 years of loud noise and cotton dust in the plant.

Wu and a fellow worker, Tang, in his early 50s, spoke candidly
about their fears  --  and their surprisingly bitter feelings toward
their factory managers  --  on condition that their full names be

Workers like these two toiled for a pittance for decades, with
the lifetime promise of a communist state's "iron rice bowl."
Now, caught between two economic eras, they feel betrayed.

Tang pulled his last pay slip from his pocket and pounded on a
table, his voice quivering. "Look at this!" he said. "Eighty
dollars a month, after 35 years of work!"

"We haven't had a pay raise in seven years, but during that
time the wallets of the managers have grown fatter and fatter,"
Tang said. "In this country the workers have the lowest status."

 Such fears and angers, shared by millions across the country,
add up to one of China's greatest challenges. And it will be even
greater if China fulfills the market-opening commitments it made
Monday to the United States in return for U.S. endorsement of its
application to join the World Trade Organization.

That challenge is the creation of a better safety net for the
tens of millions of workers who are being displaced in this
wrenching transition.

Even more daunting than the problem of urban workers, and
receiving far less official attention, is the task of creating new
jobs and lives for millions of inefficient farmers who are expected
to lose out to global trade and may join the country's vast
floating population of migrants who compete for bottom-rung jobs in
the cities.

"China's social security system is far from ready for the
structural change in employment that would be brought about by WTO
accession," concluded a recent report by the China International
Capital Corp., an investment bank in Beijing that is a joint
venture of the Chinese government and Morgan Stanley Dean Witter.

China has only begun to create Western-style unemployment,
welfare, pension and health insurance systems  --  all vital to
smoothing the transition from the old government-run economy to a
modern market one.

"It's inevitable that older state enterprises and economic
sectors here are going to lose out," said Hu Angang, an economist
at the Chinese Academy of Sciences. "I think it's crucial that
government aid should not go to the losing enterprises to prop them

 "Instead, the aid should go directly to the laid-off workers.
That's the key to a successful transition."

The government has been acutely aware of the problem in the last
two years as laid-off workers and retirees in dozens of cities have
held protests when promised subsistence allowances were not paid.

In the past, state enterprises had lifelong obligations to their
workers, including living allowances and medical care for those
laid off. But in the 1990s many ailing or moribund enterprises have
simply had no money to give out.

To stave off spreading unrest, last year the government mandated
the creation of thousands of "re-employment centers" in every
city and required local governments to share the costs of living
stipends with laid-off workers' former companies.

Workers enrolled at the centers are supposed to get training and
job referrals, and in the meantime are supposed to receive monthly
subsistence payments of about $20 to $35, depending on the

But the coverage is spotty, and many failing companies still pay
little or nothing to their former employees, leaving them to fend
for themselves. And under current policy, the re-employment centers
are supposed to be phased out at the end of 2001.

The No. 2 textile mill on the east side of Beijing, where Wu 
and Tang work, employed about 7,000 workers in the early 1990s. Since
then it has laid off 3,000, with more sent packing every month. The
nearby No. 3 textile factory, which employed 6,000, shut down
entirely in June.

Workers from those plants have no re-employment center, the men
said, and have had to search for new jobs on their own. They are
receiving monthly stipends of $28. A few former co-workers have
found jobs mopping floors at new shopping centers, the men said,
while some sell items in street markets.

For laid-off workers and for those who, like Wu and Tang, still
have jobs because of their seniority, one of the greatest worries
is health care.

Even when they use the company clinic and hospital, workers are
expected to pay for many services and drugs, to be reimbursed later
for most of the cost. But because their company is so short of
money, the two men said, workers are kept waiting a year before
they are repaid.

Class divisions in the company's medical system are another
source of bitterness. "Workers have to go to one clinic while the
managers go to another one, on the third floor of the hospital,"
Tang said. "The workers can't even get herbal medicines for a
common cold, but the managers get whatever they need.

"The managers get a free health checkup every two years, but
the workers don't get any checkups."

The two men have heard that the textile industry should boom
some time after China enters the World Trade Organization, since
the United States would be required over five years to end the
quotas that limit U.S. imports from China.

But they know that this brighter future may be beyond their own

"Only when a textile factory can get better machinery, and
better-educated and more skilled workers, can it compete," Wu
said. "So the immediate effect of converging with the world
economy is that even more workers will be laid off."

Still, and perhaps remarkably, both men seemed to offer sincere
and unqualified support for Chinese membership in the trade group.

"Without more global competition, China will be hopeless,"
said Tang, who knows at first hand about bad management and shabby
equipment. "China can get rich only by competing with capitalist

 "We know that this factory will no longer exist in the next few 
months. We all hope it will be transformed into a new factory in a 
capitalist system."   

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