Resisting Unfair Deals in China's State Enterprise Reform - Oil Workers in Chongqing Strike Back

Monthly News Review, September 2002

On September 17, China Labour Bulletin reported that the three-month mass workers' protests in Daqing, which started last March, saw its repercussion in the struggle of fellow oil workers in Chongqing.

Since September 2, retrenched workers from Chongqing-based Chuandong Oil Exploration & Drilling Company (COEDC) -- a subsidiary of Sichuan Petroleum Administrative Bureau -- have been maintaining daily sit-ins outside the COEDC building. Their demands centre on unemployment allowances, adjusting the premium for their pensions and job placement or reinstatement for retrenched young workers.

The protesting workers also started to raise funds for their planned legal action against Sichuan Petroleum Administrative Bureau (Sichuan PAB) and its subsidiaries for illegal termination of employment.

The workers' grievances are a result of restructuring in China's oil industry as it gears up to face greater international competition. Large-scale redundancies have been part of the process and have left ten of thousands of oil workers out of work and accusing industry leaders of "negotiating" in bad faith. The Daqing oil workers' protests are the subject of a recent Human Rights Watch report that looks in detail at the wave of industrial unrest that shook north-east China earlier this year.

When asked about the impact of the Daqing protests on its plan of cutting the workforce, Huang Yan, CEO of PetroChina -- which was spun off from state-owned China National Petroleum Corporation, parent company of local petroleum administrative bureaus -- reiterated the company's target to further reduce the workforce by 3,000 to 4,000 this year, bringing a total cut of 60,000 workers since the company's listing in 2000. But then they would try to "figure out a better way, a more prudent order to make sure workers have a stable life [after they're laid off]" (Business Week Online, 27/6/2002)

Sounds merciful. But when Huang said, "We must have a very thorough dialogue with the social security department, medical care department, and unemployment insurance department" (Business Week Online, ibid.), the possible scenario is that restructured state enterprises will simply push the responsibilities to local governments. The worrying question is how much local governments can cope with the fiscal implications of the mass lay-offs.

On September 12, Jiang Zemin delivered a speech at a national conference on re-employment, stating once again the government's "determination" to solve the problem of unemployment. The conference, chaired by Premier Zhu Rongji, was attended by key party and government leaders. Apart from the longstanding "three protection lines" (Note 1), the conference made particular reference to "special assistance" to middle-aged laid-off state workers (Note 2) in re-employment. (Xinhua News Online, 13/9/2002). Local moves were soon seen in Baotou City in Inner Mongolia where the city government has decided to commit Rmb 6 million to create 1,000 jobs (Mingpao, 5/10/2002).

If local governments do act accordingly, the practical question is whether they have the resources to do so, taking into account the extra millions of laid-off workers who will go on the dole in the next few years.

Widespread protests by laid-off state workers are telling of the failure of both the enterprises and local governments in fulfilling their obligations. To cut their obligations altogether, some state enterprises simply dismiss the workers in the "buying off seniority" offers (Note 3)' which are actually severance agreements. But retrenched workers are in no way falling for the companies' unilateral drive.

Picking up from the bold steps of their fellow workers in Daqing, retrenched oil workers in Chongqing take a different course of resistance by attempting to make the oil companies legally accountable to their redundancy plans which amount to illegal termination of employment.

Article 27 of the Labour Law states that

"If a work unit is on the verge of bankruptcy and is ordered to enter into a period of statutory consolidation, or runs into great financial difficulties and is deemed necessary to lay off workers, it shall explain the situation to the trade union or all the staff and workers 30 days in advance and solicit their opinions as well as report to the labour administrative department before dismissal is carried out."

From the cases that CLB has been following, the retrenched workers were offered an 'agreement', threats and no-alternative. There was no consultation, and the ACFTU was nowhere to be seen in striking fair deals for the workers.

Nevertheless, without an independent judicial system, the legal course taken by the workers in Chongqing is called into question. A CLB reader from Sichuan Province sends us his opinion on September 20:

"After reading CLB Labour Action Express Issue 10 [CLB's special release on the Chongqing protests in Chinese -- Ed], I was extremely glad and inspired by the courage of the oil workers in [Chongqing] in fighting for their legitimate rights through legal channels. On the other hand, I think they are heading into dead alleys. Everybody knows it well that the judicial system in China is corrupt... The critical question is not the corrupt judicial system itself, but the fact that we can't even step into the courtroom. When I brought my case to Sichuan Provincial Higher People's Court, my lawyer (from Sichuan Provincial Justice Department) told me that the central government had issued a notice forbidding lawyers to take up cases on lay-offs and farmers' protests. This probably is the reason why we seldom have [such cases] heard in court. I guess the oil workers' litigation will not be heard at all." [originally in Chinese]

The debate can go on as to how effective legal actions within the current political system can be. But one thing is clear -- workers are resisting with various resources open to them. The reader from Sichuan has come to his own conclusion -- "I think the only way out is to organise our own trade unions".

China Labour Bulletin



(1) "Three Protection Lines" refer to three types of allowances which laid-off state workers can claim. In the first three years after the lay-off, they are entitled to lay-off allowances. If they cannot land any new jobs, their employment with the former work unit is considered terminated, and are then entitled to a maximum of two-year unemployment allowances. Thereafter, they can claim basic living allowances (unemployed laid-off workers with acute financial problems can also apply for this allowance during the two-year period). (back)

(2) The "special assistance" is directed to laid-off workers aged over 40 for women and over 50 for men. The statutory retirement age is 50 for women (55 for female cadres) and 60 for men. (back)

(3) 'Buying off seniority' is different from laying off state workers (xiagang). Legally, xiagang workers remain on the company's books, and the company is still responsible for lay-off wages, medical costs and pension premiums and payments. However, once an employer -- in this case the State or local government as this only happens in SOEs -- implements the 'buying off seniority' policy, all relations between the SOE and the sacked worker are terminated. This action has no basis in Chinese law, there are no official compensatory benchmarks, and it is more often than not forced on workers. When a worker is sacked in this manner, the enterprise makes a one-off payment depending on the employee's length of service, and buys off, usually very cheaply, all future obligations to the worker. (back)

Archived Status: 
Back to Top

This website uses cookies that collect information about your computer. Please see CLB's privacy policy to understand exactly what data is collected from our website visitors and newsletter subscribers, how it is used and how to contact us if you have any concerns over the use of your data.