In 2014, more than 40,000 employees at the same factory operated by Yue Yuen Industrial Holdings Ltd. in the Guangdong province of China went on strike over salaries and social security payments for a week, costing the company $27 million in lost profits and additional air freight expenses.
A company spokesperson George Liu told Bloomberg the workers went on strike after the company announced “personnel adjustments” that are aimed to “enhance capabilities.” He said Yue Yuen is working with government officials and labor unions to resolve the work stoppage.
However, China Labor Watch (CLW), a New York-based nonprofit, said workers went on strike to demand an immediate payout of their housing fund after a decision by management to merge two plants.
Last week Yue Yuen combined Plant 3 with Plant S1. As a result, workers claim management altered the contracts of Plant 3 employees, which Chinese labor law states must be first negotiated with the employees. Yue Yuen said the merger only applies to office and logistical staff in Plant 3, not production.
An employee from Plant 3 told CLW that workers are not satisfied with Yue Yuen’s response and that workers believe the merger is a “progressive step toward movement of Yue Yuen operations out of Dongguan toward South Asia.”
Employees reportedly anticipate more downsizing and want to resign now with a payout of their housing fund. In March, new regulations came into effect, including a new rule that workers must withdraw money from their housing fund before they resign.