Migrant workers, rural residents paying the price for a cleaner future

Migrant workers and rural residents bear the brunt of Beijing's policy to close polluting factories and clean the environment

PUBLISHED : Monday, 03 March, 2014, 4:38am
UPDATED : Monday, 03 March, 2014, 5:24pm

Yan Laishun's surname means hope for a smooth and lucky life. And the bicycle repairer and his family could do with some luck after a nearby steel mill closed last year.

His two daughters and son lost their jobs. The family hasn't recouped the 120,000 yuan (HK$152,000) it contributed to the plant, nor has his son been paid four months' wages. And neither he nor the other Shuihou villagers know when they will recover the farm land the plant grabbed when it expanded.

Production at the private plant run by Xingye Industrial and Trade stopped last November when the Tangshan government razed its major blast furnace. The city also destroyed other small steel plants deemed major polluters after Beijing demanded that industry become greener and more efficient.

"The factory was too polluting and its equipment outdated. The closure was understandable," Yan says. But he's worried about his family's future.

He's not alone. An old man selling sausages and bread at an entrance to the village says that the migrant labourers who came to work at the plant had left for other job opportunities. "They have all gone," he said.

Migrant workers and rural residents like Yan are bearing the brunt of Beijing's policy to close polluting factories nationwide, an endeavour that will take years.

The government is demanding local cadres pay attention to the environment instead of just chasing growth targets.

The National People's Congress this week will discuss economic transformation and environmental protection, among other issues.

In years past, local authorities were under pressure to expand investment with few restrictions, turning China into the world's biggest carbon emitter.

"Over the past 10 years the accepted view within government circles was that high growth ensured employment and social stability. This is now being questioned," says Laurence Brahm, an international lawyer and economist based in Beijing who advises the Ministry of Environmental Protection on green policies.

"The whole process of energy transformation will be the agenda for the coming decade," he says. "As with every set of reforms there are major dislocations. But the steps are necessary as the current path is not sustainable and would bring even harder social ramifications."

The bright side, according to some, is that the transition to more sustainable economic growth could create more jobs for white collar workers.

Overcapacity has become a major concern dragging on economic growth, which has slowed to 7.7 per cent, from a peak of above 14 per cent in 2007.

The growth of the past decade came as local governments were encouraged to invest heavily in steel, cement, and other plants. The country added 400 million tonnes of steel capacity from 2005, according to an official at Tangshan Guofeng Iron and Steel, who added that it might be a "very conservative estimate".

Researchers have warned that with factories at overcapacity, an ageing population and difficulties in boosting labour productivity, the country could sink into a so-called "middle-income trap".

Hebei, the province closest to the capital, has joined the crusade to cut the level of pollutants in light of Beijing and other cities enduring worsening smog.

According to the National Development and Reform Commission, Hebei aims to slash 70 million tonnes of excess steel capacity by 2018.

Heavy industry shaped Tangshan, 250 kilometres from Beijing. It opened the country's first coal mine, built the first standard railway, as well as the first steam train engine. It will have to trim 40 million tonnes of crude steel capacity by 2017 and 28 million tonnes of iron refinery capacity by 2018.

The government hasn't released jobless numbers. But Xinhua reported in December that more than 400,000 people would need to be resettled if Tangshan met the required steel industry cuts.

The last round of massive layoffs came in the late 1990s when former premier Zhu Rongji ordered thousands of loss-making state-owned enterprises to be shut.

Zhu, dubbed "China's economic reform tsar", broke workers' "iron bowls" at state-run firms by laying off more than 21 million people from 1998 to 2000.

About 13 million were re-employed, more than a million retired, and the government said it spent 420 billion yuan of endowment funds helping the workers.

Despite official claims the process had been a success, many of the workers have suffered, prompting periodic demonstrations.

Beijing's latest environmental crusade echoes some of the aspects of the Zhu era.

"The late-1990s slump in the economy is a cautionary tale of what can go wrong if unproductive firms are allowed to continue borrowing and increasing their output," Mark Williams, chief Asia economist at Capital Economics, says.

The difference today is that capacity cuts are taking place in mostly smaller and private facilities, while the government has encouraged consolidation to form big industrial groups.

On February 23, 19 iron and steel furnaces were destroyed in several Hebei cities.

The Xingye plant, which during its boom period expanded its assets to nearly one billion yuan, is now a lumbering ruin choked by long grass.

Local governments have pledged to offer training and other services to help workers secure new jobs.

But Yan is not convinced help will arrive. He says the village's administrative office has been "useless".

One morning in February, the Tangshan Human Resources Market was filled with job seekers. But only a couple of positions seemed appropriate for low-wage steel workers. There were plenty of vacancies at property, pharmaceutical and trading companies.

A 50-year-old worker who now earns 2,000 yuan a month at a power equipment company in Tangshan says he was one of the more than 1,000 people laid off from Tangshan White Jade Ceramics factory in 2000.

He was at the job fair with his wife in the hope of finding another job. "I have tried almost every kind of job I was capable of doing since I was laid off, but none became permanent," he says.

A senior official at Tangshan Guofeng Iron and Steel says: "The painful period for the whole industry has just begun."

But economists say the industrial upgrade will create more jobs for better-educated people, such as scientists, engineers, and financial professionals. A service sector expansion will absorb more workers.

"I'd expect some local disruption, but efforts to nurture more rapid growth of the service sector - which uses far more workers [than the heavy manufacturing sector] - should more than offset the impact at the national level," says Williams.