Hong Kong Enterprises Neglect Social Responsibilities and Condone Brutal Repression on Workers

In October 2016, the HKCTU released a “Monitoring Report on Collective Labour Disputes of Hong Kong Enterprises in China” (hereafter: Monitoring Report), covering large-scale labour disputes in Hong Kong enterprises and their labour rights violations between May 2015 and April 2016. The report exposed that labour actions had taken place in many subsidiaries of members of business associations in Hong Kong, as these enterprises violated China’s labour legislations. They failed in paying workers’ social insurance as required by law, relocated plants without informing workers, forced workers into “voluntary resignation” and etc. Their ultimate goal is to undercut or minimize the employee's entitlements' to severance payments. As Guangdong Province is still undergoing economic transformation, China suffers from economic downturn and foreign investment dries up, labour actions are expected to occur more frequently. Thus, the HKCTU urges the business associations to monitor the operation of their members, to ensure that they respect labour legislations, stop repressing striking workers and observe fundamental labour rights.

In recent years, Guangdong Provincial Government has launched economic restructuring policy that aims to attract high-end/high-value industries to replace labour intensive manufacturers. The rapid development of the coastal region has led labour costs to rise and therefore, many factories in Guangdong Province have started to relocate to inner provinces or other countries in South-East Asia, for lower production costs.  However, many employers attempt to undercut workers’ wages, social insurance payments and severance payments by hiding the relocation/closure plans from workers. The Monitoring Report recorded a 30% annual growth of large-scale labour actions and among the 32 cases, almost 60% (19 cases) were caused by unpaid or missing severance compensation. Over 20% of them involved subsidiaries of Hong Kong-listed companies. In various cases, Hong Kong enterprises violated multiple legislations, e.g. in 25% of cases, the enterprises failed to pay both severance payments and wages. In short, Hong Kong enterprises often ruthlessly violate China’s labour legislations.

 

According to Item 3 of Article 40 of Labour Contract Law, “an employing unit may revoke the labour contract, if it notifies in writing the worker of its intention 30 days in advance or after paying him an extra one month salary, when the objective conditions taken as the basis for conclusion of the contract have greatly changed, so that the original labour contract cannot be performed and, after consultation between the employing unit and the worker, no agreement is reached on modification of the contents of the labour contract.” Yet, Article 46 and Article 47 state that the employer should pay financial compensation to an employee on the basis of the number of years a person works in a unit, the rate being one month’s salary for the work of one full year. Thus, an employer is obligated to inform employees about the decision of relocation and pay the severance payments to employees who disagree with the changes in the labour contracts.

 

Royale Furniture Holdings Limited (HKG: 1198) set a vivid example of corporate misconduct. During the National Day holidays in 2015, Signature Enterprise Company Limited (Guangzhou), a subsidiary of Royale Furniture Holdings Limited, moved machineries to another production site, about two hours drive from its Guangzhou plant, without informing its workers. Workers returned from their long holidays and found the factory gate had been locked and over 100 men were blocking their entrance. These men were all uniformly dressed in black T-shirts. Three workers were injured when a conflict broke out between workers and these men. On 16 October, the enterprise posted a “Notice of Return to Work”, dated on 12 October. It ordered workers to take a coach organized by the enterprise on 19 October, to travel to work in the new plant. Due to family reasons, some workers could not travel so far to work in such a short notice, a strike broke out. Workers refused to be relocated and demand severance payments. Yet the employer accused workers of “voluntary resignation” of “failing to attend work” and offered to pay 20% of the severance payments they were entitled to. Such a practice is a blunt violation of labour legislation in China.

 

The Monitoring Report also pointed out that some Hong Kong-owned enterprises violated the three fundamental labour rights, deploying violence to repress striking workers, violating workers’ rights to strike and collective bargaining. For instance, strikes broken out in Artigas Clothing & Leatherware Factory, a subsidiary of Lever Style Inc., a member of the Chinese General Chamber of Commerce, for missing pension insurance, housing provident funds, unfair dismissal and detention of workers’ representative Wu Weihua in December 2014 and June 2015. Workers reported that they were assaulted by police and threatened by local authorities repeatedly and were forced to sign “voluntary resignation agreements”. With the authority’s help, Artigas could get away without paying workers’ entitled severance payments. In the end, Artigas repaid only two years of pension insurance and four years of housing provident funds (in instalments over 6 years), a so-called relief fund calculated at a rate one third lower than Shenzhen City’s legal minimum wages, on the basis of the years of services. Compared with the legally entitled severance fund, i.e. on the basis of the number of years a person works in a unit, the rate being one month’s salary for the work of one full year, the relief fund is far lower. Deploying police to assault workers and dismissing workers’ representative, clearly violates workers’ rights to strike and collective bargaining. Yet, Lever Style Inc., as its parent company, has not paid any effort to protect workers in Artigas.

 

Another example is violation of labour legislations is found in Johnson Electrics (Guangdong) Limited, wholly owned by Hong Kong listed company Johnson Electrics (HKG: 0179), a member of the Federation of Hong Kong Industries. The plant failed to provide appropriate protective measures or training to workers who work with benzene, a carcinogn. When workers then contracted leukaemia and applied for identification of occupational diseases at the Hospital for Occupational Disease Prevention and Treatment, Johnson Electrics delayed the procedure in providing related information for an official diagnosis, which put their cases in limbo. Furthermore, it kept lobbying workers not to report their diseases to the hospital and wanted to settle the cases privately. Workers refused this offer and when they finally received the official diagnosis of occupational leukaemia from the hospital, Johnson Electrics still refused to pay compensation. Some workers had to take loans to pay for their medical expenses. In July 2016, some victims came to Hong Kong and protested at Johnson Electrics’ Annual General Meeting. They demanded the parent company to bear its responsibilities and pay compensation as required by law. Yet, until now, Johnson Electrics paid nothing.

All these cases illustrated that the four major business associations failed to ensure their members to abide China’s labour legislations and respect fundamental labour rights. In fact, these cases are simply the tip of an iceberg. It is questionable if the business associations have paid any efforts to monitor its members and thus.  Thus, the HKCTU and other labour NGOs took the opportunity to protest against the four business associations on January 26 at their joint luncheon and urged the four major business associations to:

 

  • run an annual investigation to check if its members obey the local labour legislations and publish the results;
  • disqualify members which violate labour legislations repeatedly and disclose such records;
  • urge members to disclose their labour practice in their annual report, to allow public to monitor the enterprises’ implementation of corporate social responsibility;
  • demand members to respect the three fundamental labour rights and stop brutally repressing workers’ strikes.

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