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Government offers back pay to laid-off toy factory workers

(Xinhua)
Updated: 2008-10-22 11:05

About 7,000 workers who lost their jobs after toy-making factories shutdown will receive back pay from the local government in Guangdong.

Two factories of the Smart Union Group (Holdings) Limited, a Hong Kong listed company and supplier to US Mattel Inc, were shut down on October 15. More than 7,000 workers lost their jobs, said Xu Hongfei, deputy government chief of the Zhangmutou Township in the Dongguan City, where the factories were based.

The company owed its workers at least six weeks of wages totaling 24 million yuan ($3.5 million), he said.

Related readings:  50% of toy firms 'gone in 2 years'  Thousands of toy makers laid off  Sub-contract factories fall victim to US crisis

"The boss is nowhere to be found so the township government is offering payment for the time being," Xu said. He added that wages have already been distributed to the workers.

He Ming, who used to work for Smart Union, told Xinhua that he received 1,800 yuan for working 13 days in October.

"My monthly wage was about 3,000 yuan and the money given by the government was about the amount that the factory should pay me. I'm satisfied," he said.

Township deputy head Xu said the government will not cover unemployment compensations that the company should have granted its employees.

About 1,000 workers decided to hire lawyers to have their legal rights safeguarded.

The local government promised to help people find jobs if they want to stay in the area.

Dongguan is a major base for Chinese toy exporters, but the rising yuan and escalating production costs forced many factories to go bust.

The General Administration of Customs said in a report Monday that 3,631 toy exporters, about half of the industry's businesses, shut down in 2008.

In the neighboring Shenzhen City, about 800 laid off workers from Chuangyi Toys Co Ltd, also a Hong Kong funded firm, were provided 3.7 million yuan in wages by the city government on Tuesday.

The company closed October 14. Its boss hasn't been seen since then. Assets of the firm have been sealed by local labor authorities and will be auctioned off, sources with the Pingshan community office, where the company was based, told Xinhua.

In response to fleeing company executives, the Shenzhen Labor and Social Security Bureau on Tuesday publicized the names of 30 companies which owe about 12 million yuan in back pay to their workers. It demanded executives to report to local labor authorities within 30 days.

Those companies on the list include real estate agencies, clothing, furniture and catering businesses, some of which owe as much as one million yuan in wages ($140,000).

Since June, the Shenzhen government has paid 10 million yuan to jobless workers, said Yang Baohua, deputy director of the labor bureau's back pay fund.

Black-listed companies will be ordered to pay a 25 percent fine on the prepaid amount, he said.

"We hope our measures will deter the bosses who don't have a conscience," Yang said. "The city will continue to crack down on business misconduct and will protect the legal rights of workers."