Workers fight for social security as government cracks down on malpractice

In a bid to stamp out widespread social insurance fraud in China, the State Council has decided that from next year the tax bureau will be responsible for collecting social insurance contributions directly from enterprises.

It is estimated that more than 70 percent of companies are involved in some kind of social insurance malpractice such as using the minimum wage rather than the workers’ actual salary as the basis for calculation or not including workers’ bonus payments in the total, according to the China Enterprise Social Insurance White Paper of 2018.

Although the tax bureau has more sophisticated calculation and collection capabilities, the new policy is unlikely to have a major impact. Companies in Guangdong, for example, are already seeking ways to avoid payment by setting up shell companies and hiring workers on temporary contracts.

In many cases, it will still be up to the workers themselves to force their employer to pay not only the contributions they are owed now but the arrears that have accumulated over many years, even decades. Social insurance claims have been an important element in worker protests for many years, especially during factory relocation and bankruptcy disputes, as detailed in CLB’s Workers’ Movement Report 2015-17.  And these disputes continue to erupt on a regular basis. In September this year, for example, CLB’s Strike Map recorded nine such cases, two of which are discussed in more detail below.

Bankrupt cinema chain evades contribution payments

In early September, hundreds of workers from the Stellar (星美) cinema chain in Jiangsu, Liaoning and Hebei held a series of protests over unpaid wages and social insurance contributions. Local media reported that the workers had not been paid since Stellar reduced opening hours and closed down some of its more than 300 cinemas in April.

The company has so far refused to pay its employees, even though it reportedly made a profit of 300 million yuan in the last six months and revenue increased by eight percent. “Part of that profit is our hard-earned money,” one worker told the local media.

Even though a court issued a ruling ordering the company to pay the workers’ social insurance contributions and salaries, most of the workers are still struggling to get paid because the company has reportedly forced its subsidiaries to transfer their income to its headquarters every day leaving them no money to pay the workers.

Machine factory workers strike over pension payments

Dozens of workers at a machine tool factory in Tengzhou, Shandong, went on strike on 21 September, to protest unpaid social insurance contributions. Workers claimed that the boss had not been paying his share and that employee contributions were being embezzled by the company.

All of the striking workers had been employed at the factory for at least ten years. Some of them only realized that their pension had not been paid after they reached retirement age. Many employees had only received pension contributions for a few years, while some had empty accounts. The workers estimated that each of them was owed at least 120,000 yuan.

The workers, who had already gone through the arbitration process, said that the company was using its financial situation as an excuse to shun its responsibility. Their case is now before the courts and workers are continuing with their strike action, preventing the company from handling any more orders.

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