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Authorities to build fund to help lay-offs

(Xinhua)
Updated: 2008-10-20 21:30

The court found that in addition to about 10 million yuan (US$1.46 million) in unpaid wages, the company was also 30 million yuan in debt to its suppliers in Hong Kong and the mainland.

The local labor department had sent investigators to the company, and will start mediation in the labor dispute on Thursday.

Since the closure of Smart Union's factories in Dongguan, the township government of Zhangmutou has promised to pay 24 million yuan to cover the company's two months of unpaid wages.

Xie Jianshe, rector of the Guangzhou Urban Development Research Center of Guangzhou University, said the government bailout failed to deal with the underlying causes of wage defaults in factory closures.

"Governments at different levels plan to earmark money for the contingency reserve fund to help unpaid employees, most of them migrant workers. However, it is not fair to spend tax-payers' money to cover for the companies' losses," he said.

He proposed the companies should be required to contribute to a mandatory reserve fund on registration, which would prevent layoffs from becoming a social problem.

Zhang Yansheng, director of the International Economic Research Institute under the National Development and Reform Commission, foresaw a gloomy picture for exporters who were hit by both falling global demand and rising costs.

"The country's exporters are in a very difficult situation right now," he said.

Guangdong makes one third of China's exports. However, rising materials and labor costs are forcing many plants to move out of the province.

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