China Labor Watch
Press Releases
March 2, 2008
Recent news obtained by China Labor Watch (CLW). Dongguan Fuan Textile Mill, a textile factory located in Dongguan , China has begun large-scale layoffs. Evidently, approximately 3,395 workers will be laid off. According to eyewitnesses, on February 29 th , more than one thousand workers have gathered in front of the local Chang'an Township office, demanding their employer to provide a reasonable compensation. On the other hand, Dongguan City Government has sent out four to five hundred police officers and anti-riot units along with more than dozen of police vehicles to the scene.
Dongguan Fuan Textile Mill is a branch of Hong Kong-based Fountain Set (Holdings) Limited. The factory mainly produces elastic knitted clothing such as T-shirts and athletic shirts for clients include Abercrombie & Fitch Co., Adidas, Eddie Bauer H oldings Inc., Gap Inc., Land's End Inc., Reebok, Target Corp., Tommy Hilfiger Corp., and Wal-Mart.
According to workers, the layoff was primarily due to the labor law established just this year. In order to cut down expenses, Fuan has prepared to relocate its production in other parts of China and cut down the number of its workers in Dongguan. However, unsatisfied with the compensation given by Fuan and suspect the fairness of their former employer' layoff policy, workers demanded the intervention of local labor bureau.
On the layoff notice sent by Fuan management and provided by workers prints, “Worker who was employed between April 2 nd , 2002 to April 4 th , 2005, can receive 150 percent of the average monthly wage as compensation; Worker who was employed between April 2 nd , 2000 to April 1 st , 2002 can to receive 250 percent of the average monthly wage; Worker who was employed between April 2 nd , 1998 to April 1 st , 2000 can receive 350 percent of the average monthly wage.
Based on the notice above, workers who work at Fuan for eight years or more are only able to receive compensation equivalent to four month worth of wage, thus the primary cause of the incident.
According to the New Labor Contract Law, compensation should be given by the employer accordingly to the time worker has worked for. For instance, each year of employment is equivalent to one month of wage. Worker's working period over six months and below one year is also considered as one year of employment thus should be given compensation worth one month of wage. Moreover, worker whose working period is less than six months should be given half month of wage as compensation.
In accordance with the New Labor Law, workers who work eight years are entitled to receive compensation worth eight months of wage.
CLW calls out to the laid off Fuan workers to remain calm, comply with the existing Labor Law and pursue their rights through the local labor bureau or lawsuit.
Li Qiang, Executive Director of China Labor Watch states that this incident will determine whether the New Labor Law can be executed and Chinese government's level of compliance towards it. Chinese government is currently adjusting its economic approach, raising workers' wage as well as expanding the national needs.
