[Marxism] Mass Layoffs in China’s Coal Country Threaten Unrest

Louis Proyect lnp3 at panix.com
Thu Dec 17 09:18:03 MST 2015

NY Times, Dec. 17 2015
Mass Layoffs in China’s Coal Country Threaten Unrest

HEGANG, China — In the dank shower room where the miners soak, the coal 
dust from their bodies staining the water chocolate, a lone worker sat 
smoking a cigarette, staring at the floor.

He lingered, he said, because since his pay had been cut in half, he had 
been eating dinner at his parents’ apartment, and he dreaded the 
humiliation of going there again.

“If any of the leaders would do their job properly, the situation would 
not be like this,” said the worker, Mr. Guo, 39. “If they want to sack 
me, they should just do it. Can it get any worse?”

It probably will.

The mine’s owner, the Longmay Group, the biggest coal company in 
northeastern China, announced in September that it planned to lay off 
100,000 workers. The elimination of about 40 percent of the work force 
at 42 mines in four cities is the biggest reduction in jobs that anyone 
could recall in this steadily declining rust belt near the Russian border.

China has managed mass layoffs at creaky, state-owned businesses like 
Longmay before, averting the threat of strikes and unrest by suppressing 
protests and offering payouts and job training.

But that was when the economy was booming and could readily absorb 
displaced workers. The test the government now faces in this depressed 
coal town and in other hard-hit areas across the country is whether it 
can head off labor discontent in a slowing economy.

Longmay has delayed the bulk of the layoffs, cutting only several 
hundred older workers who held nonessential jobs. Last month, the 
government of Heilongjiang Province, which owns Longmay, announced a 
$600 million bailout that would help the company repay its bonds. But 
analysts see the infusion as short-term relief that will not prevent a 

The coal industry is hurting nationwide, as coal prices have fallen 
nearly 60 percent since 2011, said Deng Shun, an analyst at ICIS C1 
Energy, a consultancy based in Shanghai. And Longmay, he said, produces 
far less coal with extra workers than newer, more efficient companies.

“They are quite worried about social unrest, so they delay,” he said. 
“These layoffs should have happened two years ago.”

Still, there have already been flashes of discontent.

In April, even before the layoffs were announced, thousands marched on 
the streets of Hegang, a city of about one million, to protest delayed 
salaries. The organizers were arrested and jailed.

In October, company management stifled a protest by locking workers in 
the mines. The police patrolled the streets outside the company 
headquarters on the day the rally was planned.

A few weeks later, Internet regulators exposed a group of workers 
discussing a demonstration on an online bulletin board. They were hauled 
to a police station, fingerprinted and warned that jail sentences would 
follow if they dared do it again.

“We are all on edge, the company is on edge,” Mr. Chen, 27, an organizer 
of that abortive protest, said over breakfast at a nearly empty 
restaurant, washing it down with a couple of beers at the end of his 
night shift. “We don’t know what is going to happen. It all depends on 
how the company takes care of the laid-off workers.”

Like other miners here, he spoke to a foreign reporter on the condition 
that he be identified only by his surname for fear of reprisal.

Of greater concern to the government, Hegang is not the only place where 
tensions with workers are increasing. The number of strikes and labor 
protests nationwide nearly doubled in the first 11 months of this year, 
to 2,354, compared with 1,207 in the same period last year, according to 
China Labor Bulletin, a monitoring group based in Hong Kong. The 
organization said strikes and worker protests hit a record high of 301 
incidents last month.

The reaction of the demoralized workers is being watched closely because 
the staying power of the Communist Party has been immutably linked to 
its ability to deliver continued economic progress. The unwritten social 
compact here is that the party delivers growth, jobs and higher living 
standards, and in exchange, the workers acquiesce to its monopoly on 
power, surrendering the right to organize unions or protest.

That bargain could fall apart if workers no longer believe the 
government is living up to its end.

The signs of severe economic trouble are evident. For-sale signs hang on 
the facades of restaurants that draw few customers. Robberies are on the 
rise; manhole covers and cellphones are popular targets. Women say they 
have stopped wearing jewelry for fear of being assaulted.

Heilongjiang has been one of the most depressed provinces in China for 
years. Its economic output fell 2.2 percent in the first three quarters 
of this year compared with the same period last year, without adjusting 
for inflation, according to the National Bureau of Statistics.

“What you have now is a very, very severe economic situation in one part 
of the country,” said Andrew Batson, China research director at Gavekal 
Dragonomics in Beijing. “It is very striking and very unusual.”

Still, the state-owned mines have been reluctant to cut production 
because there is little other work here. The first round of layoffs at 
Longmay, though relatively small, came soon after the September 

Workers in their late 50s were called to an office on the second floor 
of a disused building. Two young clerks barked orders at men. They were 
told to sign two-page contracts that pledged a small monthly stipend and 
vague promises of retraining.

Mr. Hui, 55, was one of the first. “It was 7 o’clock in the morning,” he 
recalled. “Our captain came to our changing room after meeting with the 
leaders. He said, ‘Here is bad news for you guys.’ Then he said, ‘Hui, 
you are one of those who are above the age limit.’ ”

Mr. Hui said he was crushed. He had worked as a firefighter at the mine 
for 35 years and expected a pension. He had not been told how much 
severance pay he would received, he said.

Although his wife, son and daughter-in-law had jobs, he could not make 
ends meet. “I have been paying the mortgage of my son and the day-to-day 
expenditures for our grandson,” he said. “I’m short of cash. I have to 
work. What else can I do? I want to give my grandson the best education 
so he can leave this place. There is no future in coal.”

The management of the Longmay Group declined to be interviewed. In 
response to a request to its headquarters in Harbin, the company said, 
“We are busy planning the reform of the company, and we are not ready to 
give information to the public.”

As the region’s population has dwindled in the last decade, the younger 
people who have stayed say they feel trapped. They have few skills to 
offer to factories in southern China, which in any case no longer hire 
the way they used to. And they are boxed in, expected to work in the 
mines, they say, by family traditions.

A 29-year-old mechanic who declined to be identified said he loved his 
job working with precision instruments in one of the mine’s workshops. 
He had tried to get a job in the port town of Dalian, but his parents 
forbade him to move, he said.

Blinking back tears, he said he depended on his fiancée, who earned a 
handsome salary as a video editor, and his father, who made more money 
than he did driving a truck.

“Most who are still here are like me, they don’t have a way out,” he 
said. “If the company would pay our salaries on time and in full, the 
workers would love to work.”

One employee, Mr. Cui, 40, a driver, said he had quit rather than wait 
to be laid off. He hopes to secure a taxi license to augment his 
severance of $104 a month, which he says is not enough to get by on, 
much less pay back the $6,000 he borrowed for his wife’s medical bills.

When the full brunt of the layoffs comes, the violence could be 
terrible, he predicted. Since the last economic crisis, in the 1990s, a 
conspicuous new group had appeared: the owners of recently privatized 
small mines who drove around in Mercedes-Benzes.

“In the 90s, everyone was poor,” he said. “Now the rich are too rich, 
and the poor are too poor. Because of the layoffs, everyone is worried. 
No one has a way to live outside the mines. With the New Year holidays 
coming, there will be chaos in Hegang.”

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