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 (裕元工業), 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 retirement.
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 is less in the pot than they thought.
The underpayment of social insurance contributions is common practice by factory owners across China, labor lawyers say.
The strike at Yue Yuen — which says it is the world’s largest manufacturer of branded footwear, making over 300 million pairs of shoes last year — is not just one of China’s biggest in recent years, it is 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 active in using both collective action and the law to protect their interests.
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 Labor Bulletin, a Hong Kong-based labor rights group — as firms cut costs and retrench in response to slowing growth in the world’s second-largest economy.
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.
Workers told reporters that 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 to 20 percent of the total paycheck.
Zhang Zhiru (張治儒), a prominent labor 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 said.
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 has blighted the system for years. Former Shanghai Chinese Communist Party (CCP) Secretary Chen Liangyu (陳良宇) was arrested in 2006 after siphoning off millions from the city’s pension fund.
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 did not 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 [US$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.
In a filing with the Hong Kong stock exchange, where its shares are listed, Yue Yuen said on Thursday that it would improve benefits beginning May 1.
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?” Liu said. “What we’re doing isn’t stirring up trouble. We’re just protecting our rights.”
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