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China : workers protest the privatisation of a state-owned steel firm

Wednesday 26 August 2009

China was forced to halt the privatisation of a state-owned steel firm after a protest by thousands of workers who said they had not received fair pay, state media reported.

It was the second time in less than a month that workers have been able to halt the privatisation of a Chinese steel plant as Beijing tries to overhaul the sprawling and inefficiently run industry.

Last month, a crowd assaulted and killed an executive who was managing the acquisition of state-owned Tonghua Steel in northeast Jilin province.

The latest protest was in central Henan province, where workers at state-owned Linzhou Steel Corporation opposed a proposed take-over by Fengbao Iron & Steel Co. Ltd, a private firm, the official Xinhua news agency reported.

The demonstration began on Tuesday and only ended on Saturday after a government mediation team promised to temporarily call off the deal, Xinhua said.

In a sign of official concern, the state-backed All China Federation of Trade Unions posted a notice on its website, saying that corporate restructuring plans would be deemed invalid without express approval from workers.

It said that a lack of openness had aroused workers’ suspicions and caused the outbursts of violence.

The trade union federation is unlikely, though, to fight more aggressively for workers’ rights, as its branches are dominated by management and local officials.

Separately, Xu Guangchun, Communist Party Secretary in Henan, called on all levels of officials to ensure proper consultation with workers and to evaluate risks to social stability before giving the go-ahead for any corporate restructuring.

The Linzhou Steel workers demanded higher compensation for those who had lost jobs as well as unpaid wages over the course of the firm’s restructuring, which began in August 2008, the news agency said.

Linzhou Steel, established in 1969, has 5,122 workers and pensioners on its regular payroll, of whom 2,995 were still working, Xinhua said. The plant produces roughly 400,000 tonnes of pig iron and 100,000 tonnes of cement a year.

MED police in central China have clashed with steel workers who were holding an official hostage in a protest over privatisation plans, state media reported on Saturday.

The incident happened on Friday at the Linzhou Steel Corporation in Anyang city, Henan province, after four days of demonstrations, the China Daily said.

Officers tried repeatedly to break through the lines of the workers, who had been patrolling the gates since early this week, the paper said, without stating if the police succeeded.

The paper quoted unspecified reports as saying the workers were holding an official of the local State-owned Assets Supervision and Administration Commission. It gave the official’s surname as Dong.

In a signal that authorities take the situation seriously, Chen Quanguo, a deputy governor of Henan, reached Anyang on Friday to address the workers’ ’misgivings", a senior city official told China Daily.

The clashes adds to recent evidence showing that labour-related unrest may be escalating in China.

Last month, angry workers in north-east China killed a factory manager amid a protest over an unpopular takeover.

Linzhou Steel, a state-owned enterprise with 5,122 employees, was sold to a private firm last month for about 64 million yuan (S$13.4 million) without the workers’ consent, the paper said.

Massive layoffs followed the takeover, with workers getting 1,090 yuan for each year of service they had put in, according to the paper.

It is not the first protest over the privatisation of the firm, the paper said, citing a situation in March when more than 1,000 workers tried to resist the plans by blocking the streets and shutting off the factory for days.

’I’ve been with Linzhou Steel for more than two decades and all I got was 20,000 yuan and a letter asking me to leave,’ one of the workers said on the Tianya.cn web portal.

Manager killed during protest over steel plant privatization

Workers at a state-owned iron and steel plant in Jilin attacked and killed a senior manager during a protest at the proposed privatization of the factory on Friday 24 July.

Thousands of workers at the Tonghua Iron and Steel factory staged a demonstration on Friday morning after news spread that the Jianlong Group, China’s largest privately owned steel company, would buy a majority stake. Jianlong had taken a minority stake in Tonghua in 2005, laying off several thousand workers in the process, but only sought to increase its stake in Tonghua after the company turned a profit earlier this year.

Some workers attacked Jianlong representative, Chen Guojun, who was reportedly going to take over as general manager, with bricks and clubs and later prevented police and ambulance crews from coming to his aid.

The South China Morning Post quoted a Tonghua public security bureau officer as saying; “Workers from Tonghua would not allow ambulance and medical practitioners to enter the building to rescue Mr Chen and he died.”

The death of Chen Guojen is the latest in a series of violent incidents at factories in China this summer. On 15 June, two Taiwanese managers at a plant in Dongguan were attacked and killed by a disgruntled employee, and 11 days later two workers were killed in a mass brawl between Uighur and Han employees in a toy factory in Shaoguan.

However, as CLB showed in its new report on the workers’ movement in China, labour disputes only rarely escalate into violence. Of the 100 incidents in 2007 and 2008 studied in the report, only five involved attacks on company property or management personnel.

The incident at Tonghua reflects the deep anger felt by many employees at China’s state-owned enterprises (SOEs) at their treatment during restructuring and privatization. Although the majority of SOEs were privatized in the late 1990s, the after effects are still felt today and many other SOEs, like Tonghua, are still going through the process of restructuring.

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