During a visit to the People’s Republic of China in July, Marilyn Bechtel talked with trade unionists at the enterprise, city, provincial and national levels, to learn how they are helping workers meet the challenge of economic restructuring going on in China today. This is the first of two articles; the second will deal with the situation of China’s migrant workers.

It has been a quarter century since the policy of “reform and opening up” began to be implemented in China, featuring restructuring of state owned enterprises (SOEs), and opening the economy to domestic and international capital. This complex path is a central feature of what the Communist Party of China calls “building socialism with Chinese characteristics.” It is viewed by the CPC as the only practical way to jumpstart economic development under the very difficult conditions of a developing country with a huge population and a large diverse landmass, facing extreme poverty and devastation from war as well as from world capitalism’s unending efforts to overturn the Chinese revolution. Far from being a “free-for-all,” the overall economic picture is influenced through macroeconomic controls such as monetary policies, investment growth, credit and taxes. Nor has the private sector taken over — currently about two-thirds of the Gross Domestic Product (GDP) comes from the publicly owned sector.

Especially since the start of the 1990s, the shift from a stress on state planning, with lifetime employment for urban workers, to one permitting much greater operation of markets has accelerated the country’s economic growth and brought improved living conditions to most Chinese. At the same time, however, the process has brought layoffs and unemployment to millions of workers as SOEs reorganized to boost productivity and competitiveness.

In that period, northeastern China and other old heavy industry centers have gone from industrial heartland to “rust belt,” while laid-off workers have faced the need to upgrade skills, learn new technologies and, often, to prepare for entirely different lines of work. Even in eastern China, where rapid industrial growth has been a national priority for years, similar processes are taking place.

In the U.S., millions of workers and their communities have faced similar challenges, as the workforce has been slashed under pressure of new technology and plant closings.

Like trade union movements in many countries, U.S. and Chinese trade unions are each having to develop new strategies to uphold their workers’ interests under the new conditions. However, while U.S. workers’ wages have stagnated or declined in the last decade and vacation days have decreased, in China during the same period the average worker’s wage rose 40 percent, the workweek has been cut and vacations are lengthening.

I talked with trade union leaders in four different cities — Shenyang in the northeast, Ningbo and Hangzhou in eastern China, and the capital, Beijing. Specifics varied from region to region, but the overall picture was similar — a significant gap between the number of workers seeking jobs and the employment opportunities available to them, massive programs to retrain and re-employ workers displaced in the reform of state-owned industries, and new emphasis on pre-employment training and on-the-job upgrading of skills. Though these programs are far from solving problems for all displaced workers, the avenues they offer have helped millions to find new jobs and to stabilize their employment situation.

In the years just after China’s 1949 socialist revolution, Liaoning, Jilin and Heilongjiang — the northeastern provinces once called Manchuria — were the main national center of heavy industry, producing the country’s first steel, machine tools, locomotives and airplanes. Under the centrally planned economy of that period, enormous resources from all over the country were channeled into the region and, in turn, its products were distributed nationwide.

However, as emphasis on central planning was reduced, the region lost its cutting-edge position. Once providing 17 percent of China’s industrial output, by last year the northeast had slipped to 9 percent.

The Communist Party of China’s 16th National Congress in November 2002 laid the basis to redevelop the region so it can again play a major role in China’s modernization process. Revitalization was given additional impetus at the CPC’s October 2003 Central Committee meeting. The process involves upgrading technology to contemporary standards, restructuring SOEs, encouraging development of joint public-private and private ownership, and bringing in more domestic and overseas investment. The goal is to restore the region’s full industrial potential by the year 2020. As of July, the National Development and Reform Commission had approved investments in 160 projects in the area, totaling about 66.6 billion yuan ($8 billion).

During conversations in several cities, union leaders described the union’s responsibilities to uphold workers’ rights during restructuring. In SOEs, the chair of the workplace trade union, elected by representatives of all the workshops, is usually a member of the top administrative staff or, in reorganized enterprises, a member of the board of directors. This assures union input as reorganization is discussed. The Workers’ Congress of elected representatives must discuss and ratify restructuring and employment plans before they can take effect.

While in Shenyang, I talked with Wu En Tao, vice chair of the China Shenyang Federation of Trade Unions. He said about 30 percent of workers at the city’s SOEs have been laid off. Some 20 to 25 percent have found new jobs in SOEs, while others have gone into information technology —where pay is about equal to the SOEs — or into lower-paying service jobs.

(Though he did not cite a specific figure, Liaoning Province’s Labor Bureau said some 750,000 workers were laid off in Shenyang in 2003.)

Wu outlined a series of measures with union involvement to aid the unemployed. Among them: job agencies that train workers, upgrade their skills and help them find jobs; programs matching workers’ skills to available jobs; and small interest-free loans to workers wishing to start their own businesses.

Nationwide, provisions for laid-off SOE workers include temporary income support for the newly jobless, unemployment insurance, and a minimum living standard guarantee for those who don’t find adequate new employment. Tong Qing Feng, vice president of the China Institute of Industrial Relations in Beijing, told me that while the process varies by region and by industry, workers basically have three years in which to be retrained at re-employment centers. After that, the social security minimum living standard kicks in for those who do not find a new job. However, Tong said that the social security provisions have been implemented unevenly so far because of a shortage of funds. He said the Institute is optimistic that the peak of layoffs has been reached and they will taper off soon.

An example of a long-established SOE that has found its footing in the new environment is the Shenyang Blower Works. Founded in 1934, long before the revolution, the plant at first mainly made coal cars. Now it makes centrifuges, turbines and other precision equipment for the petroleum and chemical industries. The plant employs 2,700 workers, half of whom are skilled technical workers. This fall they will move to brand new, state-of-the-art facilities.

Trade union vice chair Zhang Jiashu told me that before their employment starts, all shop-floor workers receive technical school training. When they join the plant’s workforce, they are trained for their particular job. Training is continuous, and many workers earn certificates of competency at various levels. Competitions among the workers provide added incentive to hone skills.

The economic picture is very different in densely populated Zhejiang Province, south of Shanghai, where accelerated development including building up private enterprise has been emphasized since the 1990s.

During a meeting in the city of Hangzhou, provincial Trade Union Federation leaders said over 90 percent of SOEs in the province have been restructured. Though the employment environment in Zhejiang is more stable than in other areas, problems still exist, they said. Besides SOE workers laid off during reorganization, jobs must be found for farmers who have lost their land, a rapidly growing number of college graduates, and migrant workers drawn to the bustling region.

Through combined efforts of the trade unions and government, over half a million new jobs were created last year, and a similar number is planned for this year, the unionists said, but despite this great effort, a substantial gap remains.

In the province, 75 training facilities offer some 650 classes. Programs now feature exams for skills certification. Training is done to enterprise specifications, and workers are referred to those enterprises when they finish.

Every city and county also has at least one center to aid workers who experience unusual difficulty in finding new work. These centers advocate with the government on policy matters, serve as employment agencies, aid workers in difficult life situations, and offer advanced technical and professional training.

In a period when China’s great economic progress has benefited virtually all Chinese while at the same time regional inequalities and unemployment remain to be overcome, the country’s trade union movement is playing a major role for progress as it strives to uphold workers’ rights under new and evolving conditions.

The author can be reached at mbechtel@pww.org.