Former steel workers battle industrial goliath

15 February 2011

The era of state-owned enterprises (SOEs) may have faded, but the power and influence of many of these aging monoliths remains intact, especially in the old steel towns of northeast China that still rely on them for local employment and tax revenue.

Employees in dispute with these SOEs face a major uphill battle to obtain any redress. As Liu Xiangdong, a 20-year veteran at the Lingyuan Iron and Steel Group in Liaoning discovered when he tried to sue the company for wrongful dismissal and get his wage and social security arrears back:

“The local government will go to any lengths to protect the company’s interests,” Liu told CLB Director Han Dongfang in an interview in August 2010.

Going to any lengths included putting pressure on the workers’ lawyers to drop their lawsuit, harassing and detaining the workers when they went to petition in Beijing, pressuring the local arbitration committee and courts not to accept their case and even tapping their phones and hacking into their computers.

Downgraded and then discarded

Liu’s problems began back in 2002 when, in order to cut costs, the Lingyuan Iron and Steel Group set up a labour supply company named Gangda Labour Services, and reclassified several hundred employees with dozens of years of service, including Liu, as temporary supply workers, working at Lingyuan but supplied by Gangda. However, in 2008, the new Labour Contract Law contained specific provisions designed to protect temporary workers from exactly the kind of loopholes Gangda was exploiting, so the bosses changed the workers’ status again, this time from “temporary workers” into “private contractors” with no formal labour relationship with the company.

In July 2009, Gangda ordered its employees to sign a new contract. Liu explained:

The new contract wasn’t a temporary contract with Lingyuan Steel. It was signed directly with Gangda. Moreover, the workers were no longer in an employment relationship with Lingyuan Steel. Quite a few workers refused to sign the new contract.

Three lawyers from the provincial capital Shenyang, the nearby town of Chengde and Beijing agreed to help the workers. However, all three of them soon dropped the case after coming under intense pressure from the local authorities.

The lawyer from Shenyang said he had been told by the local judicial bureau that this case involved lay-offs from SOEs. It could have repercussions for millions of laid-off workers across China, which made it a politically sensitive case. So he said he couldn’t take it on.

Liu said the company deliberately played on the fears of the local authorities by saying the workers’ goal was to oppose the central government's lay-off policy.

The truth is that we were simply asking to be allowed to work at an SOE again… After the Labour Contract Law took effect, our group of laid-off workers were legally entitled to return to the SOE. But the company claimed that we planned to fight the government’s lay-off policy, so they came down hard on us.

Strikes and petitions

Changes in their employment status combined with lower pay than their SOE colleagues prompted Liu and his fellow workers at Gangda to make repeated trips to Beijing to petition the authorities.

In 2009 Lingyuan Steel raised workers wages but Gangda did not. As a result, Gangda workers ended up getting paid about 1,000 yuan per month less than Lingyuan Steel workers.

After the three lawyers dropped the case, we basically had to give it a rest for a while, but when Lingyuan Steel raised wages, the workers downed tools and make several renewed attempts to petition the authorities.

Liu travelled twice to Beijing to petition the authorities. Specifically, he went to the Petitions Office of the All-China Federation of Trade Unions, and some of his co-workers went to the Ministry of Human Resources and Social Security and to the Central Commission for Discipline Inspection of the Communist Party of China.

“Going to the ACFTU did not produce any results,” Liu said. “The receptionist in the petitions office was pretty old, talking with him was a pointless exercise, and we could not get into any other ACFTU offices.”

Liu pointed out moreover that the subject of their complaint, the chief executive of Gangda, was the recipient of the National May 1st Labour Medal, a prestigious award presented by the ACFTU.

The Gangda chief executive enjoyed high prestige and status, and was the recipient of the National May 1st Labour Medal. We were just workers ... and naturally the whole thing also reflected on the union.

Unlike some of his colleagues, Liu did at least manage to get his foot in the door. But when he returned to Lingyuan: “They came looking for me. People came from the local police station, my family members' work unit and the district committee. I was unable to do anything.”

Harassment and detention

Liu explained that several of his fellow workers could not even get into the petition office in Beijing, and were forcibly sent back to Lingyuan.

Liaoning government officials managed to cajole a group of more than 40 workers who were in Beijing into being driven back to Liaoning to talk the matter over and find a solution after the National Day holiday. But after they were driven home, nothing was resolved and two or three pretty outspoken leaders were detained.

Even as far back as 2002, Gandga had delayed paying the workers’ social security contributions and wages. And one of the workers' main demands was that the company should pay their back wages and social security contributions.

The fact that social security contributions were overdue was evident from each worker's social security account. “At the time, some of us were shown our social security accounts, but after that, when others asked to see their accounts the social security bureau refused to pull up the accounts,” Liu said.

In addition, workers like Liu had to endure extremely hazardous working conditions. Liu worked for seven or eight years on a conveyor belt in an ore-sintering plant with extremely high concentrations of dust. “There were four shift rotations, and we worked six days out of eight, resting two days. We worked eight hours every day.”

Although the workers were provided with facemasks and some protective clothing; “in that department, the workers' clothing and personal equipment were all of extremely poor quality.”

Liu was eventually laid off on the eve of National Day in October 2009 but did not undergo a medical examination, as required by law. If the company does not arrange a medical examination for an employee who had been working in a hazardous environment, then according to law, the employment contract has not been properly terminated.

Seeking redress

By 2010, only six workers were left hanging on and fighting for their rights. They decided to go back to square one and file for an arbitration hearing. In April and May, Liu filed a claim at his local labour dispute arbitration committee for compensation for the unlawful termination of his employment contract as well as for wage and social security contribution arrears. His application included a written statement that the company had failed to give him a medical examination before terminating his employment contract. The other five workers soon followed suit and filed their own claims.

“The workers' claims were always somewhat contradictory, some said they'd sue management, some said they'd sue Lingyuan Steel. There were always some differences of opinion,” Liu said.

The labour department is legally required to issue a notice within five days stating whether or not it accepts an application for arbitration, but Liu said the department took more than three months to issue a notice informing the workers that it had not accepted their application.

Pursuing legal redress proved to be extremely difficult. After we filed an application for arbitration, the labour arbitration department dragged its feet for several months and in the end it issued a notice saying that it would not accept the application.

Liu and the five other workers hired a lawyer to bring a lawsuit against Gangda, claiming unpaid social insurance contributions and recovery of back wages, as well as compliance with certain provisions of their employment contracts and compensation for their termination. The six split the lawyer's fees, which came to 2,000 yuan each.

However Liu admitted he is not optimistic about the outcome of the lawsuit:

After we submitted the application for arbitration, they repeatedly called me at home, people from the district committee came looking for me, people from the local police station, and they all told me not to sue. The government will go to any lengths to protect the company's interests.

I got phone calls from people I knew and from people in the district committee. Basically, they were trying to get me not to sue, advising me to look for a job and make some money, to take it easy.

But, Liu explained, he was not about to give up that easily:

They violated our rights in too many ways; they tapped our home phones and hacked into our personal computers. All I feel now is anger and I just want to get back at them.

However, seeking legal redress is just about the only option left for the Lingyuan workers.

Petitioning proved pretty ineffective; it wore us down and put our families under pressure from the district committee and the local police station. So we've decided to take the more low-key approach of doing things by the numbers and going down the legal road. We have both the law and the facts on our side. Let's see if the law will come through for us.

So far however, the workers’ lawsuit has not been successful.


Han Dongfang’s interview with Liu Xiangdong was first broadcast in six episodes in August 2010. To read the full Chinese transcript or listen to the audio file of the broadcast please go to the workers’ voices section of our Chinese language website and follow the links.

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